Please enable JavaScript.
Coggle requires JavaScript to display documents.
Retail Pricing Strategies - Coggle Diagram
Retail Pricing Strategies
1. Problem: Charging Every Customer Their Maximum Willingness to Pay
Challenge: Unknown customer willingness to pay
Issue with list prices: Can't prevent high willingness to pay customers from opting for low prices
2. Price Discrimination for Maximizing Profits
Different prices for different customers
Techniques: Auctions, personalized internet prices, quantity discounts
3. Price Adjustments
Reasons: Clearance, promotional markdowns, to increase traffic and sales, generate cash
Methods: Sell-through rates, rule-based markdowns, markdown optimization software
4. Sell-Through Rate
Measures inventory movement
Helps identify products for markdown
5. Liquidating Markdown Merchandise
Options: Sell to another retailer, consolidate, online auctions, donations, carry over to next season
6. Variable Pricing and Price Discrimination
First Degree: Individualized variable pricing
Second Degree: Self-selected variable pricing
Third Degree: Different prices for different groups or regions
7. Implementing Price Discrimination
Strategies for different customer segments
Higher prices for fashion-sensitive customers initially, discounts later
Coupons for price-sensitive customers
8. Pricing Strategies: High/Low vs. Everyday Low Pricing (EDLP)
High/Low: Frequent sales promotions
Advantages: Excitement, short-term sales boost
Disadvantages: Encourages deal-waiting, may affect profits
EDLP: Steady pricing between regular and discount sale prices
Advantages: Assures low prices, reduces expenses, improves inventory management
9. Pricing Techniques for Increasing Sales
Leader Pricing: Lower prices on certain items to boost traffic
Price Lining: Predetermined price points
Odd Pricing: Prices ending in an odd number
10. Guidelines for Price-Ending Decisions
Use high numbers like 9 for high market price sensitivity
Use round numbers for markets with low price sensitivity
11. Internet and Price Competition
Shopping bots and search engines for price comparison
Retailers can offer added value beyond low prices online
12. Electronic Retailing Key Factors
Importance of location is replaced by the significance of information