Retail Pricing Case Study

7.35. What are the legal issues that affecting the retail pricing decisions?

The retailers must know what are the legal issues that affecting the retail pricing decision such as, pricing discrimination, horizontal price fixing, vertical price fixing, price comparisons and predatory pricing strategies.

Price discrimination strategy happens when a vendor sells the same merchandise to two or more retailers at different prices. Different retailers can charge different prices would depend on any differences in the cost of manufacture, sale, or delivery resulting from the differing quantities that are selling or delivered. It will be cheaper if the retailers buying in large quantities than small quantities as the manufacturers can achieve economies

For example, the vendors requiring the retailers to follow manufacturers’ suggested retail prices but retailers might allow pricing higher than the suggested retail prices in the market.

Price comparison strategy is a common practice by the retailers to compare the price of the merchandise offered for sale with a higher normal price or a manufacturer’s list price. This is a good strategy as it gives the customers perception to be a good deal as customers can compare prices in the market.

Predatory pricing strategy is another practice by the retailers by establishing merchandise prices to drive competition from the marketplace. A retailer may sell the same merchandise for different prices in different geographic locations if its costs of sale or delivery are different. Generally, retailers may sell merchandise at any price as long as the motive is not to destroy competition, for example, Wal-Mart’s everyday low pricing strategy.

7.36. What are the retail promotions mixes that retailers can develop?

The retailers can develop and implement six different methods of communication program to attract the customers to the stores that can summarize as follows:

1. Sales

How to use positioning objective to create a long-term competitive advantage edge?

A positioning objective typically is the design and implementation of a retail communication program that link retailer to a specific category of merchandise or benefit in the customer’s mind relative to its competitors in order to create a long-term competitive advantage. Specific positioning objectives that retailers can pursue are as follows:

1. The most common method for positioning is to make the retailer distinctive in a category of merchandise offered in the customer’s mind relative to its competitors. For example, a high fashion specialty store is projecting a high fashion specialty store in the customers’ mind that customers can search what are the latest fashion trends available in this high fashion specialty store.

2. There are retailers positioning themselves as high prices stores, while others positioning themselves as low prices stores. For example, Wal-Mart is positioning as low prices supermarkets by offering adequate assortments of merchandise with low pricing strategy in the customers’ minds relative to its competitors.

3. A retailer can link its store to specific attribute or benefit such as convenience or