Page 164 - DMGT550_RETAIL_MANAGEMENT

Unit 9: Merchandise Management

(a) When the retailer has no locational advantage. Notes
(b) Its sales force is not competent and has little product knowledge.
(c) Customer services offered are average
(d) It has unimpressive layout and visual merchandising

(e) It manufactures labels or merchandise of its own.

9.7 Retail Pricing Strategies

Generally retailers identify with a specific market type and streamline their efforts in gaining
maximum profit. Pricing for certain types of markets mean that entry is reliant not only on the
types of merchandise sold, but the price it sells for. There are three price positions:
1. Above the market: It implies that a retailer can safely sell their merchandise at a price or
price higher than his competitors. However, when competitors are located close by, a
retailer needs to reply on the perceived quality of their offering to maintain sales.

2. At the market: This is the most common policy as the retailer lowers risk by selling at the
same price as surrounding stores. Here the competition is fierce and this may make the
retailer adopt a different approaches. There could be value creation through added benefits
like services, or price-cutting like two for one etc.
3. Below the market: This implies that a retailer is prepared to sell merchandise at less than
the average price. This is a popular strategy for discount stores and hyper markets formats.

9.8 Some Key Pricing-related Terms

The various types of pricing are:
1. Horizontal pricing: This practice involves agreements between manufacturers, wholesales
and retailers to set prices. Such agreements usually are illegal under Indian sales laws.
2. Vertical Price Fixing: A practice where manufacturers or wholesalers seek to control the
retail price of their merchandise through some sort of agreements.
3. Price Discrimination: A pricing practice where different prices are charged from different
retailers for the same merchandise and same quality.

4. Minimum Price Laws: These laws prevent retailers from selling certain items for less than
their cost plus a fixed percentage to cover overhead.
5. Unit Pricing: The objective of such legislation is to let the customers compare the prices of
product available in many sizes. For instance, food and grocery stores must express both
the total price of an item and its price per unit of measure.
6. Item Price Removal: A pricing practice in which prices are marked only on shelves or
signs and not on individual items.
7. Price Advertising: These are guidelines pertaining to advertising price reductions,
advertising prices in relation to competitor’s prices.

Task Make a brief note on pricing strategy adopted by any one popular Indian retailer.

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