7.4 Pricing Policies
• Also considered when setting price
• How to best price product to achieve results = increased sales/profitability
LEADER PRICING
• Offer popular product or two at low price
• Generates traffic in store and encourage shoppers to purchase other goods o Consumer thinks all products in store are reasonably prices (due to some low prices ones) so he/she buys sale items + some other products o i.e., Future Shop offers a “cheap” sale price on a phone or DVD to draw people to store – hope is other non-sale products will be purchase at same time
PRICE LINING
• puts all products that are one price in one place i.e., retail clothing stores have signs stating all clothing on a rack = $25
• advantage = increase profitability
 if there are more T-shirts that cost $2 vs $5 on $25 rack then store makes more money
• advantage = customer convenience
 they do not have to check price of every item
EVERTDAT LOW PRICE
• guarantee that price paid in store is lowest price available
• advantages = saves cost of advertising, enhances stores reputation as fair dealer, sves customer time looking for best price – increased sales
• i.e., Wal-Mart and the Brick guarantees their prices are the lowest
SUPER SIZING
• receive larger portion of an item by paying a slightly higher price
• adding a low cost to product to increase selling price and profitability
NEGATED PRICING
• buyer makes offers to purchase and seller makes offers to sell item for less that published price – price settles on acceptable by all – sales rise
• i.e., new cars, houses, etc.
INTEREST- FREE PRICING
• offer consumer chance to finance purchase with no interest for a specific period of time of the contract
• i.e., Mazda