CHAPTER 7: PRICING IN RETAILING

Figure 1: Factors Affecting 

Retail Price Strategy

The figure 1 above shows that there are few factors that affect the pricing strategy in retailing which are consumers, government that alwasy take control on the price, suppliers and also competitors.

Figure 2: A Framework for Developing a Retail Price Strategy

Objectives
Market Skimming	Market Penetration

     In order to develop a retail price strategy, retailers need to follow step by step the price strategy above. First, retailer need to set the objectives first either to market skimming or market penetration. Market skimming is setting the price at high price while market penetration is at the lower price.

         Next, the retailer also need to follow the price policy choices. This is to avoid the price offered at the high price. First, there are no competitors will have lower prices; no competitors will have higher prices or prices will be consistent with competitors. Second, all items will be priced independently or the prices for all items will be interrelated to maintain image and ensure proper markups. Third, the price leadership will be exerted, competitors will be price leaders and set prices first; or prices will be set independent of competitors. Besides, the prices will be constant over a year or season, or prices will change if costs change.

         Last but not least, the price strategies that can be chosen by retailers are demand-oriented pricing, psychological pricing, price-quality association, prestige pricing, cost-oriented pricing and competition-oriented pricing.

         Lastly, retailers can adjust the price through the price adjustments which includes the adaptive mechanism, markdown, additional markup, and employee discount.