Retail Pricing Strategies

These flashcards cover key concepts related to retail pricing strategies discussed in the lecture, including high-low pricing, everyday low pricing, customer price sensitivity, markdowns, dynamic pricing, and legal issues in pricing.

What are the two main pricing strategies discussed in the lecture?

High-low pricing and everyday low pricing (EDLP).

Name some retailers that use high-low pricing.

CVS, Walgreens, Giant, and others that frequently have promotional flyers with fluctuating prices.

What is the key characteristic of everyday low pricing (EDLP)?

It emphasizes consistent prices without frequent sales.

How do high-low pricing retailers create excitement for customers?

They use promotions and sales to attract customers and increase profits.

What is customer price sensitivity, and how can it be tested?

It refers to how sensitive customers are to price changes; it can be tested by experimenting with different pricing points.

What is the optimum price point example given for riblet baskets sold at a restaurant?

$7 was identified as the optimum price point for maximizing profit.

What is breakeven analysis?

A calculation to determine the point at which total revenue equals total costs, indicating no loss or profit.

What is dynamic pricing?

Pricing that varies based on customer type, time of day, or level of demand.

What do markdowns typically aim to achieve?

They aim to clear out goods, generate enthusiasm, or promote sales.

What is price lining?

A technique used by retailers to group items into price points for easier comparison.

What is odd pricing, and what psychological effect does it have?

Odd pricing involves pricing something at an odd number (e.g., $19.99) to make it appear cheaper than it actually is.

Describe predatory pricing and its legality.

Predatory pricing is illegal pricing intended to drive competition out of business.

What is bait and switch pricing?

A deceptive practice where a retailer advertises a low-priced item to attract customers but attempts to sell them a more expensive item.

What is a reference price?

A price against which buyers compare the actual selling price of a product.

How do retailers like TJ Maxx use reference pricing?

They compare their prices to higher department store prices to highlight savings.