Pricing Objectives
Price is an integral element of the retail marketing mix.
The price of the merchandise also communicates the image of the retail store to the customers. Various factors like the target market, store policies, competition and economic conditions need to be taken into consideration arriving at the price of a product.
The next factor to be taken into consideration is the demand for the product and the target market. Who is this product meant for and what is the value proposition for the consumer? In some cases, the price of the product is linked to the quality. This is generally in case of products like electronics where a high priced product is perceived to be of good quality. On the other hand, for products like designer clothing a certain section of the population may be willing to pay a premium price. Hence it is very essential that the buyer is clear about the target market for the product and the value proposition that they would look for.
The store who wants to create a prestigious image also influence the pricing of a product. Retailers who want to create a prestige image may opt for a higher pricing policy while a retailer who wants to penetrate the market may decide to offer a value for money proposition.
Competition for the product and the competitor’s price for a similar product in the market also need to be taken into consideration. In case the product is unique and does not have any competition it can command a premium price, on the other hand, in case there is a fair amount of similar products in the market, the prices of such products need to be taken into consideration before fixing the price.