Pricing of Merchandise in Retailing

1. 4-Place

1.1. If a store is located closer to other competing stores, the scope of price flexibility is lesser. We have to fall in line. The distance between the customers and the stores also affects the prices.

2. 5-Promotion

2.1. Pricing and promotion are interrelated. A heavily promoted store charging reasonable prices experiences more off-take. Just high promotion or just lower prices exclusively would not produce an off-take higher than both practiced simultaneously

3. 6-Miscellaneous

3.1. There are other factors such as credit facilities and customer services which affect pricing. Customer services increase the operating expenses. There is a tendency to increase prices to cover these additional costs

4. 6-Miscellaneous

4.1. There are other factors such as credit facilities and customer services which affect pricing. Customer services increase the operating expenses. There is a tendency to increase prices to cover these additional costs.

5. 1-PRICING OF MERCHANDISE

5.1. Pricing is a balancing decision amongst various pulls and pressures. Price sensitivity is the reaction of the consumers to the changes in price in terms of the quantities they buy. It is called price elasticity

6. 2-FACTORS AFFECTING PRICING

6.1. Pricing is a part of the marketing mix. Marketing mix consists of product, place or distribution, promotion and price. Thus; price affects the other elements of the marketing mix and in turn is affected by them. It is an interactive decision.

7. 3-Product or Merchandise

7.1. Merchandise and nature thus affect pricing. The attributes that consumers seek from the merchandise affects its pricing. The more valuable these attributes are, the more is the willingness to pay more for them. Sometimes, merchandise is price leveraged for the quality.

8. HOW RETAIL PRICE IS ARRIVED AT?

8.1. Cost of goods indicating the cost of the merchandise plus the expenses associated with it such as transport of goods from the supplier to the store

8.1.1. Expenses are of two types - fixed and variable

8.1.2. Fixed expenses are called overheads and remain constant, irrespective of the amount of merchandise sold or business done, e.g., rents, electricity bill, telephone bill, etc

8.1.3. Variable expenses as the name itself indicates vary with the level of sales directly, e.g., profit margins

8.1.4. The retail price is fixed keeping our profit expectation or mark-up in mind, which is expressed as a percentage (of retail price or cost price).