Contributed by Richa Kapoor
One of the most crucial areas of decision making for retailers is pricing. Yet, we have found that small firms often do not have well-conceived pricing plans. A retailer's prices influence the quantities of various items that consumers will buy, which in turn affect total revenue and profit.
Hence, correct pricing decisions are a key to successful retail management. Key to small retailers prosperity in today's discount-oriented environment is guaranteed only if they have a good understanding of their niche in the marketplace.
With this in mind, the retailer should first prepare a checklist of questions that will assist him in making systematic, informed decisions regarding pricing strategies:
What is the overall pricing philosophy of the company: It's critical for the retailer to define the overall price positioning of the store… A choice has to be made between high-end…. Low-end
Target Consumer and Retailing Mix: Before fixing up the prices of the products a retailer must focus on his target consumer…. His characteristics, identify reasons of their choosing a retail store (for low prices, for convenience, for service, etc.) then a comparison should be made if the target consumer is consistent with the overall pricing philosophy.
The Central Concept Pricing: Before starting to price the products the retailer needs to decide: how do you compute prices…. When calculating prices do a retailer take is operating cost into account??
