The Impact Of Pricing Strategy On Retail

Employing the right pricing strategy at the right time is essential for any successful retail business. Nevertheless, not all retailers can afford to practice various pricing strategies for their businesses, because a professional approach to pricing is usually a demanding process in terms of costs and time.

Of the four elements (price, production, promotion and placement) blended in the marketing mix to successfully promote your business, pricing is the only one that generates revenues. Marketing specialists view pricing as a complex process that depends on manufacturing costs, market place, competition, market conditions and quality of your products.

Over 25 pricing objectives, like maximizing the long-run/ short-run profit, or increasing the volume of sales/ monetary sales, are used to define a customized pricing process. Also, professional pricing is far from resorting to one strategy only. Over 20 pricing strategies like competition-based pricing, market-oriented pricing or cost-plus pricing, are employed. And prices are calculated following different formulas to relate the factors that pricing depends upon.

But retailers who cannot afford to hire specialists in pricing often go for one simple or popular pricing strategy and use it extensively. The typical example is that of cost-plus pricing, which is preferred because of the little previous information and little calculation it implies. As information related to demand is time consuming and expensive to obtain, this pricing method is cheap. But consumers and competitors simply dont appear in this formula. Unfortunately, except for public utilities, this formula fits very few types of products.

Based on this imbalanced situation, the gap between professional (and flexible) marketing and online retail businesses, of which many are running on significantly lower budgets than their real-life counterparts, should have been even larger. To make things worse, some of the simpler pricing strategies that function in real life are less effective online. But the virtual environment has recently produced its own answer to this problem, in the form of marketing intelligence software, which is aimed at filling this gap entirely.

Marketing intelligence software is aimed at maximizing your competitive advantage. It goes way beyond picking the right pricing strategy. It performs automated price comparison for thousands of your products against hundreds of your competitors in several minutes. It can perform the automatic pricing for hundreds of thousands of products. And while at it, the software applies dynamic business optimization to protect your competitive position and margin. This way, your online retail store is fully equipped to face the world of trade today.