Pricing Strategies Examined

In a tough economy, many retailers are discounting prices.  But price alone is not a sustainable strategy to retain customers and earn a $profit$. Attract them yes! …But retain customers, no!
However, leveraging from your reduced price strategy while concurrently implementing a new value-added program(s) to your business model can be sustainable. And very profitable.

During a discounted pricing strategy, your business will increase customer traffic and customers will get exposure to your newly created (or even existing value-added (VA) services) and this will gain customer loyalty.  Such VA programs should be tailored to your target market and some basic examples include: elderly assistance, VIP treatment for women with children, build in loyalty program/points, partnering with a company that synergizes with your business, etc. 

The more creative and unique, the better: unlike Glengarry Glen Ross, it is not ABC! (Always Be Closing) but ABD! (Always be Differentiating!)

It is important for retailers to emphasize ‘what differentiates them” from the competition while employing the discounted price strategy.  Discounting on price alone will only reduce profits and ultimately precipitate a new retail strategy…one that will be a more desperate measure to gain sales. 

Side Note: New Entry Retailer Strategies
In some instances, however, discounting price is the only strategy of some retailers (usually new retailers or smaller outfits….a tactic employed to gain market share and exposure). This strategy usually has a set time limit and there is a fundamental understanding of the impact on short-term profits.
Strategically, these retailers reduce prices on specific KVI items (Known Value Items to the customer i.e. Coke, Tide) or even on destination departments such as Produce or Meat. This Retailer strategy is done to entice customers to shop repeatedly and gain familiarity with the retailer and its products/services. But, once the retailer gains significant critical mass/customer traffic, gradually they will increase retails to be more competitive. This is usually done slowly to avoid sticker shock.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Create a free website or blog at

%d bloggers like this: