From price to purchase

Seiders, Kathleen; Voss, Glenn B.
November 2004
Marketing Management;Nov/Dec2004, Vol. 13 Issue 6, p38
This article discusses the price promotion strategy that should be adopted by retailers in the U.S. Retail price and promotion practices have come under increased scrutiny. Companies like Wal-Mart, with its winning everyday low pricing (EDLP) strategy, demonstrate that pricing and promotion can be done differently, causing many retailers to second-guess their established practices. Key retail sectors that gained significant share in the 1990s--home improvement, warehouse clubs, supercenters, manufacture outlets--promoted everyday low or everyday fair pricing as an alternative to the time-honored high-low pricing format. Advocates claim that everyday pricing increases customer loyalty, improves inventory management, and reduces labor and advertising expenses. Retailers that use everyday pricing promote its benefits directly to consumers to show pricing integrity. Still, the practice of offering regular price promotions is deeply ingrained. Price promotions can increase store traffic, clear out time-sensitive merchandise, communicate a low-price image, and attract customers who will also buy higher-margin, regular-priced items. Fearing declines in profit margins and more direct price competition between national brands and their own store brands, many retailers have been reluctant to adopt everyday pricing.


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