Principles of MarketingRKT 3013 niversity of Cemtral Olahoma ou Case Study. For

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Principles of MarketingRKT 3013 niversity of Cemtral Olahoma ou Case Study. For your better understanding, let us practice how to any market offering for pricing strategy. Read the following marki supermarkets. creative ways how to design the final retail pricing strategy especially at the set the final retail price for consider your your Everyday Low Pricing May Not Be the Best Strategy for Supermarkets December 17, 2011 in Insights by Stanford Business) When stores like Wal-Mart, Sam's Club, and Costco began their rapid expansion thrown for a loop. The limited service, thinner assortments, and everyday low supercenters" consumers. What was a Safeway or a Stop&Shop; to do in the face of such brutal competition expansion in the 1990%, supermarkets were and "everyday low pricing of items in these created enormous cost savings and increased credibility with Incleding foodstuffs A new paper from Stanford GSB looks at the strat the shock to their local market positions by eaper from Stanford G58 looks at the strategic pricing decisions made by grocery firms during that period in response to their local market positions by the entry of Wail-Mart. The paper answers the age-old question in y is everyday low pricing (EDLP) better than promotional (PROMO) pricing that attempts to attract consumers through periodic sales on specific which is why it is the preferred marketing strategy of many stores. items? investigators find that while EDLP has lower fixed costs, PROMO results in higher revenue The research is also the first to provide econometric evidence that repositioning firms' marketing approaches can be quite costly. Switching from PROMO to EDLP is six times more expensive than migrating the other way around-which explairs supermarkets did not shift en masse to an "everyday low pricing" format as predicted when Wal-Mart entered the garre. The unique data set from which the results were drawn covers revenue and price-format decisions for every single retail supermarket and Wal-Mart in the United States from 1994 to 2000. rYou need a major event to cause a pricing strategy switch that can be observed, and the entry of Wal-Mart into the grocery market provided that natural experiment," explains Harikesh Nair, associate professor of marketing at the business a coauthor of the study with Paul Ellickson, assistant professor of marketing and economics, and Sanjog Misra, associate professor of marketing and applied statistics, both at the University of Rochester. The researchers exploited the switches in market structure in combination with an economic model of the industry to measure the cost and benefits to supermarkets of changing the price positioning school and Costs involved in changing pricing strategles included complex inwestments to educate (and advertise to) legitimacy of the new positioning, For example, the Wegman's chain in New York produced a mililion videos explaining to customers the benefits of their switch to everyday low pricing, Repositioning costs also overcome, such as resistance to change by managers within the frm and the need to rework channel relationships consumers about the involved internal investments to Is everyday low pricing" better than promotional pricing that attempts to attroct consumers through periodic soles on specific items? Running calculations on the data, Nair and his colleagues found that for the median store, PROMO pricing vielded $6.2 million more per year in revenues than an EDLP strategy. Moreover, changing from an EDLP to a PROMO strategy required only $2.6 million in costs over 4 years, while switching from a PROMO to an EDLP approach required outlays 6 times as large. The debate over which strategy is better stems from the fact that EDLP seems to have its advantages. It enables retailers to reduce inventory costs, better coordinate supply chains, and reduce the risk of stock shortages by smoothing the demand variability induced by frequent sales. Now we have empirical evidence to show why most stores chose PROMO pricing and stuck with it during a competitive shock -it earns more revenues and is too expensive to change," says Nair Analysis also revealed that the entry of Wal-Mart resulted in a $1.7 million loss in annual revenues for the median incumbent EDLP supermarket, while it resulted in a loss of only $690,000 a year for the median PROMO store. "The entry of Wal-Mart th hurt EDLP stores by twice as much," elaborates Nair. A PROMO strategy, then, proves more resiient to the entry of an undercutting presence, as well.

Explanation / Answer

High Low Pricing strategy is preferred for convenience stores and gas stations

Explanation:

Convenience stores and gas stations both working under competitions and they best suited for market price. Grocery, frozen goods as well as gas price may be hike due to most number of consumers have been using, if demand needs more and supply is short there is chance is to increase the price, moreover convenience stores and gas stations can work for long hours and seven days so these CEO or Managers can expect higher profit. Consumers have opportunity to get reduce price in some goods and gas oil for some period.

We can't give judgment or set the market price considering few organization price approach like walmart etc, marketers can have in high numbers, all have different kinds of situation, Walmart have not opened convenience stores and gas stations he was opened as full line discount stores, he was expanded his business in broad way his business strategy useful for retailers not for Convenience stores and gas stations because they may or may not have branches, if Convenience stores and gas stations run with single location business(only one branch) how they can work for low revenue.

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