RETAIL PRICING

Retail Price

• The price of a good or product when it is sold to the end user for consumption, not for resale through a third-party distribution channel.

Factors Affecting Retail Price Strategy

• Consumers
• Government
• Manufacturer, suppliers, wholesalers
• Current and potential competitors

Price Elasticity of Demand

• The sensitivity of customers to price changes in terms of the quantities they will buy:

~Elastic – Small percentage changes in price lead to substantial percentage        changes in the number of units bought.

~Inelastic – Large percentage changes in price lead to small percentage changes in the number of units bought.


Competition and Retail Pricing

~ Market pricing – Retailers often price similarly to each other and have less control over price because consumers can easily shop around.

~ Administered pricing – Firms seek to attract consumers on the basis of distinctive retailing mixes

Price Strategy

•Demand-oriented pricing

•Cost-oriented pricing

•Competition-oriented pricing

Markup Pricing Calculation

Markup percentage         Retail Selling Price- Merchandise Cost

  (at retail)                  =                  Retail Selling Price

                                 OR

Markup percentage              Planned Retail Operating Expenses + Planned Profit

  (at retail)                   =                            Planned Net Sales

Initial and Maintained  Markup Calculation

Initial Markup             Planned Retail Operating Expenses + Planned Profit Percentage                             +Planned Retail Reductions                  

Reduction              =                  Planned Net Sales +  Planned Retail

  (at Retail)

Maintained Markup       Actual Retail Operating Expenses + Actual Profit

Percentage                  =                          Actual Net Sales

  (at Retail)

References

http://www.businessdictionary.com/definition/retail-price.html

https://www.entrepreneur.com/article/193986

http://www.bizmove.com/marketing/m2y3.htm

SITE LOCATION

Three Types of Locations

• Isolated store - An isolated store is freestanding, not adjacent to other stores. This type of location has several advantages, including no competition, low rent, flexibility, road visibility, easy parking, and lower property costs. There are also distinct disadvantages: difficulty in attracting traffic, no variety for shoppers, no shared costs, and zoning restrictions.

• Planned shopping center - A planned shopping center is centrally owned or managed and well-balanced. It usually has one or more large (anchor) stores and many smaller stores. During the past several decades, the growth of the planned shopping center has been great. This is due to extensive goods and service offerings, expanding suburbs, shared strategy planning and costs, attractive locations, parking facilities, lower rent and taxes (except for most regional shopping centers), lower theft rates, popularity of malls (although some people are now bored with shopping centers), and lesser appeal of inner-city shopping. The negative aspects of the planned center include operations inflexibility, restrictions on merchandise lines carried, and anchor store domination. There are three shopping center forms: regional, community, and neighborhood.

• Unplanned business district - An unplanned business district generally has such points as these in its favor: variety of goods, services, and prices; access to public transit; nearness to commercial and social facilities; and pedestrian traffic. Yet, this type of location's shortcomings have led to the growth of the planned shopping center: inadequate parking, older facilities, high rents and taxes, discontinuity of offerings, traffic and delivery congestion, high theft rates, and some declining central cities..

Reference

http://smallbusiness.chron.com/three-types-locations-businesses-74244.html