HC 7 – Pricing & Promotion 24-10-2016
Pricing – Gordon & BIjmolt
Promotions – Heerde et al. & Nijs et al.
How to set a price? – Art & science (no fixed way to do it)
- Demand analysis = what is the market for this product. Calculate price
elasticity’s.
- Cost analysis = lower price sell twice as much double production
lower production costs price decreases
- Competitor analysis = look at competition what they are doing. E.g. prices
increase when competitor not following this not cooperative = problem
o Cooperative = follow prices.
- Setting the price = set limits on nr of products that consumers can buy.
Price is related to
- The demand level of a product or store
o A higher volume means more economies of scale (lower cost prices)
Also relation with cost level
- The positioning of a product or store (when positioning is clear people
better see the perception of price, e.g. high price refers quality)
o E.g. Zeeman & Aldi – B&O & Bijenkorf
- Price and price image management is important for demand level as well as
gross margin
o Lower price sell more, but doesn’t mean that profit will increase. Is
needed for investments in store
Actual price level vs. perceived price level
Actual/real pricing
- Real prices for:
o National brands (a-brands) Spar is very expensive while jumbo =
cheaper than average.
o Private labels (huismerken) Drik vd Broek vs ah price difference
more.
Retailers like to present the lowest prices, so kind of a sport of the retailer to
guess when the consumentenbond is coming to measure.
- Important test, because this test is published in different kinds of media.
Pricing – Gordon & BIjmolt
Promotions – Heerde et al. & Nijs et al.
How to set a price? – Art & science (no fixed way to do it)
- Demand analysis = what is the market for this product. Calculate price
elasticity’s.
- Cost analysis = lower price sell twice as much double production
lower production costs price decreases
- Competitor analysis = look at competition what they are doing. E.g. prices
increase when competitor not following this not cooperative = problem
o Cooperative = follow prices.
- Setting the price = set limits on nr of products that consumers can buy.
Price is related to
- The demand level of a product or store
o A higher volume means more economies of scale (lower cost prices)
Also relation with cost level
- The positioning of a product or store (when positioning is clear people
better see the perception of price, e.g. high price refers quality)
o E.g. Zeeman & Aldi – B&O & Bijenkorf
- Price and price image management is important for demand level as well as
gross margin
o Lower price sell more, but doesn’t mean that profit will increase. Is
needed for investments in store
Actual price level vs. perceived price level
Actual/real pricing
- Real prices for:
o National brands (a-brands) Spar is very expensive while jumbo =
cheaper than average.
o Private labels (huismerken) Drik vd Broek vs ah price difference
more.
Retailers like to present the lowest prices, so kind of a sport of the retailer to
guess when the consumentenbond is coming to measure.
- Important test, because this test is published in different kinds of media.
