It is midnight. I kept my new
watch in watch case and kept staring at it for half an hour. I am addicted to
get best things in low prices but now I am getting amazed why did I buy this
watch which is a few times expensive than ordinary ones. It is difficult to
sleep with this thought about my buying behavior being changed continuously
with time. This is not in particular about me but this is related to the buying
behavior of the end consumers. A customer might be addicted to low prices but
an end consumer never bargains for his likelihood. I remember my childhood when
I went out to nearest stationary, grocery etc and bought what I wanted without even
getting confused at all, about the products. Now, my shopping destination is
Carrefour, Big Bazaar etc. As time pass
by, I become price conscious like other buyers. This sensitivity about the
price consciousness is driven by the sellers. I never learnt it on my own. I
find out that I am being trained to become price conscious. If you closely look
at the marketing materials which are used these days, every piece is designed
with a price effect in it. Low price strategy is cool vodka shot which is used by
sellers to mellow out sales.
A simple question to be answered
is that why these days sellers are adopting low price strategies. A lot of
insight and creativity is required to be the most well stocked, nicely priced
and easily accessible convenient retail store. However, thinking about being
another next best price retail store might not worth all times. Let us find
some reason why this strategy is the best choice of any retailer in present
business world---
v Success
stories of Wal-Mart, Carrefour and IKEA etc.
In the history of business and
commerce, there is only one leader and rest is followers. There is always first
mover’s advantage in any game. It is the reason why these shopping destinations
have become so popular and successful in short span of time. Although, there is
always an end to it and with market getting saturated in a while, the margins
drop down and profits become stagnant.
v Reduction/Increment
of Purchasing Power.
I am confused which way to put
it. But in both the cases, the idea is to save money or buy/consume more.
Hence, it results in purchase of lower priced products. A retailer must give a
logical and emotional reason of why it is the best price to buy its product?
And off course which items are those which only its store can serve the best?
v Generation
of Bulk/Volume Sales or sales maximization.
From a retailer point of view,
more sales results in more satisfaction at all levels including its sales force
and entire organization. However, the performance will be eventually at risk when
same product offerings or substitutes will be available next door.
v Building
trust and confidence.
Pricing must be done to reflect
the value and promise which sellers make to their buyers. If we offer our price
too low in relation to the value, we lose buyer’s trust and vice versa. Prices
that reflects the value provided, enhances customer’s trust in product’s
offerings.
v Competitive
environment of business.
Every new competitor who enters
into a market uses all sorts of promotional techniques to reach maximum
penetration into existing market. Almost all strategies have creativity in
relation to price. So the roots of competition ultimately come down to price
war between competitors. If taken in a negative way, it damages the image of
the product’s offerings and its value to the customers. No sooner or later, the
promotional strategy to generate incremental sales will become a part of the
marketing calendar. As a customer, I will be addicted to be influenced every
time I visit the retail store and if not, your next door retailers are ready to
welcome with warm greetings.
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