Gaining a Competitive Edge with Price

Jan 16, 2003

By George Anderson

The latest issue of Competitive Edge offers “a new approach to retail pricing that increases price competitiveness — and drives top-line sales and gross profit dollars — without unnecessarily sacrificing gross margin.”

Jon Hauptman, vice president, Willard Bishop Consulting writes that retailers need to begin by dispelling three myths that govern many supermarkets pricing practices. These include:

  1. Having to match the prices at competitors to be “at parity”

  2. Believing that a store’s price image is primarily determined by regular prices on center store items

  3. Turning to price optimization as the sole answer to correct perceived disparities.

Mr. Hauptman suggests that enlightened retail pricing strategies require:

  1. Actively managing shelf and promotional prices across the store to enhance a retailer’s total price image

  2. Objectively determine the value of a competitor’s ads/promotional offerings to respond with a more effective use of your own marketing funds

  3. Providing pricing value deals in every category (include private label, off-brands, and/or larger packages) to appeal to frugal consumers

  4. Creating guidelines and rules for category managers to ensure price consistency across the store

  5. Automating the pricing process using the guidelines and rules developed for category managers.

Moderator’s Comment: How are supermarkets falling short
in their effort to project a competitive price image? What needs to be done
(or can anything be done) to fix this problem?
Anderson – Moderator

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