OnDemand WTP Pricing Research

Should uniform pricing be the norm for large chains? | RetailWire

A new Columbia Business School study found that, depending on the competitive landscape a retailer faces, a national pricing strategy may now be more profitable than a strategy that tailors prices locally.

Researchers analyzed 11 million store-level digital camera sale observations across 1,600 geographic markets. Profits of national and local pricing policies were monitored across two retailers employing a national approach and a third that followed a local strategy.

The findings concluded that:

  • National pricing boosts profitability for large chains: Large retailers that operate in competitive markets don’t have much to gain from switching to a local model because it can intensify competition, which could lead to lower prices and hurt profitability.
  • Pricing depends on local competitiveness: Chains facing less competition should tailor their prices and focus on customization.
  • National pricing can benefit some consumers: Because the national price would fall between the lower price in competitive markets and the higher price in non-competitive markets, consumers in non-competitive markets, which are often rural, would benefit from lower prices.

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Should uniform pricing be the norm for large chains? – RetailWire.

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