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Frequent discounts on merchandise ? Is it the result retailer's wrong pricing strategy or something else..

Created by : Manzoor Ahmed Sohail, Deputy Manager - Marketing, Normak Fashions (P) Ltd (Estelle)  | 01 22 2011 05:41:51 +0000
Industry : Retail Chain/Logistics
Keywords : frequent discount on merchandise
Activity:  346 views;  last activity : 02 15 2011 11:07:55 +0000
 
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Wrong pricing strategy Vs Market dynamics such as competitive offers,demand curve etc
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Yes...not always but wrong pricing strategy is the main reason for such discounts..infact you cant call them discounts as they got the pricing strategy altogether wrong in the first place, and then when the stocks are not getting cleared, are trying to clear by such..discounts and factory price sales...but today to lure customers, many are keeping all year discounts and half price sales, today discounts doesn't matter at all. Earlier discounts would be available only during festivals..now its there all year..hence wont work out.
By Sheetal Jadhav, Sales/BD Manager, Future Group  01 25 2011 06:07:45 +0000
 
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It is not the wrong pricing strategy Ms.Sheetal. You may be knowing the dealings between the dealers and the suppliers. The pricing strategy is purely fixed on the off take basis per month by the dealers.

The seller may maintain that if the dealers lift a qty specified by the supplier who will allow some discounts more than the normal structure and this means the dealers are eligible to get qty discount, and cash discount in case payment is made within 7/10 days from the date of supply.

The supplier will normally allow trade discount for 30/45/60 days credit periods.

Here the point to be noted is the financially sound dealers will demand the supplier to give more discounts than the normally accepted trade discounts by placing orders for substantial qty with attractive payment terms. Here the supplier will calculate his realization of money immediately instead of waiting for the credit periods and the supplier will accept the dealers terms.

Now the dealers are able to direct the market by virtue of their bulk purchasing capacity and the market prices are ruled by them and moreover the small dealers/retailers may not be able to keep such a big stocks and naturally they have to depend on the big dealers.

Under this causes we have distributors, dealers, sub-dealers, and retailers in the markets. In view of the above the prices are determined according to the demand and supply generated in the markets. Hence prices are ruled by the market dynamics only.
By NATTERAJA R. ARIKRISHNAN, GM-Projects, Bentec Electricals & Electronics Pvt. Ltd  01 26 2011 14:26:35 +0000
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It is the physiological pricing which retailers play with ,it could be a part of marketing strategy also....
By Vikas Singh, Strategy Consultant IFRS,XBRL  | 02 05 2011 14:05:36 +0000
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May be the reason for offering discount which satisfy a customer personally.
By SHRIKANT MANOHAR DANKE, Project Manager, Phadnis Infrastructur Ltd  | 01 28 2011 12:45:55 +0000
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Sheetal the other side is the discounts are already accounted for incase the merchandise are not selling as per expectation then pre pone the discounts. You may call it wrong marketing strategy but not wrong pricing.
By Rathin Deb, Freelance Retail Consultant  | 01 27 2011 08:59:28 +0000
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Its true Sheetal. We all know about it. If you see the quality of product with the price marked on that you will know company strategy. High price, poor quality then discount it is all to attract discount lovers. Even on offered discounts company earns heavy profits.
By Aditya R. Upadhyay, Site Incharge (GM), Focus Energy Ltd.  | 01 26 2011 11:49:40 +0000
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Market dynamics as inflation is at its peaks, commodity price shooting up, FMCG makers increasing the price .....this is the only way they can maintain their or rather try to boost sales
By samayita choudhuri, Business Alliances Manager, EZ BioXcel  | 01 25 2011 09:08:26 +0000
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Kouton's Discount pricing model has earned them phenomenal sales in their inital years but the same cannot be said about their Recent times. Hence now is the consolidation time for companies to understand the value of their brand in the mind of consumer. Discount pricing has taken away the trust from consumers about brands in terms of product quality.
By Joe Antony, Retail Sales and Marketing, JSW Steel Limited  | 01 25 2011 07:55:28 +0000
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Today every retailer in the market is offering huge discounts time and again.But the majority of consumers are aware of the high mark-up and discount tactics of the retailers.Hence its high time now for retailers to come up with some innovative marketing campaigns to generate sales. Pricing strategy is not going to work all the times.
By Omkar Nandi, Business Analyst Merchandise planning TARGET  | 01 25 2011 06:26:28 +0000
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Number of factors are responsible, wrong pricing policy is an important factor that cannot be ignored. Retailers need to rework on their pricing strategy instead of keeping the prices high and then looking for opportunities to bring them down in order to clear the stock!.

These discounts lure customers only once, but i think this is not right strategy to build brand loyalty, whereas retailers such as Westside, Globus, Lifestyle and shoppers stop who have their inhouse brands,very rarely goes for any discount as their product line is rightly priced.
By Manzoor Ahmed Sohail, Deputy Manager - Marketing, Normak Fashions (P) Ltd (Estelle)  | 01 22 2011 05:41:51 +0000
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i would say... its a win-win situation for both the End user and the seller.... THe product performance/competition/OTB etc matters for the retailers to go for markdown... and why will not a customer be happy if he is saving MONEY
By venkat raman, Retail operations manager, pantaloon retail India Limited  | 02 15 2011 11:07:55 +0000
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In addition to Natteraja's points, the pricing and promotions are related to the arrival of new product, seasonal items, new launches..etc. Suppose if the manufacturer plans to launch a new product, he offers a discount price to clear the stock and retailers cascading this to customers. Few seasonal promotions are based on the org decisions and tie-up with the vendors. Some of the promotions are coming up as a launch offer..etc. Most of the time these price changes are driven by the market dynamics. I read recently, the retailed poured discounts on the winter products, since they already achieved the target and they wanted to clear their whole stocks.
By Anand Balasubramanian, Deployment Mgr,  | 02 06 2011 04:31:30 +0000
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I would just like to add the point of bad quality to the above. Because of all these factors, there is a drop in sales and because of that, retailers are forced to give frequent discounts to clear their ageing stock.
By Jaygopal Raghavan, Marketing Manager, Landmark Group  | 02 05 2011 17:03:49 +0000
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This is done by all. After all marketing a product competitively in the market is very difficult. In the ever changing market scenario it is difficult to stick to one pricing strategy. This is what happens in todays market. So nothing as 'wrong pricing strategy'...
By Vijaya P, Internal Sales, Endress + Hauser  | 02 05 2011 12:02:08 +0000
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Very simply put such gimmicks are aimed to increase the sales and revenue and minimise inventory whether old or new.
By s.baalu , Consultant, XYZ LTD  | 02 05 2011 11:24:16 +0000
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Also can be depreciation is considered. Such as the year of the batch manufactured, latest models out since then, buyers reclined to buy these kind of items but , to get back the investment etc. Besides the incentives offered to the marketers, these points can not be set aside.
By KALIYAMOORTHY , Oil & Gas Area Coordinator, Undisclosed  | 02 01 2011 20:53:16 +0000
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Sorry to say but it is not ture. Many of the companies doing this but the international retailer or high profile companies not do this. I am also doing a job in retail sector as a manager. Such as nike, woodland, levis and many other companies which the sale run only its MRP, whatsoever it is on factory outlet or main stores. 

 
By bharat kumar, Sales/BD Manager, SSIPL RETAIL LTD (MASTER FRANCHISE OF NIKE IN INDIA)  | 01 26 2011 12:32:44 +0000
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The Price and Marketing dynamics are corelated, in a bid to push for higher consumption , marketers offer deep discounts and freebies. In a way it is more towards CONSUMERISM than wrong pricing.
By Sanjay Bhardwaj, Partner/Principal/VP, Health Management Solution  | 01 26 2011 12:29:18 +0000
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Actually its a sound strategy to make best profit out of two different and distinctive behaviors displayed by each consumer. To buy "the best" ( "fresh expensive stocks") to buy "more" ("cheap left out") stocks.
By RAJIV KHANNA, DIRECTOR, HELLMANN WORLDWIDE LOGISTICS  | 01 25 2011 16:10:14 +0000
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It is not the wrong price. The retailer will add up all the costs he incurs in the original price built up including the cost of slow moving goods. When he calculates the ROI and go for clearance sale which will be acutal sle price so that he will not incur any loss. If one wants to enjoy the the first things that come in to ma he has to pay the premium price and can exercise his choice. If you wait for discounts you have no choice you have to pickup from the lot. So there is no wrong pricing each price has its value.
By M V L KAMESWARI, Sales Executive/Officer, HINDUSTAN PETROLEUM CORPN.LTD.  | 01 25 2011 09:17:13 +0000
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Market dynamics as inflation is at its peaks, commodity price shooting up, FMCG makers increasing the price .....this is the only way they can maintain their or rather try to boost sales
By samayita choudhuri, Business Alliances Manager, EZ BioXcel  | 01 25 2011 09:09:12 +0000
Argue for "Wrong pricing strategy"
Argue for "Market dynamics such as competitive offers,demand curve etc"
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