6.6:
Pricing Strategies
In marketing, Everyday Low Pricing and High/Low Pricing are two key pricing strategies.
Brands select between EDLP and high/low pricing depending on target market preferences, marketing goals, product attributes, and competitive landscape.
EDLP offers consistently low prices every day, creating value for price-sensitive customers.
It reduces customers' need to compare prices, leading them to purchase in bulk as they prefer to buy from a single outlet.
This strategy fosters customer loyalty and cuts marketing costs but may invite price wars and lower perceived product quality.
Giant retailers like Walmart utilize this strategy.
On the other hand, High/Low Pricing involves higher everyday prices with frequent promotions on selected items.
It creates a sense of urgency and excitement for cost-conscious customers awaiting a sale as they perceive value by contrasting regular prices with sale prices, often leading to impulse buying.
Due to this, the business enjoys higher profit margins, but there may be potential brand dilution due to frequent discounts.
Apparel and clothing retailers, such as Nike, utilize this strategy.
6.6 Pricing Strategies
The two key pricing strategies in marketing are EDLP-Everyday Low Pricing Strategy and High/Low Pricing Strategy.
- Everyday Low Pricing (EDLP): Companies consistently set a relatively low price for products in this pricing strategy. The approach is to attract customers who appreciate the simplicity and stability of prices, eliminating the need for constant sales or discounts. Walmart is a classic example of a retailer that uses the EDLP strategy. The benefit of this strategy is that it can build customer loyalty and simplify inventory management. Conversely, it may not generate the same sense of urgency as sales promotions.
- High-Low Pricing: Unlike EDLP, high-low pricing involves setting prices higher than the competition but offering frequent promotions and discounts. The objective is to attract consumers driven by "bargains" and enjoy the "hunt" for discounted items. This strategy can create excitement and attract large sales volumes during promotional periods. On the flip side, it can also create an expectation for discounts, meaning regular-priced items may be ignored.
Both strategies have pros and cons, and the choice between them depends on a firm's overall marketing strategy, target audience, and product positioning.