Price Strategy

 

 

 

 

Your Experience
Your Solution

Online stores are dumping your prices and Off-line stores don’t want to deal with you.

Right from the beginning, you have to be aware that On-line stores will “dump” your prices if you are not in control. Base your strategy on your long-term goals; where you want to sell the most products.
———————————————————————————

Price control

You always want to be in control of your street prices - even retail wants you to be in control. If retail chains are dumping your street prices, you have to act fast (read instantly) and consequential.

You cannot let all retail chains have too high of a profit. If the average retail profit for similar competing products is 20% and you offer 40% to all chains, there is a very big chance that it will start a snowball effect and other stores will have to lower their prices too. In that situation, you cannot control the prices. Have a plan of action in case this happens. I have seen all kinds of vendor reactions. Instant and hard reactions earns you respect.

One way to control the street prices is to carefully select the retail chains/sales channels that should have an assortment of your product. It is a difficult task with all kinds of possible sales channels, but in the end, you must do this. Additionally, it is a selling-in argument for the selected retail chains.

Retail always looks for products that they can be the first to announce with a new low price. Use this as a bonus for retailers that keep the street prices in the area you want.

Prices On-line and Off-line

Don’t be surprised that on-line stores “dump” your prices. They compete in different World than the Off-line stores. Through search engines and alike, it DOES matter whether they always come out as one of the most expensive stores or one of the cheapest stores. Eventually the On-line stores have to increase the prices, but the entry barrier to be an on-line store is so low, that new discount concepts will show up for a while to come. This is also, why Off-line stores do not do well in the on-line World. They follow the prices off-line.

So what do you do? You could start out calculating how much you could expect to sell on-line and how much off-line. If your calculations say 80% On-line, then maybe you should focus on that. However, if the calculations say 80% Off-line, then you have to control the prices on-line consequently.

Note that consumers have a strong tendency to choose the products On-line they can find Off-line.



Jens Welling
 

The author of this article Jens Welling has worked with retail purchase, retail sales and retail marketing over the last 15+ years. Jens Welling has written a number of articles as a good source for any new and established company who want success with retail sales. Below are short descriptions and links to other articles.

Why You Have To Do Your Homework
Selling through retail is one of the toughest sales channels there is. Reactions come instantly. There is no mercy for mistakes in retail sales. One word covers what you need: Preparation. ...Read more

Choosing Sales And Distribution Channels
Make the right choices from the very beginning. Group the sales channels and start with the companies that fit your size and that do not compete head-on with each other. Use the distribution channels actively to get contacts inside the sales channels....Read more

Category Management
Learn to understand and use Category Management to your advantage and earn money....Read more

Unique Selling Points (USP)
Take the time to find out exactly WHOM your consumers are. You need to find your Unique Selling Points (USP). Once you get to know them, you'll know what to say to them!...Read more

Price Strategy
Right from the beginning, you have to be aware that On-line stores will “dump” your prices if you are not in control. Base your price strategy on your long-term goals: Where you want to sell the most products....Read more

What The Buyer Wants To Know
The buyer does NOT want a lot of information. He/she is living in a very high-paced environment and only wants your information in brief bullet points. Follow some simple rules and you will give the buyer what he needs....Read more

Exit Strategy
You must prepare your business for the anticipation risk of large quantities of products to be returned. You need an exit strategy. The returned products can be used to create new sales channels and partnerships, turning this somewhat hopeless situation into a profitable one....Read more

Price Setting
Consumers have psychologically priced a product with a certain amount that they are willing to pay (price point). If you exceed their psychological value, you risk failing in retail....Read more

Negotiation Tactics
It is obvious to focus on price as a sales factor. However, help yourself by prepare for negotiation tactics by highlighting the other Unique Selling Points (USP) - and at a minimum explain the price per performance compared to competitors....Read more

Rejection From Buyer
The buyer can reject you for several reasons. You must talk to the buyer to find out exactly WHY you got rejected.....Read more

Marketing Strategy
Selling to a retail chain often means you have to advertise in their catalogues, newspaper ads, etc.
This alone does not create a brand; you must also supplement the retail advertising with your own marketing strategy....Read more

Education Management
Your energy must focus on the stores (retail training). Face-to-face education is the most effective but also the most time-consuming and expensive....Read more

Warranties
What retail warranties are you ready for? Depending on your sales channels, you must consider the quantity of products that may be returned...Read more

Building A Brand
You must raise the consumers' awareness and perceived value of your product through brand development.
Once you do this, consumers can and will identify your product as a brand....Read more

Logistics
A high tech vendor will eventually have late delivery of products regardless of penalties. So what should a vendor do when the logistics fail?...Read more

Keeping Your Store Sales Alive
Keeping your retail store sales alive is a never-ending process....Read more

Product Development
One of the advantages to having a relationship with the sales channels is that you can discuss future product development....Read more