Author Question: Which of the following is an advantage of freestanding retailers? a. Lack of direct competition b. ... (Read 56 times)

berenicecastro · **on:** Jun 29, 2018

Which of the following is an advantage of freestanding retailers?
a. Lack of direct competition
b. Nearness to population
c. Cooperative planning and sharing of costs
d. Heavy traffic resulting from the wide range of product offerings of other retailers in the area
e. Traffic generated by anchor stores

Question 2

What factors should a retailer consider when deciding whether to price above the market, price at market levels, or price below the market?

Swizqar · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

Pricing Below the Market: A below-market pricing policy is attractive to many retailers such as discounters and warehouse clubs. The retailer who uses this policy benefits by discouraging some competitors from entering a given trading area so as to avoid head-to-head battles. However, for retailers to consistently price below the market and be profitable, they must concentrate on generating gross-margin dollars per square foot of space, not the gross-margin percentage. Consequently, below-market retailers must always try to increase the sales per square foot of store space since they have already reduced their markups.

Pricing at Market Levels: Competitive pricing involves a price zone, a range of prices for a particular merchandise line that appeals to customers in a certain demographic group. Pricing at market levels is extremely important for e-tailers given the ease with which consumers can compare prices across different Internet retailers. Some small retailers such as mom-and-pop grocery stores and convenience stores often stress convenience and service rather than price in their retailing mix. However, even in these cases, it is important that one's prices not be too far out of line.

Pricing Above the Market: Certain market sectors are receptive to high prices because nonprice factors are more important to them than price like outstanding service, high cost structure, and low sales volume. Some other factors that permit retailers to price above market levels include the following: merchandise offerings; services provided; convenient locations; and extended hours of operation.