Question

a) Under what circumstances is Everyday Low Pricing (EDLP) likely to work? Does it work better for retailers or manufacturers? Is it more applicable for urban or rural areas?

b) What are some additional trends in retailing and distribution? Mention one such trend.

c) How has the emergence of the Internet and E-commerce challenged the existing marketing channels? Explain to what extent e-retailers have been successful in gaining market share, and why.

Answer 1

A-

Every Day Low Pricing is a pricing strategy that promises consumers a low price on goods and services without necessarily relying on sale prices events or necessitating price comparison shopping. Every Day Low Pricing is likely to work in circumstances where the consumers or the market is characterized by consumers who are less price vigilant otherwise known as “expected price shoppers”. These kinds of consumers are less likely to do much pre purchase research or stockpile discounted items. EDLP prices are normally within the range of high-low retailer’s discounted price and hence will be readily received by the shoppers who exhibit such buying patterns.

EDLP works better for retailers especially as a result of competition amongst them. The retailers are in a “safer” position to alter their prices using the strategy after analyzing and segmenting the market. The strategy is more applicable to urban areas since the areas are characterized by a large population of consumers with busy schedules who may not have much time to engage in price comparisons. They would rather take the price as advertised. Besides, consumer demand in most urban centers does not respond much to changes in every day prices.

B-

Stores with omnichannel strategies continue to thrive. Retailers embracing multiple channels to serve customers are some of the most successful ones in 2016.Omnichannel retailing has begun to pay off for a lot of companies. For example Macy's Department store company, which just started marketing its mobile and online-to-offline services more aggressively after the success of its initial omnichannel tests. The Company has found that click-and-collect not only serves as a convenient option for customers, but it also increases their spending. In addition to click-and-collect, Macy’s has continued to invest in omnichannel via more robust order fulfillment strategies (all Macy’s locations can now ship directly to an individual’s home) and better mobile experiences.

C- Growing E-Commerce has forced transformation in distribution networks. The influx of e-commerce and m-commerce has revolutionized the retail sector. Most retailers are tapping multiple channels to sell their products - from traditional stores, by catalog, through the internet and increasingly via smart phones and tablets.

E-retailers have been successful in gaining market share to a very large extent. According to research, 92 percent of retailers are selling online. This means that they have taken nearly three quarter of the market share. This is because E-commerce presents an easy way of presenting products to a wider audience through the internet.