Question

Describe the rationale behind the retail discounting model. Give your own example of how you can maximize your own savings if you know the game.

Thank you

Answer 1

Retail Discounting Strategy talks about the discounting prices which the retail businesses provide for selling their low priced products in large volumes. This model talks about using the most effective and efficient strategies and implemention of integration techniques of vertical system like what Amazon does to decrease their cost at large, provide a discounted price in the competition of other organisation to attract the marketbase and thus be a market leader in the industry. Large retailers are able to ask and demand for the price discounts from the suppliers to make this model an effective solution as they buy the inventory in a bulk mode.

The example I would like to give where I could maximise my savings by knowing the retail game is by maintaining an integrated vertical chain of my business and the supplier. I would effectively have good relations with my supplier and place bulk orders with him to advance or grant me discount on bulk purchases. Now this would give me the inventory at a price lower for what my competitors are getting. I would essentially add more value and sell it at a price lower than the competitiors' but with the same profit margin as I would have always. This would attract customersb because lesser the price more will be the demand. Thus, demand would effectively increased, sales would increase, profit margin is same and thus, my business and savings both would eventually increase at a good rate.