Question

In: Finance

Provide a thoughtful 250+ total word response to the following questions (you will need to answer...

Provide a thoughtful 250+ total word response to the following questions (you will need to answer all parts of this question) by clicking REPLY below. Please separate your answers to clearly differentiate your answers to each question below. It makes it easier to see your specific response to each part.

– The Price is Right?

  1. As a customer, which pricing strategy do you prefer – high/low pricing or everyday low-pricing (EDLP)? Why?
  2. Looking at the advantages of each strategy listed on page 344 of your textbook, which is the strongest argument to have high/low pricing? Why?
  3. Which is the strongest argument to have EDLP? Why?
  4. If you were opening a new convenience store (like 7-11) retailer tomorrow, which pricing strategy would you use? Why?

Solutions

Expert Solution

1. As a customer i will prefer EDLP because it is everday low price, and i don't have to wait for the big discounts to buy branded products.

2. The strongest argument for high/low pricing is the sellers believe that by using this strategy, the customers are encouraged to bargain and in this way they can generate high sales during promotion. They apply discount on the high price range product and customers will attract towards it more to purchase in the preception of bargaining. This pricing used to generate more sales.

3. EDLP stands for every day low prices. In this, the companies or retailers provide low prices without any worry of providing discount sales to the customers. The strongest argument in the favour of using ELDP is that it helps in demand forecasting. Because of low prices the customers do not spend much time in comparing the products, they quickly take their products and this led to the continuity in demand. So, it helps the analysts to forecast the demand of the product according to the customer's sale.

4. As a retailer, I will prefer to use High/low pricing strategy because reatilers made more profit in this pricing strategy rather than ELDP strategy as low pricing strategy does not generate enough sale in long term with low prices.


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