The Marketing Book 5th Edition

Retail positioning

Comparative dimension

Comparisons with

rival companies

Price auditing

Subjective comparisons

Multi-segment pricing

Assortment dimension

Mark-up differences

within the range

Leader lines and KVIs

Price awareness

Unit pricing

Price endings

Geographical dimension

Differences between

stores in same chain

Area price differences

Local pricing

Time dimension

Price adjustments

over time

Price images

Hi–Lo vs EDLP

Temporary offers

Seasonal ‘sales’

Price

Cost

Mark-up

Price image development

794 The Marketing Book

prices of (say) 500 grocery prices on ‘known
value items’ (KVIs) are held at low levels,
creating a beneficial image of prices across the
whole assortment.
Time is also a critical dimension of retail
pricing, and an area of great concern in recent
years. Some years ago, the major grocers were
advised to reduce their dependence upon
short-term special offers, in favour of more
stable pricing arrangements. Other sectors have
tried to limit their use of seasonal sales, which
at one stage were seriously eroding margins in
clothing and other sectors. While seasonal sales
can help to clear stock and also generate some
excitement, their overuse can devalue hard-
won retail images. Table 30.10 summarizes the
relative benefits of high–low (Hi-Lo) and
everyday low pricing (EDLP).

Advertising and sales promotion

While much has been written about the alleged
‘death of advertising’, expenditure by UK

retailers continues to grow apace. Expenditure

by UK retailers grew from £423 million in 1991

to £1034 million in 2000 (Nielsen, 2001). Table

30.11 shows a few of the major spenders,

although it should be recognized that some of

this expenditure is subsidized by manufac-

turers, in the form of ‘co-operative advertising’

deals. Neither do the figures take full account

of discounts available to shrewd media buyers.

In spite of these important caveats, which apply

to both time periods, the data show a strong

commitment by retailers to building their

brands through advertising.

Indeed, there is a virtuous circle in the

brand advertising of large retailers. As they

increase their penetration within trading/

advertising areas, the cost-effectiveness of

media advertising improves. As own-brand

development continues, the advertising builds

both aspects of the brand: the store and the

product. As store formats and ranges develop,

the spread of the advertising benefit increases

still further.

Figure 30.8 The dimensions of retail pricing
Source: McGoldrick (2002).