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Principles of Marketing - Philip Kotler

The relative attention to prices

Concerning attention to prices. The classification of retail stores can be made on the basis of their price image. Most of the shops offer goods at average prices and the usual level of service to consumers. A number of shops offer goods and services of high quality and at higher prices. Company "Gucci" justifies its high prices as follows: "You will be remembered for a long time and the goods after they forget the price." Conversely, stores lower prices to sell their products at prices below normal as organize their activities with minimal costs and offer fewer services and lower quality. We focus on the stores and lower prices generated by these companies in the form of warehouses and stores, demzalov shops selling through catalogs.

Shops discounted prices. Shop Promotional sells standard merchandise at lower prices by reducing profit margins and increased sales volumes. Easy to use from time to time with discounted prices and unit sales still do not trade company store discounted prices. Do not make it so, and trade in low quality goods on the cheap. Real store Promotional five inherent characteristics: 1) he always sells at prices lower than those that prevail in institutions with high margins and low inventory turnover; 2) it focuses on the branded products of the national distribution so that low prices do not imply low quality of products; 3) it operates according to the method of self-service with a minimum of facilities; 4) it is usually located in low rent levels and attracts buyers from relatively remote locations; 5) it established a simple and functional trade oborudovanie11. It is estimated that in 1981 there were 8282 in the United States department stores reduced prices, had total turnover of nearly 73 billion. Doll.12

In the retail trade at discounted prices long history. This practice before the second world war resorted well-known New York department stores reduced prices, "Alexander" and "Mace". But the real boom in retail discounters began in the late 40s, when in this way began to sell not only products non-durable (clothing, toiletries), but also products durables (refrigerators, household appliances, washing machines, dishwashers, air conditioners, Products Housing, sporting goods). The first post-war shops reduced prices, such as "Masters", "Corvette" and "Tu Guy's" a success for several reasons. During these years, many durables were largely standardized, and the need for the commercial art sales counter declined. Moreover, there was a vast new group sensitive to prices, but affluent consumers. Shops Promotional worked almost in warehouses, in areas with low rent, but intensive human stream, provided a minimum number of services carried out extensive advertising and offering a sufficiently wide and deep range of branded goods. Their operating costs amounted to 12 - 18% of sales, down from 30 - 40%, as at department stores and specialty stores. By 1960, the share of shops reduced prices already accounted for one-third of the sales of electrical appliances. Average inventory turnover in them amounted to 14 times a year, instead of 4 times, as in conventional stores.

In recent years, intense competition between stores reduced prices, as well as between the stores reduced prices and department stores has prompted many retailers reduced prices do ennoblement of his image: improved interior design, added new product lines products, such as ready-made clothes, increased the number of services including the collection of checks and relief goods return procedure, open new branches in suburban shopping malls. All this led to an increase in costs, and higher prices. Furthermore, competing with shops lower prices stores often also lower prices, and the differences between these two types of commercial enterprises are increasingly blurred. Because of rising costs and the loss of their price advantage in the 70's ceased to exist a few large chain stores reduced prices.

In addition to the shops with the mixed product range retail at discount prices covered and specialty shops. There were shops reduced prices, selling sporting goods, stereo equipment, books. One of the most interesting trends is the emergence of food stores reduced prices. In 1956, supermarkets' Shop-Wright "network refused to use credit vouchers and decisively moved to trade at discounted prices. Savings provided by reducing the hours of work, giving up minor trade and services "every day low prices." Improved efficiency has allowed to set prices by about 4% lower than in conventional supermarkets and brought huge success online.

Warehouse store. Warehouse store - it is devoid of any frills trade company reduced prices with limited services, the purpose of which - the sale of large volumes of goods at low prices. In a broad sense this includes shopping malls, grocery stores and discounters, exhibited directly in containers. One of the most interesting forms - furniture warehouse store. Traditional furniture stores have long resorted to the sale directly from the warehouse, when it was necessary to get rid of the stale goods, but new trading concept of this technique became only in 1953 through the efforts of the brothers Ralph and Leon Levitz. By 1977, they had built 61 demonstration furniture warehouse store. The buyer enters the warehouse the size of a football field, located somewhere in the suburban area of ​​low-rent. After going through all the storage room, where neat tiers stowed all the stock of 52 thousand. Items worth about 2 million. USD., The visitor is in the demo section, where the beautifully decorated furniture about two hundred rooms. The consumer makes the choice and gives the order to the seller. By that time, the buyer will pay, out of the premises and drive up to the cargo section, he bought goods is already ready. Heavy objects can be delivered within a few days (and not a few agonizing weeks, when buying in a conventional furniture store) and immediately immersed in customer vehicles.

This company aims to service buyers branded furniture midrange value, who are interested in discounted prices and the ability to obtain immediate purchase. Buyers like the possibility of a wide choice of brand, like low prices, but on the other hand, they often complain about the limitations of services for customers. The store Levitz brothers have new competitors. To judge the profitability of these stores is difficult because they have a very high cost of maintaining inventory and the high cost of sales promotions in order to attract a sufficient number of customers, and often an excessively large number of competitors operating on the same rynkah13.

Shops demzaly-selling through catalogs. Shop-demzal trading in the catalog, using principles of trade directories, plus trade principles at reduced prices for the marketing of a wide range of running branded goods sold is usually a high premium. Among them, jewelry, mechanical tools, luggage, cameras and photographic equipment. These shops appeared in the late '60s and became one of the most fashionable retail innovations, presenting a threat even for traditional businesses lower prices. In 1982, the turnover demzalov stores that sell through catalogs, reached $ 9.27 billion.., While the 10 years before that, he was only 750 million. USD. In this line of business are dominated by these companies in the public domain as "Best Products, K °", "Service merchandise" and "Modern merchandising." Currently, about 400 companies in the United States are composed of approximately 2000 demzalov shops selling on katalogam14.

Shops-demzaly produce full-color catalogs, often up to 500 pages, adding to their smaller volume of seasonal editions. Catalogues are available at the showroom. In addition, they are sent by mail to customers last. In the catalog are listed sticker price of each product and its price discount. The client can order goods by phone, pay shipping, or drive in demzal, personally inspect the product and buy it from the presence.

Shops demzaly-selling directories, make money by offering branded products nationwide distribution in the product categories not related to fashion; by hiring commercial premises in areas with low rent; by reducing by one third the number of sales staff; by minimizing the opportunities for small thefts of goods placed in the windows, as well as through trade mainly for cash.