Investigating Category Pricing Tendencies at a Retail Chain Essay


In studying retailer pricing behavior, experts typically imagine retailers maximize profits throughout all brands in a focal product category. In this article, mcdougal attempts to examine empirically the extent that three elements affect price tag prices: (1) the effects of payments from producers to the merchant other than standard promotions, plus the effects of further costs in the mind by the merchant for these brands; (2) the retailer's aims specific to its retail outlet brand, including maximizing shop brand share; and (3) the effects of price tag competition and store targeted traffic. By specifying a demand function at the brand-chain level for each brand in the product category, the author derives pricing rules for the retailer. The author decomposes the retail value of a company into effects due to low cost price, markup (obtained from the demand functions), additional advertising payments, retail competition, as well as the retailer's targets for their grocer brand. The writer carries out empirical analysis for any specific product category at a single price tag grocery chain. The benefits indicate the effects of the three factors differ across brands in the category.

Investigating Category Pricing Behavior at a Retail Cycle

Studying store pricing actions are an issue that has generated a great deal of interest in the marketing materials. Researchers include examined the matter from both equally theoretical (e. g., Choi 1991; Raju, Sethuraman, and Dhar 1995) and scientific (e. g., Tellis and Zufryden 1995) perspectives. Most studies assume that retailers established prices several brands in a product category to maximize total category revenue (see, e. g., Raju, Sethuraman, and Dhar 95; Tellis and Zufryden 95; Vilcassim and Chintagunta 1995). Although some recent studies include advocated analyzing profits throughout categories, the idea of maximizing income at the category level definitely seems to be the basis on most studies about retail prices behavior. This kind of objective is likewise consistent with the maneuver toward category management as a means of doing business for equally manufacturers and retailers (see, e. g., Zenor 1994). The theoretical literature upon retail prices (see Lal, Little, and Villas-Boas mil novecentos e noventa e seis; Lal and Villas-Boas 98; Pesendorfer 2001) discusses a number of factors that determine a retailer's cost for a company in a given week, for least for frequently acquired items such as those considered in this study. Two key drivers of the prices happen to be (1) manufacturers' actions (e. g., wholesale prices, marketing payments) and (2) price tag competition. Yet , most of the empirical literature in retailer pricing has centered on only one of those decisions. For instance , Tellis and Zufryden (1995) assume values for wholesale prices and after that examine the consequence of manufacturers' actions on selling prices. Though Pesendorfer (2001) accommodates the two factors in his theoretical ingredients, the data he uses will not contain information about wholesale prices. In this article, I incorporate both of these factors that affect dealer pricing into one empirical analysis. Thus, I actually build on the previous empirical materials on retailer pricing tendencies (Gupta 93; Kim, Blattberg, and Rossi 1995; Tellis and Zufryden 1995; Vilcassim and Chintagunta 1995; Zenor 1994). While most previous research has aimed at the prices the retailer will need to charge conditional on the estimated demand function parameters, my objective is to analyze whether observed full prices indicate factors advised in the books. In executing this research, I likewise account for several additional empirical issues that occur because of the character of the data at hand. My spouse and i discuss these issues that could affect retailer prices behavior in the context in the data readily available for the empirical analysis. Your data are for one of two chains within a market centered by these two grocery restaurants. At the cycle level, for a particJournal of promoting Research Volume. XXXIX (May 2002),...

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