Term Paper on "Product Promotion and Pricing Strategies"
Term Paper 3 pages (1051 words) Sources: 1+
[EXCERPT] . . . .
Product Promotion and Pricing StrategiesWal-Mart (WMT) is the number one seller of toys and the industry's price leader. Last year the company used a "lost leader pricing" on popular toys that lured millions of consumers from traditional toy stores. The main result of this marketing policy was the maintenance of the first position on the market but also the wounding of other toy retailers on the market, as Toys R Us, KB Toys and FAO Schwarz. Concerning the other retailers, they tried a diversification of its products and other policies to return on the, but it was increasingly difficult as the main problem that couldn't be resolved was the overstocks.
Another problem linked to the first one is that half of all toy sales take place during the holidays and according to last years statistics, the overstocks were then constituted (as most of the consumers preferred to buy at a lower price from WMT) and remained in the stores during a long period of time, therefore they should be sold at a lower price only to be sold. As a positive aspect for retailers, one can mention the video games industry. "The industry is expected to finish flat to slightly down this year at about $20 billion for traditional toys and an additional $5 billion for video games," but the video game industry is a profitable one and can be considered as a possibility to solve the "lost leader pricing" problem, as kids are getting older, younger. They're playing video games at a younger age and getting onto computers at a younger age.
The concept of getting older younger may be difficult to grasp, but it simply means that the attraction towards electronic devices sets in at a younger age and
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Wal-Mart, even it won a lot in terms of market share and new clients using "lost leader pricing," is still not out in the open and constantly faces different price issues. According to analyst Sean McGowan, "Wal-Mart felt they left money on the table by cutting prices deeper than they needed to in order to get the sale." In this sense, "So this year, while they will be the lowest priced and very promotional, they may, for example, is only a $1 less than Toys R Us rather than $5 less on some items." In a word, comparing to what was won last year, this year Wal-Mart will win less and their position comparing to other retailers who act on the toy market can modify. Other opinions and policies of the retailers and annalists reflect a focus on bringing increased attention and value to the clients in all stores.
If we compare Wal-Mart to Toys R Us, the biggest competitor in terms of toy selling, we can point out towards the fact that there is… READ MORE
Quoted Instructions for "Product Promotion and Pricing Strategies" Assignment:
“Four page paper in which you make a case for or against Wal-Mart's using loss-leaders. Some of the points to consider in your paper might include:
(1) Marketers have several different strategies available to price their products. What did Wal-Mart use as its primary “yardstick” in 2003 to price its line of toys? Describe why it did so.
(2) What did Wal-Mart use as its primary “yardstick” in 2004 to price its line of toys? Describe why it did so.
(2) Alternative methods to determine a price for a marketer’s assortment.
(3) Wal-Mart may have used some of its most popular toys as “loss leaders”. What does that mean, and why would Wal-Mart do this? Explain.
Grant, Lorrie (2004, Oct 11) Wal-Mart Doesn’t Plan to Toy Much with Prices; Last Year’s Cuts Hurt Other Retailers and Left Giant Thinking It Slashed Too Much, USA Today. pg. B8. >Grant<
"Wal-Mart felt they left money on the table by cutting prices deeper than they needed to in order to get the sale," says ***** McGowan, analyst at Harris Nesbitt. "So this year, while they will be the lowest priced and very promotional, they may, for example, be only a $1 less than Toys R Us rather than $5 less on some items."
So Wayne, N.J.-based Toys R Us, the second-biggest toy seller, can only hope for easing price rivalry. It took a drubbing last year from Wal-Mart and rival discounter Target (whose heavy toy promotions to carve out a place in the business helped push Wal- Mart's pricing strategy).
Toys R Us recently announced that it may leave the toy business if its prospects don't improve. On the heels of shuttering its Kids R Us stores and educational toy chain Imaginarium, the chain now is using sharp discounts to thin excess inventory. And it has already begun its holiday appeal with newspaper inserts advertising new items, discounts and gift cards.
How to Reference "Product Promotion and Pricing Strategies" Term Paper in a Bibliography
“Product Promotion and Pricing Strategies.” A1-TermPaper.com, 2006, https://www.a1-termpaper.com/topics/essay/product-promotion-pricing-strategies/848686. Accessed 5 Oct 2024.
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