Being a retailer is a tough call, especially when you are the direct point of contact with the customer who wants every product in the shopping list at the lowest price possible. In such scenarios, it is a tad difficult to take care of the price sensitivity of a product for every retailer.
So, through this blog, we will help you understand why a retailer must be aware of price sensitivity anyhow, especially if this can help tweak prices and gain more sales:
- Study records of your retailer outlet for increasing sales
If you are an existing retailer, you must be carefully analysing the past sales records from quarter to quarter, or year to year. That is because doing so helps you to know the increasing or decreasing customer buying patterns.
This study also helps to know what kind of products are being bought together, irrespective of the sale month. And ever retailer can gauge out of his or her retailer outlet’s past sales.
And surprisingly enough, the price sensitivity of a product can also be taken care of when a retailer knows when the product is going to be in more demand. During so, the prices can be tweaked to earn more profits when the retailers are sure that the demands will not dwindle.
- Recognising the shelf space marketing for increasing profits
Everything a retailer does is for increasing the sale and decreasing the burden of the carrying or holding cost of the inventory. To do so, one of the many trustable ways is to know how regular customers are buying low-cost products.
Then, to opt for shelf space marketing to place the products on the most accessible areas and in the front on different racks. These products should be the ones which are sold more easily.
Doing so, you can control the price sensitivity and help to channelise the racks and shelves in order to place the products which are luxurious and costly as well.
- Conducting the market basket analysis
One of the major benefits of controlling or at least estimating the price sensitivity of a product is to know which products are being bought together. For example, bread and butter, bread and eggs, shoes with socks, shirts with ties, etc.
By conducting this market basket analysis, two items, out of which one might be costly while the other might not be that heavy for the customer’s pockets, can be placed, offered, recommended and sold together.
This can be made into a packaged deal to coax the customer into thinking that it is a profitable buy for him or her. Similarly, in doing so, retailers like you can enjoy the increased scalability of their sales.
This majorly happens because you help to eradicate the burden of making decisions amongst multiple choices for a customer. When that is sorted, a customer, even a regular one, will only thank you and let you decide on his or her behalf in buying the necessary items, ignoring the sensitivity of price related to a product or more together.
- Acknowledge and be informed about the price wars to tackle the loss on sale
One of the increasing importance of price sensitivity of a product is this point for every retailer. If you ignore this point, you might face an endless spiral of losses or reduced sale, which, of course, will be harmful to the profit margins and the inventory holding cost.
That is why you, as a retailer, cannot ignore the price sensitivity. You must be aware of the price of the same product being sold by your competitors.
If there is a current deal or seasonal going on at the outlet of your competitor, then you must also design the same type of sale or a better one to attract the customer you have been losing because of the competitor.
So, in a way, price wars and the sensitivity of the product drives your profits and sales throughout the year, whether it is a peak season or an offseason where deals are preferred more by the regular or new purchasers.
This step is also associated with the study of sales records. Because you can be a state-of-the-art retailer when you come up with exciting offers before your competitors. But this will only happen when you already are aware of the current and past history of your outlet.
For this, you must understand why customers are purchasing from your store throughout the year. If you know that, then you can have a greater say in deciding the price of your product and getting it sold on time.