Channel pricing is the use of distribution channels as a factor in pricing. It is common for firms to offer different prices depending where you buy an item. The following are common types of channel pricing.
Channels are a good way to differentiate between customers who are willing to pay more for your products and those who are price-sensitive. For example, a fashion shop on a posh shopping street is likely to attract customers who are willing to pay more than online shoppers.
Clearance ChannelsUsing dedicated channels to clear excess inventory such as unpopular colors. Brands may take significant steps to keep clearance inventory out of sight of their regular customers. For example, firms may open outlet shops in remote suburban or rural locations.
CostsUsing pricing to recoup the costs of expensive channels. For example, a grocery store chain may operate both discount locations and full service locations that charge higher prices but offer conveniences such as wide isles and more checkout counters.
Charging less when you open a new channel in order to gain market share. For example, using low prices to attract customers to your ecommerce presence to gain market share online.
Unified PricingIt is common for firms to make significant efforts to unify prices across channels for a region. Consistent and stable prices may be considered an important element of brand identity and customer experience. This may also be done to maintain good relationships with channel partners such as distributors, retailers, dealers, and sales representatives who are impacted if you cut prices on a channel such as ecommerce.
This is the complete list of articles we have written about pricing.
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