Fair pricing practice plays a crucial role in the reputation and credibility of the retail store business. Clearly defined written policy allows for margin, flexible pricing and concession for unusual circumstances.
The general public is programmed to expect not just discounts and sales from the mattress sector but even negotiation of the price at POS [point of sale]. In addition, the prevailing mentality of buyers for utilitarian products like mattresses, tires, and appliances is replacement. There is a need versus want, so several people prioritize getting good discounts. Often the deal can be an opinion.
Bait & switch
A mattress is a competitive product, so retailers advertise it at the lowest possible price. Many consumers perceive it to be bait & switch, but technically it is not. However, it certainly creates mistrust, thereby harming the mattress sector.
This approach can increase traffic but there will be a significant price the retailer will have to pay. Their business will lose credibility and profits. Remember, consumers shop for mattresses like a commodity. They don’t care about the form that they buy, so there is no possibility of developing a long-term relationship or loyalty with a specific retailer. It is just an impulsive buying and selling process.
Unsurprisingly, this kind of mindset makes buyers prepared to bargain. The retail sales staff experience such a mentality often. They go in a reactive mode, so as to demonstrate value. It is not an easy proposal on mattresses because of limited parameters [for example, two components and four sizes].
Retailers are familiar with a shopper’s practice, so they inflate prices with an intention to offer buyers the perception of a good deal. Therefore, the prices get marked up with an aim to markdown. This method works but has issues. The retail sales associates have flexibility on pricing but often sidestep real sales of dropping rates, when customers negotiate.
Price and discounts get in the way of fairness. While one polite consumer directly accepts the price on the tag, while another demands a deal rudely with a threat to walk away. Sometimes, rude consumers buy the same product at a significantly less price. Is this fair?
Retailers who drop prices in this way to deal with several shoppers’ negotiating practices set a bad example. In this digital era, news gets shared and travels rapidly. In time, the gentle customer learnt that they had to just act disinterested and walk away to buy the same mattress at its ‘real price’. Such practice can harm the retailer’s repute and reliability.
Pricing based on principles
Many reliable retailers don’t play such strategies. All the sales staff value and believe in the products they offer and so sell them at reasonable prices. They don’t cut individual deals. The rates consumers see is what they pay. Shoppers trust and believe in them.
Even when the retailer offers just 10% sale once a year, loyal consumers line outside the door even before their store opens, so as to take advantage. There are other retailers, who offer 50% simultaneously, but you cannot ignore the significance of legitimate promotion and sales. If you are authentic then you can drive quality traffic.
Retailers who wish to take this approach need to price their products fairly as per the quality of each mattress in comparison to their competitors. It means better quality than competitors means high prices, which will be justified.
What is MAP pricing?
MAP or Minimum Advertised Pricing is a low price agreement, which the retailer agrees with the manufacturer. According to the agreement, the retailers cannot sell products below this MAP price established by the manufacturer. If a retailer violates this agreement, the manufacturer cancels their relationship.
Manufacturers started this strategy to help to standardize the price of the best mattresses across multiple retailers and locations. It even addresses consumer’s concern of overpaying and retailers’ worry of having price competition decrease their profit margins.
Weary consumers keenly believe that manufacturers have saved them from comparison shopping. In reality, manufacturers have stooped to prevent consumers from comparison shopping. Ultimately, retailers get a little better deal because MAP priced mattresses are inclined to be most profitable.
Consumers need to bear in mind that even if MAP models show high consistency in pricing, never assume they are better than their counterparts and do not believe prices of the same models are really uniform across retailers.
How to seek out a good deal on a MAP-priced mattress?
A few retailers will sell mattresses at higher prices than MAP rates, so consumers need to compare prices. Similarly, if retailers cannot promote below a specific price does not mean consumers can’t uncover a good deal. At times, retailers are permitted to sell below mattresses at 10%+ discount but this cannot be mentioned in their advertisement. Even under strict MAP agreements retailers can add purchase freebies like accessories [pillow], coupons, gift cards, or free shipping.
When you buy a MAP priced model, which carries an invoice that is of less amount than the listed MAP price then it can affect warranty terms, in case of issue. Manufacturers may perceive the low price as an agreement violation with the retailer. It may also be assumed that the mattress you bought was a floor model. In both scenarios, your warranty could be void. Therefore, before purchasing the mattress with a price discrepancy, ensure to check the warranty or ask for a written coverage from the retailer.
Is MAP pricing legal?
MAP pricing legality is a subject of debate. According to current regulations, if the manufacturer sets price independently on their own then retailers are allowed to apply MAP prices according to their wish. The manufacturers need to involve retailers in setting prices. Visit Newsweek to learn more about mattress price assessment.
Strategies for proper retail pricing
Consumers adore sales, rebates, coupons, seasonal pricing, and other promotional markdowns. In several situations, you may consider applying this strategy to obviously increase traffic in your store, offload unsold inventory, as well as attract a price-sensitive consumer group.
Never host many sales or discounts. If you do this then a huge customer base will soon include only ‘bargain hunters’. Such people always look for a better deal and when you cannot provide it they switch to the competition. Thus, killing your business without a second thought!
Loss leading pricing
Loss-leading pricing attracts consumers towards a mattress they need at a lower price than your competitors. Simultaneously, they indulge in buying several others like a bed sheet or memory foam pad. This results in an increase in overall sales per buyer. Be cautious not to overdo loss-leading prices because buyers will regularly expect bargains.
Competitors’ data are used as a benchmark to deliberately price products lower, so as to attract customers to your shop. This tactic can work if you are able to efficiently negotiate a low price on each mattress as well as concentrate on cutting costs to actively promote this special pricing.
For small mattress retailers, this is hard because they will only make small margins.
If your mattress price is marked more than your competitors deliberately and you simultaneously brand yourself to be more exclusive, luxurious, and prestigious then it works. This pricing tactic will work because consumers perceive your mattresses to be of superior quality because of the rates they will pay. It can be hard to pull off in a location, where the demographic is very price-sensitive as well as have other alternatives.
It is a psychological strategy, where the sale price and the original price are listed. It establishes the amount consumers perceive to save from purchasing. Retailers can take advantage of the mental bias of anchoring strategy. Original price acts as a reference point in the consumer’s mind, which they anchor to form an opinion of listed lower price. Consumers will be satisfied to have found a better deal motivating him/her to act on this spontaneous buying habit.
In this strategy, prices of new innovative mattresses are set high during the launching phase. Gradually, prices get decreased as soon as competitors enter the market with their better features. The benefit of price skimming is to maximize profits from early buyers before dropping rates to lure price-sensitive shoppers.
In pricing there is no running and white tactic, it is a moving goal. Thus, the options given above need to be considered while deciding on which strategy will suit your business.
Pricing is an art and science, needing an experimental attitude paired with an intuitive feel of how you desire your products to be observed. Low prices can attract a lot of sales but a risk to your bottom line. High prices can provide profit but are not competitive in price-sensitive locations. You will need to experiment and determine a suitable pricing strategy.