Sales Strategy
Understanding Profitable Price-Based Marketing for Retail Business February 02, 2023 (0 comments)
Sydney, Australia--Traditional brick-and-mortar stores often struggle to compete with online retailers, but pricing can play a crucial role in their marketing strategy.
[Photo by Miguel Á. Padriñán]
An article examines how brick-and-mortar store managers can use pricing to create better customer experiences and drive sales by highlighting the success of Ulta, a beauty retailer with a promising price-based marketing approach.
Ulta has seen a booming success in the past year, with net sales reaching $2.3 billion, a remarkable 17% increase year-on-year, even in the face of inflation and consumers' tightened spending. The article notes that the secret to their success lies in their in-store product organization strategy — grouping premium products on one side and mid-priced mass-market items on the other.
Ulta incorporated unique fixtures and visual cues to distinguish between price points, making it easier for customers to find specific products and understand their value. Additionally, they introduced sections named "Cue the New" to showcase new products and conduct rapid price and product trials. The report stated that this attracted customers and helped the business minimize risk in entering new categories and brands.
Ulta's in-store design was purposeful and aimed at facilitating customer purchases.
The research by the global pricing and financial advisory firm publishing the article indicated similar propositions. It said businesses could start seeing incremental earnings growth in 12 weeks with the proper setup and pricing team. Within six months, improved price management processes can result in an additional 1.0-3.25% margin. After 9-12 months, businesses can expect to generate a 7-11% additional margin annually as they uncover more complex pricing opportunities and minimize risks.
Additionally, when a business invests in internal pricing skills and capabilities, it can achieve a sustainable pricing system that leads to a 3-10% yearly margin improvement, translating to a significant 30-60% boost in profits.
Learn more in the entire report on the firm's website.