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Penetration Pricing

Submitted By: SYNDICATE-2 Bhawana Malhotra 11020541087 Harshal Bhoyar 11020541088 Ranjeet Chavan 11020541089 Chethana Raveendran 11020541090

WM : Wal-Mart / Why-Me? 

often lower than the eventual market price • Objective: To increase market share or sales volume. rather than to make profit in the short term .What is Penetration Pricing? • Setting a relatively low initial entry price.

What is Penetration Pricing? .

• High Initial Sales Results In A Lower Per-unit Cost • Purchasing A High-quality Product At A Fair Price Creates Goodwill For The Company .Advantages • Can Sell Products At Lower Prices Than The Competition.

• If Customers Perceive The Product As Too Cheap  Quality Brand Image Could Be Damaged. .Disadvantages • If Sales Fall Short  A Large Inventory And Higher-thanexpected Costs. • Lowering Its Own Prices Creating A Price War.

Where To Apply? Product demand is highly price elastic Substantial economies of scale are available Where Standardization is important WHERE Stiff Competition after Product Introduced Not enough demand for Price Skimming Enough demand of Product .



Quick Facts • Serves customers and members more than 200 million times per week • More than 9700 retail units under 60 different banners in 28 countries • With fiscal year 2010 sales of $405 billion • Employs 2.1 million associates worldwide • Ranked in the top ten among retailers in Fortune Magazine’s 2010 Most Admired Companies survey .

The Walmart Story .

EDLP  Every Day Low Pricing  To provide customers – a wide variety of high quality. offering better value for their money . branded and unbranded products at the lowest possible price.

Wal-Mart’s advertisement describing EDLP said: “Because you work hard for your every dollar. you deserve the lowest price we can offer every time you make a purchase. You deserve our Every Day Low Price. it’s a great price you can count on every day to make your dollar go further at WalMart ” . It’s not a sale.

EDLP : The Strategy  To procure products in bulk at the lowest possible prices from the manufacturers  Sharing the savings with customers  Wal-Mart’s products were usually priced 20% lower than its competitors .

you can lower your markup but earn more because of the increased volume” .Explaining his pricing strategy Mr. you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language. Sam Walton said: “ By cutting your price.


Always low price. “Always” • “Everyday Low Price” Strategy • Most Advanced Cost Control And Logistic Systems • Core Competence .

Strategies • Offered relatively high-quality products • Excellent customer service to consumers • At reasonable prices .



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