Agriculture Reference
In-Depth Information
Use those five items as the base plate to any advertisement to underpin your
position as a price leader.
Many farm retailers are afraid to address this issue for fear of losing prof-
itability. There is a reality attached to this strategy. Sales of the low priced
items will explode, usually in the scale of 250-700% on what they would
have previously. In the scheme of the total merchandise mix within the
store they will create an imbalance that will need to be addressed and this is
simply managed by an increase of the remainder of the merchandise's gross
profit margins of just 1- 2%. This will, in actual fact, increase the total store's
gross profit dollars dramatically whilst building both customer traffic and
the business's price competitive perception.
There is another reality attached to this strategy. Dynamic retail competi-
tors will match or better the prices within weeks. The main aim of this strategy
is to create price leadership and a monthly rotation of the items featured will
help a farm business remain in front of the competition. A 12 month price
perception strategy has the potential to transform a business if consumers
feel you are not already a price competitive retailer in the category and it will
actually improve business gross profit value from merchandise.
Perception pricing
This is a technique that has proved to work in the restaurant industry and we are
sure will work for other culinary tourist operations as well. We came across it in
a blog by Roger Dooley entitled 'Neuro-Menus and Restaurant Psychology'. 10
The principle is that you price an inferior product at a close price point to
a genuine great quality product with the aim of boosting sales of the higher
priced product. The two products need to be located near to each other
to enable the consumer to price compare and they both need to be heavily
signed. This system could work where a retailer offers a small and large ver-
sion of the same product. Put the price up of the smaller product to make the
larger product look more attractive to the consumer.
Romance the sale or selling the sizzle
This is a technique used by the perfume industry, food retailers and plant sel-
lers. It is a simple technique where the retailer literally romances the product
in the words used to promote the product. If you are not sure how the system
works, pick up a women's magazine and look at the words used to promote
products in the adverts. As we write this section of the topic we have a maga-
zine next to us and the words in the adverts include:
This season the rules are being rewritten with a trend. . .
What a great way to sell a new product, in this case it was lipstick.
Feel, Imagine, Enjoy
to sell a perfume, and
Splash out on Timeless Treats
to sell blouses.
 
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