Channel-independent pricing offers retailers a competitive weapon, but requires an understanding of consumer expectations, clearly stated intentions and proper supply chain coordination.
Consider daily-deal Web platforms like Groupon. Consumers respond to online coupons differently than traditional coupons through brick-and-mortar channels. Retailers condition consumers to look to the Internet for special deals or website-only pricing and to understand that prices can and will vary.
Some companies communicate specific goals for each channel, demonstrating situational pricing by channel, conditioning consumers to view channels with different purposes. Offering channel-specific pricing stimulates the sale of supply chain inventory, while maintaining brand image.
JCPenney, Sears and GameStop represent a sample of retailers extending online-only promotions for products also carried in stores.
Truer today than ever, consumers have more information in their hands than store employees. Retail executives suggest that consumers are more savvy than ever and are armed with everything: competing brands, product attribute insights, consumer ratings, competitor offerings and prices, and detailed offerings of Web-only retailers.
A channel-consistent pricing strategy has the potential to place multichannel retailers in an uncompetitive position by forcing online pricing for brick-and-mortar locations. Adopting a two-pronged strategy, where prices are channel-consistent combined with independent promotions that align with customer expectations, is a winning solution for multichannel retailers.
Consider Sears, whose tires, appliances and consumer electronics sales associates are trained to search for pricing from reasonable competitors (online and brick-and-mortar) then offer the customer the lowest price found.
Customers know they will receive the best possible price, and avoid searching the Web for a better deal.
Risks and Transparency
The risk rests with an inaccurate portrayal of consumer demand. If customers expect consistent pricing across channels and you deliver otherwise, your company may create undesirable responses. You also have to consider the laws governing pricing practices across various countries and local jurisdictions, since there are jurisdictions that prevent channel-specific pricing.
Retail channels emphasize the importance of trust. Adopting a channel pricing strategy of consistent pricing is the first prong, and an informed, fact-based approach for channel-independent pricing is the second. This will deliver channel consistency and flexible pricing. Retailers who have the ability to do both are positioned for success.