Passive vs. Aggressive Pricing Models
The rise of technology in recent years has brought about many changes in the retail environment- especially in the way its consumers shop. At the click of a button a consumer can effortlessly find the retailer with the lowest cost and best value of their desired product. And with this digital world becoming increasingly mobile today, consumers can perform such price matching in-store, while they shop. With this, it has become ever more important for retailers to be conscious of their consumer’s shopping habits, especially in regards to how much they are willing to pay for a specific product.
With this there are two opposing pricing strategies a retailer can adopt: passive and aggressive pricing models.
A passive pricing strategy consists of a focus on the retailer and their value instead of worrying about what the competition in doing.
An aggressive pricing strategy on the other hand instead focuses on competitor pricing with its goal being to beat competitors by offering lower prices. With the increased use of technology, more and more retailers are beginning to gravitate toward this model.
One of the most popular forms of this strategy is matching the competition. With this, the retailer advertises to its consumers that if a competitor offers the same product at a lower price, the retailer will match that price for the consumer.
Price matching has been a fairly popular tactic in recent years with big names such as Best Buy and Target using this strategy to reportedly compete with Amazon. However, Business Insider suggests that the use of such price matching could prove extremely frustrating for customers during periods of high store traffic, such as during the holidays. The article explains that with Target in particular, customers on line may get annoyed being stuck behind a person that decides to price match all of the items in their cart. Being customers are normally asked to show proof, they would have to pull up pricing for each item, in which the article suggests customers who are not as price sensitive may become impatient with the process.
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