The factors that leads to the variations in prices
To demonstrate the wide variation in pricing of an identical item, visit three different stores and compare prices on similar items.
Select a category of store. Some suggestions are:
- Grocery: large chain store, local chain store, convenience store
- Health and beauty aids: grocery store, drugstore, discount store
- Over-the-counter drugs: chain drugstore, local drugstore, discount store
- Clothing: specialty store, department store, discount store
Select two items to compare in the category you chose. For example, in the grocery category, you could compare a type of cereal, a canned soup, and a snack item. Explain the factors you believe lead to the variations in prices. Is it worthwhile for consumers to compare prices when they shop? Some pricing issues you may want to consider include: price competition, non-price competition, odd‑even pricing, promotional pricing, prestige or image pricing, price lining, and unit pricing.
The two items compared for different pricing in three different stores are 13 oz Nutella Hazelnut Spread Jar and 19 oz Cheez-It Original Baked Snack Crackers. Walmart was the first store visited for this purpose. According to the pricing of these two items at Walmart, I found that 21 oz Cheez-It Original Baked Snack Crackers was priced at $4.54. The second item, 13 oz Nutella Hazelnut was priced at $3.48. Then I visited Target as the second store selected for this purpose. The first item, 19 oz Cheez-It Original Baked Snack Crackers, was priced at slightly higher price of $4.79. At the same time, 13 oz Nutella Hazelnut Spread was priced at $3.49. The third store was the local chain store, Publix, for this purpose. I found that the same size Cheez-It was priced at $4.89 and Nutella Hazelnut Spread was priced at $3.99. Therefore, the cheapest price among the three different stores for both items were found at Walmart. The highest price for both were at Publix local chain store. Target was maintaining the middle price between Walmart and Publix.
Both of these items were family products that are popular among children as well as other market segments. Price comparison is an important for the customer sees they can determine how much they can save monthly or annually based on the level of consumption. Both of these items are popular among the children, and the parents who find it easier to use these products as part of snacks for children and other family members. If the monthly consumption of hazelnut spread jars is 34 particular family, it can save $4.50 if the family chooses Walmart instead of Publix. At the same time, the family can save $1.75 by visiting Walmart instead of Publix if it buys five packs of 19 oz Cheez-It Original Baked Snack Crackers. The total annual saving will be $75 if Walmart was chosen in place of Publix. The amount of savings will be lower if the family chooses Target instead of Walmart because target maintains in between prices for both items compared to Walmart and Publix.
Publix maintains higher prices with its higher quality customer service compared to Walmart and target. The other noticeable strategy for these three stores was that Walmart and Target are usually located at busy intersections while Publix is located in the neighborhood with many communities around. Walmart uses even pricing strategy for both items to appeal the customers while maintaining the lowest price among the three. However, the two stores maintain on pricing strategy for the similar items although the price of items at Publix was the highest. Walmart, as the biggest retailer in the world, has the objective of serving its customers in the lowest price. It maintains its margins lower while trying to sell more items to maintain higher revenues. On the other hand, Target stores keeps the price in between the highest and lowest among the three stores to appeal a different segment of customer base which mainly consists of middle income families. Publix has the highest quality of customer service among the three, and it focuses more on customer satisfaction and providing a better shopping experience compared to the other two. It apparently has lower demand for both of these items compared to Walmart, but higher margins are maintained to keep its profits.