It is crucial for a product to be given enough shelf space to attract the buyer’s attention. In order to help ensure this, the science and industry of packaging has mushroomed. Yet, all of the manufacturer’s careful packaging efforts can be counteracted by an insufficient amount of shelf space in the store. Without adequate shelf facings, the item will be lost in the mass of 22,000 other multiple facings lining the average supermarket’s shelves.
There have been a number of experiments on shelf space elasticity that is, the ratio of relative changes in unit sales to relative change in shelf space. The result of these experiments is that is a small positive relationship between shelf space and unit sales. However, the relationships is not uniform among products or across stores or intra store locations. Supermarket tests have concluded that products can have too many as well as too few facings, with both situations resulting in wrong use of space.
An adequate number of facings is especially important for new products. Tests show that doubling shelf facings on new items during their first two to three weeks in stores produced sales increases from 85 per cent to 160 per cent over stores that stocked the items but did not make any facing adjustments . In addition, fast moving items tend to react much more dramatically to changes in shelf space than do slow moving products.
We have already discussed the way in which consumers perceptual processes influence their evaluation of prices. There are other elements of pricing which can affect consumers in their shopping activities. This article presents two of the influencing strategies.
Although consumers have a critical attitude toward the general price level and supermarket prices in particular they apparently have difficulty recalling the actual price paid for a previously purchased product. For example only about one shopper in twelve can name the exact price of even one out of a broad range of common food store items. However, there has been some criticism of the method of such studies and recent research using a different approach suggests that shoppers are more knowledgeable about prices than earlier studies indicated. Nevertheless it is surprising just how imperfect information attention and retention are even at the point of purchase. Less than half the grocery shoppers in one study gave the correct price of the item they had just placed in their shopping cart one in five had no idea what the item cost; less than half were aware that a select item was selling at a reduced price; and those who gave incorrect answers were off by 30 cents on a $2.00 item.
Even though consumers may not know the exact price of the items they purchase they often are unwilling to pay full price. In fact, shopping on sale has become the way of life. While single people are more likely to pay full price than married, there are few other differences by sex, age or income. Because price is one of the most critical criteria in store choice, it is often important for store operations to achieve a low price image. This is often accomplished by the use of loss leaders — products that are heavily advertised and sold at slightly above cost to draw traffic into the store and create an impression of low prices.
Promotional Pricing: one form of promotional pricing involves multiple pricing the techniques by which retailers price items in multiple quantities such as 2 for 25 cents 3 for 49 cents and so on. The basic idea of multiple pricing is to offer the customer a lower price on a quantity purchase. However, the technique has long been complained about by some consumerists as a device that confuses customers more than it saves them money and one that causes them to buy more than they had planned. nevertheless 74 per cent of supermarket customers usually buy items priced in multiple units.
Excerpts from Consumer Behavior