Posted in Operations and Supply Chain Terms, Total Reads: 952
Definition: Value Pricing
Recently companies have started adopting itself to value pricing in which it tries to win loyal customers by charging them a fairly low price for higher quality product or services. Thus value pricing is not only means setting low prices but it requires lot of re-engineering and improvement in its operation to become a low-cost producer.
All this is done without sacrificing on the quality, thus attracting a large number of value-conscious customers.
A commonly used value pricing known as Everyday Low Pricing (EDLP) which is mostly used in big retails tries to keep the price low for a very low period. This eliminates week to week price uncertainty for the customers thereby boasting customer’s value proposition for that product.
Eg: One of the best examples of value price is IKEA furniture store who as kept its prices highly competitive thank to its innovative operational processes and delivery system.