ASPECTS OF TOTAL QUALITY MANAGEMENT APPLIED IN ...

Annals of the University “Constantin Brâncuşi”of Tg-Jiu, No. 1/2008, Volume 2,
ISSN: 1842-4856
2. Retail Trade Goals
The process may be a complex one due to the occasional excessive demand, to the number
of products and due to the external factors mentioned above.
A price strategy must emphasize its own targets and must be closely connected to the sales
and the profit. Nevertheless, certain price goals must be mentioned in order to avoid problems that
may appear because of the confusion created by the displaying of more prices, problems caused by
the long lasting negotiations with clients, or by offering frequent discounts to stimulate client flow,
or even problems caused by the major importance given to prices.
The goals that are to be achieved can take the shape of incomes and/or volume units. An
aggressive strategy, also known as market penetration price is used when the retailer wishes to
obtain incomes by selling large quantities of goods at a low price. The profit per unit is lower, but
the total profit is high if the goal is achieved. This strategy is advantageous in the case of price
sensitive clients and if costs do not increase.
Implementing a high price strategy the company attracts clients who are interested in
services and prestige and not in prices. Usually it does not maximize sales, but it draws high unitary
profit (e.g. Bvlgari – third jewellery company in the world; if you ask how much does it cost?
means you cannot afford it).
Return on investment and quick depreciation are other goals that retailer aim to. The retailer
aims a certain percentage of the investment (such as 20%). Quick depreciation is used by retailers
who do not possess high resources, wish to expand or have an uncertain future.
Other goals are listed bellow. Each retailer establishes a list of priorities based on its current
position, and creates a plan that tries to fulfil. Some of the goals may be incompatible.
To maintain a suitable image;
To encourage clients not to be price sensitive;
To be equitable to all parts (including suppliers, employees and clients);
To have a consequent price policy;
To increase client flows in off-peak seasons;
To sell season stocks;
To align prices to competition without starting a price war;
To promote a “we-won’t-have-the-lowest-prices” philosophy;
To be acknowledged as price leader by competitors;
To supply a high range of services;
To minimize the government chance to response to price established and made public;
To discourage potential competitors to enter the market;
To maintain the clients interested;
To encourage business repetitiveness.
3. Price Policies
Through a large price policy a retailer generates and integrates a price plan on both short
and long term (goals that can be achieved in a short period of time and goals that can be achieved in
a long period of time), that aim creating a consequent image (essential to franchises an shop chains).
The retailer connects the price policy to the target, to the image and to other specific elements.
Here are some price policies a company may chose from:
• No competitor will have lower prices; no competitor will have higher prices (in case of
prestige) or prices are aligned to competition;
• All goods will have independent prices, based on demand; or all prices are connected to one
another to ensure a certain image and to create a suitable addition;