Extensive market research in the home improvement industry has determined 10 levels of price sensitivity. We have coded every item in our inventory with a number 1 through 10.
Approximately 9 percent of SKUs in your inventory are code 1’s and 2’s. Pay close attention to where your competition is priced on these items as it can make or break your business.
Orgill’s MSP pricing strategy provides a system that can adjust a retailer’s prices to match any competitive situation, and any desired price position, based on the local market conditions.
The chart below demonstrates the effect of the MSP strategy.
Market Specific Pricing establishes a retail price-positioning plan customized for your store, based on your local market conditions.
MSP utilizes retail sensitivity codes to comprehensively and systematically manage your retail pricing. This methodical approach enhances price image and maximizes gross margin dollars.
To begin the MSP process, a research team will conduct a complete price audit from your retail operation, covering a sampling of products from all core hardware departments over all ten levels of price sensitivity.
After the research has been gathered, this pricing information is then entered into a pricing template. Through this template, you are able to determine where your store is positioned compared to other similar retailers in your market, while considering all ten sensitivity levels.
Once the data has been applied, you will be able to create a retail price positioning plan by making a price decision for each sensitivity code.