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Pricing Misconception
The two stores whose pricing strategy has been looked at here are GIM Computers and Ginstar Computers, both located Downtown Atlanta, with the varying prices for their computer related products. The computer related products were picked for this case study since their specifications are easier to match to the last detail hence an easier comparison of the prices.
The five products selected are Seagate 1TB hard disk,
Product
GIM Computers price ($)
Ginstar Computers price ($)
Seagate 1TB hard disk
Internal Floppy drive
External Floppy drive
Microsoft windows 7 professional
GIM Computers.com and Ginstar Computers Inc. website.
Customer-based pricing
From the pricing trend seen above, it is apparent that the two businesses are engage in the customer-based pricing strategy. They have the customer needs and way of thinking in mind and specifically employs the psychological pricing as a sub-set of customer-based pricing strategy. This is bearing the unusual price points that are detected in their price tags. For instance the $15.99 and $9.99 for the internal floppy drives and the other products as well, are price tags that are meant to break some perceived price barriers among the clientele. These are clients who would rather buy an item for $9.99 that $10 thinking the latter is a bit too much. This pricing strategy makes the client believe the item is cheaper that it actually is and is intended to attract clients looking for 'value'.
Competitor-based pricing
Bearing the number of competitors around these two computer shops (around seven more shops) as well as close proximity to each other, the pricing must also take into account the competition. This strategy is seen in the pricing of the two where the prices are hardly 5% apart. This is an indication that the clients have a wide range of choices to pick from hence the sellers have to price in line with the other competitors and capitalize on non-price-based means of attracting and retaining customers.
References
Ginstar Computers Inc., (2012). Storewide Holiday Sale. Retrieved November 7, 2012 from http://www.ginstar.com/home.aspx
GIM Computers, (2012). Welcome To GIM Computers. Retrieved November 7, 2012 from http://new.gimcomputers.com/index.php
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