Marketing Audit on a 1 shop Essay Example | Topics and Well Written Essays - 2750 words

Marketing Audit on a 1 shop - Essay Example According to the figures released earlier this year, Poundland reported an 81.5% increase in profits from the previous year. Poundworld posted record profits of ?5.4m in on sales of ?133m. Buying from these pound points provides incredible value for money to the consumers, and with budgets stretched, it makes pound shops very preferable for them. The low prices are made possible due to low costs incurred in their model, by these shops. A conscious effort to keep a check on costs is made, in terms of overhead expenses and direct costs. Pound shops are able to save large chunk of money by buying in bulk quantities. They don’t shelve varieties for their products, but usually stack on products from one or two manufacturers for each category. This allows them a lot of bargaining power with the suppliers. Since they only have to stock few varieties for each product category, they can always switch to those suppliers that offer the lowest rates. Even renowned brands have supplied the ir products to pound shops, recently. Pound shops’ model is based on keeping prices at the low price points, ensuring there’s price consistency across the shop, and which continues overtime. This creates greater certainty for the customers, who confidently return to the shop, knowing they would be able to shop without draining on their low budgets. For the administration too, it’s a relief, since they don’t have to spend time and hire resources, to calculate prices for each product item. All product items can be arranged anywhere in the shop, and rearranged to change the display, without worrying about changing tags, or shelves. Pound shops also don’t undergo price inflation. This certainty gives them a rare advantage over other consumer retail and other avenues of consumers’ pounds, where inflation can be a huge drain on consumers’ already limited incomes. Pound shops try to absorb inflation by negotiating harder with suppliers so th ey continue getting products at same level of prices. Alternatively, they might switch to another supplier, which, however, could be offering products which are inferior to those previously offered. However, at times, pound shops have been known to counter inflation by other means too. Instead of increasing prices, they have reduced the quantity of product offered. 99p Stores, for instance, were selling 200g Toblerones but later the chocolate bars were only 170g in weight. In general, however, the zero-price inflation, price consistency, and of course low prices, ensure a large customer base for pound shops. In times of recession and low economic growth, when wages don’t increase by much, if at all, low wage earners find pound shops extremely valuable. When unemployment is relatively high, more people are living off benefits. Middle and upper classes too feel compelled to look for value in their shopping, and then there are students and other such groups of consumers who are very conscious about their spending. With their unique business model, pound shops are able to reach out to, and cater to, a larger customer base than other retailers. Pound shops also employ an effective tool in their marketing mixes- that of psychological pricing, in pricing. 99c is a successful price point chain in UK, and others also use the psychological pricing effectively, to give the consumer the perception of greater value for money. In terms