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EDLP versus Hi-Lo Pricing Strategies in Retailing

Literature Review and Empirical Examinations in the German Retail Market

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Sabine El Husseini

Retail pricing strategy is seen as one of the priorities in retail management. There exist two main pricing strategies in retailing: the Every Day Low Price (EDLP) strategy and the High-Low (Hi-Lo) pricing strategy. Despite the importance of this topic, it has been given little attention in academic research. The author fills this gap in academic literature and examines the topic both from a theoretical and an empirical perspective. Based on a comprehensive conceptual examination of pricing strategies in retailing, the author conducted two large-scale empirical studies about the impact of the retailer’s pricing strategy and the price promotion activity on store performance and derives fruitful implications both for future research and for managerial action.
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3 Don’t get Stuck in the Middle! An Examination of Pure versus Hybrid Pricing Strategies in Retailing

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3 Don’t get Stuck in the Middle! An Examination of Pure versus Hybrid Pricing Strategies in Retailing2

3.1Introduction

In chapter 2 we explained the importance of pricing strategy in retailing and provided a comprehensive literature review about this topic. We build on our theoretical basis from chapter two and design a study about the impact of an EDLP versus Hi-Lo pricing strategy on financial outcomes. We address some of the directions for future research, named in chapter 2 in this study: for example we provide a detailed measurement of pricing strategy in retailing, we include retailer related outcomes in our model such as sales dollars per squaremeter and sales volume per squaremeter and we look at the influence of competitor factors and retailer factors on the relation between pricing strategy in retailing and the retailer related outcomes. It was also addressed to conduct more research from the pricing strategy perspective, as there are many studies about pricing tactics and price promotions. In general, this study is an empirical examination of pricing strategies from the retailer’s point of view, as also named as a fruitful future research direction in chapter 2.

The following study is based on the unpublished manuscript of Fassnacht, El Husseini and DeKinder 2012.

As also stated in chapter two, in practice, retailers typically want to accomplish a multitude of objectives with their pricing strategy (Bailey 2008; Hoch, Dreze, and Purk 1994). As a result, many retailers end up pursuing...

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