Macy's, Kohl's, and JCPenney practice a retailing pricing strategy called "high-low pricing." Which of the following correctly describes high-low pricing?

Question

BlackTom AI · Accepted Answer

Contextualize the pricing concept: high-low pricing involves selling products at higher regular prices but periodically discounting them through sales, promotions, or special events to stimulate demand.
Option 1: 'The retailer does not have to run sales on selected items.' This contradicts high-low pricing, which relies on sales and promotions to create the perception of a bargain; so this statement misrepresents the strategy.
Option 2: 'Retailers do not have to use promotions.' Again, the essence of high-low pricing is the use of promotions to create value gaps between regular and sale prices, making this option incorrect.
Option 3: 'The retailer charges higher prices on an everyday basis, coupled with frequent sales and other price promotions.' This aligns directly with the high-low pricing model, where everyday prices are relatively higher but sales promotions are used to drive traffic and purchases.
Option 4: 'Some products are priced high, others are priced low, and still others are priced at bargain-basement levels.' While this suggests a range of prices, it does not capture the recurring sale/promotional dynamic central to high-low pricing; it’s more characteristic of assorted pricing rather than the intentional high regular price with promos.
Option 5: 'Retailers charge an everyday low price with no special promotions.' This describes EDLP (everyday low pricing), which is the opposite of high-low pricing’s promotional approach.

Macy's, Kohl's, and JCPenney practice a retailing pricing strategy called "high-low pricing." Which of the following correctly describes high-low pricing?

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