Often is the case that some categories rely on consistent promo pricing to help gain ahead of a large competitive category. As we know pricing is one critical piece in how consumers perceive the quality of your products. The question you need to ask such categories that require regular promos is: What’s your average price? Average price is a good place to start when understanding pricing at retail level.
Your average price will come from two factors, your everyday price and your promo price. Keep in mind:
Average price is not seen by the consumer and they do not pay that, whereas every day and promo price is both seen and paid at the register.
Unit sales are helpful to determine the average selling price during a specific period of time in order to monitor sales performance.
Different channels and retailers will have different pricing strategies.
Although you would if analyzing a specific retailer, look at that retailers pricing it is useful to look at pricing across different retailers when assessing market strategy
In order to begin to analyze average price we need to understand that average price is derived from knowing our total unit sales.
Overall average for a specified amount of time: sale price = revenue/unit sales
Example: Joe’s Beverages 12 oz in an 18-week period made a total revenue in Chain X of $78,700. For 10 of those weeks the unit price was an everyday price was an everyday price which is $3.85 with a weekly sale’s of 1000 units and for the remaining 8 weeks the unit price was a promo price of $3.35 with a weekly sale of 1500 units. This means that Joe’s Beverages 12 oz total units sold was 22,000 for all 18 weeks.
78,700/22,000 = $3.58
