Analyzing Value-Based Pricing: A Study of Walmart and Reformation

This report provides a comparative analysis of the pricing strategies employed by Walmart and Reformation clothing, focusing on the integration of customer value and the effectiveness of sales promotions. Walmart's everyday low price strategy is contrasted with Reformation's approach of offering updated styles at competitive prices through economies of scale. The report examines different pricing methods, including markup pricing and perceived value pricing, evaluating the advantages and disadvantages of sales promotions. The analysis aims to understand how each company leverages its pricing strategy to maximize profits and customer engagement, providing insights into the broader implications of value-based pricing in the retail industry. Desklib provides a platform to access this and similar solved assignments.

Running head: Value based pricing strategy
Value Based Pricing Strategy
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1Value Based Pricing Strategy
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Customer value – Walmart & Reformation Clothing..................................................................2
Pricing Strategy: Walmart & Reformation clothing........................................................................3
Setting price on different bases........................................................................................................3
Advantages of sales promotion........................................................................................................3
Disadvantages of sales promotion...................................................................................................4
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

2Value Based Pricing Strategy
Introduction
This report is based on the analysis of the pricing strategies of two different brands
named Walmart and Reformation clothing. The primary purpose of this report is to analyze the
pricing strategy used by the two brands Walmart and Reformation clothing and the secondary
purpose of the report is to examine how customer values are incorporated into the pricing
strategy and what lies the involvement of the consumers in the particular brand. Moreover the
advantages and disadvantage of sales promotion will be evaluated.
Discussion
Walmart is an American multinational retail company of discount department stores &
grocery stores. The Reformation is fashion brand clothing company for girls, they make
innovative clothes for girls by using repurposed old materials.
Customer value – Walmart & Reformation Clothing
Walmart is a successful organization as far as its effect and impact on changing corporate
business and work practices is concerned. The measure of Walmart is almost 3,550 stores which
makes them an advantageous shopping hub for American consumers.
Reformation clothing company based on Los Angeles for five years has process towards
a brand for cool girls sells their products directly to the customers with the help of their online
shopping and having three offline boutiques, in Los Angeles company have one shop and other
two was in New York City(Lacy et al., 2016).

3Value Based Pricing Strategy
Pricing Strategy: Walmart & Reformation clothing
Walmart made their achievement to a huge extent because of their everyday low price
strategy (Bauner et al., 2016). The company uses EDLP strategy which gives offers to customer
of low prices on all products everyday instead of providing offers on events day only.
Reformation clothing provides most updated styles of dress at low cost because they
attract the customers by providing huge discount and best quality products to the customers by
engaging in economies of scale(Bertram et al., 2018).
Setting price on different bases
 Mark up Pricing Method
This method is commonly used by Walmart and the Reformation clothing brand, it also
known as cost-plus pricing. In this, the profit margin is included in the product price itself
(Gowrisankaran et al., 2015). The method is used to construct the business, in
professional services and in the consumer goods.
 Perceived value pricing method
It is a market oriented method for deciding the price of the product. The price is
dependent upon the customer’s perceived value of product (Cavallo et al., 2016). The
customer’s feedback on the cost are given importance.
Advantages of sales promotion
1. When it is compared to advertisement and personal selling, the sales promotion activity is
less expensive.
2. It gives benefit to dealers and the customers to take more benefit like discount on price,
gifts and other such methods.

4Value Based Pricing Strategy
Disadvantages of sales promotion
1. Conducting sales promotion by own cannot give better results.
2. Providing sales offers like discount on price, providing free gifts gives a bad impression
of selling bad quality product.
Conclusion
Through the above analysis the market strategy and pricing strategy of the company can
be understood which they use for their greater profits. The report elaborates about the different
bases for setting the price of the product and it will also provided the pros and cons of the sales
promotion.

5Value Based Pricing Strategy
References
Bauner, C., & Wang, E. (2016). Strategic Reactions to Wholesale Club Presence: Implications of
Storability on Retailers’ Pricing and Assortment Decisions.
Cavallo, A., & Rigobon, R. (2016). The billion prices project: Using online prices for
measurement and research. Journal of Economic Perspectives, 30(2), 151-78.
Bertram, R. F., & Chi, T. (2018). A study of companies’ business responses to fashion e-
commerce’s environmental impact. International Journal of Fashion Design, Technology
and Education, 11(2), 254-264
Gowrisankaran, G., Nevo, A., & Town, R. (2015). Mergers when prices are negotiated: Evidence
from the hospital industry. American Economic Review, 105(1), 172-203.
Lacy, P., & Rutqvist, J. (2016). Waste to wealth: The circular economy advantage. Springer.