Chemist warehouse, which is known for its low prices on medicines, perfumes ,vitamins and other stuff. The slogan and banners outside the pharmacy is “Australia’s cheapest chemist” and “the lowest prices guaranteed”. what makes chemist warehouse so confident on the prices? we should start from the catalogue.
According to catalogues on Chemist warehouse website, we can find that chemist ware will introduce some products to make a promotion on half prices every once in a while. Most of the half prices products are on vitamins and other health care products, Moreover , the prices on perfumes are lower than it in big malls like David Jones and Myer.
Compared with other competitors, such as Amcal pharmacy, Terry White, Priceline and other local pharmacies, the prices in Chemist warehouse are still the lowest. There is one slogan is noticeable that lowest prices guaranteed. If any customers find any items are cheaper in other pharmacies, Chemist warehouse will do the price match and give 10% off the differences.
Price sensitivity and Cost based strategy
The price match guarantee is a major pricing strategy that most stores use to make sure the price is competitive. As most of the products can be found in other pharmacies, customers are easy to compare rices and find substitutes, as a result, the customers show low brand loyalty.
When the customers are price sensitive and the market is in violent competition, it is easy for Chemist warehouse to determine a select a price strategy. The Cost based will meet the situation.
This is a advertisement on Youtube, we can find that the striking labels are put out on major products, even the prices are the same with the old one. Why chemist warehouse like to do this?
The strategy used here is “Price discount and mood” , all the products in Chemist warehouse have labels, in which there are three numbers, the current prices, original prices and the money you saved. The discounts on each label will make customers think they are smarter and raise a feeling of directly money save. Even in the recipe of your shopping, there will show how much you have saved in total. However, the current prices are permanent and I never see Chemist warehouse sell products on original prices.
Another strategy is “prices ending in 99”. This is a major pricing strategy most retail stores will use. we can easily find it around us, Coles, Woolies, JBhifi etc. Prices end with 99 like $9.99, will raise a feeling of more cheap, the price $9.99 is more attractive than $10.
Another pharmacy which related to Chemist warehouse is My chemist. These two pharmacies are belong to a same company. however, almost all the My chemist are located in big malls with large flows. The prices of same items in My chemist is a little higher than Chemist ware house. This is price discrimination.
price discrimination in not illegal, the prices of Chemist warehouse and My Chemist is determined by the rent cost. The location of My chemist is better than Chemist warehouse in same region. For instance, in Doncaster shopping center, My chemist is located in the center near Coles, however, Chemist warehouse is outside the shopping center. In this way, My chemist has higher fixed cost on rental and more convenient for customers.
In conclusion, the price strategies of Chemist warehouse are obviously successful. The major factors are accurate segment and positioning , also the selection of pricing strategies are important.
Kaiyong XIE (ethan)
‘CHEMIST WAREHOUSE’,2015,Mercury, The( Hobart),6 December, Newspaper Source Plus, EBSCOhost, viewed 3 Sep,2016
Roy Morgan Research Ltd( 2013), The rise(and rise) of Chemist Warehouse <http://www.roymorgan.com/findings/rise-of-chemist-warehouse-201308212347>;
Chemist Warehouse Catalogue. (Fri, 19 Aug – Sun, 4 Sep)<http://catalogues.chemistwarehouse.com.au/catalogue/cool-dads-only/57rluqy3r.html?pid=promotedCatalogue#pageNo=8>
Why Shop With Us? <http://www.chemistwarehouse.com.au/AboutUs/Why-Shop-With-Us>