When a product is developed and distributed in the market, pricing is a crucial factor between them. A manufacturer looking to profit would consider the market and the economic scenario to define a price equilibrium. This pricing strategy would ultimately circulate throughout the market and set a standard for every retailer.
A market needs to operate on an actual price that reflects on the quality and worth of the commodity; otherwise, retailers would put up a price of their own, irrespective of the profit consideration for manufacturers. So it is essential to understand the SRP full form and the concept behind it underneath the retail merchandising.
SRP: Full Form & Meaning
SRP, or Manufactured Suggested Retail Price, refers to the cost of a product recommended by the producer at which a retailer should sell it to the consumer. This price specificity includes the manufacturing cost and the retailer’s selling profit. Limiting the cost of the product decides whether it will be able to grab a fair market share and the consumer’s attention.
An SRP isn’t the highest cap on a price for a commodity; instead, it is a price recommendation made by the manufacturer that aligns with what consumers would prefer for that product quality or type. Also, SRP helps brands analyze the pricing factor on the success of a product, especially during a retail store audit.
An SRP is usually applicable to luxury branded or high-priced products such as automobiles or electrical appliances that should follow a standard from one store to another. However, most retail producers put up an MSRP to manipulate the pricing strategy for consumers.
The role of the SRP strategy in the retail store audit
As SRP’s full form describes, it is a suggested price range for all the retailer owners by producers to diminish any chances of deceptive price equilibrium. A brand invests a lot in marketing and promoting its commodity to attract consumers.
Nevertheless, if the pricing strategy is not accurately determined, the marketers will keep sulking at the thought of why they cannot generate revenue. As a result, they might analyze their marketing strategy by deploying merchandisers to conduct store audits.
Retail store audits software give the merchandiser and marketing team a broader view when they observe and compare the SRP of their brand with competitors.
The application of SRP
Franchise stores or chain supermarket stores usually find it best to follow the SRP guidelines.
Some could go below the suggested price due to a sluggish economy. The COVID-19 decreased the demand for many luxury goods below, and retail store owners preferred to finish their inventory stocks. That’s why they chose to reduce the SRP.
The suggested retail price aims to keep the cost of commodities the same at all the stores. However, a fair margin is considered so that a customer can negotiate with the retail owner, and both parties come to a reasonable price. The SRP is fixed based on the profit for three parties: the manufacturer, retailer, and wholesaler. However, the SRP could sometimes affect the consumer’s choice of manufacturers by defining a higher cost.
For brands to make a breakthrough and capture the market, it is best to understand the market situation and act on the pricing. SRPs are a means to an end, but variations are possible as the economy changes.