Wheel of Retailing

Definition: the Wheel of Retailing is a life cycle phenomenon in retail in which new shops or service providers typically start as a competitor on price of existing providers.
After a new formula has become successful, there is a tendency to increase the services offered and the quality ("upgrading"). But this leads to higher costs and eventually to higher prices.
As a result, the new formula gradually starts to look more and more like its earlier competitors.
This effect is strengthened by the typical reaction of the traditional contenders on a new price competitor: downgrading their services, simplifying their offer and lowering their prices.

More on the wheel of retailing. More on pricing: By-Product Pricing, Cost-based Pricing. You may also be interested in: Affiliate Marketing, AIDA Model, Brand Asset Valuator.