Retailing Management Study Set 4

Business

Quiz 14 :

Retail Pricing

Quiz 14 :

Retail Pricing

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Note: For questions 6-10, you may use the Online Learning Center. Click on "pricing." Maintained markup is 39 percent, net sales are $52,000, and reductions are $2,500. What are gross margin in dollars and the initial markup as a percentage Explain why initial markup is greater than maintained markup.
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Retailers rarely sell the product at initial market price. They always provide discounts and offers for promotional purposes. These are called reductions on initial market price. So normally, there is difference in maintained markup price with initial market price.
Calculations are as follows.
Given;
To find:
Calculation of Gross margin (in dollar): Step1: find out maintained markup in dollar.
Step2: Gross margin in dollar.
Thus, it means the firm retains $0.34 for each dollar they spend.
Calculation of Initial markup percentage:
Step1: Find out reduction percentage-
Step 2: Find initial markup percentage-
Here, the initial markup is greater than the gross margin. The reason is that initial market price is the real price of the product. Usually no merchandise sells the product at real price, but with reduction. This is the reason why gross margin is low than the initial markups.

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Note: For questions 6-10, you may use the Online Learning Center. Click on "pricing." Men's Wearhouse purchased black leather belts for $15.99 each and priced them to sell for $29.99 each. What was the markup on the belts
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Markup is the difference between the cost of goods and the selling price. The selling price may be termed as retail price or final selling price. Normally, retailer markup the price to gain profit for the effort they invested in the production process.
Calculation to find the markup for the product (belts) is as follows.
Given;
Find: Markup
Step1: find Markup percentage
Step2: Find Markup
Thus, the markup for the belts is $14 per unit.

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What is the difference between bundled pricing and multi-unit pricing
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Pricing is very important in retail industry. The prices of the products play an important factor in selling the products and attracting the customers towards the seller.
The difference between bundled pricing and multiple-pricing can be described by stating that bundled pricing refers to the type of pricing in which the firms sell package of goods or services at a lower price as compared to the price if those products or services are bought separately. Bundled pricing allows the sellers to attract customers to buy more which increases the profits earned by the seller.
On the other hand, multiple-unit pricing refers to the pricing strategy wherein the products are sold at low price if they are bought in more quantities as compared to the price of the product if they are bought singly.
This way bundled pricing offers different products in a bundle or a package at discounted rate, while in multiple-unit pricing, the same product is sold in more units at the discounted rate.

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Note: For questions 6-10, you may use the Online Learning Center. Click on "pricing." A department store's maintained markup is 38 percent, reductions are $560, and net sales are $28,000. What's the initial markup percentage
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Why would sewing pattern manufacturers such as Simplicity, Butterick and McCall's print a price of $12.95 (or more) on each pattern and then two times a year offer patterns for sale at $1.99 each How could this markdown influence demand, sales and profits
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Why would retailers risk violating any of the legal issues discussed in this chapter such as predatory pricing, price fixing, deceptive pricing, bait and switch, or discriminatory pricing Explain your answer.
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Note: For questions 6-10, you may use the Online Learning Center. Click on "pricing." Answer the following questions: (a) The Limited is planning a new line of leather jean jackets for fall. It plans to retail the jackets for $100. It is having the jackets produced in the Dominican Republic. Although The Limited does not own the factory, its product development and design costs are $400,000. The total cost of the jacket, including transportation to the stores, is $45. For this line to be successful, The Limited needs to make $900,000 profit. What is its break-even point in units and dollars (b) The buyer has just found out that The GAP, one of The Limited's major competitors, is bringing out a similar jacket that will retail for $90. If The Limited wishes to match The GAP's price, how many units will it have to sell
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Re-read Retailing View 14.2, "Hey, Wanna Buy a Ticket " Describe how supply and demand can impact the price of tickets for sporting events, concerts, and other entertainment. How does the secondary online ticket market impact consumers and the original ticket sellers
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What types of retailers often have high/low pricing What types of retailers generally use an everyday low pricing strategy How would customers likely react if a retailer switched its pricing strategy from one to the other Explain your response.
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Note: For questions 6-10, you may use the Online Learning Center. Click on "pricing." The cost of a product is $150, markup is 50 percent, and markdown is 30 percent. What's the final selling price
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