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MARK 463 Retailing > CH17 Pricing in Retailing > Flashcards

CH17 Pricing in Retailing Flashcards

1
Q

price elasticity of demand (p. 409)

A

the sensitivity of customers to price changes in terms of the quantities they will by (think COMM 220)

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2
Q

horizontal price fixing (p. 411)

A

an agreement among manufacturers, among wholesalers, or among retailer to set prices

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3
Q

vertical price fixing (p. 411)

A

when manufacturers or wholesalers seek to control the retail prices of their goods and services

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4
Q

Robinson-Patman Act (p. 412)

A

prevents manufacturers and wholesalers from unfairly pricing their products or offering different purchase terms to different retailers if those retailers are buying similar quality products

goal? to ensure that such price discrimination does not harm competition in the marketplace

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5
Q

minimum-price laws (p. 412)

A

they prevent retailers from selling certain items for less than their cost plus a fixed percentage to cover overhead

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6
Q

predatory pricing (p. 412)

A

when large retailers seek to reduce competition by selling goods and services at very low prices, thus causing small retailers to go out of business (think Walmart, Amazon, etc.)

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7
Q

loss leaders (p. 412)

A

retailers price selected items below cost to lure more customer traffic to their stores

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8
Q

unit pricing (p. 413)

A

whereby some retailers must express both the total price of an item and its price per unit of measure

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9
Q

item price removal (p. 413)

A

hereby prices are marked only on shelves or signs and not on individual items

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10
Q

bait-and-switch advertising (p. 413)

A

*an illegal tactic where retailers advertise products at very low prices to attract customers, but then claim the item is unavailable or inferior when contacted, attempting to sell a different, often more expensive product instead

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11
Q

gray-market goods (p. 414)

A

brand-name products bought in foreign markets or goods trans-
shipped from other retailers

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12
Q

market penetration pricing (p. 415)

A

when a retailer seeks large revenues by setting low prices and selling many units

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13
Q

market skimming pricing (p. 415)

A

when a company initially sets a high price for a new product or service and then gradually lowers it over time

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14
Q

demand-oriented pricing (p. 418)

A

when a retailer sets prices based on consumer desires

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15
Q

cost-oriented pricing (p. 418)

A

when a retailer sets a price
floor–the minimum price acceptable to the firm so it can reach a specified profit goal

an effective price floor is placed above the equilibrium point between supply and demand (think COMM 220)

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16
Q

competition-oriented pricing (p. 418)

A

when a retailer sets its prices in accordance with those of its competitors

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17
Q

price—quality association (p. 418)

A

when consumers believe high prices connote high quality and low prices connote low quality

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18
Q

prestige pricing (p. 418)

A

when businesses set high prices for their products or services to convey an image of exclusivity and superior quality

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19
Q

markup pricing (p. 418)

A

a retailer sets prices by adding per-unit merchandise
costs, retail operating expenses, and desired profit

20
Q

markup (p. 418)

A

the difference between merchandise costs and
selling price

21
Q

markup percentage (p. 418)

A

markup percentage (at retail) = (retail selling price - merchandise cost) / retail selling price

markup percentage (at cost) = (retail selling price - merchandise cost) / merchandise cost

22
Q

initial markup (p. 420)

A

based on the original retail value assigned to merchandise less the costs of the merchandise

23
Q

maintained markup (p. 420)

A

based on the actual prices received for merchandise sold during a time period less merchandise cost

24
Q

gross margin (p. 420)

A

the difference between net sales and the total cost of goods sold (which adjusts for cash discounts and additional expenses)

gross margin ($) = net sales - total costs of goods

25
Q

variable markup policy (p. 421)

A

when a retailer purposely adjusts markups by merchandise category

26
Q

direct product profitability (DPP)
(p. 421)

A

a method that allows retailers to assess the profitability of each merchandise category by calculating adjusted per-unit gross margin and assigning direct costs related to warehousing, transportation, handling, and selling, thereby determining the appropriate markup for each category or item

27
Q

customary pricing (p. 423)

A

a retailer sets prices for goods and services and seeks to maintain them for an extended period

28
Q

everyday low pricing (EDLP) (p. 423)

A

a retailer strives to sell its goods and services at consistently low prices throughout the selling season

29
Q

variable pricing (p. 424)

A

a retailer alters its prices to coincide with fluctuations in costs or consumer demand

30
Q

yield management pricing (p. 425)

A

a computerized, demand-based pricing strategy used by retailers (often in service industries) to determine optimal pricing combinations that maximize total revenues for a specific period

31
Q

one-price policy (p. 425)

A

a retailer charges the same price to all customers buying an item under similar conditions

32
Q

flexible pricing (p. 425)

A

allows consumers to bargain over prices

33
Q

contingency pricing (p. 425)

A

a form of flexible pricing whereby a service retailer receives payment only after the service is performed, and payment depends on customer satisfaction with the service

34
Q

odd pricing (p. 425)

A

when retail prices are set at levels below even dollar values, such as $0.49, $4.98, and $199.

35
Q

leader pricing (p. 426)

A

where retailers sell selected items at lower prices to attract customers, aiming to increase overall traffic and encourage additional purchases of regularly priced goods

36
Q

multiple-unit pricing (p. 426)

A

a retailer offers discounts to customers who buy in quantity or who buy a product bundle

buy 10 for $30 (la vie en rose)

37
Q

bundled pricing (p. 426)

A

a retailer combines several items in one basic price

eg. a digital camera bundle could include a camera, batteries, a telephoto lens, a case, and a tripod for $259.

38
Q

unbundled pricing (p. 426)

A

retailers charge separate prices for each product or service sold

39
Q

price lining (p. 427)

A

retailers offer merchandise at a limited range of price points, with each point representing a distinct level of quality.

40
Q

markdown (p. 427)

A

a reduction from an item’s original price used to match a competitor’s price, address inventory overstock, clear out outdated merchandise, reduce excess items, and boost customer traffic

41
Q

additional markup (p. 427)

A

increases an item’s original price because demand is unexpectedly high or costs are rising

42
Q

markdown percentage (p. 428)

A

the total dollar markdown as a percentage of net sales (in $)

markdown percentage = total dollar markdown / net sales (in $)

43
Q

off-retail markdown percentage
(p. 428)

A

a measure that calculates the markdown for each item or category as a percentage of the original retail price

off-retail markdown percentage = (OG price = new price) / OG price

44
Q

additional markup percentage (p. 428)

A

looks at total dollar additional markups as a percentage of net sales

additional markdown percentage = total dollar additional markups / net sales (in $)

45
Q

addition to retail percentage (p. 428)

A

measures a price rise as a percentage of the original price

additional to retail percentage = (new price - OG price) / OG price

MARK 463 Retailing (17 decks)

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