Ch.14
- 1. Important Terms CH. 14 RETAIL PRICING
- 2. Value- relationship of what Everyday low-pricing (EDLP)- a pricing strategy that a customer get stresses continuity of retail (goods/services) to what prices at a level somewhere he/she has to pay for it. between the regular nonsale price and the deep-discount High/low pricing- a sale price of the retailer’s strategy in which retailers competitors. offer prices that are sometime above their Low-price guarantee policy- competition’s everyday low a program that guarantees that price, but they use the retailer will have the lowest possible price for a product or advertising to promote group of products and usually frequent sales. promises to match or better any lower price found in the local market.
- 3. Price elasticity of Markup- the increase in the demand- a measure of the retail price of an item after effect a price change has on the initial markup consumer demand; percentage has been percentage change in applied but before the item demand divided by is placed on the selling floor. percentage change in price. Markup percentage- the Yield management- the markup as a percent of practice of adjusting prices retail price. up or down in response to demand to control sales generated.
- 4. Maintained markup- the amount Reductions- includes three of markup the retailer wishes to things: markdowns, maintain on a particular category discounts to employees and of merchandise; net sales minus customers, and inventory cost of goods sold. shrinkage due to shoplifting, breakage, or loss. Pricing optimization software- a type of software program that uses a set of algorithms that Initial markup- the retail analyzes past and current selling price initially placed merchandise sales and prices, estimates the relationships on the merchandise less the between prices and sales cost of goods sold. generated, and then determines the optimal (most profitable) initial price for the merchandise and the appropriate size and timing of markdowns.
- 5. Break-even point First-degree price quantity- the quantity at discrimination- charging which total revenue equals customer different prices on total cost and beyond which the basis of their willingness profit occurs. to pay. Fixed costs- costs that are Second-degree price stable and don’t change discrimination- charging with the quantity of product different prices to different produced and sold. people on the basis of the nature of the offering. Variable cost- costs that vary with the level of sales Price bundling- the and can be applied directly practice of offering tow or to the decision in question. more different products or services for sale at one price.
- 6. Multiple-unit pricing- practice Leader pricing- a pricing of offering two or more similar strategy in which certain products or services for sale at items are priced lower than one price OR quantity discounts- the policy of normal to increase the granting lower prices for higher traffic flow of customers or quantities. to increase the sale of complementary products. Third-degree price discrimination- charging different prices to different Loss leader- an item priced demographic market near or below cost to attract segments. customer traffic into the store. Zone pricing- charging different prices for the same merchandise in different geographic locations to be competitive in local markets.
- 7. Cherry picking- customers Odd pricing- the practice visiting a store and buying of ending prices with an odd only merchandise sold at number (such as 69 cents) big discounts or buying only or just under a round the best styles or colors. number ( such as $98 instead of $100). Price lining- a pricing policy in which a retailer Predatory pricing- a offers a limited number of method for establishing predetermined price points merchandise prices for the within a classification. purpose of driving competition from the marketplace.