Retail Pricing 415 CHAPTER 14 DISCUSSION QUESTIONS AND PROBLEMS 1. What types of
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Retail Pricing 415 CHAPTER 14 DISCUSSION QUESTIONS AND PROBLEMS 1. What types of retailers often use a high/low pricing gross margin in dollars and the initial markup as a percentage? Explain why initial markup is greater strategy? What types of retailers generally use an ev- eryday low-pricing strategy? How would customers than maintained marku likely react if a retailer switched its pricing strategy 8. The cost of a product is S150, markup is 50 percent, and from one to the other? Explain your response. markdown is 30 percent. What's the final selling price? 2. Why would sewing pattern manufacturers such as9. Men's Wearhouse purchased black leather belts for $15.99 each and priced them to sell for $29.99 each. 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? What was the markup on the belts? 10. Answer the following questions 3. Reread Retailing View 14.1. Will an EDLP strategy 4. Reread Retailing View 14.5. What are your thoughts 5. What is the difference between bundled pricing and Note: For questions 6-10, you may use the Online 6. A department store's maintained markup is 38 per- (a) The Limited is planning a new line of jackets for fall. It plans to sell the jackets for $100. It is having the jackets produced in the Dominican Republic. Although The Limited does not own gn 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 work for JCPenney? Explain your answer the factory, its product development and desi about extreme couponing? Should retailers take steps to restrict it multiunit pricing? point in units and dollars: arning Center. Click on "pricing (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. IfThe Limited wants to match The Gap's price, how cent, reductions are $560, and net sales are $28,000 What's the initial markun percentage?Explanation / Answer
Answer 6.
Reductions R = $560; and Net Sales = $ 28000
So Reduction percentage is (Reduction/Net Sales)*100 = 2%
Initial Markup = Maintained Markup + Reduction %
That is, Initial Markup percentage is 38% + 2% = 40%
And, Initial Markup Price = $28,000 + $560 = $28,560
Cost Price = (Initial Markup Price*100)/(100 + Initial Markup Percentage)
= 100*28560/140
= $20,400
Answer 7.
Gross Margin $ = 28,560 - $ 20,400 = $8,160
Maintained Markup is the extra discount that seller may have to give to a buyer for a successful sales. Since Maintained Markup is Initial Markup minus Discount that is why it is always greater that Initial Markup.
Answer 8.
Markup Price = $(150*50)/100 + $150
= $75 + $150 = $225
Markdown is 30%, that is ($225/30)*100 = $75
Final Selling Price: $225 - $75 = $150
Answer 9.
Markup on belts:
100*(29.99 - 15)/15.99 = 87.55%
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