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RMAR

ch15

QuestionAnswer
price discrimination occurs when a retailer charges different prices for identical products and/or services sold to different customers
predatory pricing arises when a dominant retailer sets prices below its costs to drive competitive retailers out of business
horizontal price fixing involves agreements between retailers that are in direct competition with each other to set the same prices
bait-and-switch unlawful, deceptive practice that lures customers into a store by advertising a product at a lower-than-normal price (the bait) and then, once they are in the store, induces them to purchase a higher-priced model (the switch)
markup difference between the retail price and the cost of an item
markup percentage markup as a percentage of the retail price
reductions factors that reduce there is a difference between the initial and the maintained markup
initial markup retail selling price initially set for the merchandise, minus the cost of the merchandise
maintained markup actual sales realized for the merchandise, minus its costs
merchandising optimization software set of algorithms (computer programs) that monitors merchandise sales, promotions, competitors' actions, and other factors to determine the optimal (most profitable) price and timing for merchandising activities, especially markdowns
break-even analysis determines, on the basis of a consideration of fixed and variable costs, how much merchandise needs to be sold to achieve a break even (zero) profit
break-even point quantity quantity at which total revenue equals total cost, and then profit occurs for additional sales
fixed costs costs that do not change with the quantity of product produced and sold
variable costs the retailer's expenses that vary directly with the quantity of product produced and sold
markdowns price reductions or discounts from the initial retail price
traffic appliances small portable appliances
first-degree price discrimination charging individual customer a different price based on their willingness to pay
second-degree price discrimination offer the same multiple price schedule to all customers but require that customers do something to get the lower price--something that discourages customers with a high willingness to pay to take advantage of the lower price
coupons offer a discount on the price of specific items when they're purchased
rebates provide another form of discounts for consumers off the final selling price; however, in this case, the manufacturer, instead of the retailer, issues the refund as a portion of the purchase price returned to the buyer in the form of cash
price bundling the practice of offering two or more different products or services for sale at one price
multiple-unit pricing (quantity discounts) practice of offering two or more similar products or services for sale at one lower total price
third-degree price discrimination retailers often charge different prices to different demographic market segments
zone pricing practice of charging different prices in different stores, markets, regions, or zones
high/low pricing discount the initial prices for merchandise through frequent sales promotions
everyday low pricing (EDLP) emphasizes the continuity of retail prices at a level somewhere between the regular non-sales price and the deep-discount sale price of high/low retailers
low price guarantee policy guarantees customers they will have the lowest price in a market for products they sale
rain checks written promises given to customers when merchandise is out of stock to sell customers that merchandise at the sale price when the merchandise arrives
yield management the practice of adjusting prices up or down in response to demand to control the sales generated
leader pricing involves a retailer pricing certain items lower than normal to increase customers' traffic flow or boost sales of complementary products
loss leaders complementary products
cherry pickers shoppers who go from one store to another, buying only items that are on special
pricing lining predetermined price points within a merchandise category
odd pricing refers to the practice of using a price that ends in an odd number, typically a 9
Created by: danicita3387 on 2011-05-03



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