CTE 3806 FINAL EXAM VERIFIED STUDY GUIDE
high/ low pricing strategy - Answers - -discount the initial price through frequent sales
promotions.
- higher profits
- creates excitement
EDLP pricing strategy - Answers - -emphasizes continuous low prices
- low prices guaranteed
- reduces advertising and operating expenses
price sensitivity - Answers - - units sold at different price levels
- when the price goes up and the consumer no longer buys that product
price elasticity - Answers - -a small change in price is accompanied by large change in
quantity demanded (means its elastic)
showrooming - Answers - - a practice in which customers visit stores and interact with a
physical product and receive sales assistance than purchase the item through a less
expensive channel, like online
competition - Answers - retailers can choose to price their product above, below, or
equal to the competitor's price. but must be consistent with the overall strategy and
relative market position.
retail price - Answers - cost of merchandise + markup
markup - Answers - the difference between the retail price and the cost of the item
- (retail price- cost of merchandise)/ retail price
initial markup - Answers - the retail selling price initially set for the merchandise minus
the cost of merchandise
maintained markup - Answers - the actual sales realized for the merchandise minus its
costs
keystoning - Answers - a method of setting retail prices in which retailers simply double
the cost of the merchandise to obtain the original retail selling price.
markdowns - Answers - - type of reduction of the initial retail price that can be classified
as either clearance (to dispose of merchandise) or promotional (to generate sales)
reductions - Answers - markdowns, discounts to employees, and inventory shrinkage
due to shoplifting, employee theft, or accounting errors
high/ low pricing strategy - Answers - -discount the initial price through frequent sales
promotions.
- higher profits
- creates excitement
EDLP pricing strategy - Answers - -emphasizes continuous low prices
- low prices guaranteed
- reduces advertising and operating expenses
price sensitivity - Answers - - units sold at different price levels
- when the price goes up and the consumer no longer buys that product
price elasticity - Answers - -a small change in price is accompanied by large change in
quantity demanded (means its elastic)
showrooming - Answers - - a practice in which customers visit stores and interact with a
physical product and receive sales assistance than purchase the item through a less
expensive channel, like online
competition - Answers - retailers can choose to price their product above, below, or
equal to the competitor's price. but must be consistent with the overall strategy and
relative market position.
retail price - Answers - cost of merchandise + markup
markup - Answers - the difference between the retail price and the cost of the item
- (retail price- cost of merchandise)/ retail price
initial markup - Answers - the retail selling price initially set for the merchandise minus
the cost of merchandise
maintained markup - Answers - the actual sales realized for the merchandise minus its
costs
keystoning - Answers - a method of setting retail prices in which retailers simply double
the cost of the merchandise to obtain the original retail selling price.
markdowns - Answers - - type of reduction of the initial retail price that can be classified
as either clearance (to dispose of merchandise) or promotional (to generate sales)
reductions - Answers - markdowns, discounts to employees, and inventory shrinkage
due to shoplifting, employee theft, or accounting errors
