Pricing Approaches Overview
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Questions and Answers

What does the formula for Sales per Square Foot represent?

  • Total Sales divided by Store Employees
  • Total Sales divided by Selling Area in Square Feet (correct)
  • Total Sales divided by Number of Transactions
  • Total Sales multiplied by Selling Area in Square Feet

    • How is Same Store Sales Growth calculated?

  • A fixed percentage of Store Sales Year 1
  • Store Sales Year 1 divided by Store Sales Year 2
  • The difference between Store Sales Year 2 and Year 1, divided by Store Sales Year 2
  • The difference between Store Sales Year 2 and Year 1, divided by Store Sales Year 1 (correct)

    • Which of the following is NOT classified as nonstore retailing?

  • Online and Mobile Retailing
  • Television Home Shopping
  • In-Store Promotions (correct)
  • Direct Selling

    • Which method of nonstore retailing is based on automated sales without direct human interaction?

    <p>Automatic Vending</p> Signup and view all the answers

    What is a characteristic of the Do-Not-Call Registry in relation to telemarketing?

    <p>It restricts telemarketers from contacting registered numbers.</p> Signup and view all the answers

    Which pricing approach involves setting a high initial price for a product to maximize profits?

    <p>Skimming Pricing</p> Signup and view all the answers

    What is the primary goal of penetration pricing?

    <p>To attract a large customer base quickly</p> Signup and view all the answers

    Which pricing strategy is best suited for luxury products?

    <p>Prestige Pricing</p> Signup and view all the answers

    Which approach determines prices based on competitor prices?

    <p>Competition-oriented Pricing</p> Signup and view all the answers

    Odd-even pricing is primarily based on which psychological pricing strategy?

    <p>Perceived value of odd prices</p> Signup and view all the answers

    Cost Plus Pricing utilizes what method for determining the selling price?

    <p>Fixed percentage added to total cost</p> Signup and view all the answers

    Which of the following pricing strategies is NOT a demand-oriented approach?

    <p>Cost Plus Pricing</p> Signup and view all the answers

    Yield management pricing is particularly effective in which type of industry?

    <p>Hospitality and Airlines</p> Signup and view all the answers

    How is profit calculated according to the Target Profit Pricing method?

    <p>Profit = Total Revenue - Total Cost</p> Signup and view all the answers

    What is the main focus of Target Return-on-Sales Pricing?

    <p>Achieving a certain percentage of profit relative to total revenue</p> Signup and view all the answers

    Which pricing practice involves setting prices based on competitors' prices?

    <p>Competitive Pricing</p> Signup and view all the answers

    Which of the following is a characteristic of Fixed-Price Policy?

    <p>Prices are consistently the same across all sales</p> Signup and view all the answers

    What is the primary purpose of quantity discounts?

    <p>To encourage large purchases by reducing the price</p> Signup and view all the answers

    Which of the following is NOT a legal aspect of pricing mentioned?

    <p>Loss-Leader Pricing</p> Signup and view all the answers

    What is predatory pricing typically used for?

    <p>To attract more consumers through lower prices</p> Signup and view all the answers

    Which pricing strategy adjusts based on real-time supply and demand?

    <p>Dynamic Pricing</p> Signup and view all the answers

    Which of the following practices can be classified as deceptive pricing?

    <p>Price Fixing</p> Signup and view all the answers

    What is a main characteristic of customary pricing?

    <p>It is based on established pricing norms within the industry</p> Signup and view all the answers

    Which role does a wholesaler primarily serve in the distribution channel?

    <p>Buy large quantities of goods and resell to retailers</p> Signup and view all the answers

    What type of distribution strategy involves selling products directly to consumers without intermediaries?

    <p>Direct involvement</p> Signup and view all the answers

    Which utility is created by ensuring product availability in convenient locations?

    <p>Place utility</p> Signup and view all the answers

    Which factor is NOT typically considered when determining the distribution channels?

    <p>Marketing strategies</p> Signup and view all the answers

    What is the primary characteristic of a general merchandise store?

    <p>Stocks a broad range of product categories</p> Signup and view all the answers

    Which service level provides the least personal assistance in retail?

    <p>Self service</p> Signup and view all the answers

    How do limited-line stores differ from single-line stores?

    <p>Single-line stores offer a narrower range within a single category</p> Signup and view all the answers

    Which pricing strategy refers to consistently low prices without discounts?

    <p>Everyday Low Pricing (EDLP)</p> Signup and view all the answers

    What type of retail store emphasizes high-quality merchandise and a unique shopping experience?

    <p>Full Service Retailer</p> Signup and view all the answers

    What does 'scrambled merchandising' refer to in retail?

    <p>Selling a variety of unassociated product lines in one store</p> Signup and view all the answers

    Which type of retailer is characterized by a franchise model?

    <p>Franchises</p> Signup and view all the answers

    What does time utility mean in distribution channels?

    <p>Products available when consumers desire them</p> Signup and view all the answers

    Which type of retail outlet offers the most comprehensive customer service?

    <p>Full Service</p> Signup and view all the answers

    Which channel strategy uses independent intermediaries to sell products?

    <p>Agent involvement</p> Signup and view all the answers

    Study Notes

    Pricing Approaches

    • Four approaches for selecting prices:
      • Demand-oriented approaches
      • Cost-oriented approaches
      • Profit-oriented approaches
      • Competition-oriented approaches

    Demand-Oriented Pricing Approaches

    • Skimming pricing: Setting high initial prices to attract customers who are price-insensitive.
    • Penetration pricing: Setting low initial prices to attract a wide range of customers.
    • Prestige pricing: Setting high prices to convey exclusivity.
    • Odd-even pricing: Setting prices a few dollars below an even number (e.g., $9.99).
    • Bundle pricing: Offering several products for one package price.
    • Yield management pricing: Adjusting prices based on demand and capacity.

    Cost-Oriented Pricing Approaches

    • Cost-plus pricing: Adding a percentage markup to the cost of a product.

    Profit-Oriented Pricing Approaches

    • Target profit pricing: Setting prices to achieve a certain level of profit.
    • Target return-on-sales pricing: Setting prices to achieve a specified percentage return on sales.

    Competition-Oriented Pricing Approaches

    • Customary pricing: Setting prices based on tradition.
    • Above-, at-, or below-market pricing: Setting prices above, at, or below market prices.
    • Loss-leader pricing: Setting prices below cost to attract customers.

    Setting the List/Quoted Price

    • Fixed-price policy: Setting one price for all customers
    • Dynamic pricing policy: Adjusting prices based on individual customer or situation

    Adjustments to the List/Quoted Price

    • Quantity discounts: Lower prices for larger quantities.
    • Trade-in allowances: Allowing customers to trade in old items for a discount.
    • Price fixing: Illegal agreement among competitors to maintain prices.
    • Price discrimination: Charging different prices to different customers.
    • Predatory pricing: Setting prices below cost to drive competitors out of business.
    • Deceptive pricing: Deliberately misleading consumers with pricing information (e.g. bait and switch, bargains conditional on other purchases, etc)

    Distribution Channels

    • Distribution Channels: Organised network linking manufacturers/service providers to customers, involving wholesalers, retailers, and agents.
    • Wholesaler: Buy large quantities, warehouse, resell to retailers.
    • Retailer: Sell goods to consumers
    • Agent: Negotiate transactions between parties.

    Channel Configurations

    • Illustrative diagrams showing various possible arrangements of manufacturers, wholesalers, retailers, agents, and consumers.
    • Illustrates different options for getting products to consumers.

    Channel Objectives

    • Place utility: Product/service availability in convenient locations.
    • Time utility: Product/service availability when customers want it.
    • Information utility: Availability of information about product features and benefits.
    • Form utility: Product preparation for use
    • Example Retailing Mix
      • Retail Pricing
    • Original Markup
    • Maintained Markup
    • Markdowns
      • Everyday Low Pricing (EDLP)
      • Everyday Fair Pricing
      • Off-Price Retailing
    • Warehouse Clubs
    • Outlet Stores
    • Single/Extreme value stores
    • Factors influencing distribution channels: customer, product, middleman, and environmental characteristics.

    Classifying Retailers

    • Form of Ownership: Independent retailers, corporate chains, franchises.
    • Level of Service: Self-service, limited service, full service.
    • Merchandise Line: Limited-line stores, single-line stores, general merchandise stores, scrambled merchandising.

    Retail Positioning Matrix

    • Breadth of Product Line: Variety of products offered by a retailer
    • Value Added: Services (e.g., quality, experiences) and brand image. This will be a key feature in classifying retailers, particularly premium ones.

    Retailing activities outside stores

    • Automatic Vending
    • Television Home Shopping
    • Online/Mobile Retailing
    • Telemarketing
    • Direct Selling

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    Related Documents

    Principles of Marketing - Placement Lecture Notes PDF

    Description

    This quiz explores various pricing strategies businesses can utilize to set their prices effectively. It covers demand-oriented, cost-oriented, and profit-oriented approaches, along with key pricing techniques like skimming and bundle pricing. Test your understanding of these concepts and how they apply in real-world scenarios.

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