Buad 474 Chapter 10

Front 1

Target return objectives

Back 1

is a pricing objective that states a specific level of profit, such as percentage of sales or return on capital invested, as an objective. This amount is often stated as a percentage of sales or the retailer’s capital investment. A target return for a supermarket might be 2% of sales (pre-tax).

Front 2

Skimming

Back 2

: is a pricing objective in which price is initially set high on merchandise to skim the cream of demand before selling at more competitive prices

Front 3

Penetration:

Back 3

Is a pricing objective in which price is set at a low level in order to penetrate the market and establish a loyal customer base. For example many locally owned coffee bars, knowing that starbucks was coming, choose to charge low prices, hoping to make stopping at their shop a habit for their customers.

Front 4

Above-market pricing strategy

Back 4

is a policy where retailers establish high prices because non-price factors are more important to their target market than price.

Front 5

Below-Market pricing policy

Back 5

is a policy that regularly discounts merchandise from the established market price in order to build store traffic and generate high sales and gross margin dollar per square foot of selling space.

Front 6

Customer pricing

Back 6

is a policy in which the retailer sets prices for goods and services and seeks to maintain those prices over an extended period of time.

Front 7

Variable pricing

Back 7

a policy that recognizes that differences in demand and cost necessitate that the retailer changes prices in a fairly predictable manner.

Front 8

Price lining:

Back 8

is a pricing policy that is established to help customers make merchandise comparisons and involves establishing a specific number of price points for each merchandise classification.

Front 9

Loss Leader

Back 9

Is an extreme form of leader pricing where an item is sold below a retailer’s cost.

Front 10

Markup

Back 10

is the selling price of the merchandise less its cost, which is equivalent to gross margin