The buyer for Christmas items for a large department store is trying to determine prices for this year’s merchandise. Her manager indicated that the maintained gross margin for these items should be 45 percent of total sales. Last year, markdown reductions amounted to 25 percent of last year’s total dollar sales of Christmas items. Given that the buyer can assume that this year’s markdown percentage will be similar to last year’s, what is the initial gross margin that she should use? Given your answer to Part (a), if a lighted Santa Claus lawn ornament costs the retailer $25.30, what should be its initial retail price? Briefly explain what price segmentation is. When retail markdowns are used as a means of price segmentation, which of the six price-segmentation fences described in the course is being used? Explain your answer.
The buyer for Christmas items for a large department store is trying to determine prices for this year’s merchandise. Her manager indicated that the maintained gross margin for these items should be 45 percent of total sales. Last year, markdown reductions amounted to 25 percent of last year’s total dollar sales of Christmas items. Given that the buyer can assume that this year’s markdown percentage will be similar to last year’s, what is the initial gross margin that she should use? Given your answer to Part (a), if a lighted Santa Claus lawn ornament costs the retailer $25.30, what should be its initial retail price? Briefly explain what price segmentation is. When retail markdowns are used as a means of price segmentation, which of the six price-segmentation fences described in the course is being used? Explain your answer.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 6E: The economic analysis division of Mapco Enterprises has estimated the demand function for its line...
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The buyer for Christmas items for a large department store is trying to determine prices for this year’s merchandise. Her manager indicated that the maintained gross margin for these items should be 45 percent of total sales. Last year, markdown reductions amounted to 25 percent of last year’s total dollar sales of Christmas items.
- Given that the buyer can assume that this year’s markdown percentage will be similar to last year’s, what is the initial gross margin that she should use?
- Given your answer to Part (a), if a lighted Santa Claus lawn ornament costs the retailer $25.30, what should be its initial retail
price ? - Briefly explain what price segmentation is. When retail markdowns are used as a means of price segmentation, which of the six price-segmentation fences described in the course is being used? Explain your answer.
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