MKT 461/MKT461 Exam 3 Practice Questions With Verified Answers

MKT Exam 3 Price elasticity - ANS: a measure of the effect a price change has on consumer demand; percentage change in demand divided by percentage change in price. Elastic vs. Inelastic - ANS: Elastic: describes demand that is very sensitive to a change in price Inelastic: Describes demand that is not very sensitive to a change in price MSRP - ANS: manufacturer's suggested retail price Price discrimination - ANS: the business practice of selling the same good at different prices to different customers Horizontal price fixing - ANS: an agreement between retailers in direct competition with each other to charge the same prices. Markup - ANS: the increase in the retail price of an item after the initial markup percentage has been applied but before the item is placed on the selling floor. Initial markdown - ANS: the retail selling price initially placed on the merchandise less the cost of goods sold. Maintained markdown - ANS: the amount of markup the retailer wishes to maintain on a particular category of merchandise; net sales minus cost of goods sold. 6 methods of liquidating markdown merchandise - ANS: - Sell to another retailer. - Consolidate unsold merchandise. - Sell on the Internet. - Return to vendor. - Donate to charity. - Carry over merchandise to next season. EDLP - ANS: every day low pricing a pricing strategy that stresses continuity of retail prices at a level somewhere between the regular nonsale price and the deep-discount sale price of the retailer's competitors. Benefits of EDLP - ANS: •Assures customers of low prices.