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## Bell Ringer

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**Bell Ringer**• Advertising a great price and then not having the merchandise available for consumers to purchase is part of which practice?**Bell Ringer Answer**• Bait and Switch.**Pre-ACT Make-UpGo to the theatre AFTER morning**announcements. • Chris Buckner • Brandon Fox • Lawrence Junior • Zachary McMillen • Chris Warner • Morgan Wooden**Agenda**• Bell Ringer / Attendance – 5 minutes • Law of Supply and Demand Activity – 10 minutes • Chapter 9.2 Lecture and Notes – 25 minutes • Math in Business Activity – 30 minutes**Table of Contents**Topic Page # Digital Media Trends 4 Chapter 8.1 Vocabulary and Notes 5 Recreational Sports 6 Chapter 8.2 Vocabulary and Notes 7 Chapter 8 Assessment 8 Chapter 8.3 and 8.4 Vocabulary 9 Virtual Business – Lesson 1 Questions 10 Virtual Business – Lesson 1 Vocabulary 11 Supply and Demand 12 Chapter 9.1 Vocabulary and Notes 13 Marketing Math 14 Chapter 9.2 Vocabulary and Notes 15**Math in Business**Chapter 9.2 Vocabulary Equilibrium Point is at ______________supply/demand amount and __________ price. Operating Expenses Markup Price Lines Loss-Leader Pricing 15 12**Learning Targets**• I can discuss pricing strategies used by businesses to increase sales. • I can list five steps for determining price.**Pricing Considerations**• Price – The amount that customers pay for products and services. • Pricing – The process of establishing and communicating the value of goods and services to customers.**When determining the price to be charged, you must take into**consideration the cost of the merchandise operating expenses, and the desired amount of profit.**Pricing Consideration**• Operating Expenses all of the costs associated with running your business. • Utilities, salaries, taxes. • Markup the amount that is added to the cost of an item for sale to cover operating expenses and allow for a profit.**Pricing Policies**• One-Price Policy – all customers pay the same price for a product. • Flexible Pricing Policy – customers negotiate prices within a range. • Geographic Pricing – allows pricing variations based upon geographic location, • Distribution costs, local competition, local taxes.**Pricing Policies**• Price Lines distinct categories of merchandise based upon price, quality, and features. • Ralph Lauren has Polo as its high-end price line and Chaps as the next best alternative at a lower price.**Pricing Strategies**• Psychological Pricing – creating an illusion for customers. • Example: • Odd-even pricing • A DVD that is $29.98 is seen as being considerably less expensive than a $30 DVD.**Pricing Strategies**• Prestige Pricing – when retailers charge higher-than-average prices for merchandise and target customers seeking status and high quality.**Pricing Strategies**• Volume Pricing – stores like Wal-Mart receive merchandise at a lower cost from its suppliers, so they are able to pass those savings along to the customer.**Pricing Strategies**• Promotions – to get more customers in the sale, retailers may use promotions. • Loss-leader pricing the willingness to take a loss on the reduced prices of selected items in order to create more customer traffic.**Pricing Strategies**• Quantity Discounts – customers receive a financial benefit for buying a larger quantity.**Pricing Strategies**• Trade-In Allowances – customers may be given an allowance for old merchandise when making a new purchase.**5 Steps to Determining the Price**• Establish Price Objectives • Percentage of profit you want to earn. • Determine the cost of the product or service. • Retail price must cover the total cost and allow for a profit. • Estimate the consumer demand. • Study the competition. • Decide on a pricing strategy.**Marketing Math Problems**1. A computer software retailer used a markup rate of 40%. Find the selling price of a computer game that cost the retailer $25. 2. A golf shop pays its wholesaler $40 for a certain club, and then sells it to a golfer for$75. What is the markup rate? 3. A shoe store uses a 40% markup on cost. Find the cost of a pair of shoes that sells for$63.**Marketing Math Answers**1. The markup is 40% of the $25 cost, so the markup is: (0.40)(25) = 10 Then the selling price, being the cost plus markup, is: 25 + 10 = 35 The item sold for $35. 2. 75 – 40 = 35 Find the relative markup over the original price, or the markup rate: ($35) is (some percent) of ($40), or 35 = (x)(40)...so the relative markup over the original price is: 35 ÷ 40 = x = 0.875 Since x stands for a percentage, I need to remember to convert this decimal value to the corresponding percentage. The markup rate is 87.5%. 3. I will let "x" be the cost. Then the markup, being 40% of the cost, is0.40x. And the selling price of $63 is the sum of the cost and markup, so: 63 = x + 0.40x63 = 1x + 0.40x63 = 1.40x63 ÷ 1.40 = x= 45 The shoes cost the store $45.