Question

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NEED ANSWER ASAP / ANSWER NEVER USED BEFORE

Everyone with an address receives paper coupons and advertisements. Do you use them? Have you ever considered what it costs a retailer to put items on sale? Provide an example of CVP and do the "what if" they sold more at a lower price or "what if" they raise the price, how many sales will they lose if any?

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Answer 1

Answer:

Everyone with an address receives paper coupons and advertisements. No we do not use them because such coupon and advertisements are so common that lot of such things are coming nowadays and we are fade up with this things really. These are coming each and every day and in lot many ways, hence we are struggling with these things and not willing to get engaged with these things.

Yes we have considered that it costs a retailer to put items on sale. The cost is good enough and it is not small cost, but still the retailer wants to drive their sale with the help of this coupon and advertisement scheme, hence they are engaging high cost in this schemes and marketing products. These are having adequate cost and they impact the retailer on larger level. But still the retailer wants to explore in the hope of getting larger consumers for the purchase at his retail outlet.

Example of CVP : The coupon and advertisement for the retail of shoes making them $2 per family address.

Thus the cost for sending one coupon and advertisement on 50o homes will cost them $1000. This is big spent on marketing.

“what if" they sold more at a lower price than the retailer will be not making the desired profit and they will not be able to make good revenue and will not be able to achieve their target for the month, quarter and year. Hence it will be difficult for the retailer to manage their business and they will be struggling in near future. If they make the habit of low price sale for the customers, then the customers will always expect low cost products, thus it will be a problem for the retailer for longer duration. If they sale more at lower price than their margin will be low and will not be able to maintain their margins. But they can survive with this approach to some extent. But they are not sure for high sale with low cost.

OR "what if" they raise the price, the their sales will they lose because the higher the price, lower will be the sale, the consumers will be not attracting due to larger price, hence they will be exploring other retail outlets for better prices for their needed products. Thus price increment is not the right approach and it will impact the sale significantly. The price increase should never be more than the competition price, if this happened, then the brand image of the retail will be lost and it will be very difficult to manage the image of the retail in future. Hence price consciousness need to be ensured.