MKTG 260 Regent University Week 4 Retail Management Discussion HW I will need 2 Response posts (only) to the 2 attached posts below. My original one will a

MKTG 260 Regent University Week 4 Retail Management Discussion HW I will need 2 Response posts (only) to the 2 attached posts below. My original one will also be attached.

– 150-200 Words Each

– Supportive References

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Study from this week:

Post a message that presents your answers to the case questions for Case 25 How Much for a Good Smell?

Read: Levy and Weitz, Chapters 14-15

Retailing Management, (Boston, MA: McGraw-Hill Irwin, 9th edition, 2014), Michael Levy and Barton Weitz, ISBN: 9780077512378
APA 6th Edition Publication Manual of the American Psychological Association, (2009), American Psychological Association, ISBN 978-1-4338-0561-5. Available through http://www.apa.org/pubs/books/4200066.aspx Running head: RETAIL MANAGEMENT
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My original post:
Ecclesiastes 5:10
10 Whoever loves money never has enough; whoever loves wealth is never satisfied with their
income. This, too, is meaningless.
Any organization, business, or company needs to make profits, and it’s probably the most
crucial aspect of any business. Still, it is also vital to ensure the loyalty of your customers. When
the business only thinks about making money, they overlook certain aspects of the company,
which might be more critical. When the cost of production increases, it is only logical for the
company to raise its prices. In the case study, Courtney’s gift package had the right
characteristics of a commodity that could bring many profits. However, their supplier just
increased the price from $5.00 to $5.50, the owner of the store insists on retaining the price at
$9.95 but the store personnel argues that they need to raise the retail price to $12.50. The owner
remains adamant, insisting that their customers might lose trust in them if they increased the
prices. He knows that brand loyalty is more important than profits, which does not serve the
community.
The highest profit will be realized if the product price is raised to $12.50, which the store
personnel suggests. It has always been company policy to maximize the profits for all the unis
and the store in general. However, factors affect how consumers make decisions on what to
purchase and how much they are willing to spend on the item. Disposable income for the buyer
and the importance of items are characteristics that the consumer will ask themselves before
purchase. Store policy should be transcended by the needs of the customer every time.
Understanding the purpose and fulfillment of serving a community depends on them for quality
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products at affordable prices. The cost of distribution and storage should be factored in if the
final product price. Costing should always appropriately cover the cost to avoid losses.
I feel the price should remain at the $10 mark and increase the units to a thousand pieces.
To ensure that the customers are happy, the price must reflect our loyalty to our customers.
Increasing the price too high will make the customers think the company as greedy, not a good
perception. Ensuring that there is enough for the company’s needs, covering all overheads, and
ensuring that the core business remains to make the customer happy, customer loyalty will be
increased with fair prices, which is the same view as the owner. Having the capacity to
accommodate more customers who will appreciate the fair prices is more comfortable than
getting people on board just for the uniqueness of the product.
References
Levy, M., Weitz, B. A., & Grewal, D. (1998). Retailing management. New York, NY:
Irwin/McGraw-Hill.
http://www.academia.edu/download/6062130/2008_winter_mark_468_lec_b2.pdf
Posts to respond to:
Post #1 – Kat
1. What prices caused Courtney’s new charges?
Prices that caused Courtney’s to implement new charges on their popular potpourri product are
the price changes that the manufacturer incurred one year from the next. For example, one year it
cost the store $4.50/per unit to purchase the potpourri from the manufacturer, but then the
consecutive years had higher per unit prices of $5.00/per unit and $5.50/per unit, respectively. In
order to maintain the store’s economic health, to maintain equilibrium the owners opted to
increase the sales price of the potpourri so as to adjust for the price inflation and maintain the
same proportional margins on their sales (Levy, Weitz, & Grewal, 2014, p. 586).
2. Which price would result in the highest profit?
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By purchasing 1,000 units and maintaining the $9.95/per potpourri sales price, Courtney’s has
the favorable potential of selling all 1,000 units and acquiring a total gross sales of $9,950, with
net profits amounting to $4,450 ($5.50 x 1,000 = $5,500 cost to purchases supplies, and a $9,950
gross profit subtract the $5,500 initial cost = a $4,450 net profit). This $9.95 price point would
amount in the highest profit, as the alternative suggested pricing of $12.50/per unit sales price
could possibly deter price sensitive customers and extremely impact the demand curve of the
potpourri negatively. Furthermore, as stated in the case, raising a familiar product’s price by 25%
could make customers incredulous of Courtney’s prices, henceforth even straining the price
sensitivity of customers more (Levy, Weitz, & Grewal, 2014, p. 586).
3. What other factors should Courtney’s consider?
In addition to the price sensitivity of customers, a valuable factor that Courtney’s should also
consider is how their potpourri serves as a product to get customers through the door of their
store, and potentially spend money on other products as well. This marketing strategy is known
as a “loss leader,” which is a product sold at a lower price, or even at a loss, so as to attract
customers into the store and spend money on higher-margined items. Fortunately for Courtney’s,
a pricing of $9.95/per unit of potpourri is not necessarily a “loss,” but it would be appropriate to
retain the more humble pricing of the most popular item so as to continue drawing customers
into the store (Lal & Matutes, 1994).
4. What price would you charge, and how many units would you order?
I would charge the price of $9.95/per unit of potpourri and order at least 1,000 units. The
strategy of having a loss leader product has worked tremendously for retailers in the past, i.e.
Costco Wholesale with their rotisserie chickens and $1.50 hotdog and soda combo, and it would
be beneficial for Courtney’s to also possess an attractive product/deal for customers to look for
and look forward to (Brophy, 2019). In addition, by ordering 1,000 units, as the store’s buyer, I
would work with the manufacturer company/or my company’s merchandise account agent so as
to negotiate a better per unit wholesale price of the potpourri (Ingram, et al., 2015). This would
be an extremely reasonable request, as an order of 1,000 units is much more than previous years,
such as the 300 units ordered years prior, and would be deserving of a discount. Furthermore, it
would be extremely wise for the manufacturer to allot a discount for Courtney’s 1,000 unit order,
as they would mutually benefit as well by receiving larger, stronger business from Courtney’s as
a clientele (Parnell, 2017).
References
Brophy, M. (2019). 8 Things Retailers Can Learn from Costco (and One Thing NOT to Follow).
Retrieved from https://paymentdepot.com/blog/8-things-retailers-can-learn-costco-one-thing-notfollow/.
Ingram, T. R., LaForge, R. W., Avila, R. A., Schwepker Jr., C. H., & Williams, M.R. (2015). Sales
management analysis and decision making (9th ed.). New York, NY: Taylor & Francis.
Lal, R., & Matutes, C. (1994). Retail pricing and advertising strategies. Journal of business, 345-370.
Levy, M., Weitz, B. A., & Grewal, D. (2014). Retailing Management (7th ed.). New York, NY:
McGraw-Hill.
Parnell, J. A. (2017). Strategic management: Theory and practice (5th ed.). Academic Media Solutions.
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Post #2 – Rob
Courtney’s new charges are the result of the wholesale price of their potpourri rising. The
dilemma they face is what to price the potpourri at in the coming holiday season. If they go
with the buyer’s suggestion of 12.95 and sell 1000 units as expected, this will yield the most
substantial profit. However, business isn’t about maximizing profit in everything you do.
Raising prices in consecutive years, especially at a 25% increase this year, could alienate
their customers and sour their opinions of Courtney’s.
“As a customer, whenever I notice an increase in a regular purchase, I’m not pleased. Why do I
have to spend more of my hard-earned cash on the same product” (Moxness, 2019)? Inevitably,
all businesses will need to raise prices due to inflation and worker compensation. The situation
that Courtney’s finds itself in is different than regular small incremental price increases. Their
buyer has realized an opportunity to take advantage of their consumer’s willingness to
purchase and the scarcity of the product. However, “If your business is not focused on growth,
it may not be around very long. You need to keep the customers or clients you currently have
and focus on how to continue to grow to serve more people” (Sloan, 2017).
Courtney’s should purchase the 1000 units for the Wholesale price of 5.50. They have proven
year over year that the potpourri sells and so the increased risk of buying more units is
negligible. The store should sell them for the set price of 9.95, which will keep customers happy
and returning to the store. This method will still yield them a 33% profit over the last year.
Moxness, A. (2019, August 29). Top Tactics for Raising Prices to Keep Your Customers.
Retrieved July 16, 2020, from https://www.vendasta.com/blog/raising-prices
Sloan, K. (2017, February 25). Why Earning More Shouldn’t Be Your Main Business Focus.
Retrieved July 16, 2020, from https://due.com/blog/earning-shouldnt-mainbusiness-focus/

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