Coupons & Markdown Clip a Coupon - MHS Marketing

Coupons & Markdown. Clip a Coupon. MARKDOWN. DISCOUNTS. Coupon: a voucher entitling the holder to a discount off a particular product. Consumer View.
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1.Coupons & Markdown

2. Clip a Coupon Coupon: a voucher entitling the holder to a discount off a particular product. MARKDOWN DISCOUNTS

3. Consumer View • How many of you have actually used a coupon? • How many of you would cut coupons out? • Can these discounts add up to anything? • If an item is 20% off, how would you figure this? • If a clearance item is already 50% off and you get an additional 20% off, is that 70% off?

4. Why Coupons!! •Why Do Companies Develop them? •To get consumers’ attention •steer consumers toward your product instead of a competitor's •Advertise a New Product •Buy Customer Loyalty •How do you feel when you get a coupon from your favorite store •To Get repeat Business •To advertise you have a markdown! •http://www.investopedia.com/financial-edge/0911/why-do-companies-print-coupons.aspx

5. Coupons!! Formula: Discount Amount = Reg. Price * discount rate Net Price = Reg. price – Discount amount If 34% discount off $40, what is the discount amount? Discount amount = X = Net Price = - = • $40 x .34 = $13.60 • $40 – 13.60 = $26.40

6. Coupons!! •You get a coupon in the mail for 25% off of a pair of jeans. The jeans you want are $85. What would your final cost (net price) for the Jeans be? Discount amount = X = Net Price = - =

7. Coupons!! Short Formula: • Reg. price X percentage you have to pay Net Price = Reg. Price * (1-discount rate) If you get a 35% discount off a $600 TV, what is the net price paid? Net Price = X (1-discount rate)= Net price = $600 x (1-.35) = $390 $600 x .65 = $390 paid

8. Coupons!! •You get a coupon in the mail for 25% off of your entire purchase. You buy $195.00. What would your final net price be? Net Price = X (1 - ) =

9.Markdown VS Discount • A markdown is the term used by the business or marketing personnel to reduce the price of a product to increase the sales volume • A discount term used by a business or marketing personnel to express in a percentage markdown to the consumer to show the sale

10. WHY MARKDOWN? •Why do businesses mark items down? • Sales of that item are slow • Seasonal Item • Item that will be discontinued • Going out of business • Introduction of an item

11. Three Markdown Types 1. Temporary Markdown – Reduction in price for a specified period of time - will raise back to the normal price after the sale expires – Most familiar pricing method used to generate sales 2. Permanent Markdown – used to remove old products that: are perishable and close to being out of date (e.g., donuts); – Remove older model to make room for new models – products that the marketer no longer wishes to sell

12. Three Markdown Types 3. Seasonal – see price reductions at the end of prime selling season – Products primarily sold during a particular time of year – Ex: clothing, gardening products, sporting goods and holiday-items

13.Markdown Steps Include • Retail Price: Original selling price of the product • Dollar Markdown: amount off of the retail price • Sales Price (Net Price): final price you pay

14. Dollar Markdown & Sales Price Formula: Dollar Markdown = Retail Price x % Markdown Sales Price = Retail Price – Dollar Markdown

15. Practice • Our school store sells an MHS Sweatshirt that retails for $60.00 and you want to markdown the product by 25% to increase sales. What is the amount of the mark down? • Dollar Markdown = x = $60 X .25 = $15.00 Markdown What is the Sale Price? • Sales Price = - = Net Sales Price = $45 net price

16.LET’S PRACTICE What is 25% of 100? Dollar Markdown = x = Sale Price = - = What is 15% of 50? Dollar Markdown = x = Sale Price = - = What is 50% of 75? Dollar Markdown = x = Sale Price = - =

17.More Terms…. • Net Price : The price you actually pay for the item (after discount) • List Price: The price the business pays, often expressed in a catalog (catalog price)

18. Alternative Method Short Formula: Net Price = Retail Price x (1 – markdown %) For Business Discount: Net Price = List Price x (1-markdown%)

19. Alternative Method • You have a new item of clothing with a 40% discount for April 3 – April 6 that sells for $75.00, what is the net price? – Net Price = X (1- ) =

20.Example • Retail price: $380 for a last years TV Model with a discount Rate: 30% Find the net price you pay: Net Price = X (1- ) =

21. PUT IT ALL TOGETHER The winter season is about halfway complete and we have a large quantity of MHS mittens. We need to increase the sales of the mittens. What would the sale price of the mittens be if the retail price is $15 and a markdown of 25%. Net Price = X (1- ) =

22.Put it All Together • The Sports Shop purchases running shoes from wholesalers for a list price of $119.50. Sports Shop receives a discount of 20%. What is the net price? • Net Price =

23.Figure this… • A sports stadium sold a total of 15,125 tickets and 25% of those tickets were children. How many tickets were sold to children? » Remember to round to a whole number! • Total = – 15,125 x .25 = 3782 tickets

24.WORKSHEET • Please show me that you understand the concepts to this point.