Fashion MarketingPricing Price Value to Price Ratio the
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Fashion Marketing-Pricing
Price • Value to Price Ratio: the relationship between the perceived quality and the expected satisfaction with the garment and the price • Setting the Price: – Manufacturers to wholesalers to retailers – Wholesale: manufacturer’s price to the retailer – Retail: price final consumer pays for a garment
Pricing Terms and Strategies • Markdown: price reduction taken from the original retail price to speed up sales • Markup: percentage added to the cost of the wholesale price to create a profit for the retailer and cover operating expenses • Operating Expenses: salaries, advertising, building maintenance, cost to cover damage & stolen merchandise, cost of security
Pricing Terms and Strategies • Margin/Gross Profit: difference between the selling price and the cost of the fashion item • Net Profit: balance left after operating expenses are paid • Formula: Selling Price-cost of itemsoperating expenses= net profit
Wholesale Price Retail Price Operating Expenses Net Profit Margin, Gross Profit, and Markup
Pricing Terms and Strategies • Markup: the amount added to the cost to cover the operating expenses and the desired profit • Retail $-Cost $=Markup $ • Markup %=Retail $-Cost $ Retail $
Pricing Policies • Competition: other businesses selling similar items • Market Share: percentage of the total market represented by a customers in a target market
Pricing Categories • Price Range: used to identify th equality of the fashions – Discount: low end price line represented by high-volume sales items and close-outs (Ross) – Budget: below average prices (Wal-Mart) – Value-Priced: good quality, not high fashion – Moderate: middle-priced items – Better: middle to high prices, sold in specialty shops or department stores
Pricing Categories • Bridge: low-price end of a designer line of fashions (young designer, up & coming or special line designed for lower price like Polo) • Designer: high-price end and carries a brand name with an image that allows the high price (established-Chanel, Gucci, Ralph Lauren) • Couture: original, luxury items that are one of a kind and made of the top quality materials, hand-made (Chanel Couture)