chapter 15

decreasing graduated recovery method

- AKA "declining price structure" - a pricing method where there is an inverse relationship between the mark-up and the retail of the casket with higher priced caskets given a lower mark-up - advantages: 1. consumer value index increases with each step upward in product assortment 2. consumer encouraged to buy better quality merchandise - disadvantages: 1. low-end merchandise mark-up may be excessive

gross casket profit

- AKA "margin or profit" - the difference between merchandise cost and selling price - retail price - wholesale cost = gross profit - measures the profit of each casket to the funeral home

modified graduated recovery method

- AKA "modified graduated recover method" - similar to declining method except the lowest priced casket(s) are less expensive - highest mark-ups taken on mid-level priced caskets with lowest mark-ups on low-end and high-end caskets - advantages: 1. consumer value index increases with higher priced caskets 2. encourages consumer to buy better merchandise 3. provides for consumer who requires lower-priced caskets - disadvantages: 1. low-profit margin on low-end caskets 2. attractive option for consumer who can but doesn't want to spend

fixed multiple method

- AKA "straight line or times factor" - a price determination method whereby the casket cost is multiplied by a constant factor - casket wholesale cost ($200) X fixed multiple (3) = casket selling price ($600) - advantages: 1. easy to use 2. provides quality - disadvantages: 1. no improvement in customer value index 2. no incentive to buy-up

quartile

- a division of the total into four segments, each one representing 1/4th of the total - may represent total number of caskets (16) divided by 4=4 caskets in each quartile or may represent price quartiles

consumerized pricing

- a method of pricing so that actual price figures are familiar to the consumer - avoids awkward pricing - $1285 vs. 1284.25 - "big-ticket" items usually round-up or round-down prices - consumerized pricing final digit is almost always a "5", "7", "9", or "0"

increased graduated recovery method

- a pricing method where the mark-up varies with higher-priced caskets given a higher mark-up - advantages: 1. low-end merchandise available at low-cost - disadvantages: 1. consumer value index decreases with each step upward in product assortment 2. consumer implicitly discouraged from purchasing between quality merchandise 3. rewards those who spend the least

median

- a value in an ordered set of numbers which represents the midpoint, whereby there are an equal number of values above and below the midpoint value

sales analysis/statistical terminology

- average (mean) - median - mode - range - quartile

merchandise pricing terminology

- consumer value index - gross casket profit - merchandise value ratio

merchandise pricing strategies

- fixed multiple method - increased graduated recovery method - decreasing graduated recovery method - modified graduated recovery method

horizontal merchandising

- gives consumers a number of choices at each price level - largest number of choices should be at or slightly above the target sales objective

vertical merchandising

- gives consumers a selection of price ranges - provides steady and obvious value progression at each price level

the most expensive/least expensive caskets

- most and least expensive casket offering serves as the points of reference to which other offerings may be compared - most expensive casket's job: 1. available for the consumer who wants the very best 2. implicitly sets the perceived "middle price range" 3. price should be easily divisible by two 4. when divided in half, it should be slightly above the target sales objective 5. middle price range is where most consumers purchase - least expensive casket should be reasonably attractive but not TOO attractive

consumer value index (CVI)

- the percentage derived by dividing the wholesale amount of the merchandise by the retail price of the merchandise - wholesale cost/retail price = CVI - measures the value received for each dollar spent by the consumer - ensures value progression - "if buyers spend more, they should get more!"

merchandise value ratio (MVR)

- the relationship between the wholesale cost of the merchandise and the total cost of both service and merchandise to the consumer - wholesale cost ($200)/total of merchandise +services ($4,000) = MVR (5%)

average (mean)

- the sum of a group of numbers divided by the number of units

range

- the upper and lower limits of a series of numbers - determined by subtracting the least value from the greatest value

mode

- the value that occurs most frequently in a group of numbers

vertical and horizontal merchandising

- vertical merchandising - horizontal merchandising

itemization

a method of price quotation by which each unit of service and/or merchandise is priced separately

unit pricing

a method of price quotation in which one price includes both service and caskets

functional pricing

a method of price quotation in which the charges are broken down into several major component parts

bi-unit pricing

a method of price quotation showing separately the price of the service to be provided and the price of the casket

package pricing

a pricing method which groups together selected services and/or merchandise