Randy Todd, marketing manager for New Waves Sports Products, Inc. (NWSP), is thinking about how changes taking place among retailers in his channel might impact his strategy.
NWNSP sells the products it produces through wholesalers and retailers. For example, NWSP sells basketballs to Wholesale Supply for $8.00. Wholesale Supply uses a 20 percent markup and most of its "sport shop" retailer customers, like Kings' Sporting Goods, use a 33 percent markup to arrive at the price they charge final consumers. However, one fast growing retail chain, Sports Fitness, only uses a 20 percent markup for basketballs, even though it pays Wholesale Supply the same price as other retailers.
Is Sports Fitness retail price higher or lower than the other retailers? ____
Calculate the retail price for Sports Fitness basket balls___________
Calculate the retail price of the basketball for Kings sporting Goods __________
Show your calculations for each problem.
Furthermore, Sports Fitness occasionally lowers the price of basketballs and sells them at cost--to draw customers into its stores and stimulate sales of its pricey basketball shoes. What is Sports Fitness Cost?_________________
Sports Fitness is also using other pricing approaches that are different from the sports shops that usually handle NWSP products. For example, Sports Fitness prices all of its baseball gloves at $20, $40, or $60--with no prices in between. There are three big bins - one for each price point.
Jimmy is also curious about how Sports Fitness's new strategy to increase sales of tennis balls will work out. The basic idea is to sell tennis balls in large quantities to nonprofit groups who resell the balls to raise money. For example, a service organization at a local college bought 2,000 tennis balls printed with the college logo. Sports Fitness charged $.50 each for the tennis balls-plus a $500 one-time charge for the stamp to print the logo. The service group plans to resell the tennis balls for $2.50 each and contribute the profits to a shelter for the homeless.
What is the service organization's average cost for the printed tennis balls it buys from Sports Fitness? __________________________
Show your calculations for each problem.