Retail Management Private Labels the Term Paper

Excerpt from Term Paper :

The basic explanation for this is that they rely on always offering the lowest prices, which makes them cut back on other costs. However, the future might bring about more pretentious and harder to satisfy customers and strategies will then have to be developed.

3. Internet Retailing

The best selling strategy is that of combining multiple channels. This is similar to the financial sector, where the investor is advised to diversify his portfolio in order to reduce risks and maximize its chances of income. In the retailing business therefore, the company should use multiple channels to get their product to the end consumer. A basic explanation as to why numerous internet only purchase stores have failed where multi-channel companies have succeeded could reside in that the multiple-channel companies offer the audience the chance to directly see the product before buying it. In other words, an interested potential buyer can go to the store or the showroom, depending on the business, and directly look at the desired item and even discuss its features with a specialized retail consultant. He can then go home and use the information acquired to finalize the purchase online and avoid the crowd and long lines in the stores.

In the case of an online only system of purchase, the company does not have a showroom where the customer can get the desired information on the product nor see it in its real size, colour and other features he might be interested in. The product characteristics available online can sometimes be misleading (not with the intent of the company but through various mistakes or misinterpretations) and fail to convince the customer to make the purchase. Also, the customer is unable to directly speak to a specialized retail consultant, who generally offers reassurance, increases the trust in the company and helps finalize the transaction. All in all, the main reason why internet only purchase stores fail is that they only address a narrow palette of customers and that they do not combine and diversify their services.

4. Computation a) the log-log demand function can also be expressed as Log (sales volume) + 2.5 log (retail price) = 8.3, which is also equivalent to Log (sales volume) + log (retail price2.5) = 8.3, which is also equivalent to by applying log to both sides of the equation, we will have

Log (Log (sales volume) + log (retail price2.5)) = log 8.3, which is equivalent to These are just different ways of explaining the initial function. In order to find the value of the profit-maximizing retail price for the 96-ounce FFTT brand of orange juice, we need to calculate the maximum for the function log (sales volume) = 8.3-2.5 log (retail price). This is done by calculating the first derivative of the function and equaling that to 0.

That will mean that 8.3-2.5/retail price = 0 (according to derivative rules, Log'x = 1/x). From this equation, retail price = $3.32. For a price per bottle of $3.32, the profit is maximized.

A b) the percentage markup is calculated as (3.32/3.00) = 10.6%

References

Beal, B., Getting Loyalty Programs Right, CRM News, July 14, 2004, http://searchcrm.techtarget.com/news/article/0,289142,sid11_gci992695,00.htmllast accessed on May 15, 2008

Liebeck, L., 1996, Private Label Goes Premium - Private Label Product Sales at Supermarkets, Drug Stores and Discount Stores - Cover Story, Drug Store News, November 4,…

Sources Used in Document:

References

Beal, B., Getting Loyalty Programs Right, CRM News, July 14, 2004, http://searchcrm.techtarget.com/news/article/0,289142,sid11_gci992695,00.htmllast accessed on May 15, 2008

Liebeck, L., 1996, Private Label Goes Premium - Private Label Product Sales at Supermarkets, Drug Stores and Discount Stores - Cover Story, Drug Store News, November 4, 1996

Liebeck, L., Private Label Goes Premium..., Drug Store News, November 4, 1996

Beal, B., Getting Loyalty Programs Right, CRM News, July 14, 2004

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