Page 213 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes Table 1: Sandeep’s Space Bar’s, planned Versus Actual Profit Data
(for the most recent academic year)
Total New Texts Used Texts Signature goods Health & Other
Beauty
aids
Net Sales 1085000 600000 300000 70000 15000 100000
Cost of goods sold 764600 469700 182800 42100 10600 59600
Initial mark-up at retail 334250 132000 120000 35000 5250 42000
Retail reductions 13850 1700 2600 7100 850 1600
Operating expenses 260400 144000 72000 16800 3600 24000
Net Profit 60000 13700 45400 11100 800 16400
Actual Data
Total New Texts Used Texts Signature goods Health & Other
Beauty
aids
Net Sales 1088000 630000 270000 50000 10000 128000
Cost of goods sold 770100 487800 180400 27100 7000 67800
Maintained mark-up at
retail 317900 142200 89600 22900 3000 60200
Operating expenses 280000 162132 69485 12868 2574 32941
Net Profit 37900 19932 20115 10032 426 27259
Allocated on the basis of percentage of overall sales.

Questions
1. Describe why Sandeep’s Space Bar did not reach the planned goals as depicted in
Table l.

2. Using the data in Table 1, compute the initial and maintained mark-up percentage
for the totalstore and each product category. Explain the differences.
3. Recommend a pricing strategy to improve the store’s performance.

4. If the store decides to carry personal computers, what pricing strategy should it use?
5. Explain the pricing method followed by Sandeep’s Space Bar.

Self Assessment

Multiple Choice Questions:
11. Which of the following is not a variable cost?

a. Sales personnel’s compensation
b. Electricity charges
c. Raw materials charges
d. Rent of the facility

12. cost pricing is a special kind of cost-based pricing occurs when service firms
choose not to include their fixed costs.
a. Full

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