Case Analysis on Markups, Markdowns and Channel Decisions

SwimMaster

$"$It was just like solving a problem in one of those math puzzle books," Jenny Hsu

was telling her friends after work. Jenny works for the SwimMaster Division of the

Nottingham Corporation. Her division manufactures swimming pool supplies and

equipment.

$"$We are going to introduce a new pool vacuum attachment that we think should

retail for $$79\mathrm{.}95$ at the pool supply stores. These stores expect at least a $45\%$

markup based on the store's retail selling price and buy from wholesalers who

expect at least a $32\%$ markup based on the price at which they sell to the

retailers. The attachment costs us $$21\mathrm{.}26$ to make. Now, what suggested prices

do we set at each level in the channel?" Jenny asked her befuddled friends.

Guidelines for channel markup decisions:

Formula:

Markup $\frac{?}{?}\%on$ Price $=\frac{\text{P}\text{r}\text{i}\text{c}\text{e}-\text{C}\text{o}\text{s}\text{t}}{P}$rice $**100\%$

Markup $\%on$ Cost $=\frac{\text{P}\text{r}\text{i}\text{c}\text{e}-\text{C}\text{o}\text{s}\text{t}}{C}$ost $**100\%$

Manufacturer Price $=$ Cost $**(1+$ Markup $\%on$ Cost $)$

Retail Price $=$ Cost $\frac{?}{(1-\text{M}\text{a}\text{r}\text{k}\text{u}\text{p}\%on\text{P}\text{r}\text{i}\text{c}\text{e})}>$ Cost $=$ Retail Price $**(1-$ Markup $\%on$ Price $)$

Complete the following table using the data in the case $($Scenario $1).$