Retail Stores Put a Number of Items in the Aisles

question 49

Essay

Retail stores put a number of items in the aisles leading to the checkout station. These are placed there to remind customers of things they may have overlooked, or to show products that customers may not have thought of buying until they are seen. Retailers know that some items are purchased on impulse. In other words, the customer simply sees a product and purchases it. Create a fourth hierarchy of effects that would combine the three components of the ABC model when a product is selected on impulse.

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Definitions:

Horizontal Price Fixing

Occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers.

Experience Curve Effect

Refers to the drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in the price.

Unit Cost

The cost incurred to produce, acquire, or sell one unit of a product or service, calculated by dividing total costs by the number of units.

Product Volume

The quantity of units of a particular product sold or produced.