Definition
Additional Mark-On refers to a strategic increase in the retail price of merchandise beyond its regular markup. This pricing tactic is typically employed during holiday periods or peak demand times to take advantage of increased consumer spending and limited competition. Retailers use additional mark-on to optimize profit margins by leveraging periods when consumers are more willing or able to pay higher prices.
Examples
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Black Friday Sales:
- Retailers might initially advertise significant discounts on Black Friday but then apply an additional mark-on to some high-demand items to offset the discounts on more prominent deals.
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Holiday Season Toys:
- Popular toys or electronics often see an additional mark-on during the holiday season when parents are more likely to purchase these items regardless of higher prices to fulfill their children’s wishes.
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Tourist Destinations:
- Souvenir shops at tourist hotspots might increase prices during peak tourist seasons to maximize profits when visitor numbers are high.
Frequently Asked Questions (FAQs)
Why do retailers use additional mark-on?
Retailers use additional mark-on to maximize profits during times of high consumer demand, where customers are less sensitive to price increases.
Is additional mark-on legal?
Yes, additional mark-on is legal as long as it does not involve deceptive pricing practices or violates any specific local, state, or federal regulations related to price gouging.
How does additional mark-on impact consumer perception?
If executed transparently, additional mark-on can be accepted by consumers due to the higher demand. However, if used excessively or opaquely, it may negatively affect consumer trust and loyalty.
Are there instances where additional mark-on is frowned upon?
Yes, during emergencies or natural disasters, excessive price increases (price gouging) can be considered unethical and may be illegal in many jurisdictions.
Can additional mark-on be beneficial for both retailers and consumers?
Yes, carefully executed additional mark-on can help retailers manage inventory and meet the sudden surge in demand, while consumers get timely access to coveted items.
Related Terms
- Markup: The amount added to the cost price of goods to cover overhead and profit.
- Dynamic Pricing: Strategy where prices change in response to real-time supply and demand conditions.
- Price Gouging: The practice of increasing prices to an unfair level, especially during emergencies or disasters.
- Surge Pricing: Adjusting prices based on demand; commonly used in transportation services like ridesharing.
- Premium Pricing: Setting higher prices for items to reflect higher perceived value or exclusivity.
Online References
- Investopedia: Markup Definition
- Wikipedia: Pricing Strategies
- Retail Dive: Pricing Strategies & Trends
Suggested Books for Further Studies
- “Pricing Strategies: A Marketing Approach” by Robert M. Schindler
- “The Strategy and Tactics of Pricing: A Guide to Growing More Profitably” by Thomas T. Nagle, John Hogan, and Joseph Zale
- “Retailing Management” by Michael Levy and Barton Weitz
Fundamentals of Additional Mark-On: Marketing Basics Quiz
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