1. Coupons & Markdown

2. Objectives
Learn why a company issues coupons

3. Clip a Coupon
Coupon: a voucher entitling the holder to a discount off a particular product.
Have this slide up and instruct students to read the Clip a Coupon, Save a Billion article located in their notes sheet. Remember that there is a teacher answer key which includes some gauging questions for discussion with your students. The file has been titled discountteacher.doc
MARKDOWN
DISCOUNTS

4. Consumer View How many of you have actually used a coupon?
How many of you would cut coupons out?
Can these discounts add up to anything?
If a clearance item is already 50% off and you get an additional 20% off, is that 70% off?
These questions will help assess the students knowledge of math at this point already. Really focus on asking about the clearance item that is already 50% off and you get an additional 20% off question because this part of the understanding for students they would think that means it is a totally of 70% off which of course we know is not the case.

5. Why Coupons!! Why Do Companies Develop them?
To get consumers’ attention
steer consumers toward your product instead of a competitor's
Advertise a New Product
Buy Customer Loyalty
How do you feel when you get a coupon from your favorite store
To Get repeat Business
To advertise you have a markdown!
What develop them?
Coupons are a great way to advertise to consumers that you want to markdown an item. This way you can mail them out, hand them out, or publish them online for your customers to redeem at your store. This way you get your customers to your store!
Referring to the Clip a Coupon, Save a Billion, Can you really save money? Well of Course! If you think that the average consumer could use about 5 coupons a week and saving close to 5-20 dollars…that does really add up! So next time you just throw that coupon away, just think, it is like throwing cash in the trash!!!!!

6. Coupons!!
Formula:
Discount Amount = Reg. Price * discount rate Net Price = Reg. price – Discount amount
If you receive a 34% discount off a $40 item, what is the discount amount?
Discount amount = X =
Net Price = =
$40 x .34 = $13.60
$40 – = $26.40
What develop them?
Coupons are a great way to advertise to consumers that you want to markdown an item. This way you can mail them out, hand them out, or publish them online for your customers to redeem at your store. This way you get your customers to your store!
Referring to the Clip a Coupon, Save a Billion, Can you really save money? Well of Course! If you think that the average consumer could use about 5 coupons a week and saving close to 5-20 dollars…that does really add up! So next time you just throw that coupon away, just think, it is like throwing cash in the trash!!!!!

7. Coupons!!
You get a coupon in the mail for 25% off of a pair of jeans. The jeans you want are $85. What would your final cost (net price) for the Jeans be?
Discount amount = X =
Net Price = =
What develop them?
Coupons are a great way to advertise to consumers that you want to markdown an item. This way you can mail them out, hand them out, or publish them online for your customers to redeem at your store. This way you get your customers to your store!
Referring to the Clip a Coupon, Save a Billion, Can you really save money? Well of Course! If you think that the average consumer could use about 5 coupons a week and saving close to 5-20 dollars…that does really add up! So next time you just throw that coupon away, just think, it is like throwing cash in the trash!!!!!

8. Coupons!! Short Formula = Reg. price X % you have to pay
Net Price = Reg. Price * (1-discount rate)
If you get a 35% discount off a $600 TV, what is the net price paid? (What % do you pay?)
Net Price = X (1-discount rate)=
Net price = $600 x (1-.35) = $390
$600 x .65 = $390 paid
What develop them?
Coupons are a great way to advertise to consumers that you want to markdown an item. This way you can mail them out, hand them out, or publish them online for your customers to redeem at your store. This way you get your customers to your store!
Referring to the Clip a Coupon, Save a Billion, Can you really save money? Well of Course! If you think that the average consumer could use about 5 coupons a week and saving close to 5-20 dollars…that does really add up! So next time you just throw that coupon away, just think, it is like throwing cash in the trash!!!!!

9. Coupons!!
You get a coupon in the mail for 25% off of your entire purchase. You buy $ What would your final net price be?
Net Price = X ( ) =
What develop them?
Coupons are a great way to advertise to consumers that you want to markdown an item. This way you can mail them out, hand them out, or publish them online for your customers to redeem at your store. This way you get your customers to your store!
Referring to the Clip a Coupon, Save a Billion, Can you really save money? Well of Course! If you think that the average consumer could use about 5 coupons a week and saving close to 5-20 dollars…that does really add up! So next time you just throw that coupon away, just think, it is like throwing cash in the trash!!!!!

10. Markdown VS Discount
A markdown is a reduction price of a product to increase sales or because of its inability to be sold at the original planned selling price.
Ex: a sweater for sale that was originally priced at $100 and after one month of slow sales, you decide to markdown the sweater  to 20% off
Markdown: Markdown is the term used by the business or marketing personnel to reduce the price of a product to increase the sales volume.
Discount: Discount is the term used by a business or marketing personnel to express in the terms of a percentage the markdown to the consumer to show the sale.

11. Activity
Coupons Activity

12. Markdown VS Discount
A discount is a reduction in the price of an item or transaction based upon the customer making the purchase.
Examples of this would be an employee discount, senior citizen discount, and frequent-buyer discount.
A business provides a discount to another business based on # of items purchased (bulk purchases).
Markdown: Markdown is the term used by the business or marketing personnel to reduce the price of a product to increase the sales volume.
Discount: Discount is the term used by a business or marketing personnel to express in the terms of a percentage the markdown to the consumer to show the sale.

13. WHY MARKDOWN? Why do businesses mark items down?
Introduction of an item
Sales of that item are slow
Seasonal Item
Item that will be discontinued
Going out of business
Marketing personal have determined a specific rate of the sale of an item. Business owners or a marketing personal will look at past weekly or monthly sales of a particular item and see if enough flow is happening. If sales are slow for an item a markdown might be needed to increase the amount of flow for a particular item. Another reason for a markdown would be a comparison of your price to the price of your competitors and adjusting a markdown to compare. Wal-Mart is a great example of a business that will continuously look at products and compare them to their competitors, economic conditions, and sales.
A seasonal item might need to be marked down as that particular season is drawing near and you want to increase the sales so you are not left with seasonal items after that season is over. For example, the holiday items for a particular season usually start appearing on shelves a few months before the season begins. About a month before the holiday a store might markdown the seasonal items 15%. Two weeks before that holiday the store might markdown the seasonal items at 25%. The day after that holiday is celebrated the items will be marked down at 50% and will continue to add to the markdown until the seasonal items are gone.
At times a store might decide that a particular item should will not be sold anymore at that store, because of this the store (or marketing personal) will recommend that the item be marked down to increase the sales to get rid of that item faster so that shelf space can be used for the new item that will be sold.
Unfortunately some businesses have to close their doors, but before they do they will markdown their products to start the process of closing and to get rid of the inventory that they hold. Most of the time these businesses will start all items in the store at a certain percent off, such as 25% off. The store will continue to add to the percentage off to make sure to sell off their inventory and most likely will get to the point at offering products at 75% off.
Stores can markdown an item for a brief amount of time to get customers to try new products. When consumers see new products sometimes they just feel apprehensive about trying them, when they see a sale on these new items they tend to try them out. Thus a start of a customer base can happen and hopefully they will be repeat buyers.

14. Three Markdown Types Temporary Markdown Permanent Markdown
Reduction in price for a specified period of time - will raise back to the normal price after the sale expires
Most familiar pricing method used to generate sales
Permanent Markdown
used to remove old products that: are perishable and close to being out of date (e.g., donuts);
Remove older model to make room for new models
products that the marketer no longer wishes to sell

15. Three Markdown Types Seasonal
see price reductions at the end of prime selling season
Products primarily sold during a particular time of year
Ex: clothing, gardening products, sporting goods and holiday-items

16. Markdown Terms
List Price: The price the business pays, often expressed in a catalog (catalog price)
Retail Price: Original selling price of the product
Dollar Markdown: amount off of the retail price
Sales Price (Net Price): final price you pay
Retail Price: Is the price of the product that includes the components of the product cost, the operating expenses, and the net profit. The retail price includes already a percentage of a markup which has been predetermined because of the determining factors as those listed above.
Dollar Markdown: Is the dollar amount that has been figured as a percentage off of the retail price.
Sales Price (Net Price): Is the dollar amount that has been figured with the retail price minus the dollar markdown.

17. Dollar Markdown & Sales Price
Formula:
Dollar Markdown = Retail Price x % Markdown
Sales Price = Retail Price – Dollar Markdown
To find the dollar markdown of a product you would need to use the follow formula to express the markdown as a dollar amount.

18. Practice
Our school store sells an MHS Sweatshirt that retails for $60.00 and you want to markdown the product by 25% to increase sales. What is the amount of the mark down?
Dollar Markdown = x =
$60 X .25 = $15.00 Markdown
What is the Sale Price?
Sales Price = =
Net Sales Price = $45 net price
The retail price = $60
The percentage Markdown = 25
Remember to change 25% into a decimal
To find the dollar markdown take $60 times .25 and that equals $15

19. LET’S PRACTICE What is 25% of 100? What is 15% of 50?
Dollar Markdown = x =
Sale Price = =
What is 15% of 50?
What is 50% of 75?
What is 30% of 60?

20. Alternative Method
Short Formula: Net Price = Retail Price x (1 – markdown %) For Business Discount: Net Price = List Price x (1-markdown%)
An Alternative Method can be used where we subtract the discount rate from 100% so for example
The paid percent of a 30% discount is 70% we get this by taking 100%-30%
An alternative method we will use the following formula:
Net Price = List Price x (1-markdown%)

21. Alternative Method
You have a new item of clothing with a 40% markdown for April 3 – April 6 that sells for $75.00, what is the net price?
Net Price = X ( ) =
An Alternative Method can be used where we subtract the discount rate from 100% so for example
The paid percent of a 30% discount is 70% we get this by taking 100%-30%
An alternative method we will use the following formula:
Net Price = List Price x (1-markdown%)

22. Example
Retail price: $380 for a last years TV Model with a discount Rate: 30% Find the net price you pay:
Net Price = X ( ) =
Walk the students through the following example
Retail price: $380 Discount Rate: 30% Find the net price.
Paid percent of 30% = 70%
$380 x ( )
$380 x .70 = $266

23. PUT IT ALL TOGETHER
The winter season is about halfway complete and we have a large quantity of MHS mittens. We need to increase the sales of the mittens. What would the sale price of the mittens be if the retail price is $15 and a markdown of 25%.
Net Price = X ( ) =
What is the formula that we would use?
Net Price = List Price * (1 – markdown %)
Pick a student to come up to the board and write down the formula and have the other students tell the student at the
Board what to write to find the net price.
Make sure students write
$15 x ( )
$15 x (.75)
What is the net price?
$11.25

24. Put it All Together
The Sports Shop purchases running shoes from wholesalers for a list price of $ if they buy 52 pieces. Sports Shop receives a discount of 20%. What is the net price per item?
Net Price =
Have students again help with the problem.

25. Figure this…
A sports stadium sold a total of 15,125 tickets and 25% of those tickets were children. How many tickets were sold to children?
Remember to round to a whole number!
Total =
15,125 x .25 = 3782 tickets

26. WORKSHEET
Please show me that you understand the concepts to this point.
At this point of the lecture, hand out the worksheet Calculating Percents which has both methods of doing discounts for practice for students.