394 
MARKETING 
every day of the amount of stock on hand of any item. Through 
local store reports, requisitions, and warehouse stock records the 
management is in position to know continuously the stock turn 
over by item and locality, and to reduce stock-keeping to a 
scientific system. 
Pricing.—As already indicated, most chain stores do not 
handle high-priced articles. Items of a comparatively low or 
medium-price range in a given line are featured. The problem 
of pricing is given foremost attention because of (i) the neces 
sity of under-pricing the service store; (2) the necessity of a 
high rate of turnover at a profit; and (3) the desirability of 
standard prices or convenient monetary units which will stick in 
the consumer’s mind (such as a nickel, dime, quarter, or dollar). 
Mark-up, in the view of accountants, is the amount added to 
the cost of merchandise to cover operating expenses and profit. 
Yet, because of the competition which the chain-store has created 
for itself, it must proceed from the top downward, adjusting 
costs, expenses, and profit to an assumed maximum price. This 
it seeks to accomplish by greater turnover, greater purchasing 
power, and the reduction of operating wastes. 
As a general rule, standard prices are maintained for all the 
branches of a chain of stores. Some stores make a difference for 
more distant units—for example, Eastern chains selling West of 
the Mississippi. Some national chains vary their prices according 
to the distance from the distributing warehouse. Again, a gro 
cery chain sometimes permits its local manager to buy certain 
perishable items on his own account and set his own prices. 
Some chains never mark down prices, while others will cut 
prices as a stimulus to sales, being careful to avoid a “price war.” 
Price-cutting on staples may lead to a dangerous situation for 
all the stores in a community because of the inelastic demand for 
such goods. Consumers are quick to take advantage of lower 
prices on sugar and bread, but the quantities bought are not 
considerably greater, on the average, because of a cut in price. 
Yet the “special” or “loss leader” is a device often used by chain 
stores. 
Common examples of loss leaders are the “weekly specials”