-459-


 BRIEF

 PRICE GROUPINGS


 The construction of a sample line by a manufacturer at the
 beginning of each season involves a considerable c.rital investment,
 sc that the price levels at which his bags will be priced to the
 retailer must be determined in advance.

 The retailers have established wholesale prices which they are
 willing to .ay for goods intended to sell at their established retail
 prices. All manufacturers knc-' these established wholesale prices
 and figure their lines to sell at these established prices, each
 manufacturer striving to offer the most attractive styles an? give the
 most value.' -

 The custom in the industry is to make bags fit the price levels
 demanded by the retailers. Any manufacturer who offers his line at
 prices slightly above the established price levels, or at prices in
'between two price levels, is certain to encounter buying resistance
from the retailers. The result of this custom in the industry 'akCes
each manufacturer try to create his own styles so that no two manu-
facturers offer the identical bags either in materials or in style.

 Fully 950 of the manufacturers in the industry follow this custom
of meeting established rice levels. As a result possibly fifty or
'more manufacturers offer their lines at $7.75 a dozen to the retailers
who in turn sells such bags at the long established price of one dollar
each at retail. The experience of the retailers have been that if such
bags were offered at $1.05 or tl.10 each, the volume of sales would
'decline more than fifty percent. The same is true of bags that retail
:at $1.95 each, $2.95 and $4.95. The slightest increase in the rice
level is certain to result in a decrease in unit sales.

 The five percent of the manufacturers who offer their products at
less than the established price levels, are usually a few of the larger
manufacturers who do so for the purpose of satisfying a grievance
against some other manufacturer, or because they manufacture a line at
another price level which is their main line, and by pricine their
'$7.75 a dozen line at $7.50 a dozen or less they create a favorable
impression for their main line.

 At the same time, the retailer is not desirous of buying at a
price lower than $7.75 a dozen, unless he was reasonably certain that
!;no competitor could do likewise, because a price lower than t7.75 rmay
induce some of his competitors to sell the bag for less than tl.00
retail and the net margin of profit resulting from a lower retail price
is likely to be less than the margin of profit derived from uaylng
$7.75 a dozen and selling it for $1.00.