Chapter 9 Entrepreneurship

Skimming

Setting a price at the highest level the market will bear, usually because there is no competition.

Markup

The amount the entrepreneur adds to costs to provide a profit.

Law of supply and demand

The economic theory that describes how the demand for products or services and the supply of them affect each other.

Total Product

The entire bundle of products, service, ans meanings of your offering; includes extras like service warranty, or delivery, as well as what the product means to the customer.

Markup pricing

A price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit.

Margin

The amount of profit, usually stated as a percentage of the total price.

4 P's of marketing

The four major components of a marketing effort - Product, price, promotion, and placement. Some-times called the marketing mix.

Target market

The group of people on which a marketer focuses promotion and sales efforts.

Goods

A Tangible product.

Internal reference price

A consumers mental image of what a products price should be.

Heterogeneity

A quality of a service in which each time it is provided it will ne slightly different form the previous time.

Optimum Price

The highest price that will produce your desired level of sales in your intended market.

Bundling

combining two or more products in one unit and pricing it less than if the units were sold separately.

external reference price

An estimation of what a price should be based on information external to a consumer, such as advice, ads, or comparison shopping.

Tangibility

An items capability of being touched, seen, tasted, or felt.

Price gouging

Charging an outrageously high price for something.

off-peak pricing

Charging lower prices at certain times to encourage customers to come slack periods.

Multiple or bonus pack

Combining more than one unit of the same product and pricing it lower than if each unit were sold separately.

Augmented Product

Core product plus features that tend to differentiate it from the competition.

Elasticity

From economics, the idea that the markets demand for a product or service is sensitive to changes in its price.

Elastic product

Product for which there are any number of substitutes and for which a change in price makes a difference in quantity purchased.

Inelastic product

Product for which there are few substitutes and for which a change in price makes very little difference in quantity purchased.

Me-too Products

Products essentially similar to something already on the market.

odd-even pricing

setting a price that ends in the numbers 5,7, or 9.

New Product development process

1. Generation 2. Screening 3. Evaluation 4. Development 5. Commercialization

Services

A Nonphysical product.

Partitioned pricing

Setting the price for a base item and then charging extra for each additional component.

captive pricing

Setting the price for an item relatively low and then charging much higher prices for the expendables it uses.

Inseparability

A quality of a service in which the service being done cannot be disconnected from the provider of the service.

Core Product

The very basic description of what a product is - A bar of soap, a house-cleaning service.

Referral discount

A discount given to a customer who refers a friend to the business.

Perishibility

A service exhibits perish-ability in that if its not used when offered, it cannot be saved for later use.

Periodic or random discounting

Sales conducted at either predictable or non predictable intervals.

Prestige or premium pricing

Setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol.

Price lining

The practice of setting (usually) three price points; good quality, better quality, best quality.