ENTR 4113 Test 2

Earning multiple ratio

firm value divided by actual or expected annual earnings

Stages of the industry life cycle

introduction→ growth→ boom→ shake-out→ maturity→ decline→ death or retrenchment

What do small businesses outsource?

legal issues, accounting and finance, sales, HRM

Influencer

may have a persuasive role in relation to the deciders

cost strategy risk

other firms may be able to lower their costs as well

Initiator

players who recognize that there is a need to be satisfied or a problem to be solved

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

Disintermediation

reduction in the use of intermediaries between producers and consumers

Decider

responsible for making the final deal or decision

Heuristics

rules of thumb that are commonly used to estimate firm value in relation to some easily observable characteristics of the business

Periodic or random discounting

sales conducted at either predictable or unpredictable intervals

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

Pivot

"Go ahead and start the business in any way you can and look for better opportunities as you go along. It happens all the time. William Wrigley Jr. started out selling soap and baking powder and, to get people's attention, he gave away gum as a promotional item. Wrigley switched to selling gum when he realized how popular a product his Juicy Fruit gum was. This approach is also called the corridor principle because until you start going down the corridor you can't tell what opportunities you might find."

Strategy

"the central, integrated, externally oriented concept of how we will achieve our objectives"

focus strategy risks

- Imitation: It may be easy for a broad-market cost leader to adapt its product in order to compete directly. - Change in the market segments: Other focusers may be able to carve out sub-segments that they can serve even better

Start-up advantages

-Begins with a clean slate -Provides the owner with the opportunity to use the most up to date technologies and new unique products or services -It can be deliberately kept small to limit possible losses

E-commerce models and strategies

-Brokerage: unite buyer/seller -Advertising: content plus advertising -Subscription: periodic fee -Infomediary: customer information -Merchant: wholesaler/retailer, list price/auction -Manufacturer: reach customer directly -Affiliate: partner sites -Community: user contribution -Utility: metered, "pay as you go"

Start-up disadvantages

-Has no initial name recognition -Will require significant time to become established -Can be very difficult to finance -Cannot easily gain credit -May not have experienced managers and workers

Franchising disadvantages

-Little control of business marketing and operations -Success determined to a large extent by the success of the franchisor

Franchising advantages

-The benefit of a proven successful business model -Training and management support -Less risk than in starting a new business or acquiring an operating business

Advertising

-often used to support the corporate identity and value propositions that are established through public relations efforts. -Part of conveying your message to your customers, outlets include newspapers, magazines, billboards, television, and Internet banner ads.

Situations when it might make sense to start a part-time business

1. gain experience 2. lack of resources 3. narrow window of opportunity

Scope

A characteristic of a market that defines the geographic range covered by the market (from local to global)

Scale

A characteristic of a market that describes the size of the market (mass or niche)

Search engine optimization

A general approach to website design intended to result in the site being displayed toward the beginning of a search engine (e.g., Google, Yahoo, etc.) listing for that term.

Heterogeneity

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

Inseparability

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

Blue ocean strategy

A strategy based on a new product or service which has no competitors.

Market Penetration

A strategy whose goal is growth, based on selling more of the firm's product or service to the existing customer base

Public Relations

Activities used to establish and promote a favorable opinion by the public.

Business format franchising

An agreement that provides a complete business format, including trade name, operational procedures, marketing, and products or services to sell.

Conversion franchising

An agreement that provides an organization through which independent businesses may combine resources

Trade name franchising

An agreement that provides only the rights to use the franchisor's trade name and/or trademarks.

Product distribution franchising

An agreement that provides specific brand name products which are resold by the franchisee in a specified territory

Tangibility

An item's capability of being touched, seen, tasted, or felt.

Outsourcing

Contracting with people or companies outside your business to do work for your business.

Augmented Product

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

Ethnographic research

Data gathered by simple observation - seeing what consumers do, rather than asking them.

Cognitive dissonance

Doubt that occurs after a purchase has been made. An inconsistency between experience and belief.

Pricing elasticity

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

Zoning laws

Government specifications for acceptable use of land and buildings in particular areas.

Promotional Mix

How much of each message conveyance you will use to sell your product as well as your objective in using each one -consists of advertising, sales promotions, public relations, personal selling, and direct marketing

Publicity

Information about your company and its activities that is disseminated to the public in order to get their good opinion.

Secondary Research

Information already collected for some other purpose than the current problem or questions

Primary Research

New information collected to solve a problem at hand or answer current questions

Variance

Permission from a government organization to act differently than the laws state.

Intellectual property

Property coming from some sort of original thought; ex: patents, trade secrets, trademarks, and copyrights.

Open-ended Questions

Questions that allow respondents to express themselves as they choose; for example, "What do you like about this book?"

Categorical Questions

Questions that are answered by selecting the proper category; for example, "What is your ethnicity? White, African American, Hispanic, Asian, American Indian, Other."

Scalar Questions

Questions that are answered by some sort of scale; for example, "On a scale of 1 to 5, how do you like this book?"

Dichotomous Questions

Questions that have only two possible choices; for example, "Have you shopped here before?

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. prestige - status symbol premium- non-status symbol

Skimming

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

Odd-Even Pricing

Setting a price that ends in the number 5, 7, or 9.

Total Product

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

Covenant

The limitations imposed on your property by other organizations such as your neighborhood group.

Segmentation

The process of dividing the market into smaller portions of people who have common characteristics.

Due diligence:

The process of investigating a business to determine its value

Personal Selling

The process of selling your products and service; includes prospect and evaluate, prepare, present, close, and follow-up.

Core Product

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

Grow

______ customers by up-bundling, up-selling, cross-selling, referrals

Keep

______ customers by using customer satisfaction surveys, loyalty programs, product updates, and customer check-in calls

Get

______ customers by using earned and paid media to bring awareness, interest, consideration, and purchase of the product

Spin-off

a business that is created by separating part of an operating business into a separate entity

Minimum viable product

a development technique in which a new product or website is developed with sufficient features to satisfy early adopters. The final, complete set of features is only designed and developed after considering feedback from the product's initial users

Referral discount

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

Sales promotions

a form of communication that encourages the customer to act immediately, such as coupons, sales, or contests

Cost strategy

a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

Focus strategy

a generic strategy that targets a portion of the market called a segment or niche

Perceptual Mapping

a graphic display which positions products, services, brands, or companies according to their scores on important strategic dimensions.

Penetrated market

a market where the potential users of a product or service are aware of it, and in many cases are active consumers of it

Chargebacks

a reduction in the bank account of a merchant by a credit card company; a fee the service levies on you for any variety of problems related to the sale

Industry Analysis

a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends.

Differentiation strategy

a type of generic strategy aimed at clarifying how one product is unlike another in a mass market

Value

benefit/cost

Discounted cash flows

cash flows that have been reduced in value because they are to be received in the future

Off-peak pricing

charging lower prices at certain times to encourage customers to come during slack periods

Bundling

combining two or more products in one unit and pricing less than if the units were purchased seperately

Multiple or bonus pack

combining two or more units of the same product and pricing less than if the units were purchased seperately

strategy builds on four key types of decisions you make about your firm

goals, customer and benefits, industry dynamics and analysis, strategy selection

Perishability

if a service is not used when offered, it cannot be saved for later use.

differentiation strategy risks

imitation by competitors and change in consumer tastes

Gatekeeper

individuals who press the stop/go button in the process

Product life cycle

introduction, growth, maturity, decline

Combination of cost and differentiation for niche markets risk

stuck in the middle; trying to achieve both advantages may lead to no advantages at all

Net realizable value

the amount for which an asset will sell, less the cost of selling

Bricolage

the construction or creation of a work from a diverse range of things that happen to be available; construction achieved by using whatever comes to hand

Replacement value

the cost to acquire an essentially identical asset; net realizable value is significantly less

Book value

the difference between the original acquisition cost and the amount of accumulated depreciation

Serviceable available market

the part of TAM that can actually be reached; within your geographical reach

Serviceable obtainable market

the portion of SAM that you can capture

magic number

the post-tax income the entrepreneur personally seeks from the business.

Price lining

the practice of setting three price points - good quality, better quality, best quality

Buyer

the professional function within an organization generally responsible for purchasing, as well as sourcing and negotiation

Total available market

the revenue opportunity available for a product or service; total market demand for a product or service

End User

those who put the service or product into operation once the deal has been clinched

Generic strategies

three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus

bootstrapping

using low-cost or free techniques to minimize your cost of doing business