Entrepreneurial Small Business Ch. 9 and 10

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

Skimming

Setting a price at which 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, 9

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

Value Proposition

Small business owners unique selling points that will be used to differentiate their products and/ or services from those of the competition

Diversification

a strategy whose goal is growth, based on adding new products or services to the firm's existing collection of offerings

Press Release

a written announcement intended to draw news media attention to a specific event

Press relations

activities used to establish and promote a favorable opinion by the media

Optimum price

refers to the highest price that would produce your desired level of sales (or revenues) in your target market

Markup

the amount an entrepreneur adds to costs to provide a profit

Margin

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

Key Factors for Determining Optimum Price

- Demand for the product or service - Value delivered to the customer - Prices set by competing firms - Your business strategy and product placement

Idea evaluation

- exhaustive process of specifying the details of each idea's technological feasibility, its cost, how it can be marketed, and its market potential - basic evaluation tool is the feasibility analysis

Guidelines for Naming a Business

-Be careful about infringing on trademarks -Something that describes firm or product and is easy to remember: "Discount Furniture" -Creative spellings are eye-catching; don't go overboard -Beware of selecting a name too narrow to allow the firm to grow

Crafting Your Message

-Message should combine the elements of your product or service's value proposition with the needs of your target customer -Need to decide the voice or tone of you message i.e. humor, fear, patriotism, collegiality, etc.

Total Product Approach

-Your product means more to the consumer than just the core component -Can help you get inside your customers' heads and figure out the most cost-effective "bundle" of value and cost benefits -Knowing what your product "means" to consumers will help you set an appropriate price

Augmented Product

-core product plus features that tend to differentiate it from the competition -brand names, quality levels, packaging

Promotional Mix

-how much of each message conveyance you will use to sell your product as well as your objective in using each one - Personal Selling, Direct Marketing, Advertising, Public Relations, Sales Promotion

Marketing funnel

-the rule of thumb in marketing that it takes a large number of people to be made aware of your product in order to find a purchaser - for mass marketing and internet advertising the typical ratio is 1000 to 1

Stages of New Product Development

1) Idea Generation/Source of Business Ideas (End users, Customers, Salespeople, Market Research, Competitors) 2) Idea Screening for Business Potential (Objective fit, Return on Investment, Product fit, Market trends) 3) Idea Evaluation/Feasibility Study (Concept testing, Business analysis) 4) Product Development (Prototypes, Test market) 5) Commercialization (Marketing plan, Production, Market introduction)

Areas for Idea Screening

1) Product - innovativeness and uniqueness 2) Market - customer need and market size 3) Intellectual property 4) People behind the idea 5) Additional resources needed to bring the idea to market 6) Profitability of the idea

Goods-Services Mix

1) Pure Good 2) A Good-Dominated Product 3) Hybrid 4) A Service-Dominated Product 5) Pure Service

Public interest

1. things that are generally considered to be beneficial to large numbers of people 2. civic causes and benefits as opposed to private and corporate benefits

Currency

A concept in public importance which alludes to the degree to which the issue is immediate in its impact

Internal Referance Price

A consumer's mental image of what a product's price should be

Sales promotion

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

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.

Perishability

A service exhibits perishability in that if it not used when offered, it cannot be saved for later use

Product Expansion

A strategy whose goal is growth, based on selling existing customers a product or service they have never bought before

Market Expansion

A strategy whose goal is growth, based on selling in areas or to groups previously not served by the business

Market Penetration (Customer)

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

Customer Vector

A type of CRM report which segments by customer (or customer group) on purchases or dates of purchase

Advertising

Advertising is often used to support the corporate identity and value propositions that are established through public relations efforts. advertising outlets include newspapers, magazines, billboards, television, and Internet banner ads.

External Reference Price

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

Tangibility

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

Viral marketing

Any electronic equivalent of word-of-mouth advertising, in which the advertiser's message spreads quickly and widely via e-mail, web site, blogs, and other online tools

Product

Anything that is offered to the market to satisfy consumer wants, needs and demands. Goods, services, people and ideas.

Basics of a Press Release

Attention: Get their attention with a catchy headline. Something clever or a play on words may do the trick. It needs to be short—no longer than ten words and preferably less. ● Interest: While the title should start to pique their interest, the opening paragraph should really capture them. This first paragraph should include the who, what, when, where, why, and how of the story. ● Desire: Now provide the meat of the press release—details that tell us more about the opening information and increase our interest. Depending on what your press release is about, this could include features of your new products, or some biographical information on the new person you hired. ● Action: At the end you put contact information. Where can they find out more about your wonderful new product, your exciting new vice president, or this fantastic company that just won an award? The goal is to get them to be potential clients; kind of hard if they don't know where to find you!

Off- Peak Pricing

Charging lower prices at certain times to encourage customers to come during 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 separatley

Bundling

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

Segmenting your Market

Dividing the market can be done several ways: 1) Geographically (certain city or neighborhood) 2) Demographically (income, age, religion, ethnicity) 3) By the benefits sought (clothing that is practical, stylish)

Cognitive dissonance

Doubt that occurs after a purchase has been made, an inconsistency between experience and belief

Elasticity

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

Publicity

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

Free ink

Mentions of your company or products in the media for which your firm did not pay.

Donations

Monetary or other gifts to organizations or people who are in need.

Sponsorships

Paying for a local organization's needs in exchange for recognition.

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

4 P's of Marketing

Product, Price, Promotion, Placement

Predetermined market segments

Professionally compiled target audiences based on shared demographic, financial, shopping, and psychographic characteristics.

Periodic or Random Discounting

Sales conducted at either predictable or nonpredictable intervals

Personal Selling Steps

Step 1: Prospecting. In this stage you are looking to find potential customers and evaluate the best methods to reach them. Step 2: Prepare your plan of attack. Have you brochures and flyers ready. Practice your pitch. 3: Present the information to the potential client Make sure the presentation is short enough to hold their attention At the same time you must convey your passion and stimulate interest. This is the only chance you get to make a first impression The Close: A major fault of presentations is that no one asks for the sale. Ask "How many would you like" or "Now lets write up your order" rather than presenting the information and walking away. Follow-up: When the order is sent, make sure it arrives in good condition and on time. Make sure the product performed as it should. This helps build a customer relationship which will lead to increased repeat sales.

Search engine optimization

Techniques applied to web pages in order to obtain favorable placement on Internet search page results.

Customer retention

Techniques that focus on efforts to promote satisfaction with and interest in the firm.

Keyword and description tags

Terms included in the hidden portion of a web page which are used by search engines such as Yahoo! and Google to describe your website and evaluate its focus and category placement.

Total Product

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

Developing a Value Proposition

The goal of this value proposition is to create and occupy a space inside the target customer's head. Create a value proposition for your chosen small retail business by replacing the text in parentheses below as it reflects the product, market, and strategy. ● For (target customer) ● Who (statement of the need or opportunity) ● The (retail business name) is a (product or service category) ● That (statement of key benefit-that is, compelling reason to buy/purchase) ● Unlike (primary competitive alternative) ● Our business (statement of primary differentiation) ● Is available (where) Now place the answers in paragraph format to arrive at the overall value proposition. Feel free to share your perception of the proposition with the actual small business owner.

Price Lining

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

Personal Selling

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

Customer relationship management CRM

The process of tracking the customer's different contacts with the firm, and using this data to help improve sales as well as the customer's experience.

Core Product

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

Newsworthy events

To garner serious attention from the media and the public, a news story needs to deliver certain essentials that will hold their attention and keep your news in their thoughts. should have public recognition, importance, and interest.

Succinct Message

Your key point in as few and as memorable words as possible

Human interest

a concept in public interest which alludes to a character to whom the public can relate

Good Story

a concpet in public interest which alludes to an incident with good triumphing

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