Entrepreneurship Chapter 5

Discount Pricing

pricing strategy that offers customers a reduced price to encourage them to buy

competition-based pricing

pricing that is determined by considering what competitors charge

Competition-Based Pricing

pricing that is determined by considering what competitors charge for the same product or service

Demand-Based Pricing

pricing that is determined by how much customers are willing to pay for a product or service

Marketing strategy

A plan that identifies how business goals will be achieved through marketing efforts - product introduction or innovation - pricing - Distribution - promotion - sales or market share - projected profitability

Medium term goals

Achievements for the NEXT TWO to FIVE YEARS

Short term goals

Achievements for the NEXT YEAR - number of customers - level of sales - Level of profits

Marketing mix

Reaching the target market through a blend of: -product -price -distribution -promotion

marketing concept

Uses the needs of customers as the primary focus during the planning, production, distribution, and promotion of a product or service.

bundling pricing

When all services are combined under one charge

marketing plan

a written document that defines market, identifies customers and competitors, outlines a strategy for attracting and keeping customers, and identifies and anticipates change

return on investment

amount earned as a result of the investment, usually expressed as a percentage

marketing mix

blending of four marketing elements-product, distribution, price, and promotion used to reach a target market

prestige pricing

selling at a high price in order to create a feeling of superior quality and social status

The branding, packaging, and labeling of your product should accomplish all of the follow expect

Describe the company's product mix

True or false Opening two more restaurants in other locations around the city would be an example of a short-term goal for the owner of a new restaurant?

False it would be a long term goal

Which of the following would be a good addition to the product mix for a health club?

Fitness apparel

psychological pricing

Pricing method based on the belief that certain prices have an impact on how customers perceive a product

Market share

a business's percentage of the total sales generated by all companies in the same market - amount of sales / total market size

market share

a company's product sales as a percentage of total sales for that industry

marketing

all of the processes-planning, pricing, promoting, distributing, and selling-used to determine and satisfy the needs of customers and the company

Marketing

all process - planning, pricing, promoting, distributing, and selling - utilized by a company to place its product in the hands of potential customers.

product mix

all products and services a business sells

Return On Investment (ROI)

amount earned as a result of the investment, usually expressed as a percentage

Return on Investment (ROI)

amount earned as a result of the investment, usually expressed as a percentage

Marketing Mix

blending the product, price, distribution, and promotion used to reach a target market

bundling

combining products under one charge

positioning

creating an image for a product in the customer's mind

Positioning

creating an image for a product in the customers mind

price lining

involves offering different levels of prices for a specific category of product based on features and quality

multiple-unit pricing

involves pricing items in multiples

promotional pricing

offering lower prices for a limited time to increase sales

discount pricing

offers customers a reduced price encouraging them to buy

Marketing Strategy

plan that identifies how marketing goals will be achieved

marketing strategy

plan that identifies how marketing goals will be achieved

cost-based pricing

pricing determined by using the wholesale cost of an item as the basis for the price charged

Psychological Pricing

pricing strategy based on the belief that certain prices have an impact on how customer perceive a product

demand-based pricing

pricing that is determined by how much customers are willing to pay for a product or service

Cost-Based Pricing

pricing that is determined by using the wholesale cost of an item as the basis for the price changed

Features

product characteristics that will satisfy customer needs

features

product characteristics that will satisfy customer needs. Features include such things as color, size, quality, hours, warranties, delivery, and installation

quantity discount

reduction in prices based on the purchase of a large quantity

trade discount

reduction on the list price granted by a manufacturer or wholesaler to buyers in the same trade

quantity discounts

reductions in price based on the purchase of a large quantity

trade discounts

reductions on the list price granted by a manufacturer or wholesaler to buyers in the same trade

odd/even pricing

suggests that buyers are more sensitive to certain ending numbers

Package

the box, container, or wrapper in which the product is placed

Brand

the name, symbol, or design used to identify a product

branding

the name, symbol, or design used to identify a product

product features

the specific characteristics of a product that will satisfy customer needs

seasonal discount

used for selling seasonal merchandise out of season

seasonal discounts

used for selling seasonal merchandise out of season

price skimming

used when a product is new or unique

penetration pricing

uses a low introductory price with the goal of building a strong customer base

Marketing Concept

uses the needs of customers as the primary focus during the planning, production, distribution, and promotion of a product or service

Price

- the amount a customer pays for a product or service - needs to be low enough that customers buy from you - needs to be high enough so revenues exceed expenses

Marketing plan

- defines your market - identifies your customers and competitors - outlines a strategy from attracting and keeping customers

List six elements that should be addressed in a company's marketing strategy?

- product introduction or innovation - pricing - distribution - promotion - sales or market share - projected profitability

Long term goals

Achievements for 5 or more year time

return on investment (ROI)

Amount earned as a result of the investment, usually expressed as a percentage

A marketing strategy should be consistent with the business's overall __________

Goals

cash discounts

Offered to customers to encourage early payment of invoices

Product mix

The different products and services a business sells

Marketing concept

Uses the needs of customers as the primary focus during - planning - production - distribution - promotion

Label

Where information about the product is given on the package

Market Share

business's percentage of the total sales generated by all companies in the same market

royalties

licensee makes payments to you based on a percentage of the product sales

up front payment

licensee pays you a fee before development or sales begin

annual minimum

licensee pays you a minimum amount each year regardless of the amount of sales

To successfully use the marketing concept, a business must do which of the following?

Identify what will satisfy the customer's needs and wants Develop and market products or services that customers consider better than other choices Operate profitably

Which of the following is not a pricing objective?

To decrease expenses

Marketing Plan

defines the market, identifies customers and competitors, outlines a strategy for attracting and keeping customers, and recognizes and anticipates change

time-based pricing

determined by the out of time it takes to complete a service

Product Mix

different product and services that a business sells