Small Business Management Chapter 11

Increasing market share

A firm's product or service should be priced lower than that of the competition to take the competitor's percentage of total sales amount

Which of the following statements about odd-even pricing are correct?

Consumers believe that products that are priced using an odd number cost less. It is simply setting a price that ends with a 9, 7, or 5. Studies have found that customers positively react to odd prices.

indirect exporting

exporting using intermediaries such as agents, export management companies, or export trading companies

random discounting

run on a schedule that is unpredictible to the customer

direct marketing

selling goods and services to consumers without intermediaries, typically to select customer groups and typically with tracking of the results

Price skimming

setting a price at the highest level the market will bear

Which of the following statements about direct mail are correct?

Businesses don't have to make major inventory investments, thus there are low costs for getting started / One advantage of using the direct mail approach is the ability to sell on a business' schedule / It takes many forms including postcards, catalogs, and videos

Which of the following are true of coupons?

Coupons encourage people to try new products / coupons serve an advertising purpose

Which of the following statements regarding mail order are correct?

Customers can read the advertisements at their leisure and have time to decide whether to make a purchase. These are sales made from ads in newspapers or magazines. A company has customer service people to process phone, mail, and online purchases.

Which of the following statements regarding price lining are correct?

Each product has a different level of quality or number of features. This pricing strategy attempts to appeal to several different markets and budgets. Often there are three levels: a bare bones, midrange, and high-end with the bells and whistles.

Which statement about microinventories is correct?

Internet firms typically use this inventory method / A company needs stable, consistent, and secure source of inventory supply to make this work well / Inventory is purchased after the sale is made

Which of the following describe a sales promotion that is likely to be used by businesses?

Introductory techniques like giveaways, samples, and tastings. Contests like sweepstakes and games that introduce the new product. Discounting using coupons, rebates, and other promotions.

Which of the following are true of direct marketing?

It can be relatively inexpensive. It enables a manufacturer to control where a product goes.

In the context of traditional layouts for retail operations, which of the following are true of the free-form layout?

It lays out a store in sections with aisles meandering through the store / It has a visual impact

Which of the following statements regarding multichannel marketing are correct?

It refers to using several outlets for contacting your customers. A business should clearly provide contact information on its product's packaging in case the retailer doesn't carry the product. A business should include multiple ways for the customer to make contact including a phone number, website address, and email.

At a client's location At a mutually accessible location At a remote location

Organizing of services into a rotating schedule Specialized equipment that cannot be readily transported Infrequent face-to-face meetings with a client

referral discount

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

Which of the following statements about guerilla marketing are correct?

The key to it is to capture the customer's attention / It is a fairly new marketing concept / It is an unusual and nearly free form of advertising

Which of the following layout formats are used for manufacturing operations?

The process layout / The grid layout

Which of the following statements about documentary drafts are correct?

The purpose of using a documentary draft is to eliminate the seller's risk. A larger bank can assist businesses with the process. A payment procedure includes the seller, buyer, and both firms' banks.

Which of the following statements regarding multiple or bonus packs are correct?

The unit price for the bundle is less than the individual product price This strategy also helps create customer loyalty These are popular at wholesale clubs like Sam's

Which of the following statements regarding fulfillment centers are correct?

They provide inventory levels and reorder products as necessary / They warehouse, pack, and ship products to customers on behalf of the seller / They will process credit card payments and provide call center services

Which of the following statements about price skimming are correct?

This strategy is used to recoup R&D and other costs / It is usually possible to do this only if the business is the only one to produce the product or service / It is usually a brand new product, for example when 4k televisions first were introduced

Which of the following are examples of price-elastic goods and services?

Travel / eating out / tickets to movies

Which of the following are examples of inelastic products?

Utilities Basic food Housing

sales promotion

a form of communication that encourages the customer to act immediately

direct mail

a method of selling in which catalogs, brochures, and other pieces of marketing materials are mailed directly to customers

sheltered workshop

a nonprofit organization or institution that provides business services by using workers who have disabilities or who are rehabilitated

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

captive pricing

a strategy where the price for an item is relatively low and then charging much higher prices for the expendables it uses

internal reference price

founded on a consumer's expectation of what the price should be based on their own knowledge

Wholesaler

intermediary business that buys and sells to businesses rather than consumers

traffic generators

other businesses that bring customers to a shopping area

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

manufacturer

the entity that produces a product or service to be sold

optimum price

the highest price that will produce a desired level of sales in an intended market

price elasticity

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

Channels

the people and firms who connect producers of goods and services with customers

multiple; bonus pack

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

Which of the following are examples of an external reference price?

Comparison shopping. Newspaper advertisements Advice from friends.

Which of the following statements about optimum price are correct?

If sales are too high, the owner might ask whether a price is too low. If sales are too low, the owner might ask whether the price is too high. It is the highest price that will generate the most income for a good or service

Which of the following are true of low customer contact businesses?

In such business, customer access is relatively insignificant / Access for employees and adequate workspace are critical in such businesses

leasehold improvements

In the context of concessions associated with subletting properties, refers to the permanent modifications made to a location to fit a business's needs

Which of the following statements about telemarketing are correct?

It can either be inbound where customers call the company or outbound where the company calls the customer / It is the most expensive form of direct marketing / Many consumers find this type of marketing annoying, but it is still a viable form of direct marketing

Which of the following is true of an organization that functions as an accelerator?

Its goal is to boost a start-up and make it ready to pitch for investment.

Which of the following issues is a firm owner working out of a leased workspace likely to face in the context of day-to-day operations?

Lack of specifications about operating hours / Hidden charges that have not been added to a property's lease papers

Which of the following statements about freight forwarders are correct?

Many of these companies are small businesses and have faced many of the same problems / They are specialists in export-related activities / Their services include tariff schedules, shipping, insurance, transportation arrangements, and custom clearing

Which of the following objectives do small businesses look at to achieve to ensure their survival in the early years?

Maximizing profits / increasing market share

Which of the following statements about letters of credit are correct?

They lower the risk of selling goods to overseas customers. The buyer's bank guarantees payment to the seller after it complies with the specific terms. A payment procedure includes the seller, buyer, and both firms' banks.

letter of credit

a document issued by a bank that guarantees a buyer's payment for a specified period of time upon compliance with specified terms

accelerator

a variant of incubator; an organization that supports start-ups, typically of a particular type with financial investment that includes free or inexpensive office space, mentoring, and a variety of other services

Contract manufacturer

an existing firm with the correct manufacturing capabilities that makes products for other businesses

agent

an intermediary business that represents a manufacturer's product or service to other business-to-business intermediary firms

retailer

an intermediary business that sells to consumers or end users of a product

periodic discounting

conducted at predictable intervals, such as before major holidays

Which of the following are ways that firms reduce prices and promote sales?

coupons delivered in newspapers or by mail / loyalty programs

direct exporting

exporting without using intermediaries

mail order

sales made from ads in newspapers or magazines, with purchases taken online or by phone as well as by mail

Prestige pricing

a strategy where the price is set above the competitor's price to indicate that the firm's product is a status symbol

Which of the following statements about bundling are correct?

It can be used to push a second product or service's sales that is not doing as well. It works equally as well for products or services. An example of bundling would be offering a haircut and coloring for a lower price than if a customer purchased these services separately.

Which statement about the law of supply and demand is correct?

When the supply of a product or service is generally enough to meet demand for it, the price is stable, and, over the long-term, pretty average

fulfillment center

a company that will warehouse a business' products and fill customers' orders on behalf of the business

external reference price

a comparison price provided by others

documentary draft

a draft that can be exercised only when presented with specified shipping documents

Premium pricing

a strategy where the price is set above the competitor's price to indicate that the product is of higher quality

Elastic products

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

loyalty programs

reward loyal customers by providing a discount or free item at specific intervals

off-peak pricing

scheduled for specific times to encourage customers to come during slack periods

Just in time (JIT) inventory

the practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer

price lining

the practice of setting price points: good, better, and best

Maximizing profits

the price of a firm's product or service should be above the average price as this adds to financial gains