Ch. 9 Small Business Marketing: Product and Pricing Strategies
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.
Heterogeneity
A quality of a service in which each time it is provided it will be slightly different from the previous time.
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.
Target Market
The group of people on which a marketer focuses promotion and sales efforts.
Captive Pricing
Setting the price for an item relatively low and then charging much higher prices for the expendables it uses.
Internal Reference Price
A consumers mental image of what a product's price should be.
Referral Discount
A discount given to a customer who refers a friend to the business.
Inseparability
A quality of a service in which the service being done cannot be disconnected from the provider of the service.
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 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.
Partitioned Pricing
Setting the price for a case item and then charging extra for each additional component.
Total Product
The entire bundle of products, services, and meanings of your offering; including extras like service, warranty, or delivery as well as what that product means to customers.
4 Ps of Marketing
The four major components f a marketing effort- product, price, promotion, and placement. Sometimes called the marketing mix.
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.
Price Gouging
Charging an outrageously high price for something.
Off-Peak Pricing
Charing 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 separately.
Bundling
Combining two or more products in one unit and pricing it less than if the units 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.
Periodic or random discounting
Sales conducted at either predictable or non predictable intervals.
Branding
1. Idea Generation/Source of Business Ideas 2. Idea Screening for Business Potential 3. Idea Evaluation/Feasibility Study 4. Product Development 5. Commercialization
Goods-Services Continuum
-Pure Good-A Good Dominated Product-Hybrid-A Service Dominated Product-Pure Service
Services
A nonphysical products.
Goods
A physical product.
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.
Perishability
A service exhibits perishability in that if it is not used when offered, it cannot be saved for later use.
Core Product
The very basic description of what a product is- a bar of soap, a house-cleaning service.
Optimum price
The highest price that will produce your desired level of sales in your intended market
Price Lining
The practice of setting (usually) 3 price points: Good quality, better quality, and best quality.