Chapter 9 - Small Business Entrepreneurs
elasticity
from economics, the idea that the markets demand for a product or service is sensitive to changes in its price
perishability
if not used when offered, it cannot be saved for later use
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 quality 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
tangibility
an item's capability of being touched, seen, tasted, or felt
price gouging
charging an outrageously high price for something
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 seperatley
bundling
combining two or more products in one unit and pricing it less than if the units were sold seperately
partitioned pricing
selling the price for a base item and then charging extra for each additional component
augmented product
core product plus features that tend to differentiate it from the competition
internal reference price
a consumer's mental image of what a products price should be
referral discount
a discount given to a customer who refers a friend to the business
services
a nonphysical product
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
heterogeneity
a quality of a service in which each time it is provided it will be slightly different from the previous time
inserparability
a quality of a service in which the service being done cannot be disconnected from the provider of the service
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
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
captive pricing
setting the price for an item relatively low and then charging much higher prices for the expendables it uses
margin
the amount of profit, usually stated as a percentage of the total price
law of supply and demand
the economic theory that describes how the demand for products and the supply of them affect each other
total product
the entire bundle of products, services, and meanings of your offerings; includes extras like service, warranty, or delivery, as well as what the product means to the customer
target market
the group of people on which a marketer focuses promotion and sales efforts
optimum price
the highest price that will produce your desired level of sales in your intended market
price lining
the practice of setting three price points: good quality, better quality, best quality
core product
the very basic description of what a product is - a bar of soap, a house-cleaning service
