Entrepreneurship A - Unit 2
fall
In addition to increased competition, an increase in obsolescence of products over time is one reason why prices tend to _____ over time.
True
In order to establish pricing policy, an entrepreneur must ask where her product falls in terms of quality compared to products of other competitors.
bundle
Decreasing the cost per ounce of a product as the quantity purchased increases is an example of _____ pricing.
A pricing strategy is a series of tactics used by companies to price goods and services in order to maximize profitability.
Describe what a pricing strategy is.
True
Discounting can be an effective tool in attracting customers looking for a deal on products they might not otherwise consider.
The number of products sold, even at lower costs, has more impact on long-term profitability than how much revenue a single product makes.
How is sales volume more important to profitability than profits per individual product?
True
Ideas are rarely sold as products in and of themselves.
break-even point
If Pineapple, a smartphone manufacturer, is releasing its next model in November, the _____ would be the number of units that must be sold in order to pay for all the initial costs of developing, manufacturing, and distributing the product.
$29.74
The following equation is used for calculating a discounted price based on the current retail price and desired discount percentage. Find the total discounted price for a product retailing at $34.99 with a desired discount of 15%. Round to the nearest cent. discount price = item price x (1 - discount percentage)
$32.00
The following equation is used for calculating a discounted price based on the current retail price and desired discount percentage. Find the total discounted price for a product retailing at $40 with a desired discount of 20%. discount price = item price × (1 − discount percentage)
$67.49
The following equation is used for calculating a discounted price based on the current retail price and desired discount percentage. Find the total discounted price for a product retailing at $89.99 with a desired discount of 25%. discount price = item price × (1 − discount percentage)
$215.38
The following equation is used for calculating markup percentage. Find the retail price if a retailer wants a 35% markup for a product that costs $140 to buy from a wholesaler. Round to the nearest cent. retail price = [(item cost) / (100 - markup percentage)] x 100
$12.50
The following equation is used for calculating markup percentage. Find the retail price if the retailer wants a 20% markup for a product that costs $10 to buy from the wholesaler. retail price = [(item cost) / ( 100 − markup percentage)] × 100
$215.38
The following equation is used for calculating markup percentage. Find the retail price if the retailer wants a 35% markup for a product that costs $140 to buy from the wholesaler. Round to the nearest cent.
$30.77
The following equation is used for calculating markup percentage. Find the retail price if the retailer wants a 35% markup for a product that costs $20 to buy from the wholesaler. retail price = [(item cost) / (100 − markup percentage)] × 100
$204.28
The following is an example of calculating cost-plus pricing. Find the missing number based on the provided formula.
$50.16
The following is an example of calculating cost-plus pricing. Find the missing number based on the provided formula.
inventory control
The goal is to have as little inventory as possible while still meeting every order in a timely fashion
maximize
The ultimate goal of price-skimming is to _____ profits by capturing the highest sale price at the beginning of the product life cycle.
False; The value of a product increasing over time, which therefore causes its price to also increase, is sometimes a possibility.
The value of a product increasing over time, which therefore causes its price to also increase, is never a possibility.
decrease
The vast majority of products manufactured in the world tend to _____ in value over time.
pricing policy
Which of these is a set of standards an organization has that dictates how to set and change product prices over time?
cost of goods sold
Which of these is all the direct costs related to producing a finished good for the consumer?
intellectual property
Which of these is an invention or idea that results from creativity and that one has the legal rights to?
product management
Which of these is the business function dealing with planning, forecasting, producing, and marketing products?
break-even point
Which of these is the point at which startup costs of a venture match revenue?
ideation
Which of these is the process of forming new concepts for products, their function, and their design?
product-mix strategy
Which of these is the product decision-making done by a company determining what products, product lines, and variations it should produce and how they should be offered to the customer?
pricing policy
Which of these is the set of standards an organization has that dictates how to set and change product prices over time?
product turnover
Which of these is the term for the rate at which products sell in an organization?
product mix
Which of these is the total number of product lines offered by a company to its customers?
marketing and design
Which product management step includes knowing the products your customers want, informing the customers about them, and delivering the products to the customers?
distribution
Which product management step includes methods of getting products to the customer, such as semi-trucks, freight trains, air delivery, and mail delivery?
1
While Total Sharp's product lines are extensive, their variations rarely exceed more than three or four.
Service providers can easily slow their work to earn more money based on the rate of pay.
Why do customers often shy away from rate-based pricing?
all of these
Why do entrepreneurs often find it difficult to compete with low-cost leaders in an industry?
False
Rate-based pricing is merely a function of hourly rate multiplied by cost of goods sold.
True
Real estate is an example of a market whose products typically increase in value over time instead of decreasing.
False; Revenue is the total sales, or income, that a product or company earns over time.
Revenue is the total costs that a company spends over time
product line
Which of these is a group of related products under a single brand sold by a single company?
ideation and product selection
forms new concepts for products
raw materials
the very beginning of the production process; include the basic materials from which a product is made
market leader
A _____ is an organization that has the predominant market share of a particular product in a particular industry.
project-based pricing cost-plus pricing competitive pricing rate-based pricing revenue-potential pricing
A customer agrees to a flat rate, knowing that the project will be completed within a predetermined price range. This is the process of adding up the cost of goods sold and overhead, dividing by the number of units, and adding the desired markup. This is the easiest pricing structure to implement in markets where there is little product differentiation. This is predominantly a service-based pricing structure, though customers often try to avoid it because it encourages service providers to work slowly to make more money. This is used to calculate just how much sales potential an idea can generate over a given period of time.
True
A product being withdrawn from the marketplace can result from a lack of market demand, a decision from the manufacturer, or both.
markup
A(n) _____ is the price increase retailers create after purchasing products from a wholesaler.
True
After the break-even point is crossed, true profits are being earned by an organization.
False
An example of overhead includes raw materials.
True
An example of overhead includes utilities.
True
As soon as an organization begins offering more than one product, it has a product mix.
5
Because Iver's only sells shoes, the company is extremely consistent.
1
Because of the variety of products offered, Total Sharp's products are extremely inconsistent.
intellectual property
Books, designs, trademarks, copyrights, and other legally protected creative works are all examples of ______.
True
By taking the overall direct materials and direct labor costs and dividing them by the number of goods manufactured, you get the average cost of goods sold per product.
product mix
Companies that offer more than one product automatically possess a _____.
direct (raw)
Cost of goods sold includes _____ materials and direct labor.
Long-term profitability considers the objectives of product revenue potential over extended periods of time, and answers questions such as "Do we want to be the quality leader or the price leader in our market?"
Explain how long-term profitability affects pricing.
Short-term profitability considers the objectives of product revenue potential typically over periods of two years or less. Short-term profitability is a tactic effective for situations in which product life cycles are short. It can also encourage sales growth through discounting or couponing.
Explain how short-term profitability affects pricing.
Product turnover is the rate at which products are sold.
Explain what product turnover is.
True
Fixed costs are the costs a business has that do not change regardless of the quantity of products made.
True
Generally speaking, the longer a product is on the market, the lower the price falls.
project-based pricing cost-plus pricing competitive pricing rate-based pricing revenue-potential pricing
Hamad agrees to a flat rate because he wants the project to be completed inside a specific price range. This is the process of adding up the cost of goods sold and overhead, dividing by the number of units, and adding the desired markup. This is the easiest pricing structure in markets where there is little product differentiation. This is predominantly a service-based pricing structure because it relies on calculating man-hours applied to a job. This is used to calculate just how much sales potential an idea can generate over a given period of time.
psychological
Having a pricing model in which all your products are discounted at all times in order to appear lower than they really are is an example of _____ pricing, since it appeals more to customers' emotions than their logic.
ideation and product selection
In this stage, businesses rely on customer feedback, surveys, and creative departments to formulate new product concepts.
utilities
Included in overhead are examples like insurance, rent, and _____.
4
Iver's offers dozens of colors, variations, and sizes, but not quite as many as its competitors.
1
Iver's only offers five specific lines of shoes.
marketing and design
Knowing the products your customers want, informing the customers about them, and delivering the products to the customers are all parts of this step.
product turnover
Large retail chains sell thousands of products a day. They can afford to drop prices significantly due to this high _____, giving them an advantage over the small businesses of entrepreneurs.
False
Nearly all companies have product mixes, even if they only offer a single product.
False; Net income is the term for a company's profits after all costs have been removed.
Net revenue is the term for a company's profits after all costs have been deducted.
True
Oftentimes, when there is little difference between products in a given market, competitors use branding, marketing, and design to differentiate themselves.
False; Pricing is the process of determining an appropriate price and pricing structure for a good or service.
Pricing is the process of determining the objectives of product revenue potential over time.
manufacturer's suggested retail price (MSRP)
Producers utilize the ________ to help standardize the prices of products across dozens or even hundreds of retailers.
False
Product-mix consistency deals with how many variations of each product a company has.
True
Product-mix depth deals with the total number of variations within each product of a company.
True
Rate-based pricing is merely a function of an hourly rate multiplied by total hours worked.
economy pricing premium pricing psychological pricing price skimming bundle pricing
Small business owners can struggle with using this strategy because larger retail chains can sell more products at greater volumes. This is the company practice of pricing products higher than competitors. Pricing a T-shirt at $19.99 instead of $20 is an example of this pricing strategy. The main goal of this is to maximize profits by implementing the highest possible price at the beginning of a product's life cycle. This pricing strategy is particularly effective for companies that sell complementary items.
quality
Sometimes, the best tactic for the entrepreneur is to be the high-_____ leader in the marketplace.
product life cycle
The _____ is the cycle that all products go through, from their conception (introduction and ideation) to their withdrawal from the market.
True
The number of products a company sells is more important to long-term profitability than revenue per item sold.
5
The number of products offered exceeds 6,500, the largest in the industry.
1
The number of products sold, five, is consistent with the number of product lines.
the rise of competitors with similar products
The two primary reasons the value and price of products tend to fall over time are increased obsolescence and _____.
increased competition
The two reasons products tend to decrease in price over time are increased obsolescence and ______.
False; There is a significant difference between a product life cycle and a product line life cycle.
There is little to no difference between a product life cycle and a product line life cycle.
production and quality control
This entails the process of getting from raw materials to packaging.
profitability customer satisfaction competition sales
This is the first objective of pricing since it is good for companies, employees, consumers, and therefore the economy. Many customers feel satisfied when they pay a low price for a product; others feel satisfied when they pay a higher price for a premium product. This often requires a business to be the low-cost leader in order to beat competition. This deals more with quantity of products sold.
distribution selection of the production process marketing and design inventory control ideation and product selection production and quality control
This occurs after the packaging process and includes transportation, shipment, and delivery. This considers changes in the production timeline, resources needed, and the distribution process. This involves the business of promoting and selling products and services. Stored products must be carefully cataloged and categorized so as to ensure accuracy and efficiency in the fulfillment of orders. In this process, new concepts for products are formed. This is performed throughout the entire manufacturing process to ensure satisfactory quality.
selection of the production process
This step considers changes in the production timeline, resources needed, and distribution process.
distribution
This step includes methods of getting products to the customer, such as semi-trucks, freight trains, air delivery, and mail delivery.
4
Total Sharp offers nearly 160 product lines of office stationery and equipment, which is just slightly less than other market leaders.
direct labor costs
Two primary examples of cost of goods sold include raw materials and ______.
direct labor costs
Two primary examples of the cost of goods sold include raw materials and _____.
two
Typically, organizations and individuals will not want to invest in a new idea or venture unless the break-even point occurs within a _____-year period.
False; Variable costs are the costs a business has that increase or decrease depending on the quantity of goods or services produced.
Variable costs are costs such as rent and renters insurance that a business pays to its landlord.
manufacturer's suggested retail price
What does MSRP stand for?
real estate
What is an example of an industry in which the prices of products often increase over time?
Because large retail chains sell thousands of products a day, they can afford to drop prices to significantly low levels.
What is the main reason large companies can afford to drop their prices to low levels compared to their competitors?
Premium pricing is the practice of keeping prices higher than competitors' to increase product desirability.
When products in a given market are very similar between competitors, how do these competitors differentiate themselves?
consistency
Which of the following four product-mix dimensions represents how close a company's products are to one another in relation to production, marketing, and distribution?
consistency
Which of the four product-mix dimensions deals with how close product lines are to one another in terms of use, production, and distribution?
depth
Which of the four product-mix dimensions deals with the total number of variations within each product of a company?
length
Which of the four product-mix dimensions relates to a company's total number of products within the company's product mix?
width
Which of the four product-mix dimensions represents the number of product lines a company has to offer?
pricing structures
Which of these are methods used by companies to determine the best ways to price products, services, and ideas to maximize profitability?
rate-based pricing, project-based pricing
Which of these are the two predominant pricing structures for services?
cost of goods sold
Which of these includes all the direct costs related to producing a finished good for the consumer?
pricing structures
Which of these includes methods used by companies to determine the best ways to price products, services, and ideas to maximize profitability?
premium pricing psychological pricing economy pricing price skimming bundle pricing
With this strategy, businesses must work hard to increase the desirability of their products. This is the strategy companies use when they market and promote prices that appeal to customers on an emotional level more than a logical level. This targets the most price-conscious consumers. This is the strategy of setting product rates high on initial launch and then slowly lowering prices during the product life cycle. This is the strategy of selling multiple goods at a lower rate if purchased together than if they were sold individually.
economy pricing premium pricing price skimming bundle pricing psychological pricing
With this strategy, producers do their best to minimize the costs of production and marketing in order to sell their products at the lowest price possible while still earning a desirable profit. This pricing strategy works well for products that are perceived as being of superior quality in the consumers' eyes. The ultimate goal of this pricing strategy is to maximize profitability by beginning with premium pricing and ending more on the side of economy pricing. This pricing strategy increases sales volume far more quickly, but also gives buyers the impression that they are saving money. The goal of this pricing strategy is to entice customers to purchase products based on an emotional response.
product line
a group of related products under a single brand sold by a single company
market share
a portion of a particular market that is controlled by a company or product
revenue-potential pricing
a pricing structure based on the sales potential of a venture or idea
competitive pricing
a pricing structure that bases prices on the behaviors of competitors
cost-plus pricing
a pricing structure that calculates all the costs of producing a single product and then adds the desired markup to determine an appropriate sales price
pricing strategy
a series of tactics used by companies to price goods and services in order to maximize profitability
pricing strategy product mix long-term profitability distribution short-term profitability sales volume
a series of tactics used by companies to price goods and services in order to maximize profitability the total number of product lines offered by a company to its customers considers the objectives of product revenue potential over extended periods of time the process of making a product available to the consumer when desired considers the objectives of product revenue potential typically over periods of two years or less the number of goods or services provided by a company over a given period of time
pricing policy
a set of standards an organization has that dictates how to set and change product prices over time
overhead
all business expenses that do not include direct labor or direct materials, such as insurance, rent, and utilities
supply chain
all processes needed to develop and deliver a product, including production, product development, and the information systems needed to direct production activities
cost of goods sold
all the direct costs related to producing a finished good for the consumer
cost of goods sold revenue fixed costs competitive pricing variable costs
all the direct costs related to producing a finished good for the consumer, including direct (raw) materials and direct labor the total sales, or income, that a product or company earns over time the costs a business has that do not change regardless of the quantity of products made, such as rent or insurance a pricing structure that bases prices on the behaviors of competitors the costs a business has that increase or decrease depending on the quantity of goods or services produced
intellectual property
an invention or idea that results from creativity and that one has the legal rights to, such as a book, design, copyright, trademark, brand, or patent
market leader
an organization that has the predominant market share of a particular product in a particular industry
market leader rate-based pricing overhead markup cost-plus pricing pricing structures
an organization that has the predominant market share of a particular product in a particular industry the process of pricing services based on the number of man-hours applied to a project all business expenses that do not include direct labor or direct materials, such as insurance, rent, and utilities the price increase retailers create after purchasing products from a wholesaler a pricing structure that calculates all the costs of producing a single product and then adds the desired markup to determine an appropriate sales price methods used by companies to determine the best ways to price products, services, and ideas to maximize profitability
selection of the production process
considers changes in the production timeline, resources needed, and the distribution process
long-term profitability
considers the objectives of product revenue potential over extended periods of time
short-term profitability
considers the objectives of product revenue potential typically over periods of two years or less
III II I IV V
costs revenue break-even point variable costs fixed costs
inventory control
ensures stored products are carefully cataloged and categorized so as to maintain accuracy and efficiency in the fulfillment of orders
sales competition customer satisfaction profitability
involves sales volume, or the number of goods or services sold by a company over time demonstrates that competing with other companies can be easier for a business if it is the high-quality leader or the low-cost leader emphasizes the importance of customers feeling like they received an excellent product at a good price includes two kinds, long-term and short-term, which are both highly important to an organization, and is the first objective of pricing since it is good for the economy
marketing and design
involves the business of promoting and selling products and services
production and quality control
is performed throughout the entire manufacturing process to ensure satisfactory quality
pricing structures
methods used by companies to determine the best ways to price products, services, and ideas to maximize profitability
distribution
occurs after the packaging process and includes transportation, shipment, and delivery
net income
profits after all costs have been removed
inventory
raw materials, work-in-progress products, and finished goods that are ready or will be ready for sale
B D C A E
revenue variable costs costs break-even point fixed costs
product management
the business function dealing with planning, forecasting, producing, and marketing products
marketing
the business of promoting and selling products and services
fixed costs
the costs a business has that do not change regardless of the quantity of products made, such as rent or insurance
variable costs
the costs a business has that increase or decrease depending on the quantity of goods or services produced
product life cycle
the cycle that all products go through, from their conception to their withdrawal from the market
sales volume
the number of goods or services provided by a company over a given period of time
break-even point
the point at which the startup costs of a venture match its revenue
premium pricing
the practice of keeping a product's price artificially high in order to give the impression that the product is of superior quality
manufacturer's suggested retail price
the price at which a manufacturer recommends retailers place their products
markup
the price increase retailers create after purchasing products from a wholesaler
pricing
the process of determining an appropriate price and pricing structure for a good or service
pricing product turnover bundle pricing long-term profitability price skimming economy pricing
the process of determining an appropriate price and pricing structure for a good or service the rate at which products are sold the strategy of selling multiple goods at a lower rate if purchased together than if they were sold individually considers the objectives of product revenue potential over extended periods of time the process of setting product rates high on initial launch and then slowly lowering prices during the product life cycle the strategy of pricing in order to target the most price-conscious consumers
ideation
the process of forming new concepts for products, their function, and their design
distribution
the process of making a product available to the consumer when desired
project-based pricing
the process of pricing a service by project at a flat, predetermined rate
project-based pricing competitive pricing revenue-potential pricing cost-plus pricing rate-based pricing
the process of pricing a service by project at a flat, predetermined rate the pricing structure that bases prices on the behaviors of competitors and is often used in markets with low product differentiation a pricing structure based on the sales potential of a venture or idea the pricing structure that calculates all the costs of producing a single product and then adds the desired markup to determine an appropriate sales price the process of pricing services based on the number of man-hours applied to a project
project-based pricing competitive pricing revenue-potential pricing cost-plus pricing rate-based pricing
the process of pricing a service by project at a flat, predetermined rate the pricing structure that bases prices on the behaviors of competitors and is the easiest structure to implement when there is a lack of differentiation in a market a pricing structure based on the sales potential of a venture or idea the pricing structure that calculates all the costs of producing a single product and then adds the desired markup to determine an appropriate sales price the process of pricing services based on the number of man-hours applied to a project
rate-based pricing
the process of pricing services based on the number of man-hours applied to a project
price skimming
the process of setting product rates high on initial launch and then slowly lowering prices during the product life cycle
supply chain management
the process of streamlining a business's product management activities to maximize consumer benefit and gain a competitive advantage in the marketplace
product-mix strategy
the product decision-making by a company determining what products, product lines, and variations it should produce and how they should be offered to the customer
product-mix strategy
the product decision-making done by a company determining what products, product lines, and variations it should produce and how they should be offered to the customer
product turnover
the rate at which products are sold
psychological pricing
the strategy of marketing and promoting prices that appeal to customers on an emotional level more than a logical level
psychological pricing pricing policy premium pricing short-term profitability sales volume pricing strategy
the strategy of marketing and promoting prices that appeal to customers on an emotional level more than a logical level a set of standards an organization has that dictates how to set and change product prices over time the practice of keeping a product's price artificially high in order to give the impression that the product is of superior quality considers the objectives of product revenue potential typically over periods of two years or less the number of goods or services provided by a company over a given period of time a series of tactics used by companies to price goods and services in order to maximize profitability
economy pricing
the strategy of pricing in order to target the most price-conscious consumers
bundle pricing
the strategy of selling multiple goods at a lower rate if purchased together than if they were sold individually
product mix
the total number of product lines offered by a company to its customers
revenue
the total sales, or income, that a product or company earns over time
raw materials product line cost of goods sold overhead supply chain inventory
the very beginning of the production process; include the basic materials from which a product is made a group of related products under a single brand sold by a single company all the direct costs related to producing a finished good for the consumer all business expenses that do not include direct labor or direct materials, such as insurance, rent, and utilities all processes needed to develop and deliver a product, including production, product development, and the information systems needed to direct production activities raw materials, work-in-progress products, and finished goods that are ready or will be ready for sale
D A B C E
variable costs break-even point revenue costs fixed costs
D A B C E
variable costs break-even point revenue costs fixed costs
