Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Unit 1
Mr. Hurdle Unit 1 Expenses, Pricing, and Accounts
| Question | Answer |
|---|---|
| promotional advertising | focuses on merchandise with intent of attracting immediate customer traffic and creating a volume of sales |
| institutional advertising | focuses on the business with the intent of building store prestige and store acceptance |
| Factors affecting the promotional mix: | 1. Current demand of the product, 2. Fashion, 3. Distinctiveness, 4. Special events, 5. Price of the item, 6. Promoting single versus multiple items, 7. Advertising a private brand versus a national brand |
| Distinctinveness | How exclusive the product is |
| Special events | Seasonal, Holidays |
| Price of the item | appeal, bargain, is it economical? |
| omnibus | ad that advertises many different unrelated items |
| Determinants of how much to invest on advertising | 1. Age of business, 2. Size of business, 3. Competition, 4. Merchandise offered, 5. Store location, 6. Size and nature of market area, 7. Media available, 8. Business philosophy |
| Age of the business | the older and more well-known the business is, the less aggressive it needs to be with advertising |
| Size of the business | smaller stores don't need to advertise as much |
| Competition | more competition needs more aggressive advertising |
| cost | expenditures to pay for goods purchased |
| flat expense | expense that never changes or that is about the same from month-to-month |
| variable expense | expense that differs each month |
| overhead | cost ot operate a store |
| Four categories of Overhead Expenses | 1. Rent, 2. Store maintenance, 3. Recordkeeping, 4. Administrative expenses |
| Administrative expenses | education, training, mandatory seminars, etc. |
| Factors in pricing | 1. Knowing the customer |
| Special sales and pricing | Two types of leader merchandising and premium merchandising |
| leader | priced below normal but still profitable |
| loss leader | priced below cost but will incur losses |
| premium | something of value given free |
| Two types of credit accounts | open account and revolving account |
| open account | the whole month's purchases are billed at the end of the month, and one is expected to pay in full; not as common anymore |
| revolving account | account used for credit cards; customers have a credit limit and may charge up to it until the unpaid balance at the end of the month is paid in full; much more expensive than it appears; is very dangerous |
| price | the actual cost and the methods of increasing the value of the product to the customers |
| pricing | establishing and communicating the value of products and services to prospective customers |
| economic utility | value is added through changes in form, time, place, or possession |
| elasticity of demand | the relationship between changes in a product's price and the demand for that product |
| inelastic demand | a price decrease will decrease total revenue |
| elastic demand | a price decrease will increase total revenue. |
| price fixing | competing companies at the same level in a channel of distribution (manufacturers, wholesalers, retailers) cannot cooperate in establishing prices |
| price discrimination | businesses cannot discriminate in the prices they charge to other businesses in their channel of distribution. A manufacturer must offer equivalent prices, discounts, and quantities to all wholesalers or retailers rather than giving an unfair advantage |
| price advertising | businesses cannot mislead consumers through the advertising of prices and must also clearly communicate the terms of credit offered to customers |
| examples of misleading advertising | phony list prices (price at which product is never sold), incorrect comparisons with competitors' prices, or continuous promotion of a sale price |
| bait-and-switch | companies cannot lure customers into a store with offers of extremely low prices and then tell the customer the low-priced product is unavailable or inferior |
| unit pricing | many products that are sold in varying quantities or package sizes must carry a label listing the price for a basic unit of measurement, such as a liter, ounce, or pound, so consumers can make price comparisons |
| possible price objectives | maximize profits, increase sales, maintain an image |
| maximum price | the highest possible price that can be charged is determined by the target market |
| minimum price | the lowest price in the price range is determined by the costs of the seller |
| breakeven point | the quantity of a product that must be sold for total revenues to match total costs at a specific price; calculated using fixed costs, variable costs, total costs, product price, and total revenue |
| fixed costs | the costs to the business that do not change no matter what quantity of the product is produced or sold |
| variable costs | those costs that are directly related to the quantity of the product produced or sold |
| total costs | fixed costs plus variable costs for a specific quantity of the product |
| product price | price at which the business plans to sell the product |
| total revenue | the anticipated quantity that will be sold multiplied by the product price |
| breakeven point formula | (Total fixed costs)/(Price - variable costs per unit) |
| gross margin | the amount that is available to cover the business' expenses and provide a profit on the sale of the product |
| operating expenses | all costs associated with actual business operations-cost of buildings, equipment, utilities, salaries, taxes, and other business expenses |
| net profit | the difference between the selling price and all costs and operating expenses associated with the product sold |
| markup | an amount added to the cost of a product to determine the selling price; usually stated as percentage rather than dollar amount; can be percentage of cost or percentage of selling price |
| markdown | a reduction from the original selling price; can be expressed as specific dollar amounts or as a percentage of the original selling price; usually viewed as business mistakes |
| pure competition | customers see all product choices as identical |
| monoply | business has the advantage that the customers have no good substitutes |
| skimming price | a very high price designed to emphasize the quality or uniqueness of the product, even though it attracts fewer customers |
| penetration price | a very low price designed to increase the quantity sold of a product by emphasizing the value |
| non-price competition | de-emphasizes price by developing a unique offering that meets an important customer need |
| one-price policy | all customers pay the same price |
| flexible pricing policy | allows customers to negotiate the price within a price range |
| price lines | distinct categories within which products are organized based on differences in price, quality, and features. |
| FOB (free on board pricing) | identifies the location from which the buyer pays the transportation costs and takes title to the products purchased |
| zone pricing | different product or transportation costs are set for specific areas of the seller's market |
| discounts and allowances | reductions in a price given to the customer in exchange for performing certain marketing activities or accepting something other than what would normally be expected in the exchange |
| quantity discount | offered to customers who buy large quantities of a product |
| seasonal discount | offered to customers who buy during times of the year when sales are normally low |
| cash discount | offered to customers who pay cash rather than using credit or who pay their credit accounts quickly |
| trade discount | specific percentage reduction in price offered to businesses at various levels in a channel of distribution (wholesalers and retailers) |
| trade-in allowance | reduction in price in exchange for the customer's old product when a new one is purchased |
| Advertising allowance | price reduction or specific amount of money given to channel members who participate in advertising the product |
| coupon | specific price reduction offered by a channel member through a printed promotional certificate |
| rebate | specific amount of money returned to the customer after a purchase is made |
| consumer credit | credit extended by a retail business to the final consumer. may be provided by seller or may be offered by another business that is participating in the marketing process, such as a bank, finance company, or a credit card company like VISA |
| trade credit | offered by one business to another business |
| Procedures for making sure credit is a successful part of a marketing strategy | credit policies, approving credit customers, and developing effective collection procedures |
Created by:
sissiloo
Popular Marketing sets