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SBModule10
Location and Pricing
| Question | Answer |
|---|---|
| business image | The perception or beliefs that people have about a business. |
| Convenience goods | Items bought out of habit and sold in numerous outlets; Should be available close to the consumer’s home or along the route traveled regularly |
| Shopping goods | Items purchased after comparing prices and features; Should be located where customers can easily compare prices and features |
| Specialty goods | Items that consumers purchase infrequently and will make an extra effort to buy; Location is not a major factor since customers will go out of their way to make these purchases. |
| Downtown area | Centrally located and easily accessible; Populated primarily by offices and professional businesses;Varying rental rates depending on the city |
| Neighborhood shopping center | Located close to a residential area to meet the convenience needs of the nearby neighborhood residents;Usually include a supermarket or drug store as an anchor tenant; location for goods and services purchased frequently; Rental rates usually low |
| Community shopping center | serves residents of many neighborhoods; Combines convenience goods and shopping goods; major stores plus 10 or more smaller stores; variety or junior department stores as anchor tenants; Rent affordable, but higher than neighborhood shopping center |
| Regional shopping center or mall | Combines three or four anchor stores with 40 or more other stores; Located to serve several towns or cities in the region; Less accessible for some customers due to distance; Rent high |
| Super regional shopping center or mall | Extremely large (>750,000 sq. ft); Combines many anchor stores and hundreds of smaller stores; Designed to attract customers willing to travel great distances to shop; Rent very high; Not recommended for new business owners |
| Industrial park | Business properties developed on less expensive sections of land away from housing developments and downtown areas; May be subsidized by communities in an effort to attract industrial businesses |
| Stand-alone/Free-standing | Separate from other businesses;Often, but not always, located just outside shopping centers;Dependent on drive-by traffic; Must advertise;Rent usually lower |
| Home-based | Located in a private residence;Suitable for businesses requiring little personal contact with customers or where work is picked up or dropped off; No rent to pay; Possible tax savings |
| business layout | A floor plan or map that shows how a business intends to use the space in the site to conduct business. |
| Right-angle grid | Highly structured pattern of crossing aisles; Facilitates the flow of traffic; Reduces security concerns; Works well for self-service operations (such as grocery stores) |
| Open layout | Completely open sales space bounded by outside walls;Enhances visibility of merchandise and sales coverage; Provides security; |
| Enclosed layout | Organizes types of merchandise into separate areas divided by walls; Creates individual shopping environments;Used by department stores |
| Landscaped layout | Combines elements of the open and enclosed layouts; Improves customer and sales staff interaction; Includes creative displays; Does not use space efficiently; Increases the danger of shoplifting |
| Furniture | Examples- desks, chairs, bookcases, filing cabinets, tables, computer stands |
| Fixtures | Examples- lamps, overhead lights, shelving, counters, showcases |
| Office equipment | Examples- computers, modems, fax machines, telephones, photocopiers |
| Office supplies | Examples-stationery, pens, pencils, scissors, tape, staples, paper clips, manila folders, calendars |
| Maintenance supplies | Examples- paper towels, toilet tissue, cleaning supplies |
| Kitchen supplies | Examples- coffee maker, microwave, small refrigerator, coffee, tea |
| Price | The amount charged to customers in exchange for goods and services. Price communicates value to customers and profit to sellers. |
| market price | The price that prevails in the market for a particular good at a specific time. |
| Fixed costs | Costs that remain constant over a period of time regardless of sales volume. For example |
| Variable costs | Costs that vary based on sales volume or changes in business needs. For example |
| competition | A rivalry between businesses to attract scarce consumer dollars. |
| Direct competition | Competition between businesses that have similar formats and sell similar products. For example |
| Indirect competition | Competition between businesses that have dissimilar formats and sell dissimilar products. For example |
| Opportunity cost | The option that is given up when a consumer chooses one product/service over another. For example |
| Price competition | A competitive strategy in which businesses use price as a means to attract customers. The marketer assumes that all things being equal, the customer will choose the product with the lowest price. |
| Non-price competition | A competitive strategy in which businesses use factors other than price as a means to attract customers. For example |
| demand | The number of products consumers are willing to buy at a given time and at a given price. |
| supply | The number of products manufacturers are willing to produce at a given time and at a given price. |
| Elastic Demand | if demand for the product is sensitive to a change in price. Such products tend to be non-essential products such as entertainment, specialty foods, and fashion. |
| Inelastic Demand | if demand for the product is not sensitive to a change in price. These products are usually considered necessities to the customer. For example |
| Cost oriented pricing | Implemented by carefully determining all of the costs associated with carrying a product and selling it to consumers then adding the desired profit to arrive at a selling price. |
| Markup pricing | Used primarily by wholesalers and retailers (organizations that buy for resale); Simply adds a predetermined percentage to the cost of products; This percentage is usually applied to all products carried by the business. |
| Cost-plus pricing | Examines costs for individual products or services then adds a standard markup; products and services are considered individually rather than a predetermined percentage being added across the board to the cost of all products and services. |
| Demand oriented pricing | Most effective when selling products with inelastic demand;Requires estimate of the value customers place on products and set prices accordingly; When selling products with elastic demand, an inaccurate estimation can undermine the success of a business. |
| Competition oriented pricing | This strategy is unique in that it does not consider costs and expenses or profit goals in the process. |
| Promotional pricing | Involves selling a product at a temporarily lower price in order to attract customers. |
| Loss leaders | Selling a product below cost in an effort to increase customer traffic. |
| Special event pricing | “Back-to-School” sales and other similar sales events designed to attract customers and encourage them to buy. |
| Fixed pricing | (One-Price Policy) The pricing technique in which the organization charges the same prices to all customers regardless of the quantity of the purchase. |
| Variable pricing | (Flexible-Price Policy) This technique encourages customers to bargain with sellers in an effort to obtain the best price for products and services. Used when selling cars, furniture, jewelry, and other similar products. |
| Price lining | Establishing price points between products in a product line. Price points can be used to communicate differences in quality and/or service to consumers. |
| Unit pricing | Stating the price of a product per unit of standard measure. For example |
| Psychological pricing | Used by organizations that believe that customers base their perceptions of products on price and that these perceptions affect customer buying decisions. |
| Odd/even cent pricing | Based on the principle that prices ending in odd numbers ($5.99) communicate a bargain and prices ending in even numbers ($6.00) communicate quality. This technique is widely used by retailers. |
| Prestige pricing | Believing that customers equate high price with high quality, this technique sets a higher-than-average price for products in order to communicate quality and status. |
| Skimming pricing | Setting a high price to capitalize on demand when introducing a product that has little competition and will appeal to customers who like to be the first to have the latest products. |
| Penetration pricing | Setting a low price to motivate customers to purchase when introducing a product into a competitive market and attempting to gain customer trial. |
| profit | Revenue remaining after the expenses of running the business have been deducted from income. |
| cost of merchandise sold | The amount paid by a business for products purchased for resale or for use in the production of other goods. This is the first expense that must be paid and it is deducted directly from sales revenue to determine gross profit. |
| 1. Calculate retail price | The most basic pricing formula is the one for calculating retail price when given cost and dollar markup. RETAIL PRICE (RP) = COST (C) + MARKUP (MU) |
| Calculate cost and markup | Using variations of the basic equation, calculate cost and markup.COST (C) = RETAIL PRICE (RP) – MARKUP (MU);MARKUP (MU) = RETAIL PRICE (RP) – COST (C) |
| Calculate retail price using Keystone pricing | A common pricing method used by retailers. Retail price is calculated by doubling the cost of the merchandise. |
| Markdowns | are used as a tool to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices, and/or increase customer traffic. calculated for a specific period of time rather than on individual items. |
| Quantity discounts | Reductions in price given by manufacturers/ wholesalers when a large or specified quantity is purchased. |
| Cumulative quantity discounts | Based on a buyer’s total purchases over a specified period of time. |
| Non-cumulative quantity discounts | Given to buyers for a quantity purchase on a single order. For example, the office supply wholesaler may offer a 5% discount if a business purchases 1-15 boxes of envelopes or a 10% discount if 16-30 boxes are purchased. |
| Trade discounts | functional discounts, offered to channel members; stated either as a percentage off the list price or a series of percentages off the list price. When stated as a series of discounts, the worth each succeeding discount based on the previous price |
| Cash discounts | Cash discounts are offered to buyers as an incentive for paying the invoice amount within a specified number of days. These discounts are stated in the following dating terms |
| Ordinary dating | 2/10, net 30 -- based upon the date of the invoice. |
| Advanced dating | 5/10, net 30, June 15 -- indicates that the payout period does not begin until the date indicated in the terms. |
| End-of-month dating | 2/10, net 30, EOM -- indicates that the payout period does not begin until the last day of the month in which the invoice is dated. |
| Receipt-of-goods dating | 2/10, net 30, ROG -- indicates that the payout period does not begin until the buyer receives the goods from the seller. |
| Extra dating | 3/10, 60X, net 90 -- indicates that the buyer has additional days in which to pay and still receive the cash discount. |
Created by:
mrsljohnson
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