MGMT 435

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Consumer Pricing: Type of pricing strategy used in the growth stage in the product life cycle.
Categories of an Income Statement: Revenue, Expenses, Net Income
Forms of Tolerance of Failure: Moral failure, personal failure, uncontrollable failure
Focus Groups: Small groups usually 7 to 10 participants that are selected from a broader population and interviewed through facilitator-led discussions for opinions and attitudes about a particular issues
Odd Pricing: Setting a price just below a round number. Commonly found in infomercial.
Retained Earnings: The accumulated net income over the life of the corporation to date.
Analyze the situation; Formulate a statement of the problem or the goal; Design the research; Carry out the survey; Tabulate, analyze and information; Apply the date to the purpose: Steps in Marketing Survey
Types of data: Primary and Secondary
Disadvantage that the distinction of smallness brings: Lack of financing; market knowledge; lack of management expertise and technology constraints
Primary Data: Includes Survey Research and Focus Groups
Cash System of Accounting: A method of accounting whereby revenue and expenses are recorded when received and paid, respectively without regard for the period to which they apply
Price Lining: The process of offering merchandise in several different price ranges; most commonly used when it is possible to distinguish among grades or levels of goods and services
Owner's Equity: The residual interest of the firm's owners; It is what remains after the firm's liabilities are subtracted from its assets
Skimming pricing: The technique of selling at a high price to skim off of the strongest demand in the market place. Helps a new venture generate high profit per unit. Only maintained for a short time because the conditions that allow for this type of pricing does not last very long.
Deontology: The distinguishing mark of deontology is its insistence that certain actions are intrinsically good (right) or bad (wrong), regardless of their consequences (Frankena, 1973, pp. 15, 23-28). Goodness and badness are seen as qualities of the actions themselves. Thus, telling the truth, keeping promises, and treating people justly are good in and of themselves; lying, breaking promises, and treating people unjustly are inherently bad in and of themselves.
Straight Commercial Loans: Usually made for a period of 30 to 90 days. Generally based on financial statements of the borrower and are self liquidating
Warehouse Receipt Loans: Inventory is stored in warehouses and a receipt for it is given to the bank as security for a loan to pay off the supplier
Intangible Assets: Copyright and Patents
Pure Competition: Market that exits when many independent sellers offer products in the same basic way. Products are standardized and buyers are indifferent to which one they purchase e.g. agriculture
Key Elements of Growth: Control; Responsibility; Effective Delegation; Tolerance of Failure; Change; Flexibility
Overextended: Situation which occurs when the company has no additional sources to borrow against
Markon: An increase in the initial markup on goods that will be reduce in price later or on goods that can be damaged or stolen easily.
Ways that new venture determine price: Wholesalers, Retailers, Service and Manufacturing Establishments
Image: Marketing strategy helps establish this
Prepare for the session; Develop questions; Plan the session; Facilitate and manage the session; Follow up Immediately after the Sessions: Steps in Conducting Effective Focus Groups
Internal funds: Reinvesting into the business
Pricing Considerations: The nature of the product; the competition; the marketing strategy; the customer and value perceptions; general business conditions
Secondary Data: Statistics compiled about the industry, the competition, and the local area, as well as information gleaned from business publications
Price Bundling: Type of pricing in which customers acquire a host of goods and services, along with the products they purchase
Failure to manage growth: The entrepreneurial challenge of the 21st century
Fixed Assets: Land; Building; Accumulated Depreciation of Building; Equipment
Small Business Investment Companies: SBIC
Key Pricing Factors: The Cost of goods; Competitive prices; Market demand
Skimming: Type of pricing strategy used in the introductory stage for a unique product
Debt Capital: Borrowed money that must be repaid at some predetermined date in the future
Geographic Pricing: The techniques of charging customers based on where they live
Income Statement: A financial statement that shows the change that has occurred in a firms position as a result of its operations over a specific period
Contributed Capital: Common Stock and Preferred Stock
Self Liquidating: Money obtained from the sale of inventory that is used to pay off a short term loan. Most trade credit and short term bank loans are considered to this.
Specialty Items: High price, High quality
Markup: The difference between the selling price of a good and its cots to the business
Gross Margin: Another term for Markup
Informal Investors: Also referred to as angels
$150,000: Maximum of a direct SBA loan
Line of Credit: An informal agreement or understanding between the borrower and the bank with regard the maximum amount of credit the bank will provide the borrower at one time
SBA: Independent agency of the federal government established for the purpose of advising and assisting the nation's small businesses. One of the primary areas in which it helps is guaranteeing loans
Manufacturer: Some form of "cost plus" where the company charges a markup over its own expenses
Demand-Oriented Pricing: Type of pricing strategy used in the maturity of the product life cycle
Monopolistic Competition: Exists when an industry has many firms, each producing only a small share of output demand
MESBIC: Minority Enterprise Small Business Investment Company. Formed for the purpose of providing venture capital and equity financing to new ventures owned by people who are economically or socially disadvantaged including African American, Puerto Ricans, Mexican Americans, Native Americans and Eskimos
Accounts Receivable Factoring: Similar to brokers and advance companies money based on accounts receivable. They differ because they buy the accounts receivable
Monopoly: Features only one seller or producer - no substitutes for the desired food or service exist
Common Stock: The basic form of corporate ownership which gives the individual the right to vote for the board of directors
Consumer Pricing: Combination of penetration and competitive pricing in order to gain market share; depends on consumer's perceived value of the product
Tolerance of Failure: The level of failure that the entrepreneur experienced and learned from at the start of venture should be the same level expected and learned from during this stage
Conditions that must be met to be considered a small business: Independently owned and operated; Is a for-profit firm; Not dominant in its field; has a two year average net profit after taxes of less than $2.5 million
Home interview; store interview; mail survey; telephone interview; specialized surveys; demonstration approaches: Other Methods of Data Collection
Utilitarianism: Assesses the rightness or wrongness of an act in terms of the harms and benefits it produces. The point to be emphasized here is that individuals do not see particular actions as being right or wrong in themselves; the criterion for judging their rightness or wrongness is the net benefit or harm of the consequences that flow from them. Lying, therefore, is not seen as wrong in and of itself.
Participation, Leadership, Donations: Challenges the community presents to smaller ventures
Parts of a Balance Sheet: The financial resources owned by the firm (assets) and the claims against these resources (liabilities)
Four critical steps in time management: Assessment; Prioritization; Creation of procedures; Delegation
Vietnam Veterans and Disabled Individuals: Only groups that can obtain direct SBA loans
Market: A group of consumers who behave in a similar way
Unique Challenges of Growing Venture: The distinction of smaller size; the one person band syndrome; time management; community obligations; continuing management education; other issues in the formative years
Psychological Pricing: Another term for odd pricing.
Production costs, Overhead costs and Indirect costs: Categories that operations expenses fall into.
Personal Savings: Most frequently used for financing. Eliminates the requirements of fixed interest charges and a definite repayment date
Penetration: Type of pricing strategy used in the introductory stage for a non-unique product
$750,000: Maximum of the SBA loan guarantee program
Current Liabilities: Accounts Payable Notes Payable, Taxes Payable, Loan, Payale
Preferred Stock: Holders have preference to the assets of the firm in case of dissolution. After creditors are paid, they have the next claim on whatever assets are left
Different market niches: High price, medium price, low price
Discount: Reduction in the list price
Steps in Effective Delegation: Assigning specific duties; granting authority; creating the obligation of responsibility
Liabilities: The claims creditors have against the companies; the debts of the business
Base of consumer buying decision: Need, price that competing firms charge and availability of substitute goods
Market Research: The systematic study of the factors that affect a venture's sales in its particular niche
Small Business Innovation Research Program: Three phase program; Phase 1 awards are $100,000 for a six month period and are designed to evaluate the scientific and technical merit and feasibility of an idea; Phase II - projects with most potential are funded for $750,000 or less for two years with product development; Phase III - private investment at brining an innovation to the market place.
Leader pricing: The marking down of a popular product in order to attract more customers; Objective of this pricing strategy is to build consumer traffic
The one person band syndrome: The business and the entrepreneur is one and the same; the natural tendency to do everything
SBIC (Small Business Investment Companies): Establishments which are licensed by and operated under the responsibility of the SBL. Their purpose is to provide venture capital to new venture. The capital can take various forms ranging from secured to unsecured loans, debt security with equity characteristics or pure equity represented by common and preferred stock
Unit Pricing: Listing of the product's price in terms of some unit of measurement
Currents Assets: Cash; Accounts Receivable; Inventory; Prepaid Expenses
Price range:: Important because entrepreneur cannot buy above certain levels nor will they buy below certain levels
Objectives of pricing strategies: Earn a profit for the firm; garner and maintain market demand for the product
Equity capital: An investment in the business and requires no promise from the borrowing firm to repay. Investment usually comes about through the sale of common stock
Trade Credit: Seller allows buyers to take merchandise immediately and pay for it later
Par value of stock: Determines the legal capital of a corporation. Legal capital is the amount that total stockholders cannot fall below.
Loss leaders: One of the most popular forms of leader pricing
Wholesalers (Wholesale prices): Prices generally based on an established markup or gross profit for each line
Accounts Receivable Loan: Made by large banks and is the type of loan made against the company's outstanding receivables; when they are collected, the bank is repaid
Penetration Pricing: The strategy of employing a low price that is competitive and designed both to stimulate demand and to discourage competition. Typically used for low priced good's where the firm's objective is to trade profit per unit for gross sales. Discourages new competitors because the profit per item is low.
Term Loans: Maturity of 1 to 10 years. Most have shorter terms 1-4 years and are unsecured.
Staple convenience goods: Standardized products that tend to carry customary prices or the going market price. These goods usually have low prices and any price cutting will be met quickly by competition.
Form of short term loans: Trade credit and short term bank loans
Service Enterprises: They charge what everyone else is charging; They set their own prices and try to justify the decision by differentiating the service and presenting it in a unique or creative way
Short term loan: Particularly helpful when a temporary need for capital exists, such as when retailers build up a seasonal inventory and pay for it once it is sold
Avoid cost leadership, focus on promotional differentiation: Best strategy for entrepreneurs
Retailers: Provides the most interesting example of new venture pricing. The nature of the product is usually the most significant because different types of products are priced in different ways
Collateral loans: Loans made on the basis of such security as real estate mortgages, life insurance policies, stocks and bonds
Price elasticity: How demand will respond to a change in price
Price Flexibility: Another term for price lining
Oligopoly: Market with dominant firms. Tend to have a philosophy of let and let live. Does not compete on the basis of price but use advertising and personal selling to draw customer
Basic ways of marking up goods: Price determined as either percentage of the retail selling price or the percentage of the cost of good
Other Private Sources of Capital: Insurance Companies, Finance Companies, Factors
Ownership Equity: Represents the owner's investment in the company
Parity Pricing: Pricing strategy where the entrepreneur charges at or near what the competitors are charging.
Fashion goods: Products that tend to be priced high. If they do no sell, then it is marked down.
Minority Business Development Agency: Provides special assistance to minority individuals, partnerships and corporations.
Groceries: Tend to be purchased in terms of best buys
Slide Pricing: Method of moving prices in relation to demand. Involves a combination of skimming and penetration. Usually follows a skimming, followed by a penetration patter.
Balance Sheet: A financial statement that reports a business's financial position at a specific time

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