The study of how the resources of a society are allocated
What is Economics?
100
Proper pricing of a product or service addresses two objectives. Name one.
The price to serve as a customer relations tool.
The price to ensure profit to the seller.
100
The price at which the costs of producing and/or selling a product or service are covered
What is break – even point?
100
Name 3 reasons for markdowns
Damaged merchandise
Old merchandise
Broken assortments
Special Promotions
Competitor Prices
Space Considerations
100
Name 3 Sales Methods
Telemarketing, Cold Calling, Vending Machines,Retailing, Direct Mail, Trade Shows, Product Demonstration,Mail Order Catalogs
200
If the price of a product is perceived as too high, the demand for the product will be low. What is a problem this can cause?
Causes a surplus of the product in the marketplace
Production will have to be slowed or stopped
200
How does price serve as a customer relations tool?
A fair price tells the customer that the business offers good value, encouraging a demand for the product or service.
200
This pricing strategy is used for products that are not expected to remain on the market.These products are fads that take advantage of current, but temporary, demands in the marketplace.
What is short-term profit pricing strategy
200
This pricing strategy is used for products that are not expected to remain on the market.These products are fads that take advantage of current, but temporary, demands in the marketplace.
What is short-term profit pricing strategy?
200
What are the three parts of an effective sale?
Sales Approach, Sales Presentation, Sales Close
300
If a product is priced below the perceived value, the demand for the product will be ___________
Great
300
A cost that does not vary even though there are changes in production and/or sales volume.
What is Fixed Cost/Overhead?
300
Toni sales t-shirts for $9 a piece. Her total overhead cost is $2053/month. She pays $1.00 per shirt for ink, $4.00 for each blank T-shirt. How many shirts must she sell in a month to break even?
Profit per shirt $9 (retail $) - $ 1 (cost of shirt) - $4 (ink) = $4
Overhead Costs Per Month/Profit Contributed Per T-shirt =Breakeven Point in number of T-shirts per month
2053/4 = 514
t-Shirts per month x Sales price per shirt = Breakeven Point in dollars 514x9 = 4626
300
Price levels are firmly established and remain relatively fixed until something happens in the market that makes a chance necessary.
What is Status Quo Pricing Strategy
300
Entrepreneurs must understand the importance of instilling a good feeling about the product or service in the customer, even if a sale is not made. why?
Goodwill leads to repeat business, which is important to all businesses. A good sales plan emphasizes that the customer must feel important at all times.
400
Point that is reached when the demand line intersects with the supply line
What is Equilibrium?
400
Profits that remain in a business for future use
What are retained earnings?
400
What is the markdown amount of an item that sold for $40 and is now 15% off?
To calculate markdown amount:
RETAIL PRICExPERCENT MARKDOWN=MARKDOWN AMT.
$40 x .15 = $6
To calculate markdown price:
RETAIL PRICE–MARKDOWN AMOUNT = MARKDOWN PRICE
$40 - $6 = $34
400
When might a price change be necessary for a status quo priced item?
With new competition
Changes in established competition's pricing strategies
Changes in demand due to market shortages or overflows
Changes in the economy
Using one’s money for the product or service that will bring the greatest need satisfaction
What is utility satisfaction?
500
Total pricing concept states that prices are set to do three things...
1. Compete successfully
2. Build good customer relations
3. Ensure the long-term success of a business
500
A shoe store owner pays a manufacture $22 a pair for a popular brand of athletic shoes. The store offers the shoe to customers for $104 a pair. What is the markup percentage?
Customer/consumer. They will not buy if they do not perceive the price as fair. However, in the initial stages, entrepreneurs must set prices for products or services to determine what is acceptable to customers.
500
When making a sale, the salesperson will often encounter objections. Name one method for handling objectives
One method is to use the objections to emphasize the benefits of the product