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Small Business
Vocabulary 9.0
38
Business
12th Grade
04/27/2011

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Term
Cash discounts
Definition
Discounts offered to buyers as an incentive for paying the invoice amount within a specified number of days.
Term
Competition
Definition
A rivalry between businesses to attract scarce consumer dollars.
Term
Cost of merchandise sold
Definition
The amount paid by a business for products purchased for resale or for use in the production of other goods.
Term
Cost-oriented pricing
Definition
Implemented by carefully examining 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.
Term
Cost-plus pricing
Definition
A pricing strategy that examines costs for individual products or services and adds a standard markup.
Term
Cumulative quantity discounts
Definition
Based on a buyer’s total purchases during a specified period of time.
Term
Demand
Definition
number of products consumers are willing to buy at a given time and a given price.
Term
Demand oriented pricing
Definition
Most effective when selling products with inelastic demand, this pricing strategy requires price planners to estimate the value customers place on products and set prices accordingly.
Term
Direct competition
Definition
between businesses that have similar formats and sell similar products.
Term
Elastic demand
Definition
Demand that is sensitive to a change in price of the product.
Term
Fixed costs
Definition
Costs that remain constant over a period of time regardless of sales volume.
Term
Fixed pricing:
Definition
(One-Price Policy) A policy under which an organization charges the same prices to all customers regardless of the quantity of the purchase.
Term
Indirect competition
Definition
Competition between businesses that have dissimilar formats and sell dissimilar products.
Term
Inelastic demand
Definition
Demand that is not sensitive to a change in price of the product.
Term
Inelastic demand
Definition
Demand that is not sensitive to a change in price of the product.
Term
Loss leaders
Definition
A product that is sold below costs in an effort to increase customer traffic.
Term
Markdowns:
Definition
Reductions in selling price used to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices, and/or increase customer traffic.
Term
Market price
Definition
The price that prevails in the market for a particular good at a specific time.
Term
Markup pricing
Definition
Pricing strategy that adds a predetermined percentage to the cost of products.
Term
Non-price Competition
Definition
based on factors other than price as a means to attract customers.
Term
Non-cumulative quantity discounts
Definition
Reductions given to buyers for a one-time purchase or shipment.
Term
Odd/even cent pricing
Definition
Psychological pricing technique 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.
Term
Opportunity cost
Definition
The opportunity cost is the option that is given up when a consumer chooses one product/service over another
Term
Penetration pricing
Definition
Setting a low price when introducing a product into a competitive market to motivate customers to purchase.
Term
Prestige pricing
Definition
Pricing technique that sets a higher-than-average price for products in order to communicate quality and status
Term
Price
Definition
The amount charged to customers in exchange for goods and services.
Term
Price Competition
Definition
: Competition that uses price as the primary means to attract customers.
Term
Price lining
Definition
Establishing price points between products in a product line to communicate differences in quality and/or service to consumers.
Term
Profit
Definition
Revenue remaining after the expenses of running the business have been deducted from income.
Term
Promotional pricing
Definition
Selling a product at a temporarily lower price in order to attract customers.
Term
Psychological pricing:
Definition
Pricing technique based on the belief that customers form their perceptions of products on price and these perceptions affect customer buying decisions.
Term
Quantity discounts
Definition
Reduction in price given by manufacturers/ wholesalers when a large or specified quantity is purchased
Term
Skimming pricing
Definition
Setting a high price when introducing a product that has little competition and will appeal to customers who like to be the first to have the latest products.
Term
Supply
Definition
The number of products manufacturers are willing to produce at a given time and at a given price.
Term
Trade discounts
Definition
Functional discounts) Discounts offered to channel members for performing certain functions like storing or record keeping.
Term
Unit pricing
Definition
Stating the price of a product per unit of standard measure.
Term
Variable costs
Definition
Costs that vary based on sales volume or changes in business needs.
Term
Variable pricing
Definition
(Flexible-Price Policy) Pricing technique that encourages customers to bargain with sellers in an effort to obtain the best price for products and services.
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