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DSST Things to know_Intro to Business

Cost based or cost plus based on cost of

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Cost-Based or Cost Plus – based on cost of manufacturing Demand Based or value-based – based on demand of perceived value of the product Competition Based – influenced by what the competition is charging Price skimming – initial high price to recoup cost Penetration pricing – new products initial low cost to introduce a product Price is affected by: Discounts Rebates Product bundling Psychological or fractional pricing $1.99 Loss leaders – lower price on other products to bring customers into the store Promotion – Advertising Personal selling Sales promotions (cents off discount coupons, bounce back coupons, point of sale (POS) displays Publicity and public relations Communication Strategy – (marketing manager or product manager) Develops product message Determines the appropriate media mix Develops the budgt Launches the campaign Assesses the effectiveness of the campaign (revises as needed) Place – Distribution aspect of marketing a product Distribution may involve intermediaries between the producer and end user: Wholesalers who buy from producers and resell to other intermediatires or end users Retailers who sell directly to end users Agents and brokers (do not buy products to sell, act on behalf of buyer or seller) o Paid a commission May be a manufacturers agent Selling agent Purchasing agent Distribution Channels – Direct: producer to consumer or business Retail: producer to retailer to consumer to business Wholesale: producer to wholesaler to retailer to consumer or business
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Broker or Agent: producer to broker or agent to consumer or business Retailer Types- Bricks and Mortar Retailers o Department stores o Supermarkets o Specialty stores o Convenience stores o Discount/bargain stores o Wholes/warehouse clubs o Factory outlets o Hypermarkets – large markets (include everything under one roof, clothes, grocery, furniture) o Catalog showrooms Direct Response Retailers o Catalog mail order o Telemarketing E-Tailers o E-catalogs o Virtual storefronts Financial Management – responsible for planning and budgeting of funding for both short term and long term operations research and development and capital investments monitoring cash flow oversight of receivables and payables Short Term Financial Goals – prepare operating budget o operating expenses paid out of revenue Long Term Financial Needs – capital projects (large equipment), may be financed o borrowing money o selling a new block of stock (called equity financing) o issuing corporate bonds (debt financing) unsecured bonds - only backed by promise to pay value plus interest secured bonds (debenture bonds) Company Assets = cash on hand, investments, equipment and real estate Gross Profit Margin = total revenue minus cost of goods sold divided by total revenue Gross profit margin determines overall profitability of a company’s production
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