Entrepreneurship- Marketing Mix Review
Define Pricing Key Terms (Sim Lesson 1)
Price- amount of money a business charges for items it offers for sale
Profit= total revenue of a business less expenses
Cost- amount of money a store pays to purchase merchandise from a supplier
Margin- difference between the retail price of an item and the cost of the item
supply and demand- principle that describes the amount of product to sell and the willingness of
customers to buy
market share-% that a store has of the total sales in its selling area
markdown= reduction in price of merchandise to increase sales of a product that is not selling
Pricing Key Math Concepts (Sim 1)
1. How do you calculate the price for an item? PRICE = COST + DESIRED PROFIT
2. How do you calculate the margin for an item? MARGIN = PRICE - COST
3. What are markups and markdowns? Increases or reductions in price based on demand
Pricing Strategies (See pricing strategies handout)
1. List one primary price objective. (There are 4- see Pricing Strategies Handout)
 Build or maintain an image
 Increase sales volume
 Obtain or Expand a market share
 Maximize profits
2. What are the three strategies for determining price?
i. Demand-Based
ii. Competition-Based
iii. Cost-Based
3. What is the difference between global and individual pricing?
Global pricing has a consistent markup for ALL products.
Individual pricing has different markups for each product.
4. What is bundling?
Combining the price of several items into one price
Marketing Mix- Promotion (see handout)
1. What is advertising? Paid form of communication about a product or service
2. What two things should an advertisement communicate? Message and an Image
3. What does the AIDA model stand for?
Attention
Interest
Desire
Action
4. Explain one way a business keeps customers.
i. Rewarding customers
ii. Analyzing competitors
iii. Listening to customers
5. Name one way a business can track the effectiveness of its advertising.
i. Ask customers
ii. Coupon codes
iii. Look at sales results
6. What are public relations?
Establishing favorable relationships with customers and the general public.
7. Name one advantage and one disadvantage of publicity.
Advantage- No cost (free)
Disadvantage- Hard to control and manage
Marketing Mix- Place (see handout)
1. Name three factors to consider when deciding where to locate your business?
i. Target market lives
ii. Parking
iii. Traffic
iv. Accessibility
v. Physical distance from competitors
vi. Condition and safety of building
vii. Hours of operation
2. What is the difference between a direct and indirect business channel? What is an
intermediary?
Indirect uses an intermediary. An intermediary is a “middleman” that
bridges the producer to the consumer in distribution.
3. What type of distribution makes a product available in as many sales outlets as
possible?
INTENSIVE
4. A retail business must offer product(s) to consumers in a __convenient
location.
5. Service businesses use a _direct___ channel of distribution.
Target Marketing (Sim 7)
1. What is a target market? Specific group to which products/services are marketed.
2. A target market profile consists of three different items. Be able to identify
Demographics, Psychographics and Geographics.
a. Demographics- basic characteristics (age, gender, income)
b. Psychographics- lifestyles/activities
c. Geographics- physical location (work)
3. What is the difference between disposable and discretionary income?
Disposable income is your money left after taxes for your needs.
Discretionary income is your money left over after paying for your needs.
4. Why are target marketing campaigns more effective than broad campaigns?
Cost effective as they target a specific group.
Merchandising (Sim 8)
1. Be able to identify the types of merchandise (staple, fashion, seasonal and convenience)
Staple- basic stock
Fashion- sells for a few years (trend)
Seasonal- sells at particular times
Convenience- purchased without customer thinking
2. What are complementary items and give an example?
Nacho chips and salsa (items that sell together and should be placed
together in a store to improve both of their sales)
3. What type of item would you generally place in the back of the store, needs or impulse
items? Give an example.
Needs - MILK
4. What type of product would you generally place by the cash register, needs or impulse
items? Give an example.
Impulse – Candy at a register
5. Be able to compute a planned sales increase.
Planned Sales Increase = Last Year’s Sales X % of Increase Planned
Example: Using the info below, compute a projected 6% sales increase.
Last year’s sales = $ 3,145 X .06 = $ 188.70 (Planned Sales Increase)
Projected Sales = $3,145 + $188.70 = $ 3,333.70