10.3 price and distribute products Flashcards Preview

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Flashcards in 10.3 price and distribute products Deck (45):
1

What are the two types of distribution channels?

  1. direct channel of distribution
  2. indirect channel of distribution

2

channel of distribution that includes one or more other businesses between the producer or consumer

indirect channel of distribution

3

What do distribution channels do?

  • gathers products from many producers to offer customers the variety of products they need in convenient locations
  • they move products efficiently from where they are produced to where they can be sold
  • they store products from the time they are produced until customers want to buy them

4

the locations and methods used to make a product or service available to the target market

distribution

5

when businesses specialize in producing a specific type of product, a channel of distribution will be needed to adjust differences in:

  • time
  • location
  • assortment
  • quantity

assortment

6

wholesalers who take ____, or ownership of goods, are called merchant wholesalers

title

7

What is the relationship between markup and the expected gross margin?

the markup is equal to the expected gross margin

8

the final business organization in an indirect channel of distribution for consumer products

retailers

9

the amount of money available to the business after all costs and expenses have been paid

profit

10

intermediaries between manufacturers and retailers, they create an assortment by breaking larger bulks of producer's products into smaller units by repacking and redistributing in smaller lots for retailers and other industrial buyers

wholesalers

 

11

a product that has a ready supply will have a (higher/lower) ____ price

lower

12

if a product is easily available and the seller provides a high level of customer service, prices will go ____ (up/down)

up

13

customers expect to pay ____ (low/high) prices if they shop at a large warehouse store that is not as conveniently located and offer little servce

low

14

the difference between the selling price and the product costs, represents the amount of money on hand to pay for operating expenses and provide a profit

gross margin

15

the money a customer must pay for a product or service

price

16

how do you figure out the markup on cost?

product costs x percent markup = markup on cost

17

products with many features and options will also command ____ (lower/higher) prices

higher

18

a reduction from the original selling price

markdown

happens when demand is not as high as projected, if the selling season is ending, or if there is a flaw in the product

19

an effective ____ takes the large quantities produced and breaks them into quantities customers want to buy

an effective channel of distribution takes the large quantities produced and breaks them into quantities customers want to buy

20

the businesses that take part in a channel of distribution

channel members

21

highly complex and technical products have ____ (lower/higher) prices than simple products

higher

22

prices on seasonal products will be ____ (lowest/highest) just before and at the beginning of the season

highest

 

the prices will be lower on these items during other times of the year

23

Describe how the price of a product changes.

  • it changes as it moves from producer to consumer
  • the manufacturer sets the price that other businesses pay to them
  • those businesses then increase the price and sell the products to the final customers
  • the price that is set by the businesses is determined by adding the product costs, operating expenses and profit together

24

the costs to the manufacturer of producing the product or the price paid by other businesses to buy the product

product costs

25

What differences exist between producers and consumers in complex economies?

  • differences in quantity - businesses produce or sell large amounts of each product to many customers, each consumer needs only a very small number of products at a given time
  • differences in assortment - businesses usually specialize in producing a specific type of product while consumers want to purchase a variety of products
  • differences in location - in today's economy, thousands of miles can separate producers and consumers.  business may need to distribute their products to customers in many countries
  • differences in timing - businesses are efficient by producing large amount of a product at one time, agricultural products sometimes can only be produced at a specific time of year.  consumers may want to buy products at different times than when they are produced

26

how do you figure out the markup on selling price?

gross margin / selling price = percent markup on selling price

27

all expenses of operating the business that are associated with the product; can include salaries, storage, display equipment, facilities, utilities, taxes, etc

operating expenses

28

why do businesses join a channel of distribution?

  • they join a channel when either the producer or consumer does not want to perform one or more marketing activities or when the business can perform the activities better or at a lower cost

29

channel of distribution where products move from the producer straight to the consumer with no other organizations participating

direct channel of distribution

30

when products are first introduced to the market, prices will be very _____ (high/low)

high

31

buyers usually want to pay the ____ price possible and sellers want to charge the ____ price possible for a product

buyers usually want to pay the lowest price possible and sellers want to charge the highest price possible for a product

32

_____ are well-known and an important part of distribution channels for consumer products.  they offer a range of products at convenient locations for consumers.

retailers

33

as products age, the price gradually _____ (increases/decreases)

decreases

34

products that are used at a certain time of the year like winter apparel, air conditioners, and holiday decorations have high  levels of sales for a ____ time

products that are used at a certain time of the year like winter apparel, air conditioners and holiday decorations have high levels of sales for a short time

 

aka seasonal items

35

the amount added to the cost of a product to set the selling price

markup

 

is stated as a percentage of the product's cost or as a percentage of the product's selling price

ex.  if a product costs $15 and has 100% markup then the selling price would be $30

36

if the demand for a product is high, prices will _____ (increase/decrease)

increase

37

_____ involves determining the best methods and procedures to use so customers can find, obtain and use a product or service

distribution

38

if a product has few close competitors because it is unique, the price will be (higher/lower) ____ than products that are very similar to others

higher

39

what is the selling price formula?

product costs + operating expenses + profit = selling price

40

What factors go into a decision about a fair price?

  • supply and demand
  • uniqueness
  • age
  • sesason

41

products with low levels of demand will have (higher/lower) _____ prices

lower

42

the price paid by the customer for the product

selling price

43

What are some things that retailers do?

  • offer a range or products at convenient locations for consumers
  • they help consumers to select the best products
  • can provide financing and delivery services
  • sometimes offer repairs and other customer services
  • assist manufacturers by storing, displaying and advertising the products and often paying the manufacturer well before final consumers buy the products

44

the route a product follows and the businesses involved in moving a product from the producer to the final consumer

channel of distribution

45

which of the following conditions will result in a lower rather than a higher price?

  • a high customer demand
  • a large quantity of available products
  • a product that has very few similar competing products
  • all would result in lower prices

a large quantity of available products