FINANCING DECA Vocab

Budget

a plan for how available funds will be spent

Business cycle

the ups and downs of the economy; also called the economic cycle

Club seats

Premium stadium seats that provide another source of high revenue for the owners

Competitive parity budgeting method

advertising budgeting method designed to maintain the current share of voice

Direct economic impact

the total of new spending resulting from the event or attraction

Discretionary income

the amount of money individuals have available to spend after paying for the necessities of life and other fixed expenses, such as housing and car payments

Economic Cycle

the ups and downs of the economy, also called the business cycle

Equilibrium

the point where the supply and demand curves intersect. (Willing to pay vs Demand)

Expansion fee

price the owner of a new franchise will have to pay; the price is set by existing owners and the fee is divided among them

Exploratory research

conducted when a business is unaware of the exact problem

Financing

requires a company to budget for its own marketing activities and to provide customers with assistance in paying for the company's products or services; budgeting, finding ways to pay the costs of doing business, managing the costs so that they do not exceed the revenues coming in, and helping customers pay for the products or services

Fixed sum per unit budgeting method

determines the advertising budget based directly on the expected number of units to be sold

Flexible pricing policy

Allows customers to negotiate prices within a range

Free-enterprise

an economic system based upon independent decisions made by consumers and businesses; also called private-enterprise system

Fringe benefits

incentives received in addition to a base salary, such as medical insurance use of an organization's vehicles, and paid travel; extra incentives beyond salary and wages that employers are not required by law to provide

Geographic Pricing

pricing policy that allows pricing variations based upon geographic location

Globalization

international economic relationships

Group packages

special ticket prices offered to members of a group when tickets are purchased in large quantities, such as 15 or more

Incentive Pay

compensation based upon the quantity and quality of work completed by employees

Income Statement

shows all revenues received and all expenses incurred over a specific period of time

Indirect economic impact

the portion of the money spent by visitors on local goods and services that is in turn spent locally by employers and employees

Inflation

prices for goods and services rise faster than consumer income

Joint venture

two organizations share the costs and profits of a business; one of the organizations may be a government

Law of Demand

inverse relationship between the price of a product and consumer demand for it- when the price goes up and demand goes down, and when the price goes down and demand goes up

Liabilities

amounts owed for purchases made on credit and loans

Liable

the business is legally responsible for damages and might have to pay for the medical costs and other losses suffered by and injured person

Loss-Leader Pricing

the willingness to take a loss on the reduced prices of selected items in order to create more customer traffic

Marginal Analysis

a technique of setting the advertising budget by estimating the point at which an additional dollar spent on advertising equals additional profit

Marketing price

price determined by the laws of supply and demand

Market share

the percentage of total sales of a product or service that company expects to capture in relations to its competitors (Pie chart)

Markup

the amount that is added to the cost of an item for sale to cover operating expenses and allow for a profit

Multiple-unit pricing

customers receive a financial benefit for buying the larger quantity

Odd-even pricing

pricing policy by which prices ending in $.98 or $.99 give customers the illusion of spending less than the next higher dollar amount

One-price policy

All customers pay the same price for a product, such as a concert, football game, or running shoes

Operating expenses

all the costs associated with running your business

Penetration price strategy

uses low pricing to help capture a large market share early

Percent of sales budgeting method

directs a percentage of expected sales revenues to the advertising budget

Premium

Payment for Insurance

Prestige Pricing

Pricing policy whereby retailers charge higher-than-average prices for merchandise and target customers seeking status and high quality

Price

The amount that customers pay for products and services

Profit

the amount of money remaining from revenues after all expenses are paid

Profit motive

making decisions to use resources in ways that result in the greatest profit

Psychological Pricing

Pricing policy that creates an illusion for customers (Ex. $.99)

Push Money

an extra commission paid to salespersons who sell or push particular products

Rational purchases

purchases based upon careful thought and sound reasoning that take place when individuals recognize needs and wants, assess their priorities and budget, conduct research, and compare alternatives

Rebates

coupons on products that customers can mail in for a refund

Recession

less severe contraction of the economy in the business cycle

Recovery

period of the business cycle that occurs when the economy shows signs of improvement

Return on investment (ROI)

the income from a venture that is distributed to investors

Revenue

the money a business receives from the sale of goods and services

Risk

the possibility of financial gain or loss or personal injury

Royalty

fee paid to the owner of a copyright for the use of the copyrighted work

Salary

a specified amount paid annually for a job, regardless of the number of hours worked

Salary Cap

a maximum amount that a team can spend on players' salaries

Sales promotions

additional incentives offered for a limited time to encourage consumers to buy a product

Share of voice

refers to maintaining a similar dollar amount or frequency of advertising as that of competitors

Sponsor

a person, organization, or business that gives money or donates products and service to another person, organization, or event in exchange for public recognition

Sponsorship

underwriting an event for the purpose of gaining positive association for a brand with the event, the participants, and or the attendees.

Subsidize

to pay part of the cost of something or to give money to a person or organization to help support an activity, product, or service

Trade Allowances

sales promotion that offers short-term discounts to distributors and retailers for selling or participating in the promotion of a product

Trade-in allowance

customers receive a discount for trading in old merchandise when making a new purchase

Uninsurable Risk

there is a chance that a loss could occur. but the dollar amount of the loss cannot be estimated

Volume pricing

discounted pricing a business receives from its suppliers due to the large volume of merchandise it purchases