Entrepreneurship Trimester 1 Study Guide

Vocabulary flashcards covering key concepts from the Entrepreneurship Trimester 1 Study Guide, including promotion, pricing strategies, distribution channels, business financing methods, financial statements, and personal selling principles.

Promotion

The aspect of the marketing mix concerned with the most effective techniques for communicating information about products.

Promotional mix

The combination of tools used to promote a product.

Advertising

Any form of paid non-personal communication used by an identified sponsor to persuade or inform potential buyers about a product.

Personal selling

Person-to-person sales; a promotional tool in which a salesperson communicates one-on-one with potential customers.

Sales promotion

Direct inducements such as coupons and package inserts to tempt consumers to buy products.

Public relations

Communication efforts directed at building goodwill and favorable attitudes in the minds of the public toward the organization and its products.

Neuro promotions

Advertisements placed on walls, bus stations, trains, cars, T-shirts, and decorations.

Commercials (celebrity)

Commercials that use celebrities to endorse a product in order to grab attention and give it credibility (e.g., an athlete in a sports drink ad).

Informative advertising

Advertising used heavily when introducing a new product category to communicate customer value, build brand and company image, announce a new product, and explain how a product works.

Persuasive advertising

Advertising that becomes more important as competition increases, focused on building brand preference, encouraging brand switching, creating engagement, and changing perceptions of product value.

Reminder advertising

Advertising important for mature products to maintain customer relationships, remind consumers where and when to buy, and keep the brand in mind during off-seasons.

Pricing

The process of determining what a company will receive in exchange for its products.

Price

The amount paid by consumers for a product.

Penetration pricing

Setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales (e.g., Verizon FIOS and Optimum).

Market skimming

Setting a high price for a new product when a firm has a unique or highly differentiated product with low customer sensitivity to price (e.g., smartphones).

Psychological pricing

Setting prices that take account of customers' perception of product value, taking advantage of the fact that consumers do not always respond rationally to stated prices.

Odd-even pricing

A psychological pricing tactic based on the premise that customers prefer prices not stated in even dollar amounts (e.g., $.99$, perfume).

Loss leader

A product sold at a very low price to encourage consumers to buy other products in the market (e.g., bread and milk).

Price discrimination

A pricing strategy occurring when a business sells the same product to different consumers at different prices (e.g., airlines).

Promotional pricing

Special low prices offered to gain market share or sell off excess stock (e.g., markdowns, Buy One Get One Free / BOGO).

Variable pricing

A strategy where the customer and seller negotiate the price for the product offered for sale (e.g., a car dealer).

Distribution mix (place)

The combination of distribution channels by which a firm gets its products to end users.

Distribution channel

A network of interdependent companies through which a product passes from producer to end user.

Intermediary

An individual or firm that helps to distribute a product.

Direct channel

A distribution channel in which a product travels directly from producer to consumer without intermediaries.

Wholesaler

An intermediary who sells products to other businesses for resale to final consumers.

Retailer

An intermediary who sells products directly to consumers.

Sales agent

An intermediary who generally deals in the related product lines of a few producers and forms long-term relationships to represent those producers and meet customer needs.

Broker

An intermediary who matches numerous sellers and buyers as needed, often without knowing in advance who they will be.

Financing

The act of providing or raising funds (capital) for a purpose.

Equity financing

Financing a business venture by exchanging a share or percentage of ownership in the company in return for money.

Debt financing

Financing a business venture by borrowing money that must be repaid with predictable loan payments.

Crowdfunding

A funding method that connects prospective borrowers and lenders virtually and earns revenues based upon transaction fees.

Angel investor

A wealthy individual who invests personal funds in businesses.

Venture capitalist

An investor or investment company whose specialty is funding new, high-potential entrepreneurial companies.

Financial statement

Any of several types of reports summarizing a company's financial status to stakeholders and aiding in managerial decision making.

Income statement

A financial report that records the revenue, costs, and profit (or loss) of a business over a given period of time.

Balance sheet

A financial statement that supplies detailed information about a firm's assets, liabilities, and owners' equity at one point in time.

Cash flow statement

A financial report that describes a firm's cash receipts and cash payments.

Asset

Any economic resource expected to benefit a firm or an individual who owns it.

Liability

Financing obligations of a business that it is required to pay in the future.

Shareholders' equity

The total value of assets less the total value of liabilities ($\text{Shareholders' equity} = \text{Assets} - \text{Liabilities}$).

Cash outflow

Payments in cash made by a business, such as those made to suppliers and workers.

Cash inflow

Payments in cash received by a business, such as receipts from customers (debtors) or receiving a bank loan.

Start-up investment (seed capital)

The one-time expense required for opening a business.

Prototype

A model or pattern that serves as an example of how a product would look and operate if it were produced.

The eight-step sales call

The sequential sales process consisting of: 1. Preparation, 2. Greeting, 3. Listening to the customer, 4. Showing the product or service, 5. Dealing with objections, 6. Closing the sale, 7. Follow-up, and 8. Asking for references.