Business and Commerce Concepts

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Why is retargeting considered effective?

It often takes multiple brand exposures before someone buys

What is the primary benefit of segmenting an audience based on behavior?

To send timely, tailored marketing messages to each segment

What is one of the advantages of prospect targeting in behavioral targeting?

Targeting prospects who have demonstrated an interest in a product or service

How can behavioral targeting help marketers with their resources?

By making better decisions about how and where they’re directing their resources

What is one of the benefits of behavioral targeting in terms of customer experience?

It creates a more interesting and engaging experience for visitors

What does behavioral targeting teach companies about their brand?

How their target customers perceive their brand and interact with their assets

What is the main goal of a cost-plus pricing strategy?

To determine the price of a product based on its production cost

Which pricing strategy takes into account the psychological impact of prices on customers?

Psychological pricing

What is the purpose of a bundle pricing strategy?

To sell multiple products together at a single price

Which pricing strategy involves setting different prices for the same product based on the location of the buyer?

Geographic pricing

What is the main difference between a premium product and a basic product in an optional product pricing strategy?

The features and benefits of the product

Which pricing strategy sets a price based on the customer's perceived value of the product?

Value-based pricing

What is the primary goal of trading?

To make a profit

What type of business involves buying and selling products at a markup?

Buying and selling

What is the primary function of marketing?

To provide information about a product and the company

What type of service business focuses on providing financial services to customers?

Finance

What determines the type of business organization?

The nature or purpose of the business

What is a characteristic of a service business?

It provides an intangible valuable offering

Which type of cost is directly related to producing a good or service?

Direct Cost

What type of labor is considered a product cost?

Direct labor

Which of the following is an example of a period cost?

Marketing expenses

What is included in the Manufacturing Overhead Cost?

All the indirect costs incurred during manufacturing

What is the main difference between Direct Cost and Indirect Cost?

Direct Cost is related to producing a good or service while Indirect Cost is not

What are the three main components of Manufacturing Costs?

Direct Materials, Direct Labor, and Manufacturing Overhead

What is the primary goal of a premium pricing strategy?

To create a perception of high-value products

What is the main difference between a skimming pricing strategy and a competition-based pricing strategy?

The price of the product is higher at the start and then decreased

What is the primary objective of a freemium pricing strategy?

To offer a basic version of a product and hope users will upgrade

What is the result of using a competition-based pricing strategy?

A better position to win a customer's business

What is product line pricing also known as?

Price lining

What is the primary focus of a skimming pricing strategy?

The highest possible price for a new product

Study Notes

Pricing Strategies

  • Optional Product Pricing: allows customers to pay a higher price for a product with additional features or a lower price for a basic version.
  • Bundle Pricing Strategy: offers two or more complementary products or services together for a single price.
  • Psychological Pricing Strategy: takes advantage of human psychology to boost sales, e.g., pricing at $99.99 instead of $100.
  • Geographic Pricing Strategy: prices products or services differently based on geographical location or market.
  • Cost-Plus Pricing Strategy: focuses on the cost of producing a product or service and adds a markup for profit.
  • Value-Based Pricing Strategy: prices products or services based on what the customer is willing to pay.

Costs

  • Direct Costs: can be easily traced to a product, department, or project, e.g., raw materials, labor, and distribution costs.
  • Indirect Costs: cannot be easily traced to a product, department, or project, e.g., overhead expenses, rent, and marketing expenses.
  • Manufacturing Costs: include direct material, direct labor, and manufacturing overhead costs.

Pricing Strategy Types

  • Skimming Pricing Strategy: charges the highest possible price for a new product and lowers it over time.
  • Competition-Based Pricing Strategy: focuses on the existing market rate for a product or service.
  • Premium Pricing Strategy: prices products high to present a high-value, luxury, or premium image.
  • Freemium Pricing Strategy: offers a basic version of a product for free, hoping users will upgrade to a paid version.
  • Product Line Pricing: separates goods and services into cost categories to create perceived quality levels.

Behavioral Targeting

  • allows marketers to target prospects who have demonstrated interest in a product or service.
  • helps convert leads into customers with personalized messaging.
  • creates a more engaging experience for visitors, increasing customer loyalty.
  • enables marketers to make better resource allocation decisions.

Business Concepts

  • Trading: the buying and selling of financial assets in markets to make a profit.
  • Buying and Selling: purchasing products at wholesale and selling them at a higher price.
  • Marketing: providing information about a product and company.
  • Service Business: provides an intangible valuable offering to customers, often handled by an individual or group of people.

Types of Service Businesses

  • Personal: one-on-one interaction between seller and buyer, e.g., hair salon.
  • Finance: provides services concerning financing needs, e.g., banking, insurance.
  • Recreational: provides service facilities for sports, entertainment, amusement parks, etc.

Types of Business Organizations

  • Profit Organizations: exist to make a profit.
  • Non-Profit Organizations: do not distribute profits to owners or shareholders.

Test your knowledge of fundamental business concepts, including trading, buying and selling, marketing, and aids to trade. Learn about different business models and strategies. Identify the key components of a successful business.

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