MARKETING THE SMALL BUSINESS

RELATIONSHIP BETWEEN
SUPPLY AND DEMAND
THE HIGHER THE PRICE OF THE PRODUCT OR SERVICE, THE
SMALLER THE MARKET WILL BE. THE LOWER THE PRICE OF
THE PRODUCT OR SERVICE, THE GREATER THE DEMAND FOR
THE PRODUCT.
 ENTERPRENUER’S GOAL
TO FIND THE PRICE POINT THAT ALLOWS A BALANCE OF
DEMAND AND SUPPLY
 OBJECTIVES OF PROPER
PRICING:
1. TO SERVE A CUSTOMER RELATION TOOL (FAIR PRICE TELL
THE CUSTOMER THAT THE BUSINESS OFFER GOOD VALUE,
ENCOURAGING A DEMAND FOR THE PRODUCT OR SERVICE)
2. TO ENSURE PROFIT TO THE SELLER, THEREBY ALLOWING
THE BUSINESS TO CONTINUE SERVING THE MARKET.
 IMPORTANT TERMS IN PRICE
SETTING:
BREAK-EVEN POINT
-FIXED COSTS
-RENT
-UTILITIES
-INSURANCE
-VARIABLE COST
-COST OF GOODS OR MATERIAL
-SALARIES
-ADVERTISEMENT
 IMPORTANT TERMS IN PRICE
SETTING:
BREAK-EVEN POINT
THE PRICE AT WHICH THE COSTS OF PRODUCING
AND/OR SETTING A PRODUCT OR SERVICE ARE COVERED

FIXED COST
A COST THAT DOES NOT VARY EVEN THOUGH THERE
ARE CHANGES IN PRODUCTION AND/OR SALES VOLUME.
 IMPORTANT TERMS IN PRICE
SETTING:
VARIABLE COST
A COST THAT FLUCTUATES WHICH
CHANGES IN PRODUCTION AND/OR SALES
VOLUME.
 REQUIREMENTS TO CONSIDER
IN PRICING A PRODUCT:
1. THE TOTAL COST OF THE ITEM TO BE SOLD
MUST BE COVERED INCLUDING THE DIRECT
EXPENSES OF MANUFACTURING OR BUYING
THE PRODUCT AND THE OPERATING AND
OVERHEAD EXPENSES
2. A CONTRIBUTION TO THE LONG TERM
STABILITY OF THE BUSINESS MUST BE MADE-
ENOUGH PROFIT MUST BE MADE TO GENERATE
RETAINED EARNINGS.
 REQUIREMENTS TO CONSIDER
IN PRICING A PRODUCT:
3. THE ENTERPRENEUR MUST BE REWARDED
FOR THE EFFORT EXPANDED AND RISK
ASSUMED IN OWNING AND RUNNING THE
BUSINESS.
4. CUSTOMER MUST PERCIEVE THE PRICE AS
GIVING FAIR VALUE.
 REQUIREMENTS TO CONSIDER
IN PRICING A PRODUCT:
IMPORTANT:
BY SATISFYING THESE REQUIREMENTS, THE
ENTREPRENEUR IS OPERATING THE TOTAL
PRICING CONCEPT, MEANING PRICE ARE SET
TO COMPLETE SUCCESSFULLY, BUILD GOOD
CUSTOMERS RELATIONS, AND ENSURE THE
LONG-TERM SUCCESS OF A BUSINESS.
 MARKUP
THE AMOUNT ADDED TO THE COST OF AN ITEM
TO ARRIVE AT A SELLING PRICE. THEY VARY
WIDELY DEPENDING ON THE INDUSTRY AND
MARKET CONDITIONS.
 MARKDOWN
THE DIFFERENCE BETWEEN THE ORIGINAL
SELLING PRICE AND THE PRICE AT WHICH AN
ITEM IS ACTUALLY SOLD.
 REASONS FOR TAKING
MARKDOWNS:
1. DAMAGE MERCHANDISE
2.OLD MERCHANDISE
3.BROKEN ASSORTMENTS
4.SPECIAL PROMOTIONS
5.COMPETITIONS PRICE
6.SPACE CONSIDERATION
 PRICING STRATEGIES
SHORT TERM PROFIT
MARKET PENETRATION STRATEGIES
LOSS LEADER PRICING