market economy terms 2.02 examine purchasing decisions and various products with respect to value,...
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Market Economy Terms
2.02 Examine purchasing decisions and various products with respect to value, service, maintenance and price.
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Market Economy
Basic economic decisions are based on the actions of buyers and sellers in the market.
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Price
The amount of money given or asked for, when goods or services are bought or sold.
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Market or Marketplace
Any place where individuals buy and sell goods and services.
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Demand
The amount of goods or services consumers are willing and able to buy.
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Law of Demand
Consumers will buy less of an item at a higher price than at a lower price.
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Supply
Amount of goods or services that producers will provide.
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Law of Supply
The higher the price more producers will supply it and the lower the price fewer producers will supply it.
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Surplus
An over supply of a product. Producers are producing more of a product than consumers will buy.
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Shortage
An under supply of a product. Consumers are demanding more of a product than producers are producing.
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Equilibrium Price
The price at which the amount supplied and the amount demanded come together.
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Nondiscretionary Income
Income used to purchase items to meet basic needs
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Discretionary Income
Income that is left over after a consumer’s basic needs have been met
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Types of Products
Convenience Goods Shopping Goods Specialty Goods
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Convenience Goods
Goods consumers buy regularly without spending much effort.
Usually inexpensive
Examples: milk and bread
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Shopping Goods
Goods consumers buy after spending time looking around and comparing products.
Usually more expensive than convenience goods
Examples: vehicles and designer clothing
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Specialty Goods
Goods that consumers select by brand or company which require a special sales effort.
Usually expensive
Examples: digital cameras, stereo equipment, and perfume
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Types of Merchandisers
Department Stores Mass Merchandisers Off-Price and Outlet Stores Limited Line Retailers Superstores/Hyperstores
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Department Stores Stores have different departments selling
a variety of products – men’s, women’s, children’s clothing, home furnishings, jewelry, and services
Goods are moderately priced, salespeople are in each dept., special services are available (gift wrapping, delivery), elaborate merchandise displays and may even have a salon
Ex: Macy’s, Nordstrom’s, Saks Fifth Avenue
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Mass Merchandisers
Sells a variety of items at reasonable or low prices; often are nationwide stores; practical displays and not always very organized; some service is available
Examples: Target, Sears, Wal Mart
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Off-Price Stores Off-price stores usually buy from
producers with surpluses; therefore, carry many manufacturers’ brands or manufacturer’s overruns
Prices are discounted at 20-70% off; merchandise can be slightly imperfect or discontinued; limited service is available
Example: TJ Maxx
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Outlet Stores
Outlet stores are operated by the manufacturer and carry only that manufacturer’s brand or an affiliated manufacturer
Examples: Easy Spirit, Carter’s, Peaches and Cream, Corning
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Limited Line Retailers
Sell only one kind of merchandise – clothing stores, athletic goods stores, home appliance stores, hardware stores; services vary, selling methods and prices vary
Examples: Limited, GAP, Foot Locker, Best Buy
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Superstores/Hyperstores Superstores: Extremely large
(30,000 sq feet), similar to supermarkets, but also sell mass merchandise items like clothing, garden products, and books; no customer services
Hyperstores: Larger than Superstores (200,000 sq feet)
Examples: Kroger, Harris Teeter, Lowes Food Store, Food Lion