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Marketing

A McGraw Hill and QUT Custom Publication

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

accessory equipment Business goods that have substantial value and are used in an organization’s operations.

activity indicator of buying power A market factor that is related to sales and expenditures and serves as an indirect estimate of purchasing power.

administered vertical marketing system An arrangement that coordinates distribution activities through the market and/or economic power of one channel member or the shared power of two channel members.

adoption process The set of successive decisions an individual or organization makes before accepting an innovation.

adoption rate The speed or ease with which a new product is accepted.

advertising All activities involved in presenting to an audience a nonpersonal, sponsor-identified, paid-for message about a product or an organization.

advertising agency An independent company that provides specialized advertising services and may also offer more general marketing assistance.

advertising campaign All the tasks involved in transforming a theme into a coordinated advertising program to accomplish a specific goal for a product or brand.

advertising media The communications vehicles (such as newspapers, radio, and television) that carry advertising as well as other information and entertainment.

agent middleman A firm that never actually takes title to (i.e., owns) products it helps market but does arrange the transfer of title.

agent wholesaling middleman An independent firm that engages primarily in wholesaling by actively negotiating the sale or purchase of products on behalf of other firms but does not take title to the products being distributed.

agribusiness Farms, food-processing firms, and other large-scale farming-related enterprises.

AIDA A sequence of steps in various forms of promotion, notably personal selling and advertising, consisting of attracting Attention, holding Interest, arousing Desire, and generating buyer Action.

annual marketing plan A written document that presents the master blueprint for a year’s marketing activity for a specified organizational division or major product.

Asia-Pacific Economic Cooperation forum (APEC) A trade pact among 18 Pacific Rim nations that seeks the elimination of major trade barriers.

Association of Southeast Asian Nations (ASEAN) An agreement creating a free-trade zone among Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

attitude A learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way.

auction company An agent wholesaling middleman that helps assembled buyers and sellers complete their transactions by providing auctioneers who do the selling and physical facilities for displaying the sellers’ products.

automatic vending A form of nonstore retailing where the products are sold through a machine with no personal contact between the buyer and seller.

average fixed cost The total fixed cost divided by the number of units produced.

average fixed cost curve A graph of average fixed cost levels showing a decline as output increases because the total of the fixed costs is spread over an increasing number of units.

average revenue The unit price at a given level of unit sales. It is calculated by dividing total revenue by the number of units sold.

average total cost The total cost divided by the number of units produced.

average total cost curve A graph of average total costs, which starts high, then declines to its lowest point, reflecting optimum output with respect to total costs (not variable costs), and then rises because of diminishing returns.

average variable cost The total variable cost divided by the number of units produced.

average variable cost curve A graph of average variable cost levels, which starts high, then declines to its lowest point, reflecting optimum output with respect to variable costs (not total costs), and then rises.

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B

Baby boomers Americans born during the 10 years following World War II.

balance of payments The accounting record of all of a country’s transactions with all the other nations of the world.

balance sheet A financial statement that summarizes the assets, liabilities, and net worth of a company at a given time.

banner ad A boxed-in promotional message often appearing at the top of a Web page.

barter The exchange of goods and/or services for other products.

base price The price of one unit of the product at its point of production or resale. Same as list price.

behavioral segmentation Market segmentation based on consumers’ product-related behavior, typically the benefits desired from a product and the rate at which the consumer uses the product.

Boston Consulting Group (BCG) matrix A strategic planning model that classifies strategic business units or major products according to market shares and growth rates.

boycott A refusal to buy products from a particular company or country.

brand A name and/or mark intended to identify and differentiate the product of one seller or a group of sellers.

brand equity The value a brand adds to a product.

brand label The application of the brand name alone to a product or package.

brand licensing See trademark licensing.

brand manager See product manager.

brand mark The part of a brand that appears in the form of a symbol, design, or distinctive color or type of lettering.

brand name The part of a brand that can be vocalized—words, letters, and/or numbers.

breadth The number of product lines offered for sale by a firm.

break-even analysis A method of calculating the level of output at which total revenue equals total costs, assuming a certain selling price.

break-even point The level of output at which total revenue equals total costs, assuming a certain selling price.

bribes Something given in exchange for services or protection, it is common in foreign markets.

broker An agent wholesaling middleman that brings buyers and sellers together and provides market information to either party and that ordinarily neither physically handles products being distributed nor works on a continuing basis with those sellers or buyers.

browser A program that enables its users to access electronic documents included in the World Wide Web on the Internet.

business analysis One stage in the new-product development process, consisting of several steps to expand a surviving idea into a concrete business proposal.

business cycle The three recurring stages in an economy, typically prosperity, recession, and recovery.

business format franchising An agreement, covering an entire method (or format) for operating a business, under which a successful business sells the right to operate the same business in different geographic areas.

business market The total of all business users.

business marketing The marketing of goods and services to business users, as contrasted to ultimate consumers.

business product A product that is intended for purchase and resale or for purchase and use in producing other products or for providing services in an organization.

business services market The total set that deals in data and information such as marketing research firms, ad agencies, public utilities, and financial, insurance, legal, or real estate firms.

business-to-business advertising Advertising that is directed at businesses.

business users Business, industrial, or institutional organizations that buy goods or services to use in their own organizations, to resell, or to make other products.

buy classes Three typical buying situations in the business market—namely new-task buying, modified rebuy, and straight rebuy.

buying center In an organization, all individuals or groups involved in the process of making a purchase decision.

buying motive The reason why a person or an organization buys a specific product or makes purchases from a specific firm.

buying roles The users, influencers, deciders, gatekeepers, and buyers who make up a buying center.

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C

cannibalization Situation in which a firm introduces new products to stimulate sales but the profit comes at the expense of other products sold by that firm.

cartel A group of companies that produce similar products and act collectively to restrain competition in manufacturing and marketing.

cash discount A deduction granted to buyers for paying their bills within a specified period.

category-killer store A type of retail institution that has a narrow but very deep assortment, low prices, and few to moderate customer services. It is designed to “destroy” all competition in a specific product category.

change agent In the process of diffusion, a person who seeks to accelerate the spread of a given innovation.

channel assembly Strategy in which a distributor takes over the final assembly role, which allows products to be customized, thus shortening delivery time because manufacturers often delay custom projects so they don’t disrupt their production processes.

channel conflict A situation in which one channel member perceives another channel member to be acting in a way that prevents the first member from achieving its distribution objectives.

channel control The actions of a firm to regulate the behavior of other companies in its distribution channel.

channel power The ability of a firm to influence or determine the behavior of another channel member.

client market Individuals and/or organizations that are the recipients of a nonprofit organization’s money or services. Same as recipient market.

clustering Electronic research technique that tracks the pages visited, the amount of time at a page, and the items purchased by individuals as they navigate a site.

collaborative filtering Electronic research technique that compares a person’s selections and the purchases of previous visitors and enables a site to recommend current products that may be of interest to the visitor.

collaborative planning, forecasting, and replenishment (CPFR) Method by which a producer or wholesaler and a customer, ordinarily a retail chain, jointly and interactively develop sales forecasts through a shared website.

cobranding Agreement between two separate companies, or two divisions within the same company, to place both of their respective brands on a particular product or enterprise; also called dual branding.

commercial information environment As contrasted with the social information environment, all communications directed to consumers by organizations and individuals involved in marketing.

Common Market of the South (MERCOSUR) An agreement between Argentina, Brazil, Paraguay, and Uruguay to allow 90% of trade, among these countries, to occur tariff-free.

communication The verbal or nonverbal transmission of information between someone wanting to express an idea and someone else expected or expecting to get that idea. The four elements are a message, a source of the message, a communication channel, and a receiver.

company sales branch See manufacturer’s sales branch.

comparative advertising A form of selective-demand advertising in which an advertiser either directly (by naming a rival brand) or indirectly (through inference) points out the differences among competing brands.

competitive intelligence The process of gathering and analyzing publicly available information about the activities and plans of competitors.

concentration strategy See single-segment strategy.

Consolidated Metropolitan Statistical Area (CMSA) A giant urban center consisting of two or more adjacent Primary Metropolitan Statistical Areas.

consumer advertising Advertising that is directed at consumers.

consumer behaviour A discipline dealing with how and why consumers purchase ( or don't purchase ) products and services.

consumer buying-decision process The series of logical stages, which differ for consumers and organizations, that a prospective purchaser goes through when faced with a buying problem.

consumer product A product that is intended for purchase and use by household consumers for nonbusiness purposes.

Consumer Product Safety Act Federal legislation that created the Consumer Product Safety Commission (CPSC), which has authority to establish mandatory safety standards for many consumer products.

containerization A cargo-handling system in which shipments of products are enclosed in large metal or wood receptacles that are then transported unopened from the time they leave the shipper’s facilities until they reach their destination.

contract logistics An arrangement under which a firm outsources various physical distribution activities to one or more independent firms.

contract manufacturing An arrangement in which a firm in one country arranges for a firm in another country to produce the product in the foreign country.

contracting A legal relationship that allows a firm to enter a foreign market indirectly, quickly establish a market presence, and experience a limited amount of risk.

contractual vertical market system An arrangement under which independent firms—producers, wholesalers, and retailers—operate under contracts specifying how they will operate in order to improve their distribution efficiency and effectiveness.

contribution-margin approach In marketing cost analysis, an accounting method in which only direct expenses are allocated to each marketing unit being analyzed.

convenience goods A category of tangible consumer products that the consumer has prior knowledge of and purchases with minimum time and effort.

convenience store A type of retail institution that concentrates on convenience-oriented groceries and nonfoods, typically has higher prices than other grocery stores, and offers few customer services.

cookie An inactive data file, placed on the computer’s hard drive after the user connects to a particular website, used to record the visitor’s activities while connected to the site.

cooperative advertising Advertising promoting products of two or more firms that share its cost.

corporate chain An organization of two or more centrally owned and managed stores that generally handle the same lines of products.

corporate vertical marketing system An arrangement under which a firm at one level of a distribution channel owns the firms at the next level or owns the entire channel.

correlation analysis A statistical refinement of the direct-derivation method, an approach to demand forecasting that takes into account how close the association is between potential sales of the product and the market factor affecting its sales.

cost of goods sold A financial figure showing the value of the merchandise sold during a given period, calculated by adding the value of any merchandise on hand at the beginning of the period to the net cost of what is purchased during the period and then deducting the value of whatever remains at the end of the period.

cost per thousand (CPM) The media cost of gaining exposure to 1,000 persons with an ad.

cost-plus pricing A major method of price determination in which the price of a unit of a product is set at a level equal to the unit’s total cost plus a desired profit on the unit.

countertrade An arrangement under which domestically made products are traded for imported goods.

culture A complex of symbols and artifacts created by a society and handed down from generation to generation as determinants and regulators of human behavior.

cumulative discount A quantity discount based on the total volume purchased over a specified period.

customer specialization One method of organizing selling activities in which each sales person is assigned a specific group of customers, categorized by type of industry or channel of distribution, to which to sell. Same as market specialization.

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D

database A set of related data that are organized, stored, and updated in a computer.

data mining Method used to identify patterns and meaningful relationships in masses of data that would be unrecognizable to researchers.

data warehouse A collection of data from a variety of internal and external sources, compiled by a firm for use in conducting transactions.

decision support system (DSS) A procedure that allows a manager to interact with data and methods of analysis to gather, analyze, and interpret information.

decline stage The fourth, and final, part of a product life cycle during which the sales of a generic product category drop and most competitors abandon the market.

Delphi method A forecasting technique, applicable to sales forecasting, in which a group of experts individually and anonymously assesses future sales, after which each member has the chance to offer a revised assessment as the group moves toward a consensus.

demand forecasting The process of estimating sales of a product during some future period.

demographic segmentation Subdividing markets into groups based on population factors such as size, age, and growth.

demographics The characteristics of human populations, including such factors as size, distribution, and growth.

department store A large-scale retail institution that has a very broad and deep product assortment, tries not to compete on the basis of price, and offers a wide array of customer services.

depth The relative variety of sizes, colors, and models offered within a product line.

descriptive label The part of a product that gives information about its use, construction, care, performance, and/or other pertinent features.

desk jobber See drop shipper.

differential advantage Any feature of an organization or brand perceived by customers to be desirable and different from those of the competition.

differential disadvantage Any feature of an organization or brand perceived by customers to be undesirable and different from those of the competition.

diffusion A process by which an innovation spreads throughout a social system over time.

direct costs Separate expenses that are incurred totally in connection with one market segment or one unit of the sales organization. Same as separable expenses.

direct-derivation method An approach to demand forecasting that directly relates the behavior of a market factor to estimated demand.

direct foreign investment A method through which a company can build or acquire production or distribution facilities in a foreign country.

direct distribution A channel consisting only of producer and final customer, with no middlemen providing assistance.

direct investment The actions of a company to build or acquire its own production facilities in a foreign country.

direct marketing A form of nonstore retailing that uses advertising to contact consumers who, in turn, purchase products without visiting a retail store.

direct selling A form of nonstore retailing in which personal contact between a sales person and a consumer occurs away from a retail store. Sometimes called in-home selling.

direct tests Measuring or predicting the sales volume attributable to a single ad or an entire advertising campaign.

directory Collection of lists of websites organized by topics and subtopics.

disintermediation The replacement of some traditional intermediaries in a process due to the growth of Internet-based sales.

discount retailing A retailing approach that uses price as a major selling point by combining comparatively low prices and reduced costs of doing business.

discount store A large-scale retail institution that has a broad and shallow product assortment, low prices, and few customer services.

distribution center A facility that has under one roof an efficient, fully integrated system for the flow of products—taking orders, filling them, and preparing them for delivery to customers.

distribution channel The set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user.

donor market Individuals and/or organizations that contribute money, labor, or materials to a nonprofit organization. Same as contributor market.

drop shipper A merchant wholesaler that does not physically handle the product being distributed, but instead sells merchandise for delivery directly from the producer to the customer. Same as desk jobber.

dumping The process of selling products in foreign markets at prices below the prices charged for these goods in their home market.

dynamic pricing A form of price adjustment that occurs instantly and frequently in accordance with what the market will bear.

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E

early adopters A group of consumers that includes opinion leaders, is respected, has much influence on its peers, and is the second group (following the innovators) to adopt an innovation.

early majority A group of fairly deliberate consumers that adopts an innovation just before the “average” adopter in a social system.

economic environment A set of factors, including the business cycle, inflation, and interest rates, that affect the marketing activities of an organization.

economic order quantity (EOQ) The optimal quantity for reorder when replenishing inventory stocks, as indicated by the volume at which the sum of inventory-carrying costs and order-processing costs are at a minimum.

80–20 principle A situation in which a large proportion of the total orders, customers, territories, or products account for only a small share of the company’s sales or profit, and vice versa.

elasticity of demand A price-volume relationship such that a change of one unit on the price scale results in a change of more than one unit on the volume scale.

electronic commerce The buying and selling of goods and services through the use of electronic networks.

electronic data interchange (EDI) Computer-to-computer transmission of orders, invoices, or other business information.

electronic information A form of networking involving the creation of a corporate website to post information about the firm.

electronic networks Individuals or organizations linked via some form of telecommunications.

electronic transactions Purchases made directly from a firm’s website.

enterprise resource planning (ERP) systems Strategy in which the various business functions of sales, manufacturing, purchasing, distribution, financial management, and human resources are integrated through the use of computer programs; also called enterprise software.

environmental monitoring The process of gathering information regarding a company’s external environment, analyzing it, and forecasting the impact of whatever trends the analysis suggests. Same as environmental scanning.

environmental scanning See environmental monitoring.

ethics The rules and standards of moral behavior that are generally accepted by a society.

European Union (EU) A political and economic alliance among most of the countries of Western Europe that seeks to liberalize trade among its members.

evaluation The stage of the management process during which an organization determines how well it is achieving the goals set in its strategic planning.

everyday low pricing (EDLP) A pricing strategy that involves consistently low prices and few, if any, temporary price reductions.

exchange The act of voluntarily providing a person or organization something of value in order to acquire something else of value.

exclusive dealing The practice by which a manufacturer prohibits its dealers from carrying products of its competitors.

exclusive distribution A strategy in which a supplier agrees to sell its product only to a single wholesaling middleman and/or retailer in a given market.

exclusive-territory policy The practice by which a producer requires each middleman to sell only to customers located within an assigned territory.

executive judgment A method of sales forecasting that consists of obtaining opinions regarding future sales volume from one or more executives.

expected price The price at which customers consciously or unconsciously value a product—what they think the product is worth.

experiment A method of gathering primary data in which the researcher measures the results of changing one variable in a situation while holding all others constant.

export agent A middleman that operates either in a manufacturer’s country or in the destination country and that negotiates the sale of the product in another country and may provide additional services such as arranging for international financing, shipping, and insurance on behalf of the manufacturer.

export merchant A middleman operating in a manufacturer’s country that buys goods and exports them.

exporting The activities by which a firm sells its product in another country, either directly to foreign importers or through import-export middlemen.

express warranty A statement in written or spoken words regarding restitution from seller to customer if the seller’s product does not perform up to reasonable expectations.

extranet A network that links a large number of firms at different levels of a distribution channel.

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F

fabricating materials Business goods that have received some processing and will undergo further processing as they become part of another product.

fabricating parts Business goods that already have been processed to some extent and will be assembled in their present form (with no further change) as part of another product.

fad A product or style that becomes immensely popular nearly overnight and then falls out of favor with consumers almost as quickly.

family A group of two or more people related by blood, marriage, or adoption living together in a household.

family branding A strategy of using the company name for branding purposes.

family life cycle The series of life stages that a family goes through, starting with young single people, progressing through married stages with young and then older children, and ending with older married and single people.

family packaging A strategy of using either highly similar packages for all products or packages with a common and clearly noticeable feature.

fashion A style that is popularly accepted and purchased by successive groups of people over a reasonably long period of time.

fashion-adoption process A series of buying waves by which a style becomes popular in a market; similar to diffusion of an innovation.

fashion cycle Wavelike movements representing the introduction, rise, popular acceptance, and decline of the market’s acceptance of a style.

fashion obsolescence See style obsolescence.

Federal Trade Commission Act A federal law, passed in 1914, prohibiting unfair competition and establishing the Federal Trade Commission.

first-mover advantage Strategy of entering a market during the introductory stage of a product in order to build a dominant position; also called pioneer advantage.

fixed cost A cost that remains constant regardless of how many items are produced or sold.

flat-rate pricing Arrangement where a purchaser pays a stipulated single price and then can consume as much or as little of the product as desired.

flexible-price strategy A pricing strategy under which a seller charges different prices to similar customers who buy identical quantities of a product. Same as variable-price strategy.

FOB (free on board) factory pricing A geographic pricing strategy whereby the seller quotes the selling price at the point of production and the buyer selects the mode of transportation and pays all freight costs. Same as FOB mill pricing.

FOB mill pricing See FOB factory pricing.

focus group A preliminary data-gathering method involving an interactive interview of 4 to 10 people.

forecast demand The process of estimating sales of a product during some future period. Same as demand forecasting.

for-profit services firms Those that sell to consumers or other businesses with profitable operations as a primary goal.

franchising A type of contractual vertical marketing system that involves a continuing relationship in which a franchiser (the parent company) provides the right to use a trademark plus various management assistance in return for payments from a franchisee (the owner of the individual business unit).

freight absorption pricing A geographic pricing strategy whereby the seller pays for (absorbs) some of the freight charges in order to penetrate more distant markets.

freight forwarder A specialized marketing institution that serves firms by consolidating less-than-carload or less-than-truckload shipments into carload or truckload quantities and arranging for door-to-door shipping service.

freight in Freight charges paid by a buyer.

fulfillment The act of packing and shipping orders to customers.

full-cost approach In marketing cost analysis, an accounting method in which all expenses—direct and indirect—are allocated to the marketing units being analyzed.

full-service wholesaler An independent merchant middleman that performs a full range of wholesaling functions (from creating assortments to warehousing).

functional discount See trade discount.

functional obsolescence See technological obsolescence.

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G

General Agreement on Tariffs and Trade (GATT) An organization, formed in 1948 and now comprising over 100 countries, that seeks to develop fair-trade practices among its members.

General Electric (GE) business screen A planning model developed by General Electric that classifies strategic business units or major products based on two factors, market attractiveness and business position.

Generation X Those people in the U.S. who were born between approximately 1966 and 1976. Also called baby busters, twentysomethings, or boomerangers.

Generation Y Those people in the U.S. who were born between either 1976 and 1994, or 1978 and 1982. Also called echo boomers, or millenium generation.

generic product A product that is packaged in a plain label, is sold with no advertising and without a brand name, and goes by its generic name, such as “tomatoes” or “paper towels.”

geographic segmentation Subdividing markets into groups based on their locations.

geographic specialization One method of organizing selling activities, in which each sales person is assigned a specific geographic area—called a territory—in which to sell.

global sales teams A type of personal selling where a team of sales people is responsible for all of its company’s sales to an account anywhere in the world.

global strategy A strategy in which essentially the same marketing program is employed around the world.

goal See objective.

government market The segment of the business market that includes federal, state, and local units buying for government institutions such as schools, offices, hospitals, and military bases.

grade label The part of a product that identifies the products judged quality (grade) by means of a letter, number, or word.

gray marketing Practice of buying a product in one country, agreeing to distribute it in a second country but diverting it to a third country; also called export diversion.

Green River ordinance Law that restricts door-to-door salespeople by requiring them to register and purchase a license.

gross margin The amount of money that is left after cost of goods sold is subtracted from net sales.

gross margin percentage The ratio of gross margin to net sales.

growth stage The second part of a product life cycle during which the sales and profits of a generic product category rise and competitors enter the market, causing profits to decline near the end of this part of the cycle.

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H

heterogeneity A characteristic of a service indicating that each unit is somewhat different from other units of the same service.

hierarchy of effects The stages a buyer goes through in moving toward a purchase, specifically awareness, knowledge, liking, preference, conviction, and purchase.

high-low pricing A pricing strategy that combines frequent price reductions and aggressive promotion to convey an image of very low prices.

horizontal business market A situation where a given product is usable in a wide variety of industries.

horizontal conflict A form of channel conflict occurring among middlemen (either of the same type or different types) at the same level of distribution.

household A single person, a family, or any group of unrelated persons who occupy a housing unit.

hypothesis A tentative supposition that if proven would suggest a possible solution to a problem.

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I

iceberg principle A concept related to performance evaluation stating that the summary data (tip of the iceberg) regarding an activity may hide significant variations among segments of this activity.

implementation The stage of the management process during which an organization attempts to carry out its strategic plans.

implied warranty An intended but unstated assurance regarding restitution from seller to customer if the seller’s product does not perform up to reasonable expectations.

import-export agent An agent wholesaling middleman that brings together sellers and buyers in different countries. Export agents work in the country in which the product is made; import agents work in the country in which the product will be sold.

import quota A limit on the amount of a particular product that can be brought into a country.

impulse buying A form of low-involvement decision making; purchases made with little or no advance planning.

income statement See operating statement.

independent retailer A company with a single retail store that is not affiliated with a contractual vertical marketing system.

indirect costs Expenses that are incurred jointly for more than one marketing unit and therefore cannot be totally charged to one market segment.

indirect distribution A channel consisting of producer, final customer, and at least one level of middleman.

indirect tests Measuring or predicting the effects of advertising by using a factor other than sales volume.

inelastic demand A price-volume relationship such that a change of one unit on the price scale results in a change of less than one unit on the volume scale.

inflation A rise in the prices of goods and services.

informal investigation The stage in a marketing research study at which preliminary, readily available data are gathered from people inside and outside the company—middlemen, competitors, advertising agencies, and consumers.

infrastructure The country’s levels and capabilities with respect to transportation, communications, and energy.

in-home selling See direct selling.

innovation adopter categories Groups of people differentiated according to when they accept a given innovation.

innovators A group of venturesome consumers that are the first to adopt an innovation.

inseparability A characteristic of a service indicating that it cannot be separated from the creator-seller of the service.

inside selling Situation where the customer comes to the sales person, includes retail stores and telephone order takers.

installations Manufactured products that are an organization’s major, expensive, and long-lived equipment and that directly affect the scale of operations in an organization producing goods or services.

institutional advertising Advertising that presents information about the advertiser’s business or tries to create a favorable impression—build goodwill—for the organization.

intangibility A characteristic of a service indicating that it has no physical attributes and, as a result, is impossible for customers to taste, feel, see, hear, or smell before they buy it.

intensity of distribution The number of middlemen used by a producer at the retail and wholesale levels in a particular territory.

intensive distribution A strategy in which a producer sells its product through every available outlet in a market where a consumer might reasonably look for it.

interest rates The percentage amounts either charged to lend money or paid to acquire money.

intermodal transportation The use of two or more modes of transportation to move a shipment of freight.

international market Sales, market potential, or sales potential in foreign (or nondomestic) areas.

international marketing The activities of an organization to market its products in two or more countries.

Internet Global network of networks linking millions of users, originally created to link researchers at many different sites and allow them to exchange information.

Internet selling The offering of goods or services to customers over the Internet.

Internet survey A method of gathering data by posting questionnaires on a firm’s website or by e-mailing them to a sample of individuals.

intranet A local electronic network created by linking the personal computers of individuals in a company or department.

introduction stage The first part of a product life cycle during which a generic product category is launched into the market in a full-scale marketing program. Same as pioneering stage.

inverse demand A price-volume relationship such that the higher the price, the greater the unit sales.

ISO 9000 quality standards The International Organization for Standardizations certification to assure that firms conform to specific standards in processes, procedures, operations, controls, and management.

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J

joint venture A partnership arrangement in which a foreign operation is owned in part by a domestic company and in part by a foreign company.

just-in-time (JIT) A form of inventory control, purchasing, and production that involves buying parts and supplies in small quantities just in time for use in production and then producing in quantities just in time for sale.

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K

kinked demand A condition in which total revenue declines when a product’s price is increased or decreased in relation to the prevailing market level.

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L

label The part of a product that carries information about the product and the seller.

laggards A group of tradition-bound consumers who are the last to adopt an innovation.

Landham Trademark Act A federal law passed in 1946 that made it illegal for organizations to make false claims about their own products.

late majority A group of skeptical consumers who are slow to adopt an innovation but eventually do so to save money or in response to social pressure from their peers.

leader In leader pricing, an item on which price is cut.

leader pricing A pricing and promotional strategy in which temporary price cuts are made on a few items to attract customers.

learning Changes in behavior resulting from observation and experience.

level of involvement The amount of effort that is expended in satisfying a need.

licensing A business arrangement whereby one firm sells to another firm (for a fee or royalty) the right to use the first company’s brand, patents, or manufacturing processes.

life-style Habits that relate to a person’s activities, interests, and opinions.

limited-line store A type of retail institution that has a narrow but deep product assortment and customer services that vary from store to store.

line extension One form of product-mix expansion in which a company adds a similar item to an existing product line with the same brand name.

list price See base price.

local strategy A strategy used to develop customized marketing programs for each distinct area.

local-content law A regulation specifying the proportion of a finished product’s components and labor that must be provided by the importing country.

local operating laws A constraint on how, when, or where retailing can be conducted.

logistics See physical distribution.

loss leader In leader pricing, an item on which price is cut to a level that is below the store’s cost.

loyalty Faithfulness in a particular brand or retailer so that the consumer purchases that brand or from that retailer without considering alternatives.

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M

mail survey A method of gathering data by mailing a questionnaire to potential respondents, and asking them to complete it and return it by mail.

major-accounts organization A variation of customer specialization that usually involves team selling to better service key accounts.

management The process of planning, implementing, and evaluating the efforts of a group of people working toward a common goal.

manufacturers’ agent An agent wholesaling middleman that sells part or all of a manufacturer’s product mix in an assigned geographic territory. Same as manufacturers’ representative.

manufacturers’ representative See manufacturers’ agent.

manufacturer’s sales branch A manufacturer’s sales facility that carries a stock of the product being sold. Same as company sales branch.

manufacturer’s sales facility An establishment that engages primarily in wholesaling and is owned and operated by a manufacturer but is physically separated from manufacturing plants.

manufacturer’s sales office A manufacturer’s sales facility that does not carry a stock of the product being sold.

marginal cost The cost of producing and selling one more unit; that is, the cost of the last unit produced or sold.

marginal cost curve A graph of marginal cost levels, which slopes downward until marginal costs start to increase, at which point it rises.

marginal revenue The income derived from the sale of the last unit.

markdown A reduction from the original selling price.

markdown percentage The ratio of the total dollar markdowns to total net sales during a given period.

market People or organizations with wants to satisfy, money to spend, and the willingness to spend the money. Alternatively, any person or group with whom an individual or organization has an existing or potential exchange relationship.

market aggregation strategy A plan of action under which an organization treats its total market as a single segment—that is, as one mass market whose members are considered to be alike with respect to demand for the product—and thus develops a single marketing mix to reach most of the customers in the entire market. Same as mass-market strategy and undifferentiated-market strategy.

market factor An item or element that (1) exists in a market, (2) may be measured quantitatively, and (3) is related to the demand for a good or service.

market-factor analysis A sales forecasting method that assumes the future demand for a product is related to the behavior of certain market factors and, as a result, involves determining what these factors are and then measuring their relationships to sales activity.

market-orientation stage The third stage in the evolution of marketing management in which companies identify what customers and tailor all their activities to satisfy those needs as efficiently as possible.

market-penetration pricing A strategy in which the initial price of a product is set low in relation to the target market’s range of expected prices.

market potential The total sales volume that all organizations selling a product during a stated time period in a specific market could expect to achieve under ideal conditions.

market-response system A form of inventory control in which a purchase by a final customer activates a process to produce and deliver a replacement item.

market segmentation The process of dividing the total market for a good or service into several smaller groups, such that the members of each group are similar with respect to the factors that influence demand.

market segments Within the same general market, groups of customers with different wants, buying preferences, or product-use behavior.

market share The proportion of total sales of a product during a stated time period in a specific market that is captured by a single firm.

market-share analysis A detailed analysis of the company’s share of the market in total as well as by product line and market segment.

market-skimming pricing A strategy in which the initial price of a product is set high in relation to the target market’s range of expected prices.

market specialization See customer specialization.

market tests One stage in the new-product development process, consisting of acquiring and analyzing actual consumers’ reactions to proposed products.

marketer Any person or organization that desires to stimulate and facilitate exchanges.

marketing A total system of business activities designed to plan, price, promote, and distribute want-satisfying products to target markets to achieve organizational objectives.

marketing audit A comprehensive review and evaluation of the marketing function in an organization—its philosophy, environment, goals, strategies, organizational structure, human and financial resources, and performance.

marketing concept A philosophy of doing business that emphasizes customer orientation and coordination of marketing activities in order to achieve the organization’s performance objectives.

marketing cost analysis A detailed study of the Operating Expenses section of a company’s profit and loss statement.

marketing information system (MkIS) An ongoing, organized procedure to generate, analyze, disseminate, store, and retrieve information for use in making marketing decisions.

marketing intermediary An independent business organization that directly aids in the flow of products between a marketing organization and its markets.

marketing mix A combination of the four elements—product, pricing structure, distribution system, and promotional activities—used to satisfy the needs of an organization’s target market(s) and, at the same time, achieve its marketing objectives.

marketing research The development, interpretation, and communication of decision-oriented information to be used in the strategic marketing process.

markon See markup.

markup The amount added to the cost of a product to arrive at the price at which the seller would like to make a transaction. Alternatively, the difference between the selling price of an item and its cost. Same as markon.

Maslow’s need hierarchy A structure of five need levels, arrayed in the order in which people seek to gratify them.

mass customization Developing, producing, and delivering affordable products with enough variety and uniqueness that nearly every potential customer can have exactly what he or she wants.

mass-market strategy See market aggregation strategy.

maturity stage The third part of a product life cycle during which the sales of a generic product category continue to increase (but at a decreasing rate), profits decline largely because of price competition, and some firms leave the market.

merchant middleman A firm that actually takes title to (i.e., owns) products it helps to market.

merchant wholesaler An independently owned firm that engages primarily in wholesaling and takes title to products being distributed. Sometimes called a wholesaler.

methods of sales-force compensation The three types of compensation plans are salary, straight commission, and a combination plan.

Metropolitan Statistical Area (MSA) An urban area in the U.S. with a center of population of at least 50,000 and a total MSA population of at least 100,000.

middleman A business firm that renders services directly related to the purchase and/or sale of a product as it flows from producer to consumer.

micromarketing The concept of marketing to a small segment of consumers.

middleman’s brand A brand owned by a retailer or a wholesaler.

misdirected marketing effort Marketing endeavors that do not produce results commensurate with the resources expended.

mission An organization’s statement of what customers it serves, what needs it satisfies, and what types of products it offers.

mix extension One form of product-mix expansion in which a company adds a new product line to its present assortment.

modified rebuy In the business market, a purchasing situation between a new task and a straight rebuy in terms of time and people involved, information needed, and alternatives considered.

motive A need sufficiently stimulated to move an individual to seek satisfaction.

multinational corporation A truly worldwide enterprise, in which the foreign and the domestic operations are integrated and are not separately identified.

multiple-brand strategy A strategy in which a firm has more than one brand of essentially the same product, aimed either at the same target market or at distinct target markets.

multiple correlation analysis A more sophisticated form of correlation analysis that allows the inclusion of more than one market factor in the calculation.

multiple-distribution channels The use by a producer of more than one channel of distribution for reasons such as achieving broad market coverage or avoiding total dependence on a single arrangement.

multiple packaging The practice of placing several units of the same product in one container.

multiple-segment strategy A plan of action that involves selecting two or more different groups of potential customers as the firm’s target markets.

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net cost of delivered purchases A financial figure calculated by taking gross purchases at billed cost, deducting sales returns, sales allowances, and cash discounts for early payment, and adding freight in.

net profit The amount of revenue that remains after a firm pays the cost of merchandise and its operating expenses.

net profit percentage The ratio of net profit to net sales.

net sales The net amount of sales revenue, out of which the company will pay for the products and all its expenses.

networks Individuals or organizations linked together to share data, exchange information and ideas, and perform tasks.

new product A vague term that may refer to (1) really innovative, truly unique products, (2) replacement products that are significantly different from existing ones, or (3) imitative products that are new to a particular firm but are not new to the market.

new-product department An organizational structure for product planning and development that involves a small unit, consisting of five or fewer people, and that reports to the president.

new-product development process A set of six stages that a new product goes through, starting with idea generation and continuing through idea screening, business analysis, prototype development, market tests, and eventually commercialization (full-scale production and marketing).

new-product strategy A statement identifying the role a new product is expected to play in achieving corporate and marketing goals.

new-task buying In the business market, a purchasing situation in which a company for the first time considers buying a given item.

niche marketing A strategy in which goods and services are tailored to meet the needs of small market segments.

niche marketers Sellers that pursue single segments within the total market.

niche markets A small, targeted segment.

nonadopters Those consumers that never adopt an innovation.

nonbusiness market The total set of churches, colleges and universities, museums, hospitals and other health institutions, political parties, labor unions, and charitable organizations.

noncumulative discount A quantity discount based on the size of an individual order of one or more products.

nonprice competition A strategy in which a seller maintains stable prices and attempts to improve its market position by emphasizing other (nonprice) aspects of its marketing program.

nonprofit organizations Those groups that provide services but do not have a profit objective.

nonstore retailing Retailing activities resulting in transactions that occur away from a retail store.

North American Free Trade Agreement (NAFTA) An agreement among the United States, Canada, and Mexico to eliminate tariffs between the countries.

North American Industry Classification System (NAICS) Coding system similar to the SIC, but has 20 rather than 10 industry sectors, to provide a more detailed and contemporary classification scheme.

not-for-profit services organizations (N-F-P) Those groups that have a profit goal because growth and existence depend on generating revenue in excess of costs.

nutrition labeling The part of a product that provides information about the amount of calories, fat, cholesterol, sodium, carbohydrates, and protein contained in the package’s contents.

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objective A desired outcome. Same as goal.

observation method A method of gathering primary data by observing the actions of a person without direct interaction.

odd pricing A psychological pricing strategy that consists of setting prices at uneven (or odd) amounts, such as $4.99, rather than at even amounts, such as $5, in the belief that these seemingly lower prices will result in larger sales volume.

off-price retailer A type of retail institution, often found in the areas of apparel and shoes, that has a narrow and deep product assortment, low prices, and few customer services.

oligopoly A market structure dominated by a few firms, each marketing similar products.

one-price strategy A pricing strategy under which a seller charges the same price to all similar customers who buy identical quantities of a product.

one-stop shipping A transportation firm offers multiple modes of transportation of goods to its customers.

online retailing Electronic transactions made over the Internet in which the purchaser is the ultimate consumer.

operating expense ratio Operating expenses divided by net sales.

operating expenses The marketing, administrative, and miscellaneous costs, but not the cost of goods purchased or manufactured, incurred by a firm.

operating statement A financial statement summarizing the firm’s income, expenses, and profit or loss over a given period of time. Same as income statement and profit and loss statement.

operating supplies The “convenience” category of business goods, consisting of tangible products that are characterized by low dollar value per unit and a short life and that aid in an organization’s operations without becoming part of the finished product.

organizational strategies Broad plans of action by which an organization intends to achieve its goals and fulfill its mission. These plans are for (1) the total organization in a small, single-product company or (2) each SBU in a large, multiproduct or multibusiness organization.

outside sales The kind of personal selling group in which sales people go to the customers, making contact by mail, telephone, or face-to-face.

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package-delivery firms Companies that specialize in the delivery of small packages and high-priority mail.

packaging All the activities of designing and producing the container or wrapper for a product.

past sales analysis A method of sales forecasting that applies a flat percentage increase to the volume achieved last year or to the average volume of the past few years.

patronage buying motives The reasons why a consumer chooses to shop at a particular store.

perception The process carried out by an individual to receive, organize, and assign meaning to stimuli detected by the five senses.

perfect competition A market structure in which product differentiation is absent, buyers and sellers are well informed, and the seller has no discernible control over the selling price.

perishability A characteristic of a service indicating that it is highly transitory and cannot be stored.

personal interview A face-to-face method of gathering data in a survey.

personal selling The personal communication of information to persuade somebody to buy something. Alternatively, the direct (face-to-face or over-the-phone) presentation of a product to a prospective customer by a representative of the organization selling it.

personal selling process The logical sequence of prospecting, preapproach, presenting, and postsale services that a sales person takes in dealing with a prospective buyer.

personality An individual’s pattern of traits that influences behavioral responses.

physical distribution All the activities involved in the flow of products as they move physically from producer to consumer or industrial user. Same as logistics.

physical distribution management The development and operation of processes resulting in the effective and efficient physical flow of products.

physical facilities The building—including its location, design, and layout—that serves as a store for a retail firm.

piggyback service The transporting of loaded truck trailers on railroad flatcars.

pioneering stage See introduction stage.

planned obsolescence A strategy that is intended to make an existing product out of date and thus to increase the market for replacement products. There are two forms: technological and style.

planning The process of deciding now what we are going to do later, including when and how we are going to do it.

political and legal forces A set of factors, including monetary and fiscal policies, legislation, and regulations, that affect the marketing activities of an organization.

portal An entrance and guide to the World Wide Web.

position The way a product, brand, or organization is viewed in relation to the competition by current and prospective customers.

positioning A product’s image in relation to directly competitive products as well as other products marketed by the same company. Alternatively, a firm’s strategies and actions related to favorably distinguishing itself from competitors in the minds of selected groups of consumers. Same as product positioning.

postage stamp pricing See uniform delivered pricing.

postpurchase cognitive dissonance The anxiety created by the fact that in most purchases the alternative selected has some negative features and the alternatives not selected have some positive features.

postsale service Maintenance and repairs as well as other services that are provided to customers in order to fulfill the terms of a firm’s warranty and/or to augment the firm’s revenues.

price The amount of money and/or other items with utility needed to acquire a product.

price competition A strategy in which a firm regularly offers products priced as low as possible, usually accompanied by a minimum of services.

price customization Method of establishing prices based on how much different people value a product.

price differential The difference in prices of an identical brand from one area to another.

price discrimination A situation in which different customers pay different prices for the same product.

price elasticity of demand The responsiveness of quantity demanded to price changes.

price lining A pricing strategy whereby a firm selects a limited number of prices at which it will sell related products.

price war A form of price competition that begins when one firm decreases its price in an effort to increase its sales volume and/or market share, the other firms retaliate by reducing prices on competing products, and additional price decreases by the original price cutter and/or its competitors usually follow.

pricing above competition One form of market-based pricing in which price is set above the prevailing market level.

pricing below competition One form of market-based pricing in which price is set below the level of your main competitors.

pricing objective The desired outcome that management seeks to achieve with its pricing structure and strategies.

pricing to meet competition A pricing method in which a firm ascertains what the market price is and, after allowing for customary markups for middlemen, arrives at its own selling price.

primary data New data gathered specifically for the project at hand.

primary-demand advertising Advertising that is designed to stimulate demand for a generic category of a product.

Primary Metropolitan Statistical Area (PMSA) A Metropolitan Statistical Area in the U.S. that has a population of at least 1 million.

Printer’s Ink statutes State legislation intended to punish “untrue, deceptive, or misleading” advertising.

private warehouse A warehouse that is owned and operated by the firm whose products are being stored and handled at the facility.

producer’s brand A brand that is owned by a manufacturer or other producer.

product A set of tangible and intangible attributes, which may include packaging, color, price, quality, and brand, plus the seller’s services and reputation. A product may be a good, service, place, person, or idea.

product abandonment A decision and subsequent action by a firm to drop a product that has insufficient and/or declining sales and lacks profits.

product advertising Advertising that focuses on a particular product or brand.

product alteration A strategy of improving an existing product.

product and trade name franchising A distribution agreement under which a supplier (the franchiser) authorizes a dealer (the franchisee) to sell a product line, using the parent company’s trade name for promotional purposes.

product color The hue(s) given to a particular product, including its packaging.

product counterfeiting The unscrupulous placement of a brand name on a product without the legal right to do so.

product design The arrangement of elements that collectively form a good or service.

product differentiation A strategy in which a firm uses promotion to distinguish its product from competitive brands offered to the same aggregate market.

product liability A legal action alleging that an illness, accident, or death resulted from the named product because it was harmful, faulty, or inadequately labeled.

product life cycle The aggregate demand over an extended period of time for all brands comprising a generic product category.

product line A broad group of products intended for essentially similar uses and having similar physical characteristics.

product manager An organizational structure for product planning and development that makes one person responsible for planning new products as well as managing established products. Same as brand manager.

product-market growth matrix A planning model that consists of four alternative growth strategies based on whether an organization will be selling its present products or new products to its present markets or new markets.

product mix The set of all products offered for sale by a company.

product-mix contraction A strategy in which a firm either eliminates an entire line or simplifies the assortment within a line.

product-mix expansion A strategy in which a firm increases the depth within a particular line and/or the number of lines it offers to consumers.

product-planning committee An organizational structure for product planning and development that involves a joint effort among executives from major departments and, especially in small firms, the president and/or another top-level executive.

product positioning See positioning.

product quality See quality.

product specialization One method of organizing selling activities so that each sales person is assigned one or more product lines to sell.

production-orientation stage The first stage in the evolution of marketing management, in which the basic assumption is that making a good product will ensure business success.

profit and loss statement See operating statement.

promotion The element in an organization’s marketing mix that serves to inform, persuade, and remind the market of a product and/or the organization selling it in the hope of influencing the recipients’ feelings, beliefs, or behavior.

promotional allowance A price reduction granted by a seller as payment for promotional services performed by buyers.

promotional budgeting method The means used to determine the amount of dollars allocated to promotion in general and/or to specific forms of promotion.

promotional mix The combination of personal selling, advertising, sales promotion, public relations, and publicity that is intended to help an organization achieve its marketing objectives.

psychoanalytic theory Freudian theory that argues people have subconscious drives that cannot be satisfied in socially acceptable ways.

psychographic segmentation Subdividing markets into groups based on personality dimensions, life-style characteristics, and values.

psychological obsolescence See style obsolescence.

public relations Communications efforts that are designed to favorably influence attitudes toward an organization, its products, and its policies.

public warehouse An independent firm that provides for a fee storage and handling facilities for individuals or companies.

publicity A special form of public relations that involves any communication about an organization, its products, or its policies through the media that is not paid for by the sponsoring organization.

pull strategy Promotional effort directed primarily at end users so they will ask middlemen for the product.

push strategy Promotional efforts directed primarily at middlemen that are the next link forward in the distribution channel for a product.

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qualitative evaluation bases In sales-force evaluation, subjective criteria for appraising the performance of sales people.

quality The degree to which a product meets the expectations of the customer. Same as product quality.

quantitative evaluation bases In sales-force evaluation, specific, objective criteria for appraising the performance of sales people.

quantity discount A deduction from a seller’s list price that is offered to a buyer when a large quantity of the product is purchased.

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raw materials Business goods that become part of another tangible product prior to being processed in any way.

rebate A discount on a product that a customer obtains by submitting a form or certificate provided by the seller.

recipient market See client market.

reference group A group of people who influence a person’s attitudes, values, and behavior.

refusal to deal A situation in which a producer that desires to select and perhaps control its channels declines to sell to some middlemen.

regional strategy A strategy used to market a product to different regions by recognizing distinctions in climate, custom, or taste.

relationship marketing An ongoing interaction between a buyer and a seller in which the seller continuously improves its understanding of the buyer’s needs, and the buyer becomes increasingly loyal to the seller because its needs are being so well satisfied.

relationship selling An attempt by a sales person or organization to develop a deeper, longer-lasting relationship built on trust with key customers—usually larger accounts.

repositioning Reestablishing a product’s attractiveness in the target market.

resale price maintenance A pricing policy whereby a manufacturer seeks to control the prices at which middlemen resell their products.

reseller market One segment of the business market, consisting of wholesaling and retailing middlemen that buy products for resale to other organizations or to consumers.

retail scanners The electronic devices at retail checkouts that read the bar code on each item.

retail trade See retailing.

retailer A firm engaged primarily in retailing.

retailer cooperative A type of contractual vertical marketing system that is formed by a group of small retailers who agree to establish and operate a wholesale warehouse.

retailing The sale, and all activities directly related to the sale, of goods and services to ultimate consumers for personal, nonbusiness use. Same as retail trade.

return on investment A commonly used measure of managerial performance, calculated by dividing net profit by either total assets or equity.

return on marketing investment A way for firms to measure profit gain from marketing expenditures.

Robinson-Patman Act A federal law passed in 1936 that was intended to curb price discrimination by large retailers and the granting by manufacturers of proportionally unequal promotional allowances to large retailers or wholesalers.

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sales allowance A situation in which a customer who is dissatisfied with a product keeps it but is given a reduction from the selling price.

sales-force automation (SFA) Strategy of equipping sales people with laptop computers, cellular phones, fax machines, and pagers to give them access to databases, the Internet, and e-mail to help them manage accounts more effectively.

sales-force composite A method of forecasting sales that consists of collecting from all sales people estimates of sales for their territories during the future period of interest.

sales forecast An estimate of probable sales for one company’s brand of a product during a stated time period in a specific market and assuming the use of a predetermined marketing plan.

sales-orientation stage The second stage in the evolution of marketing management, in which the emphasis is on using various promotional activities to sell whatever the organization produces.

sales potential The portion of market potential that a specific company could expect to achieve under ideal conditions.

sales promotion Demand-stimulating devices designed to supplement advertising and facilitate personal selling.

sales return A situation in which a customer returns merchandise and receives a refund equal to the full purchase price in cash or credit.

sales team See selling center.

sales-volume analysis A detailed study of the Net Sales section of a company’s profit and loss statement.

scrambled merchandising The main source of horizontal channel conflict, a strategy under which a middleman diversifies by adding product lines not traditionally carried by its type of business.

seasonal discount A deduction from the list price that is offered to a customer for placing an order during the seller’s slack season.

secondary data Available data, already gathered for some other purpose.

selective-demand advertising Advertising that is intended to stimulate demand for individual brands.

selective distribution A strategy in which a producer sells its product through multiple, but not all possible, wholesalers and retailers in a market where a consumer might reasonably look for it.

selective perception The process of screening all the marketing stimuli to which an individual is exposed on a daily basis.

self-concept The way a person sees himself/herself. Same as self-image.

self-image See self-concept.

selling agent An agent wholesaling middleman that essentially takes the place of a manufacturer’s marketing department by marketing the manufacturer’s entire output.

selling center A group of people representing a sales department as well as other functional areas in a firm (such as finance, production, and research and development) that work cooperatively to achieve a sale. Sometimes called a sales team or team selling.

separable expenses See direct costs.

service An identifiable, intangible activity that is the main object of a transaction designed to provide want-satisfaction to customers.

service encounter In services marketing, a customer’s interaction with any service employee or with any tangible element, such as a service’s physical surroundings.

service quality The degree to which an intangible offering meets the expectations of the customer.

shopping center A planned grouping of retail stores that lease space in a structure that is typically owned by a single organization and that can accommodate multiple tenants.

shopping goods A category of tangible consumer products that are purchased after the buyer has spent some time and effort comparing the price, quality, perhaps style, and/or other attributes of alternative products in several stores.

single-price strategy An extreme variation of a one-price strategy in which all items sold by a firm carry a single price.

single-segment strategy A plan of action that involves selecting one homogeneous segment from within a total market to be the firm’s target market. Same as concentration strategy.

single-source data A data-gathering method in which exposure to television advertising and product purchases can be traced to individual households.

situation analysis The act of gathering and studying information pertaining to one or more specified aspects of an organization. Alternatively, a background investigation that helps in refining a research problem.

situational influences A temporary force, associated with the immediate purchase environment, that affects behavior.

slotting allowance A fee that some retailers charge a manufacturer in order to place its product on store shelves.

small-order problem A situation confronting many firms, in which revenue from an order is less than allocated expenses because several costs, such as billing and direct selling, are essentially the same regardless of order size.

social and cultural forces A set of factors, including life-styles, social values, and beliefs, that affect the marketing activities of an organization.

social class A division of, or ranking within, society based on education, occupation, and type of residential neighborhood.

social information environment As contrasted with the commercial information environment, all communications among family members, friends, and acquaintances about products.

societal marketing concept A revised version of the marketing concept under which a company recognizes that it should be concerned about not only the buyers of its products but also other people directly affected by its operations and with not only tomorrow but also the long term.

specialty goods A category of tangible consumer products for which consumers have a strong brand preference and are willing to expend substantial time and effort in locating and then buying the desired brand.

specialty store A type of retail institution that has a very narrow and deep product assortment (often concentrating on a specialized product line or even part of a specialized product line), that usually strives to maintain manufacturers’ suggested prices, and that typically provides at least standard customer services.

stages in the adoption process The six steps a prospective buyer goes through in deciding whether to purchase something new.

Standard Industrial Classification (SIC) system A coding system developed by the federal government that groups firms into similar types of businesses and thus enables a company to identify and analyze small segments of the business market.

standards and certification A requirement that a product contain or exclude certain ingredients or that it be tested and certified as meeting certain restrictive standards.

stimulus-response theory The theory that learning occurs as a person (1) responds to some stimuli and (2) is rewarded with need satisfaction for a correct response or penalized for an incorrect one.

stockturn rate The number of times the average inventory is turned over, or sold, during the period under study.

straight rebuy In the business market, a routine, low-involvement purchase with minimal information needs and no great consideration of alternatives.

strategic alliance A formal, long-term agreement between firms to combine their capabilities and resources to accomplish global objectives.

strategic business unit (SBU) A separate division for a major product or market in a multiproduct or multibusiness organization.

strategic company planning The level of planning that consists of (1) defining the organization’s mission, (2) analyzing the situation, (3) setting organizational objectives, and (4) selecting appropriate strategies to achieve these objectives.

strategic marketing planning The level of planning that consists of (1) conducting a situation analysis, (2) developing marketing objectives, (3) determining positioning and differential advantage, (4) selecting target markets and measuring market demand, and (5) designing a strategic marketing mix.

strategic planning The managerial process of matching a firm’s resources with its market opportunities over the long run.

strategic window The limited amount of time in which a firm’s resources coincide with a particular market opportunity.

strategy A broad plan of action by which an organization intends to reach its objectives.

style A distinctive manner of presentation or construction in any art, product, or endeavor.

style obsolescence A form of planned obsolescence in which superficial characteristics of a product are altered so that the new model is easily differentiated from the previous model and people become dissatisfied with it. Same as fashion obsolescence and psychological obsolescence.

subculture Groups in a culture that exhibit characteristic behavior patterns sufficient to distinguish them from other groups within the same culture.

suggested list price A pricing policy whereby a manufacturer recommends to retailers a final (retail) price that should provide them with their normal markups.

supercenter A combination of a discount house and a complete grocery store.

supermarket A type of retail institution that has a moderately broad and moderately deep product assortment spanning groceries and some nonfood lines, that offers relatively few customer services, and that ordinarily emphasizes price in either an offensive or defensive way.

supermarket retailing A retailing method that features several related product lines, a high degree of self-service, largely centralized checkout, and competitive prices.

suppliers The people or firms that supply the goods or services that an organization needs to produce what it sells.

supply chain management The combination of distribution channels and physical distribution to make up the total marketing system.

survey A method of gathering primary data by interviewing people in person, by telephone, or by mail.

survey of buyer intentions A form of sales forecasting in which a firm asks a sample of current or potential customers how much of a particular product they would buy at a given price during a specified future period.

SWOT assessment Identifying and evaluating an organization’s most significant strengths, weaknesses, opportunities, and threats.

systems approach to physical distribution The unification of individual physical distribution activities.

systems selling Providing a total package of related goods and services to solve a customer’s problem (needs).

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tactic A specific means by which a strategy is implemented.

target market A group of customers (people or organizations) for whom a seller designs a particular marketing mix.

tariff A tax imposed on a product entering a country.

team selling See selling center.

technological obsolescence A form of planned obsolescence in which significant technical improvements result in a more effective product. Same as functional obsolescence.

technology Applications of science for industrial and commercial purposes.

telemarketing A form of nonstore retailing in which a sales person initiates contact with a shopper and also closes the sale over the telephone.

Telephone Consumer Protection Act Federal law that requires telemarketers to keep a “do-not-call” list of consumers who request that they not receive telephone solicitations, it restricts the indiscriminant use of automatic telephone dialing systems, and it prohibits marketers from sending advertising to a facsimile machine without first obtaining the recipient’s permission.

telephone survey A method of gathering data by interviewing people over the telephone.

test marketing A method of demand forecasting in which a firm markets its new product in a limited geographic area, measures the sales, and then—from this sample—projects the company’s sales over a larger area. Alternatively, a marketing research technique that uses this same approach to judge consumers’ responses to a strategy before committing to a major marketing effort.

total cost The sum of total fixed cost and total variable cost for a specific quantity produced or sold.

total cost concept In physical distribution, the recognition that the best relationship between costs and profit must be established for the entire physical distribution system, rather than for individual activities.

total quality management (TQM) A philosophy as well as specific procedures, policies, and practices that commit an organization to continuous quality improvement in all of its activities.

total variable cost The sum of all variable costs.

trade balance In international business, the difference between the value of a nation’s imports and the value of its exports.

trade barriers Created by governments to restrict trade and protect domestic industries, these are the most common legal forces affecting international marketers.

trade discount A reduction from the list price that is offered by a seller to buyers in payment for marketing functions the buyers will perform. Same as functional discount.

trademark A brand that has been adopted by a seller and given legal protection.

trademark infringement Act of manufacturing products with names and packaging similar to well-known goods in order to achieve sales.

Trademark Law Revision Act A federal law, passed in 1988, that broadened the Landham Trademark Act to encompass comparisons made in promotional activity.

trademark licensing A business arrangement in which the owner of a trademark grants permission to other firms to use the owner’s brand name, logotype, and/or character on the licensee’s products in return for a royalty on sales of those products. Same as brand licensing.

trading down A product-line strategy wherein a company adds a lower-priced product to a line to reach a market that cannot afford the higher-priced items or that see them as too expensive.

trading up A product-line strategy wherein a company adds a higher-priced product to a line in order to attract a broader market and, through its added prestige, helps the sale of its existing lower-priced products.

trend analysis A statistical method of forecasting sales over the long term by using regression analysis or over the short term by using a seasonal index of sales.

trickle-across theory In fashion adoption, a fashion cycle that moves horizontally and simultaneously within several socioeconomic levels.

trickle-down theory In fashion adoption, a fashion cycle that flows downward through several socioeconomic levels.

trickle-up theory In fashion adoption, a fashion cycle in which a style first becomes popular with lower socioeconomic levels and then flows upward to become popular among higher levels.

truck distributor See truck jobber.

truck jobber A merchant wholesaler that carries a selected line of perishable products and delivers them by truck to retail stores. Same as truck distributor.

tying contract The practice by which a manufacturer sells a product to a middleman only under the condition that the middleman also buy another (possibly unwanted) product from the manufacturer.

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U

ultimate consumers People who buy goods or services for their own personal or household use in order to satisfy strictly nonbusiness wants.

undifferentiated-market strategy See market aggregation strategy.

unfair-practices acts State laws intended to regulate some forms of leader pricing that are intended to drive other products or companies out of business. Same as unfair-sales acts.

unfair-sales acts See unfair-practices acts.

uniform delivered pricing A geographic pricing strategy whereby the same delivered price is quoted to all buyers regardless of their locations. Same as postage stamp pricing.

universal design The design of products in such a way that they can be used by all consumers, including disabled individuals, senior citizens, and others needing special considerations.

unsought goods A category of consumer tangible products that consists of new products the consumer is not yet aware of or products the consumer is aware of but does not want right now.

utility The attribute in an item that makes it capable of satisfying human wants.

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V

value The ratio of perceived benefits to price and any other incurred costs.

value added The dollar value of a firm’s output minus the value of the inputs it purchased from other firms.

value chain The combination of a company, its suppliers, and intermediaries, performing their own activities, to add value to a product.

value pricing A form of price competition in which a firm seeks to improve the ratio of a product’s benefits to its price and related costs.

values Intangible principles that are a reflection of people’s needs, adjusted for the realities of the world in which they live.

variable cost A cost that changes directly in relation to the number of units produced or sold.

variable-price strategy See flexible-price strategy.

venture team An organizational structure for product planning and development that involves a small group, with representatives from engineering, production, finance, and marketing research, that operates like a separate small business, and that typically reports directly to top management.

vertical business market A situation where a given product is usable by virtually all the firms in only one or two industries.

vertical conflict A form of channel conflict occurring among firms at different levels of the same channel, typically producer versus wholesaler or producer versus retailer.

vertical marketing system (VMS) A tightly coordinated distribution channel designed to improve operating efficiency and marketing effectiveness.

viral marketing Strategy of spreading positive information about a company from one person to another, often utilized by smaller firms.

voluntary chain A type of contractual vertical marketing system that is sponsored by a wholesaler who enters into a contract with interested retailers.

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W

warehouse club A combined retailing and wholesaling institution that has a very broad but very shallow product assortment, very low prices, few customer services, and is open only to members. Same as wholesale club.

warning label The part of a product that tells consumers not to misuse the product and informs them of almost every conceivable danger associated with using it.

warranty An assurance given to buyers that they will be compensated in case the product does not perform up to reasonable expectations.

website A collection of Web files beginning with a home page that is accessible through a unique address.

Wheeler-Lea Act A federal law, passed in 1938, that amended the Federal Trade Commission Act by strengthening the prohibition against unfair competition, especially false or misleading advertising.

wholesale club See warehouse club.

wholesale trade See wholesaling.

wholesaler See merchant wholesaler.

wholesaling The sale, and all activities directly related to the sale, of goods and services to businesses and other organizations for resale, use in producing other goods and services, or the operation of an organization.

wholesaling middleman A firm engaged primarily in wholesaling.

wholly owned subsidiary A business arrangement in foreign markets in which a company owns the foreign operation in order to gain maximum control over its marketing program and production operations.

World Trade Organization (WTO) Created in 1995, as the governing body of global commerce, consisting of 135-member countries and accounting for 90% of world trade.

World Wide Web Collection of hyperlinked multimedia databases stored all over the world and accessible via the Internet.

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Z

zone-delivered pricing A geographic pricing strategy whereby a seller divides its market into a limited number of broad geographic zones and then sets a uniform delivered price for each zone.

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