Chapter 10: GLOSSARY

CHAPTER 10

Glossary

agent An individual or legal entity authorized to act on behalf of another individual or legal entity (the principal). An agent’s authorized acts will bind the principal. A sales representative, for example, is an agent of the seller. association of south east asian nations The economic and trade bloc founded in 1967 and comprised of

Indonesia, Malaysia, the Philippines,

Singapore, Thailand, and Brunei. Acronym: ASEAN. bottom line That which a company calls “profit” after all has been said and done. In itself it is not a bad thing, but many in the corporate world consider the bottom line a sanctified litmus test of a company’s value. Problems arise when it’s seen as the sole indication of a company’s value. The true value of any company should be viewed by its viability to compete and serve its customers in the long term—not month to month or fiscal year to fiscal year. In other words, build a good company and well-served customers will continue to buy your product. brand A name, term, design, symbol, or any other feature that identifies a seller’s goods or services as distinct from any offered by the competition. brand equity The value a company derives from the fact that their product name is recognized and well-thought-of in the marketplace. brand extension The introduction of a new product or service by associating it in promotion with an already existing and well-established brand name. brand loyalty The degree to which a buying unit, such as a household, concentrates its purchases over time on a

particular brand within a particular product category. brand repetition The constant repetition of a brand name to consumers using different advertising media. breaking into a market The process of introducing a product into a new market. broker An individual or company that negotiates contracts with a third party on behalf of a principal. Typically a wholesale intermediary who facilitates sales. channel The pathway and the intermediaries necessary for moving products from the producer to the seller. This may include distributors, agents, wholesalers, agents and retailers. co-branding A strategy of building brand equity that combines two or more brand-name products or producers into a single new product, with the goal of benefiting from each brand’s reputation, (e.g., IBM computer with Intel Inside label). communication The sharing of meaning. Five elements are necessary for communication to occur: source, message, receiver, and the processes of coding and encoding. comparative advantage (economics) An economic theory which holds that a company or nation should sell and export those goods or services that it produces more efficiently than other companies or nations and buy or import those goods or services that it produces less efficiently that other companies or nations. comparative advertising

Advertising in which the marketer compares its brand to rival brands that are actually identified by brand name. competition The rivalry among marketers who seek to satisfy the same markets.

consumer products Goods purchased by individuals or households for their personal use, as opposed to products purchased by businesses. containerization A materials-handling system that uses standardized shipping containers of varied length to ship goods from a shipper to a consignee without the actual goods being physically handled during the shipment. Sometimes the contents of a container come from multiple sources. corporate philosophy The core essence, ethics, values and fundamental beliefs of a business entity. culture The sum total of beliefs, knowledge, values, customs, and artifacts that we use to adapt to our environment and that we hand down to succeeding generations. cultural analysis The process whereby a marketeer studies the target culture in order to gain insights into the wants, needs and buying habits of the local population prior to market entry. This analysis enables the company to formulate product design and promotional efforts to please (rather than offend) local tastes. demographic segmentation The division of a mass market on the basis of statistical data such as age, gender, and buying power. direct marketing A system of marketing that uses a variety of communication techniques to contact potential customers in order to elicit a measurable and almost immediate response. It includes direct mail , database marketing , door-to-door , and coupons . distributor A company that undertakes to purchase products from the manufacturer for resale in a given market. diversification A strategy of developing new products and selling them in new markets. downsize To redesign in a small size.

Specifically to redesign a business entity in a smaller size requiring fewer workers. dumbing down A product of the

Information Age, this term refers to the

negative impact resulting from too much information—including untrue information—influencing both corporate and personal decision-making processes. Based on the axiom that he who controls the flow of information controls thought, the receiver of the information bears the burden of filtering in the data that is credible and, therefore, not destructive. economies of scale The decline in average cost per unit that results from spreading fixed costs over a large number of units. european union The trade, economic, and political bloc comprised of 18 countries: Austria, Belgium, the Czech

Republic, Denmark, Finland, France,

Germany, Greece, Hungary, Ireland, Italy,

Luxembourg, the Netherlands, Poland,

Portugal, Spain, Sweden, and the United

Kingdom. As of the summer of 2000, there were 11 other countries that had applied for membership: Albania, Bulgaria, Cyprus, Estonia, Hungary, Latvia, Lithuania,

Malta, Romania, Slovakia, and Turkey. export management company A business entity that serves as the export department for a number of other companies in exchange for a commission, fee or retainer. franchising The granting by a company (franchisor) of a license to another company (franchisee) to sell the franchisor’s goods or services in return for a fee.

The franchise agreement binds the franchisee to specific standards of operation, in return for which they gain the value of the franchisor’s brand recognition. globalization A worldwide marketing strategy by which a firm uses the same or very similar marketing mixes in all its markets. gray market Unauthorized intermediaries that circumvent legitimate marketing channels by buying in low-price markets and reselling in high-price markets at prices that are lower than those charged by authorized channel members. industrial marketing The sale of goods and services to companies that will

use the products to make other goods and services available for sale to end-users. intermodal The use of more than one mode of transportation to complete a cargo move. For example, cargo might be loaded onto a truck at a factory for shipment to a railhead where the cargo is placed onto a train for forwarding to an ocean terminal.

There the cargo is loaded aboard a ship bound for a port, where the entire process is reversed using either the same or other modes of transport in any combination. internal marketing The marketing of goods and services of one department to another department inside of a company’s operation. Or, the process that occurs when a company attracts, hires, trains and retains employees. All other marketing is considered external. keiretsu The Japanese term for “industrial group.” These groups are almost self-reliant because they can count on the support of any other member of the keiretsu for financial or material support. Such groups include the Mitsui Group—comprised of

Mitsui & Company (trading), Mitsui OSK

Lines (ocean shipping), Mitsui Bank (finance), and more; Sumitomo; Mitsubishi; and several others. All members of the keiretsu rely upon each other for the core of their existence. It is an almost a perfect example of the Japanese concept of mutual reliance and community.

Keiretsu are the lineal descendants of the pre-World War II “zaibatsu”; these were rendered illegal after the war because they were thought to be a driving economic force behind Japan’s prewar militarism and expansion into China and Southeast Asia. licensing agreement A contract whereby the holder of a trademark, patent, or copyright transfers a limited right to another person or company to use a process, sell or manufacture a product, or provide specific services covered by the license. market A set or other group of individuals or organizations that desire a product and are willing and able to buy it. market audit The systematic and formal review of all areas of a marketing plan after its implementation to examine the current environment, strategies, tactics and results. market driven 1) A company that produces goods, services or modifications based upon what consumers demand. 2)

An economic system in which supply, demand and price are the determinants of which products will enter the marketplace.

See product driven below. marketeer A person or company that promotes the sale of goods and services. marketing The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy both individual and industrial objectives. marketing mix The combination of the marketing elements of product, price, place and promotion to generate the sale of goods or services. marketing plan A detailed, heavily researched and organized plan of a company’s goals and objectives for the development, production, promotion, sale and service of its product line. It defines specific strategies and timelines for which the appropriate personnel will be assigned responsibility. market potential The maximum possible number of sales of a specific product in a specific market (or market segment) over a particular time period for all sellers in the industry, given that all sellers would be performing their maximum marketing effort under an assumed set of environmental conditions. market research The process of identifying and defining a marketing problem or opportunity, specifying and collecting the data required to address those issues, analyzing the results, and communicating the information to decision makers. market share (a.k.a. brand share) The amount of sales a company has as a portion of the entire market it has targeted.

media All forms of communications that can carry advertising and promotional messages. Includes print, radio, television, direct mail, billboards, the Internet, skywriting and more. media mix Any combination of advertising and promotional outlets used during an advertising campaign. A company varies its mix based on quantifiable results and product positioning. merchandising The activities of a marketeer’s sales force, distribution chain, and retailers that promote the sale of goods to consumers. mercosur The regional trade alliance between Argentina, Brazil, Paraguay, and

Uruguay. Also known as the Southern

Common Market. multinational company A firm that is based in one parent or home country and produces goods or services in one or more foreign or “host” countries. Acronym: MNC. niche marketing Marketing strategy in which a company focuses its entire effort on a small, specialized segment of a larger market. Niche marketing is usually practiced by small companies after significant research into the long-term profitability of the niche. north american free trade agreement The free trade pact between the US, Canada, and Mexico that took effect in 1994. Over a 15-year period, the agreement is expected to eliminate barriers to trade, promote fair competition, increase investment opportunities, provide protection for intellectual property rights, and establish a framework for the resolution of trade disputes between the three countries. Acronym: NAFTA. one size fits all The concept (in this context it is a fallacy) that one answer or solution fits every conceivable situation or problem. While some general rules apply to almost every endeavor, flexibility and a clearheaded approach to problem solving

are crucial for crafting the correct solution to any given, unique problem. on-the-ground Research or information acquired in the actual market that’s the subject of the research. This is the best form of research for cultural studies. original equipment manufacturer A firm that buys industrial products from a supplier and incorporates them into the product it produces and markets. Acronym: OEM. packaging The exterior container of a product or service as seen by the purchaser.

The package may serve to advertise, describe, promote, deter the theft of, or set portion controls for the product. Packaging is used to create brand awareness. penetration The degree to which a product and its promotion have attained market share in any targeted market segment. Usually describes a company’s first effort in any particular marketplace. perceived value The benefits (tangible and intangible) beyond the monetary value that a consumer expects to receive from the purchase of goods or services. personal selling Person-to-person communication between a buyer and a seller that may include face-to-face meetings, telephone conversations, faxes, email or other direct correspondence. positioning The way that customers perceive a company’s product in relation to that of its competition. It may be based on quality, size, price, brand recognition, packaging or a host of other “subjective” features that affect consumer decisions. price competition Competition between producers or sellers of like products which are of roughly the same quality, based on price alone. At this point, competition and consumer preference is based strictly on the price of the product. priced out of the market (to be) The failure of a product in a given market based upon its price being either too high or too low for that market.

price driven A method of positioning a product in the marketplace based primarily on its price as compared to that of the competition. product affinity The favorable attitudes that a customer exhibits toward a product or a company, as a result of positive experiences with the product, advertising, or public relations efforts. product awareness The degree of perception that a customer has regarding a product, as established by advertising and promotional efforts. product confidence The belief that customers have in a product and its value.

Confidence is most often engendered during the promotion of a product rather than after its first usage, since customers rarely buy what they believe is useless. product disconnect Lack of recognition (on the part of the marketers) that the positive benefits of a product are canceled out for many consumers by the product’s negative side effects or disadvantages. product life cycle The series of stages through which a product passes, including development, introduction, growth, maturity and decline. product line A group of products closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. product maturity The state at which demand for a product consistently absorbs allocated supply, with all pricing objectives being met by the marketeer. A product may remain mature for some time before decline begins to occur. promotion Any of the various techniques used to create a positive image of a seller’s product in the minds of potential buyers.

Includes advertising, personal selling, public relations and discounts. protectionism The shielding of one or more of a country’s industry sectors from

import competition by the erection of either high tariffs, or nontariff barriers such as cumbersome restrictions and overly complicated regulatory controls. quality The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. return on investment The ratio of after-tax net profit to the investment used to earn that profit. Acronym: ROI. roll-out Marketing term used to describe a product introduction. Applies to new products as well as the introduction of old products to new markets. sales forecast What one company expects to sell under conditions specified for the uncontrollable and controllable factors that affect the forecast. tariff In international marketing, a government tax on goods or services entering a country. trademark The sign, emblem, word, or other symbol that a company uses in commerce to distinguish its goods or services from those of another company. It may or may not be the company’s trade name. Usually, a company asserts exclusive rights to use the trademark or service mark.

Also known as a logo. valdez principles Guidelines that encourage firms to focus attention on environmental concerns and corporate responsibility. Coined after the oil spill caused by the 1989 grounding of the tanker

Exxon Valdez that spilled 11 million gallons of oil into Alaska’s Prince William

Sound. value-added In retail strategy decisions, a dimension of the retail positioning matrix that refers to the service level and method of operation of the retailer. A factor that adds value to the core product, for example, in terms of the consumer’s psychological or monetary benefit from the purchase.