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cash management
involves forecasting, collecting, disbursing, investing, and planning for the cash a company needs to operate smoothly
cash-flow cycle
the time lag between paying suppliers for merchandise and receiving payment from customers
the difference between a company’s total revenue and its total expenses
cash budget
showing the amount and the timing of the cash receipts and the cash disbursements week-by-week or month-by-month
lockbox arrangements
when customers send payments to a post office box which is maintained by the bank
security agreement
a contract in which a business selling an asset on credit gets a security interest in that asset, prtecting the company’s legal rights in case the buyer fails to pay
the exchange of goods and services for other goods and services
operating lease
when the business turns the equipment back over to the leasing company with no further obligation
capital lease
a business may exercise an option to purchase the equipment, usually for a nominal sum
Zero-based budgeting (ZBB)
a shift in the philosophy of budgeting that starts the budget from zero and evaluated the necessity of every item
money market account
an interest-bearing account offered by a variety of financial institutions, ranging from banks to mutual funds
Zero balance account
a checking account that technically never has any funds in it but is tied to a master account
guerilla marketing strategies
unconventional, low-cost, creative techniques used for marketing
target market
the group of customers at whom the company aims its products and services
market research
the vehicle for gathering the information that serves as the foundation for the marketing plan
individualized (one-to-one) marketing
a system of gathering data on individual customers and then developing a marketing plan designed specifically to appeal to their needs, tastes, and preferences
primary research
data that you collect and analyze yourself
secondary research
data that has already been compiled and are available
data mining
a process whereby business owners use computer software that uses statistical analyses, database technology, and artificial intelligence to find hidden patterns, trends, and connections in data
relationship marketing or customer relationship management (CRM)
developing, maintaining, and managing long-term relationships with customers so that they will want to keep coming back to make repeat purchases
revenue at risk
calculates the sales revenue a company stands to lose by measuring the percentage of customers who would leave because of poor service
the notion of drawing customers into a store by creating a kaleidoscope of sights, sounds, smells, and activities, all designed to entertain and sell
total quality management (TQM)
quality not just in the product or service or service itself but also in every aspect of the business and its relationship with the customer and in continuous improvement in the quality delivered to customers
time compression management (TCM)
the philosophy of speed involving three aspects (1) speeding new products to market (2) shortening customer response time in manufacturing and delivering (3) reducing the administrative time required to fill an order
product life cycle
measures these stages of growth, and these measurements enable the company’s management to make decisions about whether to continue selling product, when to introduce new follow-up products, and when to introduce changes to an existing product
any form of persuasive communication designed to inform consumers about a product or service and to influence them to purchase these goods or services
any commercial news covered by the media that boosts sales but for which the small business does not pay
personal selling
the personal contact between salespeople and potential customers that comes form sales efforts
any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor
the average number of times a person is exposed to an ad in the same time period
absolute cost
the actual dollar outlay a business owner must make to place an ad in a particular medium for a specific time period
relative cost
the ad’s cost per potential customer reached
cost per thousand (CPM)
measurement expression for relative cost
word-of-mouth advertising
whereby satisfied customers recommend a business to friends, family members, and acquaintances
television viewers who flash from one channel to another during commercials
those who use digital video recording devices such as TiVo to fast forward through commercials
Infomercials (direct-response television)
come in two lengths: short forms, which are 2-to-3 minute pitches, and long form, 30-minute full-length television commercials packed with information, testimonials, and a sales pitch asking for an immediate response
display ads
both pop-up, interstitial ads, and contextual ads
appears spontaneously in a separate window, blocking the site behind it
interstitial ad
an ad page that appears for a short time before a user-requested page appears
E-mail advertising
whereby companies broadcast their advertising messaged by e-mail
permission email
involves sending e-mail ads to customers with their permission
unsolicited commercial e-mail
cross-channel advertising strategies
where employees communicate with potential customers using a variety of media
cooperative advertising
a manufacturing company shares the cost of advertising with a retailer if the retailer features its products in those ads
shared advertising
a group of similar businesses forms a syndicate to produce generic ads that allow the individual businesses to dub in local information
stealth advertising
includes innovative ads that do not necessarily look like traditional ads and often are located in unexpected places
the monetary value of a good or service; it is a measure of what a customer must give up to obtain a good or service
price range
the area between the price floor and the price ceiling
price floor
established by a company’s total cost to produce the product or provide the service
price ceiling
the most the target customers are willing to pay
fighter brand
a less-expensive, no frills version of a company’s flagship product that is designed to confront lower-priced competitors head-on, satisfy the appetites of value-conscious customers, and preserve the image of the company’s premium product
penetration pricing strategy
enables a business to build market share quickly and establish itself as the market leader when introducing a new product into the market
skimming pricing strategy
often used when a company introduces a unique product into a market with little or no competition
life cycle pricing
a variation of the skimming pricing strategy where the firm introduces a product at a high price and relies on technological advances, the learning curve effect, and economies of scale to lower its cost and reduce the product’s price faster than its competitors and eventually becomes a high-volume producer
odd pricing
setting prices that end in odd numbers because they believe that an item selling for $12.69 appears to be much cheaper than selling a product for $13.00
price lining
a system where the manager stocks merchandise in several different price ranges or price lines when each category of merchandise contains items that are similar in appearance, quality, cost, performance or other features
dynamic (or customized) pricing
setting different prices on the same products and services for different customers using the information they have collected about their customers
leader pricing
a technique in which the small retailer marks down the customary price of a popular item in an attempt to attract more customers
geographic pricing techniques
consists of zone pricing, uniform delivered pricing, F.O.B. factory pricing
zone pricing
where a company sells its merchandise at different prices to customer located in different territories
uniform delivered pricing
a technique in which a company charges all of its customers the same price regardless of their location, even though the cost of selling or transporting merchandise varies
F.O.B. factory pricing
where the small company sells its merchandise to customer on the condition that they pay all shipping costs
reduction from normal list prices, to move stale, outdated, damaged, or slow-moving merchandise
steadily decreasing discount (SDD)
a limited duration discount that declines over time, is superior to a standard (hi-lo) discount, a common tactic in which a company offers frequent discounts off of its standard prices
multiple unit pricing
a promotional technique that offers customers discounts if they purchase in quantity
grouping together several products or services, or both, into a package that offers customers extra value at a special price
Optional-product pricing
involves selling the base product for one price but selling the options or accessories at a much higher percentage markup
Captive-product pricing
the grandaddy of all pricing tactics, in which the basic product is useless without the appropriate accessories
By-product pricing
a technique in which the revenues from the sale of by-products allow a firm to be more competitive in its pricing of the main products
markup (or markon)
the difference between the cost of a product or service and its selling price
initial markup
the average markup required on all merchandise to cover the cost of the items, all incidental expenses, and a reasonable profit
cost-plus pricing
a pricing technique commonly used by manufacturers who establish a price composed of direct materials, direct labor, factory overhead, selling and administrative costs, plus the desire profit margin
absorption costing
direct materials and direct labor plus a portion of fixed and variable factory overhead absorbed into the finished products total cost
variable (or direct) costing
Encompasses direct materials, direct labor, and factory overhead costs that vary with the level of the company’s output of the finished goods
contribution margin
the amount of money remaining that contributes to covering fixed expenses and earning a profit
unique selling proposition (USP)
a key customer benefit or a product or service that sets it apart from its competition
cause marketing
used to support and promote a nonprofit cause or charity that is important to the company and its customers and raise the visibility of their company in the community at the same time
measured the number of paid subscribers a particular medium attracts
banner ads
small rectangular ads that reside on Web sites and when site visitors click it they go straight to the advertiser’s homepage
occurs every time an ad appears on a Web page, whether or not the user clicks on the ad to explore it
click-through rate
calculated by dividing the number times a customer actually clicks the banner ad by the number of impressions for that ad
continuous advertising
when a small business spends its advertising budgets consistently across time
flighting advertising
when a small business concentrates its ad expenditures in carefully timed batches
pulsing advertising
when small companies make some expenditures consistently across the year but concentrates the rest of its ad expenditures in carefully timed pulses
revolutionary products
products so new that they transform the industry
evolutionary products
products that involve enhancements/improvements to products already on the market
me-too products
products that companies introduce to keep up with competition
the total number of people exposed to an ad at least once in a period of time

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