Added value. Value is said to be added when the utility of a product or service is increased.
Administered prices. Where prices are imposed on one or more levels of the marketing chain by some external body.
Advertising. A form of communication which a sponsor pays to have transmitted via mass media such as television, radio, cinema screens, newspapers, magazines and/or direct mail. It is intended to both inform and persuade.
Agricultural commodity. Agricultural products whose production methods, postharvest treatments and/or primary processing have not imparted any distinguishing characteristics or attributes. Within a particular grade, and with respect to a given variety, commodities coming from different suppliers, and even different countries or continents, are ready subsitutes for one another.
Auction. A system of trade in commodities in which prospective buyers and sellers are brought together under the auspices of an independent auctioneer who invites bids for the products or produce offered for sale.
Audits. Used in the context of marketing research, audits are systematic counts of the amount of product which has passed through a warehouse (warehouse withdrawal audit) or retailer (retail audit).
Augmented Product. The services and benefits which are added to the basic physical product to enhance its value to the prospective customer.
Boston Consulting Group (BCG) product portfolio analysis. An approach to portfolio analysis based on the premise that a positive relationship exists between market share and profitability. These two variable are used to classify products as rising stars, cash cows, sick dogs and problem children.
Brand. A name, term, symbol, or design or combination of these which is intended to differentiate products or services from those of competitors.
Brand image. The set of attributes, characteristics and benefits which a brand is perceived to possess.
Brand loyalty. The tendency to repeatedly buy a particular brand on a high percentage of possible purchase ocassions..
Breakeven point. The point at which, at a given selling price, sales volumes are just sufficient to cover the organisations fixed and variable costs.
Brokers. Individuals or organisations which do not take title to goods but facilitate distribution by bringing buyers and sellers together. Brokers earn a commission for informing buyers of possible sellers; and informing sellers of possible buyers. Clients use the services of a broker intermittently since their supply of the product to the market is intermittent.
Business policy. A coherent set of rules established to guide managers in their decision making by prescribing the boundaries of the alternative courses of action leaves open to him/her within a defined set of circumstances.
Cannibalisation. Where the sales of a new product are gained at the expense of the marketing organisations existing products.
Cash cows. Products which enjoy a high market share, in a low growth market and that generate large cash inflows. The owner of the product milks the revenues from this cash generator to finance other products within its portfolio.
Change agent. An individual who purposively seeks to bring about a change in the behaviour of a target group of people in a direction deemed desirable by a change agency.
Channel of distribution. The set of individuals and organisations which facilitate the transferring title to goods or services as these pass from the producer to the user.
Cognitive dissonance. An uncomfortable psychological state resulting from differences between expectations and experience. In the context of product marketing, cognitive dissonance arises when a buyer's experience of the performance of a product fails to match up to prior expectations of the performance of that product.
Commodities. (See agricultural commodities).
Competitive parity method. A system of setting budgets for marketing communications in which the strategy is to match the expenditures of immediate competitors.
Connotative brand names. Brand names designed to conjure up certain images in the mind of the prospective customer. An example would be ‘Tropical Paradise Fruit Juice’, which might conjure up images of sun drenched, exotic places as well as fun, luxury, exclusivity etc.
Core benefit. The need which a product fulfills or the problem which it solves.
Corporate strategy. An articulation of an organisation's overall objectives and the means by which these are to be met. Corporate strategy is usually stated in such a way as to convey the reason for an organisation's existence i.e. its mission and the business it is in or wishes to be in.
Cost per thousand (CPM). The cost of reaching one thousand members of the target market with a particular advertisement or promotional activity, this measurement is commonly used in the selection of appropriate media.
Culture. The mechanism by which each society evolves its distinctive behavioural patterns and values and transmits these to subsequent generations.
Dairy panel. A sample of households or individuals who agree to maintain a written record of product/service consumption and/or usage for a prescribed period of time. The diaries are periodically inspected by marketing researchers.
Demographics. Objective characteristics used to describe populations, such as age, income, education and geographical location. Demographic variables are commonly used in marketing for the purposes of market segmentation.
Denotative brand names. Brand names which are literal and explicit in conveying some tangible characteristic of the product. An example would be ‘Sweet Cure Bacon’ which denotes a bacon with a sweet taste.
Differentiated marketing. The strategy of pursuing several market segments with particular marketing mixes tailored to the needs of each segment.
Direct product profitability. The allocation of all distribution costs to specific products then comparing these against standard costs with a view to identifying and eradicating inefficiencies within the distribution system. In addition, since DPP has the potential to pinpoint the costs of delivering specific products to specific customers, it also has the potential to help in devising cost effective marketing strategies.
Distribution Requirement Planning. The application of the techniques of Manufacturing Resource Planning to warehousing and transportation activities.
Distribution intensity. See intensity of distribution.
Economic efficiency. The product of allocational and operational efficiency. Allocating resources on the bases of opportunity cost increases the value of current output. Operational efficiency is increased when unit costs of production are minimised through efficient management and the adoption of the appropriate technology
Economic order quantity (EOQ). The optimal size of order to place at which the sum of the order processing costs plus inventory carrying costs result in the minimum total inventory costs.
Economic stabilisation programmes. See stabilisation programmes.
Economic structural adjustment programmes (ESAPs). See structural adjustment programmes.
Economies of scale. Increased efficiency of operations and the multiple use of resources lowers average variable costs and, in consequence, average total costs.
Elasticity of demand. Price elasticity of demand is a measure of the responsiveness of buyers to price changes. Income elasticity of demand reflects the extent to which demand is affected by changes in income levels. Cross-elasticities indicate the impact of a change in the price of good A on the demand for good B.
Elasticity of supply. A measure of the responsiveness of producers to price changes. Cross-elasticities indicate the impact of a change in the price of good A on the supply of good B.
Elevator. (See grain elevator).
Equilibrium point. The price at which the quantity supplied by sellers equates to the quantity demanded by buyers.
Exclusive distribution. An extreme form of selective distribution in which intermediaries are granted the exclusive right distribute a product within in a geographic region.
Extensive distribution. Making the product or service available in as many distributive outlets as an organisation's resources will allow.
Family brands. The assignment of the same or similar names to several products made by the same enterprise in which the name of the enterprise is often employed.
Fixed Costs. Those costs whose level is wholly independent of the level of production.
Fixed-sum-per-unit method. A method of setting marketing communications budgets as a specified sum of money per unit sold or produced.
General electric product portfolio analysis. An approach to product portfolio analysis which includes variables such as ease of competitive entry, production efficiencies, ability to exploit market opportunities and market attractiveness.
Generic products. Unbranded products.
Grain elevator. A granary, equipped to handle and store grain. Many grain elevators are also equipped to clean and grade the grain.
Harvesting strategy. An attempt to reap short-term profits, from a product, by reducing its marketing and production costs to a minimum before withdrawing it from the market.
Hierarchy of effects. That sequence of cognitive, affective and connotative psychological states through which a potential buyer is said to proceed before purchasing.
Horizontal marketing systems. Systems in which two or more unrelated companies, at the same channel level, combine resources and expertise in order that the partners can achieve some goal that individually they could not.
Impulse purchase. Purchases which have not been pre-planned but are made as an immediate response to exposure to the product or service.
Industrial marketing. The marketing of goods and services that are used as inputs to a production process. Thus, demand for industrial goods and services is derived from the demand for the goods or services which they are used to produce.
Intensity of distribution. That proportion of all available distributive outlets through which an enterprise actually distributes its product(s) or services. The distribution of a product or service may be extensive, intensive or selective.
Inventory carrying costs. Those costs wholly due to carrying a given amount of stock, including: storage charges, interest on capital invested in stocks, insurance, taxes, shrinkage and opportunity costs
Just-In-Time (JIT). A system of materials management intended to ensures that components and raw materials arrive at the manufacturer's or processor's factory at the precise time they are required for production or processing. JIT can also be applied to the control of finished products ensuring that they arrive at a sales outlet close to the time when they are expected to be sold.
Life style. (See psychographics).
Load planning. A systematic approach to matching customer orders to the available transport facilities with a view to controlling costs whilst achieving an acceptable level of customer service.
Logistics. Marketing logistics relate to the cost effective, physical distribution of goods and services to intermediaries, final buyers and end-users.
Marketing audit. A periodic and rigorous review of marketing policies, strategies and tactics with a view to assessing their appropriateness to the prevailing and future marketing conditions and opportunities.
Marketing board. A grower organisation, government agency and/or statutory organisation having the function of intervening in the marketing process with a view to serving the cause of efficient and orderly marketing.
Marketing concept. A business philosophy which places emphasis on achieving organizational goals through the identification and satisfaction of customer needs.
Market niche. A small homogenous segment of the market with special needs or characteristics that can be profitably met by organisations who have limited resources and cannot directly challenge market leaders.
Marketing environment. Forces which impinge upon an organisation's business activities that are outwith the direct control of that organisation (e.g. macroeconomic trends, political initiatives, regulatory frameworks, demographic patterns and cultural norms).
Marketing information system. The bringing together of people, technology and procedures with the purpose of collecting data from the marketing environment, as well as from within the organisation itself, and converting this into information to improve marketing decisions.
Market segmentation. The process of subdividing large heterogeneous populations, with disparate needs, into smaller more homogenous groups with similar needs in order that market offerings can be closely matched to these needs. Those segments which an enterprise elects to serve are termed ‘target markets’.
Marketing mix. The combining of those marketing variables over which an organisation has control in such a way as to achieve its business objectives within a target market.
Marketing planning. That set of management activities involving the setting of marketing objectives, designing and implementing a programme to achieve these objectives and a monitoring and control mechanism to ascertain whether the planned programme is on track or has achieved its desired objectives. Marketing planning is a principal component of corporate strategy.
Market prices. Prices which have been determined by the unimpeded (free market) interactions between supply and demand.
Markov chain models. A way of describing a phenomenon moving from one state to another. These probabilistic models are used by marketers to describe and predict the movement of buyers from one brand to another.
Mark-on (or Margin). The per unit profit expressed as a percentage of the selling price of the unit.
Mark-up. The per unit profit expressed as a percentage of the cost of the unit.
Marginal analysis. A technique used to determine the point at which marginal revenues equal marginal costs and give rise to maximum profits.
Marginal cost. The amount by which one additional unit of production increases total variable cost and, therefore, total costs.
Marginal revenue. The additional revenue obtained from supplying one more unit of a product.
Materials management. Management of physical supply operations such as procurement, the storage and movement of raw materials to and through processing and into a finished product.
Materials requirement planning. A computerised inventory control system based on the Japanese Kanban card system. It is intended to minimise the investment in manufacturing/processing materials and components, consistent with matching production levels to current demand.
Motive. An impulse to act in such a way as to bring about the meeting of a specific need.
Need. A perceived difference between an ideal state and some desired state which is sufficiently large and important to stimulate a behavioral reaction.
Objective-and-task method. An approach to the setting of marketing communication budgets in which the organisation begins by specifying its communication objectives and then estimates how much it will cost to achieve those objectives.
Order processing costs. Those costs associated with the administration of placing orders, shipping and good inward controls.
Penetrating the market. Profit objectives are achieved through gaining a sizeable sales volume and a modest margin rather than having a large margin per unit.
Percentage-of-sales method. The practice of setting marketing communications budgets as a percentage of either last year's sales or forecasted sales for next year.
Personal selling. Direct and personal approaches to potential customers with a view to persuading the individual or organisation to purchase the product or service.
Physical distribution. That set of activities concerned with the efficient flow of raw materials, in-process inventory, and finished goods from source to point-of-consumption in such a way as to profitably meet customer needs.
Price spread. The price spread measures the gross percentage of the final retail price which accrues to each category of participant in a marketing system in return for the marketing services which they perform.
Primary research. Primary research is that which has been specifically designed to address particular marketing problems or questions.
Product class. The collective set of brands of a product or service, available on the market to met a particular basic need.
Product life cycle (PLC). The phases of a product's life span introduction, growth, maturity and decline.
Product line. A group of products whose relationship is based on the similarity of their function, target market, distribution channel(s) and/or their price range.
Product differentiation. The process of convincing the potential customer that a company's product differs significantly and in some superior way to that of other products seeking to meet customer needs within the same market segment.
Promotion. Promotion is the function of informing, persuading and influencing the customers' purchase decision.
Psychographics. Variables such as social class, personality and life style (attitudes, interests and opinions) which can be used to segment markets.
Public relations. Activities intended to create a favourable image of an organisation among its publics and to foster mutual understanding between the two. An organisation's publics includes any group having an actual or potential interest in, or impact upon, an organisation's prospects of achieving its goals.
Pull Strategy. Where the majority of the marketing effort is directed at end users in the hope that the resultant demand will be strong enough to pull the product through the channel of distribution.
Push strategy. Where the greater part of the marketing effort is directed at intermediaries in an attempt to persuaded channel members to push the product through the channel from producers to end users.
Residual-sum method. The determination of marketing communications budgets on the basis of what the organisation perceives itself to be able to afford after all other budgets have been set.
Revenue pooling. Where the product is sold at market prices, but revenues are pooled before being disbursed to producers, processors and/or middlemen. The system results in all parties in the scheme receiving the same price.
Sales agents. Sales agents do not take title to the goods but bring buyers and sellers together. Sales agents often have close, long term relations with particular clients and sell on their behalf in return for a commission. The sales agent behaves as an extension of the client's own sales organisation.
Sales promotion. Incentives intended to encourage immediate sales of a products or services. The effects of promotion are characteristically short term and therefore sales promotion is a tactical marketing instrument.
Selective distribution. The appointing of a limited number of specially selected retailers, or other middlemen to distribute a product line.
Secondary research. This term describes data which has been collected by individuals or agencies for purposes other than those of a given research study.
Shrinkage. Losses in the value of stocks held due to spoilage, deterioration, or pilfering during storage and/or transportation.
Skimming the market. Profit objectives are achieved through a sizeable margin per unit rather than by maximising sales volumes.
Social marketing. The process of identifying human needs in non-competitive economies and/or sectors of society and determining the means of efficiently and effectively delivering products and services to meet these needs.
Stabilisation programmes. IMF sponsored economic recovery programmes intended to stimulate the demand side of the economy. Stabilisation policies work to reduce a country's expenditure levels to match national income. They provide the economic stability necessary before increased growth can be achieved. The policy instruments typically employed in the pursuit of economic stabilisation are: exchange rate policy, fiscal policy and monetary policy.
Stakeholders. Those individuals or groups who affect and/or are affected by, the operations of the organisation including, consumers, members of the channel of distribution channel, suppliers, the general public, shareholders and government.
Stockouts. A failure to fulfill an order from inventory.
Strategic business units (SBUs). A business entity belonging to a larger commercial enterprise but having its own defined business strategy and whose management has responsibility for its profits and sales performance. The concept of a strategic business unit has its origins in large and diversified commercial companies. It was developed as a means of retaining the vitality of the entrepreneurial spirit by giving management a high degree of responsibility and autonomy in decision making.
Structural adjustment programmes. A suite of macro-economic policies, sponsored by the World Bank, designed to improve the structure of production by allocating resources in accordance with their opportunity cost rather than on any other basis and thereby maximising the efficiency of resource allocation, increasing the value of current output and improving the prospects for the rate of growth over time and avoiding the need for subsidies and taxes in support of the production structure. (Also termed ESAPs or Economic Structural Adjustment Programmes).
Syndicated research. The collection of marketing data using standardised procedures which is then sold to a number of different clients.
Tactics. The pursuance of a marketing plan to achieve short term objectives.
Tangible product. The physical features and characteristics perceived through the 5 senses - touch, smell, taste, vision and hearing.
Target market. Those segments of a market which an organisation decides it will attempt to serve. Each target group of customers has similar needs and/or characteristics and if successfully penetrated will help the organisation achieve its marketing objectives. (see also ‘market segments’).
Test market. The trial launch of a new product or service into a confined geographical area or market segment with the purpose of testing the performance of the proposed marketing mix prior to the full scale market introduction.
Tied-agreements. Agreement whereby an intermediary wishing to become the exclusive dealer for a given product must also carry others within the supplier's product line.
Trademark. A brand or part of a brand that to which a seller has a legally enforceable, exclusive, right to use.
Trading up. The process of moving consumption to higher priced versions of a product.
Uniformed delivered pricing. Where all buyers pay the same price for the product irrespective of differences in their physical distance from the source of supply
Universal Product Code (UPC). A set of numbered vertical bars appearing on the labels or packs of goods and which can be read by scanner systems. These numbers and bars constitute a code containing such information as country of origin, supplier, product category, product size, pack type and price.
Variable costs. Those costs which vary directly with the level of production.
Vehicle scheduling models. Mathematical models which help management route transport vehicles in such a way as to minimise both the time taken to make deliveries and total transport costs of deliveries. Examples of mathematical models are; the savings method, the simplified delivery service model and TRANSIT.
Vertical marketing systems. A system in which the producer(s), wholesaler(s) and retailer(s) act as a unified system with a resultant increase in efficiency of the system through the removal of duplicated services, economies of scale and reductions in potential conflicts of interest.
Wholesalers. Intermediaries acting to make marketing systems more efficient by buying a variety of products, in fairly large quantities, and selling these items on to other businesses who require relatively small quantities of a variety of goods.
Zone pricing. A pricing scheme which results in all customers within a defined geographical area paying the same price with different prices being paid by customers located in other geographical areas.
