Glossary of Marketing Terms

Adapted marketing mix An international
marketing strategy for adjusting
the marketing-mix elements to each
international target market, bearing more
costs but hoping for a larger market share
and return.
Administered VMS A vertical marketing
system that coordinates successive
stages of production and distribution, not
through common ownership or contractual
ties, but through the size and power
of one of the parties.
Adoption process The mental process
through which an individual passes from
first hearing about an innovation to final
adoption.
Advertising Any paid form of nonpersonal
presentation and promotion of
ideas, goods, or services by an identified
sponsor.
Advertising agency A marketing services
firm that assists companies in planning,
preparing, implementing, and evaluating
all or portions of their advertising
programs.
Advertising objective A specific communication
task to be accomplished with
a specific target audience during a specific
period of time.
Advertising specialty Useful article
imprinted with an advertiser’s name,
given as a gift to consumers.
Affordable method Setting the promotion
budget at the level management
thinks the company can afford.
Age and life-cycle segmentation
Dividing a market into different age and
life-cycle groups.
Agent A wholesaler who represents buyers
or sellers on a relatively permanent
basis, performs only a few functions, and
does not take title to goods.
Allowance Promotional money paid by
manufacturers to retailers in return for an
agreement to feature the manufacturer’s
products in some way.
Alternative evaluation The stage of the
buyer decision process in which the consumer
uses information to evaluate alternative
brands in the choice set.
Approach The step in the selling process
in which the salesperson meets the customer
for the first time.
Attitude A person’s consistently favorable
or unfavorable evaluations, feelings,
and tendencies toward an object or idea.
B2B (business-to-business) e-commerce
Using B2B trading networks, auction
sites, spot exchanges, online product
catalogs, barter sites, and other online
resources to reach new customers, serve
current customers more effectively, and
obtain buying efficiencies and better prices.
B2C (business-to-consumer) e-commerce
The online selling of goods and
services to final consumers.
Baby boomers The 78 million people
born during the baby boom, following
World War II and lasting until the early
1960s.
Balance sheet A financial statement that
shows assets, liabilities, and net worth of a
company at a given time.
Basing-point pricing A geographical
pricing strategy in which the seller designates
some city as a basing point and
charges all customers the freight cost from
that city to the customer.
Behavioral segmentation Dividing a
market into groups based on consumer
knowledge, attitude, use, or response to a
product.
Belief A descriptive thought that a person
holds about something.
Benchmarking The process of comparing
the company’s products and processes
to those of competitors or leading firms in
other industries to find ways to improve
quality and performance.
Benefit segmentation Dividing the
market into groups according to the different
benefits that consumers seek from
the product.
Brand A name, term, sign, symbol, or
design, or a combination of these,
intended to identify the goods or services
of one seller or group of sellers and to differentiate
them fromthose of competitors.
Brand equity The positive differential
effect that knowing the brand name has
on customer response to the product or
service.
Brand extension Using a successful
brand name to launch a new or modified
product in a new category.
Brand personality The specific mix of
human traits that may be attributed to a
particular brand.
Break-even pricing (target profit pricing)
Setting price to break even on the
costs of making and marketing a product;
or setting price to make a target profit.
Broker A wholesaler who does not take
title to goods and whose function is to
bring buyers and sellers together and
assist in negotiation.
Business analysis A review of the sales,
costs, and profit projections for a new
product to find out whether these factors
satisfy the company’s objectives.
Business buyer behavior The buying
behavior of the organizations that buy
goods and services for use in the production
of other products and services or for
the purpose of reselling or renting them
to others at a profit.
Glossary
Business buying process The decision
process by which business buyers determine
which products and services their
organizations need to purchase, and then
find, evaluate, and choose among alternative
suppliers and brands.
Business portfolio The collection of
businesses and products that make up the
company.
Buyer-readiness stages The stages consumers
normally pass through on their
way to purchase, including awareness,
knowledge, liking, preference, conviction,
and purchase.
Buyers The people who make an actual
purchase.
Buying center All the individuals and
units that participate in the business buyingdecision
process.
Buzz marketing Cultivating opinion
leaders and getting them to spread information
about a product or service to others
in their communities.
By-product pricing Setting a price for
by-products in order to make the main
product’s price more competitive.
C2B (consumer-to-business) e-commerce
Online exchanges in which consumers
search out sellers, learn about
their offers, and initiate purchases, sometimes
even driving transaction terms.
C2C (consumer-to-consumer) e-commerce
Online exchanges of goods and
information between final consumers.
Captive-product pricing Setting a price
for products that must be used along with
a main product, such as blades for a razor
and film for a camera.
Cash refund offer (rebate) Offer to
refund part of the purchase price of a
product to consumers who send a “proof
of purchase” to the manufacturer.
Catalog marketing Direct marketing
through print, video, or electronic catalogs
that are mailed to select customers,
made available in stores, or presented
online.
Category killer Giant specialty store
that carries a very deep assortment of a
particular line and is staffed by knowledgeable
employees.
Causal research Marketing research to
test hypotheses about cause-and-effect
relationships.
G-2 Glossary
Chain stores Two or more outlets that
are owned and controlled in common,
have central buying and merchandising,
and sell similar lines of merchandise.
Channel conflict Disagreement among
marketing channel members on goals and
roles—who should do what and for what
rewards.
Channel level A layer of intermediaries
that performs some work in bringing the
product and its ownership closer to the
final buyer.
Click-and-mortar companies Traditional
brick-and-mortar companies that have
added e-marketing to their operations.
Click-only companies The so-called dotcoms,
which operate only online without
any brick-and-mortar market presence.
Closing The step in the selling process in
which the salesperson asks the customer
for an order.
Co-branding The practice of using the
established brand names of two different
companies on the same product.
Cognitive dissonance Buyer discomfort
caused by postpurchase conflict.
Commercialization Introducing a new
product into the market.
Communication adaptation A global
communication strategy of fully adapting
advertising messages to local markets.
Competition-based pricing Setting
prices based on the prices that competitors
charge for similar products.
Competitive advantage An advantage
over competitors gained by offering consumers
greater value, either through lower
prices or by providing more benefits that
justify higher prices; An advantage over
competitors gained by offering consumers
greater value than competitors offer.
Competitive marketing strategies
Strategies that strongly position the company
against competitors and that give the
company the strongest possible strategic
advantage.
Competitive-parity method Setting
the promotion budget to match competitors’
outlays.
Competitor analysis The process of
identifying key competitors; assessing their
objectives, strategies, strengths and weaknesses,
and reaction patterns; and selecting
which competitors to attack or avoid.
Competitor-centered company A company
whose moves are mainly based on
competitors’ actions and reactions.
Complex buying behavior Consumer
buying behavior in situations characterized
by high consumer involvement in a
purchase and significant perceived differences
among brands.
Concentrated (niche) marketing A
market-coverage strategy in which a firm
goes after a large share of one or a few segments
or niches.
Concept testing Testing new-product
concepts with a group of target consumers
to find out if the concepts have
strong consumer appeal.
Consumer buyer behavior The buying
behavior of final consumers—individuals
and households who buy goods and services
for personal consumption.
Consumer market All the individuals
and households who buy or acquire goods
and services for personal consumption.
Consumer-oriented marketing The
philosophy of enlightened marketing that
holds that the company should view and
organize its marketing activities from the
consumer’s point of view.
Consumer product Product bought by
final consumer for personal consumption.
Consumerism An organized movement
of citizens and government agencies to
improve the rights and power of buyers in
relation to sellers.
Contests, sweepstakes, games Promotional
events that give consumers the chance
to win something—such as cash, trips, or
goods—by luck or through extra effort.
Contract manufacturing A joint venture
in which a company contracts with
manufacturers in a foreign market to produce
the product or provide its service.
Contractual VMS A vertical marketing
system in which independent firms at different
levels of production and distribution
join together through contracts to
obtain more economies or sales impact
than they could achieve alone.
Convenience product Consumer product
that the customer usually buys frequently,
immediately, and with a minimum
of comparison and buying effort.
Convenience store A small store,
located near a residential area, that is
open long hours seven days a week and
carries a limited line of high-turnover
convenience goods.
Conventional distribution channel A
channel consisting of one or more independent
producers, wholesalers, and retailers,
each a separate business seeking to
maximize its own profits even at the
expense of profits for the system as a whole.
Corporate VMS A vertical marketing
system that combines successive stages of
production and distribution under single
ownership—channel leadership is established
through common ownership.
Corporate Web site A Web site designed
to build customer goodwill and to supplement
other sales channels, rather than to
sell the company’s products directly.
Cost of goods sold The net cost to the
company of goods sold.
Cost-plus pricing Adding a standard
markup to the cost of the product.
Countertrade International trade involving
the direct or indirect exchange of goods
for other goods instead of cash.
Coupon Certificate that gives buyers a saving
when they purchase a specified product.
Cultural environment Institutions and
other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
Culture The set of basic values, perceptions,
wants, and behaviors learned by a
member of society from family and other
important institutions.
Customer database An organized collection
of comprehensive data about individual
customers or prospects, including
geographic, demographic, psychographic,
and behavioral data.
Customer-centered company A company
that focuses on customer developments
in designing its marketing strategies
and on delivering superior value to its
target customers.
Customer equity The total combined
customer lifetime values of all of the company’s
customers.
Customer lifetime value The value of
the entire stream of purchases that the
customer would make over a lifetime of
patronage.
Customer perceived value The difference
between total customer value and
total customer cost.
Glossary G-3
Customer relationship management
(CRM) Managing detailed information
about individual customers and carefully
managing customer “touch points” in
order to maximize customer loyalty.
Customer relationship management
The overall process of building and maintaining
profitable customer relationships
by delivering superior customer value and
satisfaction.
Customer sales force structure A sales
force organization under which salespeople
specialize in selling only to certain customers
or industries.
Customer satisfaction The extent to
which a product’s perceived performance
matches a buyer’s expectations.
Customer value analysis Analysis conducted
to determine what benefits target
customers value and how they rate the relative
value of various competitors’ offers.
Customerization Leaving it to individual
customers to design the marketing
offering—allowing customers to be prosumers
rather than only consumers.
Deciders People in the organization’s
buying center who have formal or informal
power to select or approve the final
suppliers.
Decline stage The product life-cycle
stage in which a product’s sales decline.
Deficient products Products that have
neither immediate appeal nor long-run
benefits.
Demand curve A curve that shows the
number of units the market will buy in a
given time period, at different prices that
might be charged.
Demands Human wants that are backed
by buying power.
Demarketing Marketing to reduce demand
temporarily or permanently; the
aim is not to destroy demand but only to
reduce or shift it.
Demographic segmentation Dividing
the market into groups based on demographic
variables such as age, gender, family
size, family life cycle, income, occupation,
education, religion, race, gender, and
nationality.
Demography The study of human populations
in terms of size, density, location,
age, gender, race, occupation, and other
statistics.
Department store A retail organization
that carries a wide variety of product
lines—typically clothing, home furnishings,
and household goods; each line is
operated as a separate department managed
by specialist buyers or merchandisers.
Derived demand Business demand that
ultimately comes from (derives from) the
demand for consumer goods.
Descriptive research Marketing research
to better describe marketing problems, situations,
or markets, such as the market
potential for a product or the demographics
and attitudes of consumers.
Desirable products Products that give
both high immediate satisfaction and
high long-run benefits.
Differentiated (segmented) marketing
A market-coverage strategy in which a
firm decides to target several market segments
and designs separate offers for each.
Direct investment Entering a foreign
market by developing foreign-based
assembly or manufacturing facilities.
Direct-mail marketing Direct marketing
through single mailings that include
letters, ads, samples, foldouts, and other
“salespeople with wings” sent to prospects
on mailing lists.
Direct marketing Direct connections
with carefully targeted individual consumers
to both obtain an immediate
response and cultivate lasting customer
relationships; Direct communications
with carefully targeted individual consumers
to obtain an immediate response.
Direct marketing channel A marketing
channel that has no intermediary levels.
Direct-response television marketing
Direct marketing via television, including
direct-response television advertising and
home shopping channels.
Discount A straight reduction in price
on purchases during a stated period of
time.
Discount store A retail institution that
sells standard merchandise at lower prices
by accepting lower margins and selling at
higher volume.
Disintermediation The displacement of
traditional resellers froma marketing channel
by radical new types of intermediaries.
Dissonance-reducing buying behavior
Consumer buying behavior in situations
characterized by high involvement but
few perceived differences among brands.
Distribution center A large, highly
automated warehouse designed to receive
goods from various plants and suppliers,
take orders, fill them efficiently, and
deliver goods to customers as quickly as
possible.
Diversification A strategy for company
growth through starting up or acquiring
businesses outside the company’s current
products and markets.
Downsizing Reducing the business portfolio
by eliminating products or business
units that are not profitable or that no
longer fit the company’s overall strategy.
Dynamic pricing Charging different
prices depending on individual customers
and situations.
E-business The use of electronic platforms—
intranets, extranets, and the
Internet—to conduct a company’s business.
E-commerce Buying and selling processes
supported by electronic means, primarily
the Internet.
Economic community A group of
nations organized to work toward common
goals in the regulation of international
trade.
Economic environment Factors that
affect consumer buying power and spending
patterns.
E-marketing The marketing side of ecommerce—
company efforts to communicate
about, promote, and sell products
and services over the Internet.
Embargo A ban on the import of a certain
product.
Engel’s laws Differences noted over a
century ago by Ernst Engel in how people
shift their spending across food, housing,
transportation, health care, and other
goods and services categories as family
income rises.
Enlightened marketing A marketing
philosophy holding that a company’s marketing
should support the best long-run
performance of the marketing system; its
five principles include consumer-oriented
marketing, innovative marketing, value
marketing, sense-of-mission marketing,
and societal marketing.
Environmental management perspective
A management perspective in which
G-4 Glossary
the firm takes aggressive actions to affect
the publics and forces in its marketing
environment rather than simply watching
and reacting to them.
Environmental sustainability A management
approach that involves developing
strategies that both sustain the environment
and produce profits for the
company.
Environmentalism An organized movement
of concerned citizens and government
agencies to protect and improve people’s
living environment.
Exchange The act of obtaining a desired
object from someone by offering something
in return.
Exchange controls Government limits
on the amount of foreign exchange with
other countries and on the exchange rate
against other currencies.
Exclusive distribution Giving a limited
number of dealers the exclusive right to
distribute the company’s products in their
territories.
Experience curve (learning curve) The
drop in the average per-unit production
cost that comes with accumulated production
experience.
Experimental research The gathering of
primary data by selecting matched groups
of subjects, giving them different treatments,
controlling related factors, and
checking for differences in group responses.
Exploratory research Marketing research
to gather preliminary information
that will help define problems and suggest
hypotheses.
Exporting Entering a foreign market
by selling goods produced in the company’s
home country, often with little
modification.
Extranet Anetwork that connects a company
with its suppliers and distributors.
Factory outlet Off-price retailing operation
that is owned and operated by a manufacturer
and that normally carries the
manufacturer’s surplus, discontinued, or
irregular goods.
Fad A fashion that enters quickly, is
adopted with great zeal, peaks early, and
declines very quickly.
Fashion A currently accepted or popular
style in a given field.
Fixed costs Costs that do not vary with
production or sales level.
FOB-origin pricing A geographical
pricing strategy in which goods are
placed free on board a carrier; the customer
pays the freight from the factory to
the destination.
Focus group interviewing Personal
interviewing that involves inviting 6 to 10
people to gather for a few hours with a
trained interviewer to talk about a product,
service, or organization. The interviewer
“focuses” the group discussion on
important issues.
Follow-up The last step in the selling
process, in which the salesperson follows
up after the sale to ensure customer satisfaction
and repeat business.
Forecasting The art of estimating future
demand by anticipating what buyers are
likely to do under a given set of conditions.
Franchise A contractual association
between a manufacturer, wholesaler, or
service organization (a franchiser) and
independent businesspeople (franchisees)
who buy the right to own and operate one
or more units in the franchise system.
Franchise organization A contractual
vertical marketing system in which a channel
member, called a franchiser, links several
stages in the production-distribution
process.
Freight-absorption pricing A geographical
pricing strategy in which the
seller absorbs all or part of the freight
charges in order to get the desired business.
Gatekeepers People in the organization’s
buying center who control the flow of
information to others.
Gender segmentation Dividing a
market into different groups based on
gender.
General need description The stage in
the business buying process in which the
company describes the general characteristics
and quantity of a needed item.
Generation X The 45 million people
born between 1965 and 1976 in the “birth
dearth” following the baby boom.
Generation Y The 72 million children of
the baby boomers, born between 1977
and 1994.
Geographic segmentation Dividing a
market into different geographical units
such as nations, states, regions, counties,
cities, or neighborhoods.
Global firm A firm that, by operating in
more than one country, gains R&D, production,
marketing, and financial advantages
in its costs and reputation that are not
available to purely domestic competitors.
Government market Governmental
units—federal, state, and local—that purchase
or rent goods and services for carrying
out the main functions of government.
Gross margin The difference between
net sales and cost of goods sold.
Gross sales The total amount that a
company charges during a given period of
time for merchandise.
Group Two or more people who interact
to accomplish individual or mutual goals.
Growth-share matrix A portfolioplanning
method that evaluates a company’s
strategic business units in terms of
their market growth rate and relative
market share. SBUs are classified as stars,
cash cows, question marks, or dogs.
Growth stage The product life-cycle
stage in which a product’s sales start
climbing quickly.
Habitual buying behavior Consumer
buying behavior in situations characterized
by low consumer involvement and few
significant perceived brand differences.
Handling objections The step in the
selling process in which the salesperson
seeks out, clarifies, and overcomes customer
objections to buying.
Horizontal marketing system A channel
arrangement in which two or more
companies at one level join together to
follow a new marketing opportunity.
Idea generation The systematic search
for new-product ideas.
Idea screening Screening new-product
ideas in order to spot good ideas and drop
poor ones as soon as possible.
Income segmentation Dividing a market
into different income groups.
Independent off-price retailer Offprice
retailer that is either owned and run
by entrepreneurs or is a division of a
larger retail corporation.
Indirect marketing channel Channel
containing one or more intermediary
levels.
Glossary G-5
Individual marketing Tailoring products
and marketing programs to the needs
and preferences of individual customers—
also labeled “markets-of-one
marketing,” “customized marketing,” and
“one-to-one marketing.”
Industrial product Product bought by
individuals and organizations for further
processing or for use in conducting a
business.
Influencers People in an organization’s
buying center who affect the buying decision;
they often help define specifications
and also provide information for evaluating
alternatives.
Information search The stage of the
buyer decision process in which the consumer
is aroused to search for more information;
the consumer may simply have
heightened attention or may go into active
information search.
Innovative marketing A principle of
enlightened marketing that requires that a
company seek real product and marketing
improvements.
Inside sales force Inside salespeople who
conduct business from their offices via telephone
or visits from prospective buyers.
Institutional market Schools, hospitals,
nursing homes, prisons, and other institutions
that provide goods and services to
people in their care.
Integrated direct marketing Directmarketing
campaigns that use multiple
vehicles and multiple stages to improve
response rates and profits.
Integrated logistics management The
logistics concept that emphasizes teamwork,
both inside the company and
among all the marketing channel organizations,
to maximize the performance of
the entire distribution system.
Integrated marketing communications
(IMC) The concept under which a
company carefully integrates and coordinates
its many communications channels
to deliver a clear, consistent, and compelling
message about the organization
and its products.
Intensive distribution Stocking the
product in as many outlets as possible.
Interactive marketing Marketing by a
service firm that recognizes that perceived
service quality depends heavily on the
quality of buyer–seller interaction.
Intermarket segmentation Forming
segments of consumers who have similar
needs and buying behavior even though
they are located in different countries.
Intermodal transportation Combining
two or more modes of transportation.
Internal databases Electronic collections
of information obtained from data
sources within the company.
Internal marketing Marketing by a service
firm to train and effectively motivate
its customer-contact employees and all
the supporting service people to work as a
team to provide customer satisfaction.
Internet The vast and burgeoning global
web of computer networks with no central
management or ownership; A vast
public web of computer networks, which
connects users of all types all around the
world to each other and to an amazingly
large “information repository.” The internet
makes up one big “information highway”
that can dispatch bits at incredible
speeds from one location to another.
Intranet A network that connects people
within a company to each other and to the
company network.
Introduction stage The product lifecycle
stage in which the new product is
first distributed and made available for
purchase.
Joint ownership A joint venture in
which a company joins investors in a foreign
market to create a local business in
which the company shares joint ownership
and control.
Joint venturing Entering foreign markets
by joining with foreign companies to
produce or market a product or service.
Leading indicators Time series that
change in the same direction but in
advance of company sales.
Learning Changes in an individual’s
behavior arising from experience.
Licensing A method of entering a foreign
market in which the company enters into
an agreement with a licensee in the foreign
market, offering the right to use a manufacturing
process, trademark, patent, trade
secret, or other item of value for a fee or
royalty.
Lifestyle A person’s pattern of living as
expressed in his or her activities, interests,
and opinions.
Line extension Using a successful brand
name to introduce additional items in a
given product category under the same
brand name, such as new flavors, forms,
colors, added ingredients, or package sizes.
Local marketing Tailoring brands and
promotions to the needs and wants of
local customer groups—cities, neighborhoods,
and even specific stores.
Macroenvironment The larger societal
forces that affect the microenvironment—
demographic, economic, natural, technological,
political, and cultural forces.
Management contracting A joint venture
in which the domestic firm supplies
the management know-how to a foreign
company that supplies the capital; the
domestic firm exports management services
rather than products.
Manufacturers’ sales branches and
offices Wholesaling by sellers or buyers
themselves rather than through independent
wholesalers.
Markdown A percentage reduction
from the original selling price.
Market The set of all actual and potential
buyers of a product or service.
Market buildup method A forecasting
method that identifies market factors that
correlate with market potential and combines
them into a weighted index.
Market-centered company A company
that pays balanced attention to both customers
and competitors in designing its
marketing strategies.
Market challenger A runner-up firm
that is fighting hard to increase its market
share in an industry.
Market development A strategy for
company growth by identifying and
developing new market segments for current
company products.
Market factor index method A forecasting
method that calls for identifying
the potential buyers in each market-and
estimating their potential purchases.
Market follower A runner-up firm that
wants to hold its share in an industry
without rocking the boat.
Market leader The firm with the largest
market share in an industry.
Market nicher A firm that serves small
segments that the other firms in its industry
overlook or ignore.
G-6 Glossary
Market penetration A strategy for company
growth by increasing sales of current
products to current market segments
without changing the product.
Market-penetration pricing Setting a
low price for a new product in order to
attract a large number of buyers and a
large market share.
Market positioning Arranging for a
product to occupy a clear, distinctive, and
desirable place relative to competing products
in the minds of target consumers.
Market potential The upper limit of
market demand.
Market segment A group of consumers
who respond in a similar way to a given
set of marketing efforts.
Market segmentation Dividing a market
into distinct groups of buyers who
have distinct needs, characteristics, or
behavior and who might require separate
products or marketing mixes; Dividing a
market into distinct groups with distinct
needs, characteristics, or behavior who
might require separate products or marketing
mixes.
Market-skimming pricing Setting a
high price for a new product to skim
maximum revenues layer by layer from
the segments willing to pay the high price;
the company makes fewer but more profitable
sales.
Marketing A social and managerial
process whereby individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others.
Marketing audit A comprehensive, systematic,
independent, and periodic
examination of a company’s environment,
objectives, strategies, and activities
to determine problem areas and opportunities
and to recommend a plan of action
to improve the company’s marketing
performance.
Marketing channel (distribution
channel) A set of interdependent organizations
involved in the process of making
a product or service available for use
or consumption by the consumer or business
user.
Marketing communications mix (promotion
mix) The specific mix of advertising,
personal selling, sales promotion,
and public relations a company uses to
pursue its advertising and marketing
objectives.
Marketing concept The marketing
management philosophy that holds that
achieving organizational goals depends
on determining the needs and wants of
target markets and delivering the desired
satisfactions more effectively and efficiently
than competitors do.
Marketing control The process of measuring
and evaluating the results of marketing
strategies and plans and taking corrective
action to ensure that objectives are
achieved.
Marketing environment The actors
and forces outside marketing that affect
marketing management’s ability to build
and maintain successful relationships
with target customers.
Marketing implementation The process
that turns marketing strategies and
plans into marketing actions in order to
accomplish strategic marketing objectives.
Marketing information system (MIS)
People, equipment, and procedures to
gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information
to marketing decision makers.
Marketing intelligence The systematic
collection and analysis of publicly
available information about competitors
and developments in the marketing
environment.
Marketing intermediaries Firms that
help the company to promote, sell, and
distribute its goods to final buyers; they
include resellers, physical distribution
firms, marketing service agencies, and
financial intermediaries.
Marketing logistics (physical distribution)
The tasks involved in planning,
implementing, and controlling the physical
flow of materials, final goods, and
related information from points of origin
to points of consumption to meet customer
requirements at a profit.
Marketing management The art and science
of choosing target markets and building
profitable relationships with them.
Marketing mix The set of controllable
tactical marketing tools—product, price,
place, and promotion—that the firm
blends to produce the response it wants in
the target market.
Marketing offer Some combination of
products, services, information, or experiences
offered to a market to satisfy a need
or want.
Marketing process The process of (1)
analyzing marketing opportunities, (2)
selecting target markets, (3) developing
the marketing mix, and (4) managing the
marketing effort.
Marketing research The systematic
design, collection, analysis, and reporting
of data relevant to a specific marketing
situation facing an organization.
Marketing strategy The marketing logic
by which the business unit hopes to
achieve its marketing objectives.
Marketing strategy development
Designing an initial marketing strategy
for a new product based on the product
concept.
Marketing Web site A Web site that
engages consumers in interactions that
will move them closer to a direct purchase
or other marketing outcome.
Markup The percentage of the cost or
price of a product added to cost in order
to arrive at a selling price.
Maturity stage The stage in the product
life cycle in which sales growth slows or
levels off.
Merchant wholesaler Independently
owned business that takes title to the merchandise
it handles.
Microenvironment The actors close to
the company that affect its ability to serve
its customers—the company, suppliers,
marketing intermediaries, customer markets,
competitors, and publics.
Micromarketing The practice of tailoring
products and marketing programs
to the needs and wants of specific
individuals and local customer groups—
includes local marketing and individual
marketing.
Mission statement A statement of the
organization’s purpose—what it wants to
accomplish in the larger environment.
Modified rebuy A business buying situation
in which the buyer wants to modify
product specifications, prices, terms, or
suppliers.
Motive (drive) A need that is sufficiently
pressing to direct the person to seek satisfaction
of the need.
Glossary G-7
Multichannel distribution system A
distribution system in which a single firm
sets up two or more marketing channels
to reach one or more customer segments.
Natural environment Natural resources
that are needed as inputs by marketers or
that are affected by marketing activities.
Need recognition The first stage of the
buyer decision process, in which the consumer
recognizes a problem or need.
Needs A state of felt deprivation.
New product A good, service, or idea
that is perceived by some potential customers
as new.
New-product development The development
of original products, product
improvements, product modifications,
and new brands through the firm’s own
R&D efforts.
New task A business buying situation in
which the buyer purchases a product or
service for the first time.
Nonpersonal communication channels
Media that carry messages without
personal contact or feedback, including
major media, atmospheres, and events.
Nontariff trade barriers Nonmonetary
barriers to foreign products, such as biases
against a foreign company’s bids, or product
standards that go against a foreign
company’s product features.
Objective-and-task method Developing
the promotion budget by (1) defining specific
objectives; (2) determining the tasks
that must be performed to achieve these
objectives; and (3) estimating the costs of
performing these tasks. The sum of these
costs is the proposed promotion budget.
Observational research The gathering
of primary data by observing relevant
people, actions, and situations.
Occasion segmentation Dividing the
market into groups according to occasions
when buyers get the idea to buy,
actually make their purchase, or use the
purchased item.
Off-price retailer Retailer that buys at
less-than-regular wholesale prices and sells
at less than retail. Examples are factory outlets,
independents, and warehouse clubs.
Online advertising Advertising that
appears while consumers are surfing the
Web, including banner and ticker ads,
interstitials, skyscrapers, and other forms.
Online databases Computerized collections
of information available from online
commercial sources or via the Internet.
Online (Internet) marketing research
Collecting primary data through Internet
surveys and online focus groups.
Open trading networks Huge e-marketspaces
in which B2B buyers and sellers find
each other online, share information, and
complete transactions efficiently.
Operating ratios Ratios of selected
operating statement items to net sales that
allow marketers to compare the firm’s
performance in one year with that in previous
years (or with industry standards
and competitors in the same year).
Operating statement (profit-and-loss
statement, income statement) A financial
statement that shows company sales,
cost of goods sold, and expenses during a
given period of time.
Opinion leader Person within a reference
group who, because of special skills,
knowledge, personality, or other characteristics,
exerts influence on others.
Optional-product pricing The pricing
of optional or accessory products along
with a main product.
Order-routine specification The stage
of the business buying process in which the
buyer writes the final order with the chosen
supplier(s), listing the technical specifications,
quantity needed, expected time of
delivery, return policies, and warranties.
Outside sales force (or field sales force)
Outside salespeople who travel to call on
customers.
Packaging The activities of designing
and producing the container or wrapper
for a product.
Partner relationship management
Working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers.
Partnering with marketing intermediaries
Coca-Cola provides Wendy’s much
more than just soft drinks. It also pledges
powerful marketing support.
Patronage reward Cash or other award
for the regular use of a certain company’s
products or services.
Percentage-of-sales method Setting the
promotion budget at a certain percentage
of current or forecasted sales or as a percentage
of the unit sales price.
Perception The process by which people
select, organize, and interpret information
to form a meaningful picture of the world.
Performance review The stage of the
business buying process in which the
buyer rates its satisfaction with suppliers,
deciding whether to continue, modify, or
drop them.
Personal communication channels
Channels through which two or more people
communicate directly with each other,
including face to face, person to audience,
over the telephone, or through the mail.
Personal selling Personal presentation
by the firm’s sales force for the purpose
of making sales and building customer
relationships.
Personality A person’s distinguishing
psychological characteristics that lead to
relatively consistent and lasting responses
to his or her own environment.
Pleasing products Products that give
high immediate satisfaction but may hurt
consumers in the long run.
Point of purchase (POP) promotion
Display and demonstration that takes
place at the point of purchase or sale.
Political environment Laws, government
agencies, and pressure groups that
influence and limit various organizations
and individuals in a given society.
Portfolio analysis A tool by which management
identifies and evaluates the various
businesses making up the company.
Positioning statement A statement that
summarizes company or brand positioning—
it takes this form: To (target segment
and need) our (brand) is (concept) that
(point-of-difference).
Postpurchase behavior The stage of the
buyer decision process in which consumers
take further action after purchase, based
on their satisfaction or dissatisfaction.
Preapproach The step in the selling
process in which the salesperson learns as
much as possible about a prospective customer
before making a sales call.
Premium Good offered either free or at
low cost as an incentive to buy a product.
Presentation The step in the selling
process in which the salesperson tells the
G-8 Glossary
“product story” to the buyer, highlighting
customer benefits.
Price The amount of money charged for
a product or service, or the sum of the
values that consumers exchange for the
benefits of having or using the product or
service.
Price elasticity A measure of the sensitivity
of demand to changes in price.
Price pack (cents off deal) Reduced
price that is marked by the producer
directly on the label or package.
Primary data Information collected for
the specific purpose at hand.
Primary demand The total demand for
all brands of a given product or service.
Private brand (or store brand) A
brand created and owned by a reseller of a
product or service.
Private trading networks (PTNs) B2B
trading networks that link a particular
seller with its own trading partners.
Problem recognition The first stage of
the business buying process, in which
someone in the company recognizes a
problem or need that can be met by
acquiring a good or a service.
Product Anything that can be offered to
a market for attention, acquisition, use,
or consumption that might satisfy a want
or need.
Product adaptation Adapting a product
to meet local conditions or wants in foreign
markets.
Product bundle pricing Combining
several products and offering the bundle
at a reduced price.
Product concept The idea that consumers
will favor products that offer the
most quality, performance, and features
and that the organization should therefore
devote its energy to making continuous
product improvements; A detailed
version of the new-product idea stated in
meaningful consumer terms.
Product development A strategy for
company growth by offering modified or
new products to current market segments;
Developing the product concept into a
physical product in order to ensure that
the product idea can be turned into a
workable product.
Product invention Creating new products
or services for foreign markets.
Product life cycle (PLC) The course of a
product’s sales and profits over its lifetime.
It involves five distinct stages: product
development, introduction, growth,
maturity, and decline.
Product line A group of products that
are closely related because they function
in a similar manner, are sold to the same
customer groups, are marketed through
the same types of outlets, or fall within
given price ranges.
Product line pricing Setting the price
steps between various products in a product
line based on cost differences between
the products, customer evaluations of
different features, and competitors’
prices.
Product/market expansion grid A
portfolio-planning tool for identifying
company growth opportunities through
market penetration, market development,
product development, or diversification.
Product mix (or product assortment)
The set of all product lines and items that
a particular seller offers for sale.
Product position The way the product
is defined by consumers on important
attributes—the place the product occupies
in consumers’ minds relative to competing
products.
Product quality The ability of a product
to perform its functions; it includes the
product’s overall durability, reliability,
precision, ease of operation and repair,
and other valued attributes.
Product sales force structure A sales
force organization under which salespeople
specialize in selling only a portion of
the company’s products or lines.
Product specification The stage of the
business buying process in which the buying
organization decides on and specifies
the best technical product characteristics
for a needed item.
Production concept The idea that consumers
will favor products that are available
and highly affordable.
Promotional pricing Temporarily pricing
products below the list price, and
sometimes even below cost, to increase
short-run sales.
Proposal solicitation The stage of the
business buying process in which the
buyer invites qualified suppliers to submit
proposals.
Prospecting The step in the selling
process in which the salesperson identifies
qualified potential customers.
Psychographic segmentation Dividing
a market into different groups based on
social class, lifestyle, or personality characteristics.
Psychological pricing A pricing approach
that considers the psychology of
prices and not simply the economics; the
price is used to say something about the
product.
Public Any group that has an actual or
potential interest in or impact on an organization’s
ability to achieve its objectives.
Public relations Building good relations
with the company’s various publics by
obtaining favorable publicity, building up
a good “corporate image,” and handling or
heading off unfavorable rumors, stories,
and events.
Pull strategy A promotion strategy that
calls for spending a lot on advertising and
consumer promotion to build up consumer
demand. If the strategy is successful, consumers
will ask their retailers for the product,
the retailers will ask the wholesalers,
and the wholesalers will ask the producers.
Purchase decision The buyer’s decision
about which brand to purchase.
Push strategy A promotion strategy that
calls for using the sales force and trade
promotion to push the product through
channels. The producer promotes the
product to wholesalers, the wholesalers
promote to retailers, and the retailers promote
to consumer
Quota A limit on the amount of goods
that an importing country will accept in
certain product categories.
Reference prices Prices that buyers
carry in their minds and refer to when
they look at a given product.
Retailer Business whose sales come primarily
from retailing.
Retailing All activities involved in selling
goods or services directly to final consumers
for their personal, nonbusiness use.
Return on investment (ROI) A common
measure of managerial effectiveness—
the ratio of net profit to investment.
Sales force management The analysis,
planning, implementation, and control of
sales force activities. It includes setting
Glossary G-9
and designing sales force strategy; and
recruiting, selecting, training, supervising,
compensating, and evaluating the firm’s
salespeople.
Sales promotion Short term incentives
to encourage the purchase or sale of a
product or service.
Sales quota A standard that states the
amount a salesperson should sell and how
sales should be divided among the company’s
products.
Salesperson An individual acting for a
company by performing one or more of
the following activities: prospecting, communicating,
servicing, and information
gathering.
Salutary products Products that have
low appeal but may benefit consumers in
the long run.
Sample A segment of the population
selected for marketing research to represent
the population as a whole.
Secondary data Information that
already exists somewhere, having been
collected for another purpose.
Segmented pricing Selling a product or
service at two or more prices, where the
difference in prices is not based on differences
in costs.
Selective demand The demand a given
brand of a product or service.
Selective distribution The use of more
than one, but fewer than all, of the intermediaries
who are willing to carry the
company’s products.
Selling concept The idea that consumers
will not buy enough of the organization’s
products unless the organization
undertakes a large-scale selling and promotion
effort.
Selling process The steps that the salesperson
follows when selling, which include
prospecting and qualifying, preapproach,
approach, presentation and demonstration,
handling objections, closing, and follow-up.
Sense-of-mission marketing A principle
of enlightened marketing that holds
that a company should define its mission
in broad social terms rather than narrow
product terms.
Sequential product development A
new-product development approach in
which one company department works to
complete its stage of the process before
passing the new product along to the next
department and stage.
Service Any activity or benefit that one
party can offer to another that is essentially
intangible and does not result in the
ownership of anything.
Service inseparability A major characteristic
of services—they are produced and
consumed at the same time and cannot be
separated from their providers, whether
the providers are people or machines.
Service intangibility A major characteristic
of services—they cannot be seen,
tasted, felt, heard, or smelled before they
are bought.
Service perishability A major characteristic
of services—they cannot be stored
for later sale or use.
Service-profit chain The chain that
links service firm profits with employee
and customer satisfaction.
Service variability A major characteristic
of services—their quality may vary
greatly, depending on who provides them
and when, where, and how.
Shopping center A group of retail businesses
planned, developed, owned, and
managed as a unit.
Shopping product Consumer good that
the customer, in the process of selection
and purchase, characteristically compares
on such bases as suitability, quality, price,
and style.
Simultaneous (or team-based) product
development An approach to developing
new products in which various
company departments work closely
together, overlapping the steps in the
product-development process to save
time and increase effectiveness.
Single-source data systems Electronic
monitoring systems that link consumers’
exposure to television advertising and
promotion (measured using television
meters) with what they buy in stores
(measured using store checkout scanners).
Social classes Relatively permanent and
ordered divisions in a society whose
members share similar values, interests,
and behaviors.
Social marketing The design, implementation,
and control of programs seeking to
increase the acceptability of a social idea,
cause, or practice among a target group.
Societal marketing A principle of
enlightened marketing that holds that a
company should make marketing decisions
by considering consumers’ wants,
the company’s requirements, consumers’
long-run interests, and society’s long-run
interests.
Societal marketing concept The idea
that the organization should determine
the needs, wants, and interests of target
markets and deliver the desired satisfactions
more effectively and efficiently than
do competitors in a way that maintains or
improves the consumer’s and society’s
well being.
Specialty product Consumer product
with unique characteristics or brand identification
for which a significant group of
buyers is willing to make a special purchase
effort.
Specialty store A retail store that carries
a narrow product line with a deep assortment
within that line.
Standardized marketing mix An international
marketing strategy for using
basically the same product, advertising,
distribution channels, and other elements
of the marketing mix in all the company’s
international markets.
Straight product extension Marketing
a product in a foreign market without
any change.
Straight rebuy A business buying situation
in which the buyer routinely reorders
something without any modifications.
Strategic business unit (SBU) A unit
of the company that has a separate mission
and objectives and that can be
planned independently from other company
businesses.
Strategic group A group of firms in an
industry following the same or a similar
strategy.
Strategic planning The process of
developing and maintaining a strategic fit
between the organization’s goals and
capabilities and its changing marketing
opportunities. It involves defining a clear
company mission, setting supporting
objectives, designing a sound business
portfolio, and coordinating functional
strategies.
Style A basic and distinctive mode of
expression.
G-10 Glossary
Subculture A group of people with
shared value systems based on common
life experiences and situations.
Supermarket Large, low-cost, low-margin,
high-volume, self-service store that carries
a wide variety of food, laundry, and
household products.
Superstore A store much larger than a
regular supermarket that carries a large
assortment of routinely purchased food
and nonfood items and offers services
such as dry cleaning, post offices, photo
finishing, check cashing, bill paying, lunch
counters,
Supplier search The stage of the business
buying process in which the buyer
tries to find the best vendors.
Supplier selection The stage of the business
buying process in which the buyer
reviews proposals and selects a supplier or
suppliers.
Supply chain management Managing
upstream and downstream value-added
flows of materials, final goods, and related
information among suppliers, the company,
resellers, and final consumers.
Survey research The gathering of primary
data by asking people questions
about their knowledge, attitudes, preferences,
and buying behavior.
Systems selling Buying a packaged solution
to a problem from a single seller, thus
avoiding all the separate decisions
involved in a complex buying situation.
Target costing Pricing that starts with
an ideal selling price, then targets costs
that will ensure that the price is met.
Target market A set of buyers sharing
common needs or characteristics that the
company decides to serve.
Target marketing The process of evaluating
each market segment’s attractiveness
and selecting one or more segments
to enter.
Tariff A tax levied by a government
against certain imported products.
Team selling Using teams of people from
sales, marketing, engineering, finance,
technical support, and even upper management
to service large, complex accounts.
Technological environment Forces
that create new technologies, creating new
product and market opportunities.
Telephone marketing Using the telephone
to sell directly to customers.
Territorial sales force structure A sales
force organization that assigns each salesperson
to an exclusive geographic territory
in which that salesperson sells the
company’s full line.
Test marketing The stage of new-product
development in which the product and
marketing program are tested in more realistic
market settings.
Third-party logistics (3PL) provider
An independent logistics provider that performs
any or all of the functions required
to get its client’s product to market.
Total costs The sum of the fixed and variable
costs for any given level of production.
Total market demand The volume of a
product or service that would be bought
by a defined customer group in a defined
geographic area in a defined time period
in a defined marketing environment
under a defined level and mix of industry
marketing effort.
Transaction A trade of values between
two parties.
Undifferentiated (mass) marketing A
market-coverage strategy in which a firm
decides to ignore market segment differences
and go after the whole market with
one offer.
Uniform-delivered pricing A geographical
pricing strategy in which the
company charges the same price plus
freight to all customers, regardless of their
location.
Unsought product Consumer product
that the consumer either does not know
about or knows about but does not normally
think of buying.
Users Members of the buying organization
who will actually use the purchased
product or service.
Value analysis An approach to cost
reduction in which components are studied
carefully to determine if they can be
redesigned, standardized, or made by less
costly methods of production.
Value-based pricing Setting price based
on buyers’ perceptions of value rather
than on the seller’s cost.
Value chain The series of departments
that carry out value-creating activities to
design, produce, market, deliver, and support
a firm’s products.
Value-delivery network The network
made up of the company, suppliers, distributors,
and ultimately customers who
“partner” with each other to improve the
performance of the entire system.
Value marketing A principle of enlightened
marketing that holds that a company
should put most of its resources into
value-building marketing investments.
Value pricing Offering just the right
combination of quality and good service
at a fair price.
Value proposition The full positioning
of a brand—the full mix of benefits upon
which it is positioned.
Variable costs Costs that vary directly
with the level of production.
Variety-seeking buying behavior
Consumer buying behavior in situations
characterized by low consumer involvement
but significant perceived brand
differences.
Vertical marketing system (VMS) Adistribution
channel structure in which producers,
wholesalers, and retailers act as a
unified system. One channel member owns
Glossary G-11
the others, has contracts with them, or has
somuch power that they all cooperate.
Viral marketing The Internet version of
word-of-mouth marketing—e-mail messages
or other marketing events that are so
infectious that customers will want to pass
them along to friends.
Wants The form taken by a human
need as shaped by culture and individual
personality.
Warehouse club Off-price retailer that
sells a limited selection of brand-name
grocery items, appliances, clothing, and a
hodgepodge of other goods at deep discounts
to members who pay annual membership
fees.
Web communities Web sites upon
which members can congregate online
and exchange views on issues of common
interest.
Webcasting The automatic downloading
of customized information of interest
to recipients’ PCs, affording an attractive
channel for delivering Internet advertising
or other information content.
Wheel-of-retailing concept A concept
of retailing that states that new types of
retailers usually begin as low-margin, lowprice,
low-status operations but later
evolve into higher-priced, higher-service
operations, eventually becoming like the
conventional retailers they replaced.
Whole-channel view Designing international
channels that take into account
all the necessary links in distributing the
seller’s products to final buyers, including
the seller’s headquarters organization,
channels among nations, and channels
within nations.
Wholesaler A firm engaged primarily in
wholesaling activity.
Wholesaling All activities involved in
selling goods and services to those buying
for resale or business use.
Word-of-mouth influence Personal
communication about a product between
target buyers and neighbors, friends, family
members, and associates.
Zone pricing A geographical pricing
strategy in which the company sets up two
or more zones. All customers within a
zone pay the same total price; the more
distant the zone, the higher the price.