exam 3 business

risk-return trade off

assets with higher expected returns entail greater risk

time value of money

the increase of an amount of money due to earned interest or dividends

cash flow not profits

financial managers recognize that cash pays the bills, not profits

valuation of assets

the value of an asset in an organization is its ability to generate positive cash flow over time

diversification

spreading out investments to reduce risk

financial management process

forecasts, budgets, controls

working capital

the funds that firms use to meet their day-to-day operational cash flows and needs

operating budget

focused on the expected revenue and expenses related to the firms predicted sales forecast

capital budget

aid in decisions related to the purchase of long-term assets that usually involve high-dollar expenditures

cash flow budget

show cash flow surpluses and shortfalls over shorter time periods

master budget

bring all of the information from the other budgets together and serve as a master financial plan

budget vs actual

identify deviations from the budget, propose solutions, make adjustments

trade credit

when a seller allows the buyer to pay for the product at some point in the near future yet take delivery our of the product or service immediately

debt financing

funds raised through various forms of borrowing that must be repaid

equity financing

funds provided by the owners of a company

consumer decision process

problem recognition, information search, evaluation of alternatives, purchase decision, post-purchase evaluation

extended problem solving

occurs during a purchase decision that calls for a lot of effort and time

routine response behavior

frequently purchased products without giving much thought to either the product or the purchase situation

limited problem solving

when a consumer is willing to put some effort into deciding the best way to satisfy a need

new task buy

never purchased before, most complex situation for a business

modified rebuy

has purchased before but needs to make a change

buying center roles

influencer, purchaser, user, decider, gatekeeper

marketing research process

problem definition, secondary research, setting research objectives, developing hypotheses, design research method

marketing research process (data)

design research method, data collection, data analysis, results and recommendations, follow up

exploratory research

information research that takes place in the beginning stages of marketing research to prepare for developing a project

descriptive research

counting numbers of respondents who have certain characteristics or behaviors

casual research

described as a predictive and attempts to explain cause-and-effect relationship

segmentation

grouping customers by characteristics

targeting

deciding which group to focus upon

positioning

understanding customers' perceptions of products and establishing a unique place in minds of target market

the total market

composed of customers and potential costumers who meet three criteria with respect to purchasing a particular product: ability, willingness, and authority

the target market

a set of buyers sharing common needs or characteristics that the company decides to serve

undifferentiated targeting strategy

marketer chooses to avoid segmentation process and treat total market as a single segment

differentiated target strategy

attempt to satisfy the broader marketplace by identifying multiple market segments to target and build a unique marketing mix

concentrated targeting strategy

a single segment of the market where it focuses on all marketing efforts

niche market

includes only those specific costumers who would enjoy a particular product

perceptual map

a means of displaying in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how they perceive competing products or brands

marketing mix

product, promotion, price, place

convenience products

inexpensive, regular, routine purchase

shopping

some effort to compare brands

speciality

expend time and effort, usually expensive

intangibility

the inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed

inseparability

the inability of the production and consumption of a service to be separated

perishability

the inability of services to be stored, warehoused, or inventoried

heterogeneity

variation in quality

product mix

narrow vs broad

product lines

deep vs shallow

cannabilization

diverting sales from an existing product

packaging

part of the product decision

branding

the totality of what an organization delivers to customers

manufacturers brand

brands are owned and controlled by a producer

private label brand

brand is owned or controlled be an intermediary

generic product

there is no name brand

price

an indicator of how the customer valuesthe product in the marketplace

perceived value

what the customer is willing to give up toget desired benefits

price elasticity of deman

a measure of the relationship between a percentage change in the market priceof a product and a consequential percentage change in the quantity demandedof a product

pricing objectives

goals that describe what a firm wants to achieve through pricing

profit maximization

setting prices so that total revenue is as large as possible relative to total costs

salex maximization

selling more items at lower prices

status quo

the existing state of affairs

supply chain management

encompasses the planning and management of all activitiesinvolved in sourcing and procurement, conversion and alllogistics management activities

intensive distribution

stocking the product in as many outlets as possible

selective distribution

a form of distribution achieved by screening dealers to eliminate all but a few in any single area

exclusive distribution

giving a limited number of dealers the exclusive right to distribute the company's products in their territories

operations

inputs, outputs

operations management

applies to services and manufacturing

production management

applies to only manufacturing

yield management

the application of pricing strategies to allocate capacity among various categories of demand

inventory management

the management of items held for future use

total quality management

a management system for acustomer-focused organization that involves all employees incontinual improvement

process layout

a layout that organizes the transformation process into departments that group related processes

product layout

a layout requiring that production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line