Final

Question 1

Marketing

Answer 1

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Question 2

4 Eras in the evolution of marketing in the US

Answer 2

1. Production
2. Sales
3. Marketing Concept
4. Customer Relationship

Question 3

The Marketing Concept Era

Answer 3

Fierce competition during post war baby boom. Businesses recognized they needed to be responsive to consumers if they wanted their business. Had 3 parts:

1. A customer orientation: find out what consumers want
2. A service orientation: Customer satisfaction should be a total and integrated organizational effort
3. A profit orientation: Focus on those goods and services that will earn the most profit

Question 4

CRM

Answer 4

Customer Relationship Management: The process of learning as much about customers and doing everything you can to satisfy them—or even exceed their expectations—with goods and services

Question 5

The Customer Relationship Era

Answer 5

1990s and early 2000s managers adopted CRM

Question 6

The Marketing Mix

Answer 6

The ingredients that go into a marketing program.

1. Product – designing a want-satisfying product
2. Price – choose a price that gives you a good profit margin and choose a price that fits your target market
3. Place – putting the product where people will buy it; includes physical distribution
4. Promotion - jumpstarts consumer interest

Question 7

Value

Answer 7

Good quality at a fair price. Benefits minus cost = benefits exceed the cost

Question 8

Total Product Offer

Answer 8

Everything that consumers evaluate when deciding whether to buy something; AKA value package.

Product + value enhancers (see fig. 14.1)

A successful marketer must begin to think like a consumer and evaluate the total product offer as a collection of impressions created by all the factors listed in 14.1

Question 9

Convenience Goods and Services

Answer 9

Products the consumer wants to purchase frequently and with a minimum of effort (e.g. candy, gum)

Question 10

Shopping goods and services

Answer 10

Those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers.

Question 11

Specialty goods and services

Answer 11

Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute, the consumer puts forth a special effort to purchase them.

Question 12

Unsought goods and services

Answer 12

Products that consumers are unaware of, haven’t necessarily thought of buying, or find that they need to solve an unexpected problem

Question 13

Brand

Answer 13

A name, symbol, design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.

Question 14

Brand equity

Answer 14

The value of the brand name and associated symbols

Question 15

Brand loyalty

Answer 15

The degree to which customers are satisfied, like the brand and are committed to further purchases

Question 16

Brand Awareness

Answer 16

How quickly or easily a given brand name comes to mind when a product category is mentioned

Sells products without effort or expenditure

Factors affecting the perception of quality:

1. Price
2. Appearance
3. Reputation

Question 17

Product Life Cycle

Answer 17

A theoretical model of what happens to sales and profits for a product class over time. 4 stages:

1. Introduction
2. Growth - profit peaks
3. Maturity - competition causes profit margins to decrease
4. Decline - can raise prices because of less competition and can spend less on advertising

Question 18

The Traditional Promotion Mix

Answer 18

The combination of promotional tools an organization uses.

• Advertising
• Personal Selling
• Public relations
• Sales promotion

Question 19

Promotion

Answer 19

All the techniques sellers use to inform people about and motivate them to buy their products or services. Includes:

In addition to the traditional promotion mix it includes publicity, word of mouth (viral marketing) and various sales promotion efforts such as coupons, rebates, samples and cents-off deals

Question 20

IMC

Answer 20

Integrated Marketing Communication – a technique that combines the promotional tools into one comprehensive, unified promotional strategy

in other words: using the same theme again and again across all of the promotional tools

Question 21

Advertising

Answer 21

Paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message

Question 22

Public Relations

Answer 22

The management function that evaluates public attitudes, changes policy and procedures in response to the publics’ requests, and executes a program of action and information to earn public understanding and acceptance

Question 23

Publicity

Answer 23

The talking arm of PR. Any information about an individual, product, or organization that’s distributed to the public through the media and that’s not paid for or controlled by the seller

Question 24

Sales promotion

Answer 24

The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities

Question 25

Accounting

Answer 25

The recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions

Question 26

5 key working areas in the accounting profession

Answer 26

1. managerial accounting 2. financial accounting 3. auditing 4. tax accounting 5. governmental/non-for-profit

Question 27

CPA

Answer 27

Certified public accountant – An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants Services can include designing and accounting system, helping select the correct software to run the system, and analyzing an organization's financial performance

Question 28

Managerial accounting

Answer 28

Accounting used to provide information and analyses to managers inside the organization to assist them in decision making

Question 29

Auditing

Answer 29

The job of reviewing and evaluating the information used to prepare a company's financial statements.

Question 30

Tax accountant

Answer 30

An accountant trained in tax law and responsible for preparing tax return or developing tax strategies

Question 31

government and not-for-profit accounting

Answer 31

Accounting system for organizations whose purpose is not generating revenue but serving ratepayers, taxpayers, and others according to a duly approved budget

Question 32

Financial accounting

Answer 32

Accounting information and analyses prepared for people outside the organization

Question 33

Balance sheet

Answer 33

Financial statement that reports a firm's financial condition at a specific time and is composed of 3 major accounts: 1. Assets 2. Liabilities 3. Owners' equity

Question 34

Income statement

Answer 34

The financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm (expenses), and the resulting net income or net loss

Question 35

Statement of Cash Flows

Answer 35

Financial statement that reports cash receipts and disbursements related to a firm's 3 major activities: 1. Operations 2. Investments 3. Financing

Question 36

Liquidity ratios

Answer 36

measure a company's ability to turn assets into cash to pay its short-term debts (liabilities that must be repaid within one year). 2 key liquidity ratios: 1. Current ratio 2. acid-test or quick ratio

Question 37

Investment bankers

Answer 37

Specialists who assist in the issue and sale of new securities

Question 38

Bond

Answer 38

A corporate certificate indicating that a person has lent money to a firm (or a government) 2 types: debenture (unsecure) and mortgage (secure) Usually issued in units of $1,000 Bond prices generally fluctuate inversely with current market interest rates Advantages: 1. Bondholders are creditors of the firm, not owners. Management maintains control over the firm's operations 2. Bond interest is a business expense and tax-deductible to the firm 3. Bonds are a temporary source of funding, They're eventually repaid and the debt obligation is eliminated 4. Bonds can be repaid before the maturity date if they contain a call provision. They can also be converted to common stock Disadvantages: 1. Bonds increase debt and may adversely affect the market's perception of the firm 2. Paying interest on bonds is a legal obligation. 3. The face value of the bond must be repaid by the maturity date. Without careful planning this obligation can cause cash flow problems

Question 39

NYSE

Answer 39

New York Stock Exchange – founded in 1972 and was a primarily a floor-based exchange. Merged with Archipelago in 2005. Merged with Euronext in 2007 and became NYSE Euronext. Acquired by Deutsche Borse AG of Germany in 2011

Question 40

NASDAQ

Answer 40

National Association of Securities Dealers Automated Quotations – was the world's first electronic stock market. In 2007 the NASDAQ purchased the Swedish OMX group and is now the NASDAQ ONX Group, which is the largest US electronic stock trading market and has more trading than any E-exchange in the world

Question 41

Mutual Fund

Answer 41

An organization that buys stocks and bonds and then sells shares in those securities to the public they offer small investors a way to spread the risk of stock and bond ownership and have their investments managed by a financial specialist for a fee

Question 42

Leverage (Debt) Ratios

Answer 42

measure the degree to which a firm relies on borrowed funds in its operations. Total liabilities ÷ Owner's equity = %

Question 43

Profitable (Performance) Ratios

Answer 43

measure how effectively a firm's managers are using its various resources to achieve profits. 3 of the more important ratios are earnings per share (EPS), return on sales and return on equity

Question 44

EPS

Answer 44

Earnings per Share Basic earnings per share = net income after taxes ÷ number of common stock shares outstanding

Question 45

Return on Sales

Answer 45

tells whether the firm is doing as well as its competitors in generating income from sales. ROS = net income ÷ net sales

Question 46

Return on equity

Answer 46

ROE = net income after tax ÷ total owners' equity

Question 47

Fundamental Accounting Equation

Answer 47

Assets = Liabilities + owner's equity In accounting this equation must always be balanced

Question 48

Equity

Answer 48

Assets minus liabilities

Question 49

Current ratio

Answer 49

the ratio of a firm's current assets to its current liabilities current assets ÷ current liabilities

Question 50

acid-test or quick ratio

Answer 50

measures the cash, marketable securities (such as stocks and bonds) and receivables of a firm, compared to its current liabilities cash + accounts receivable + marketable securities ÷ current liabilities

Question 51

Stocks

Answer 51

Shares of ownership in a company 2 types: common and preferred Advantages to firms who issue stock: 1. Stockholders never have to be repaid their investment 2. There's no legal obligation to pay dividends; therefore a firm can reinvest income 3. Selling stock can improve the condition of a firm's balance sheet since issuing stock creates no debt Disadvantages: 1. Stockholders have the right to vote for the board of directors so issuing new shares can alter the control of the firm 2. Dividends are paid from profit after taxes and are not tax-deductible 3. The need to keep stockholders happy can affect manager's decisions

Question 52

Common stock

Answer 52

The most basic form of ownership in a firm; in confers voting rights and the rights to share in the firm's profits through dividends, if approved by the firm's board of directors

Question 53

Preferred stock

Answer 53

Stock that gives its owners preference in the dividends and an earlier claim on assets than common stockholders if the company is forced out business and its assets sold. Normally do not get voting rights

Question 54

Sinking fund

Answer 54

Its primary purpose is to ensure that enough money will be available to repay bondholders on the bond's maturity date. A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond

Question 55

Callable bond

Answer 55

permits the issuer to pay off the principal before its maturity date (e.g. the interest rate drops so they call in the bonds and issue new ones at the lower rate)

Question 56

Convertible bond

Answer 56

can be converted into common stock. If the value of the firm's common stock grows quickly over time, bondholders can compare the value of continued bond interest earned with the potential profit of a specified number of shares of common stock

Question 57

Risk/return trade-off

Answer 57

The higher the risk of a bond, the higher the interest rate an issuer must offer

Question 58

Junk bonds

Answer 58

High risk, high interest bonds