BUS450: Managing Cash Flow Flashcards
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involves forecasting, collecting, disbursing, investing, and planning for the cash a company needs to operate smoothly
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cash management
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the time lag between paying suppliers for merchandise and receiving payment from customers
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cash-flow cycle
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the difference between a company's total revenue and its total expenses
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profit
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showing the amount and the timing of the cash receipts and the cash disbursements week-by-week or month-by-month
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cash budget
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when customers send payments to a post office box which is maintained by the bank
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lockbox arrangements
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a contract in which a business selling an asset on credit gets a security interest in that asset, prtecting the company's legal rights in case the buyer fails to pay
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security agreement
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the exchange of goods and services for other goods and services
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bartering
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when the business turns the equipment back over to the leasing company with no further obligation
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operating lease
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a business may exercise an option to purchase the equipment, usually for a nominal sum
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capital lease
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a shift in the philosophy of budgeting that starts the budget from zero and evaluated the necessity of every item
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Zero-based budgeting (ZBB)
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an interest-bearing account offered by a variety of financial institutions, ranging from banks to mutual funds
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money market account
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a checking account that technically never has any funds in it but is tied to a master account
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Zero balance account
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unconventional, low-cost, creative techniques used for marketing
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guerilla marketing strategies
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the group of customers at whom the company aims its products and services
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target market
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the vehicle for gathering the information that serves as the foundation for the marketing plan
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market research
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a system of gathering data on individual customers and then developing a marketing plan designed specifically to appeal to their needs, tastes, and preferences
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individualized (one-to-one) marketing
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data that you collect and analyze yourself
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primary research
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data that has already been compiled and are available
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secondary research
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a process whereby business owners use computer software that uses statistical analyses, database technology, and artificial intelligence to find hidden patterns, trends, and connections in data
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data mining
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developing, maintaining, and managing long-term relationships with customers so that they will want to keep coming back to make repeat purchases
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relationship marketing or customer relationship management (CRM)
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calculates the sales revenue a company stands to lose by measuring the percentage of customers who would leave because of poor service
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revenue at risk
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the notion of drawing customers into a store by creating a kaleidoscope of sights, sounds, smells, and activities, all designed to entertain and sell
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entertailing
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quality not just in the product or service or service itself but also in every aspect of the business and its relationship with the customer and in continuous improvement in the quality delivered to customers
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total quality management (TQM)
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the philosophy of speed involving three aspects (1) speeding new products to market (2) shortening customer response time in manufacturing and delivering (3) reducing the administrative time required to fill an order
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time compression management (TCM)
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measures these stages of growth, and these measurements enable the company's management to make decisions about whether to continue selling product, when to introduce new follow-up products, and when to introduce changes to an existing product
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product life cycle
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any form of persuasive communication designed to inform consumers about a product or service and to influence them to purchase these goods or services
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promotion
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any commercial news covered by the media that boosts sales but for which the small business does not pay
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publicity
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the personal contact between salespeople and potential customers that comes form sales efforts
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personal selling
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any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor
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Advertising
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the average number of times a person is exposed to an ad in the same time period
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frequency
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the actual dollar outlay a business owner must make to place an ad in a particular medium for a specific time period
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absolute cost
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the ad's cost per potential customer reached
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relative cost
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measurement expression for relative cost
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cost per thousand (CPM)
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whereby satisfied customers recommend a business to friends, family members, and acquaintances
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word-of-mouth advertising
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television viewers who flash from one channel to another during commercials
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"Zappers"
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those who use digital video recording devices such as TiVo to fast forward through commercials
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"Zippers"
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come in two lengths: short forms, which are 2-to-3 minute pitches, and long form, 30-minute full-length television commercials packed with information, testimonials, and a sales pitch asking for an immediate response
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Infomercials (direct-response television)
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both pop-up, interstitial ads, and contextual ads
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display ads
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appears spontaneously in a separate window, blocking the site behind it
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pop-up
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an ad page that appears for a short time before a user-requested page appears
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interstitial ad
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whereby companies broadcast their advertising messaged by e-mail
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E-mail advertising
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involves sending e-mail ads to customers with their permission
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permission email
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unsolicited commercial e-mail
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spam
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where employees communicate with potential customers using a variety of media
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cross-channel advertising strategies
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a manufacturing company shares the cost of advertising with a retailer if the retailer features its products in those ads
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cooperative advertising
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a group of similar businesses forms a syndicate to produce generic ads that allow the individual businesses to dub in local information
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shared advertising
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includes innovative ads that do not necessarily look like traditional ads and often are located in unexpected places
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stealth advertising
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the monetary value of a good or service; it is a measure of what a customer must give up to obtain a good or service
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price
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the area between the price floor and the price ceiling
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price range
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established by a company's total cost to produce the product or provide the service
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price floor
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the most the target customers are willing to pay
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price ceiling
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a less-expensive, no frills version of a company's flagship product that is designed to confront lower-priced competitors head-on, satisfy the appetites of value-conscious customers, and preserve the image of the company's premium product
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fighter brand
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enables a business to build market share quickly and establish itself as the market leader when introducing a new product into the market
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penetration pricing strategy
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often used when a company introduces a unique product into a market with little or no competition
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skimming pricing strategy
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a variation of the skimming pricing strategy where the firm introduces a product at a high price and relies on technological advances, the learning curve effect, and economies of scale to lower its cost and reduce the product's price faster than its competitors and eventually becomes a high-volume producer
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life cycle pricing
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setting prices that end in odd numbers because they believe that an item selling for $12.69 appears to be much cheaper than selling a product for $13.00
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odd pricing
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a system where the manager stocks merchandise in several different price ranges or price lines when each category of merchandise contains items that are similar in appearance, quality, cost, performance or other features
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price lining
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setting different prices on the same products and services for different customers using the information they have collected about their customers
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dynamic (or customized) pricing
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a technique in which the small retailer marks down the customary price of a popular item in an attempt to attract more customers
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leader pricing
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consists of zone pricing, uniform delivered pricing, F.O.B. factory pricing
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geographic pricing techniques
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where a company sells its merchandise at different prices to customer located in different territories
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zone pricing
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a technique in which a company charges all of its customers the same price regardless of their location, even though the cost of selling or transporting merchandise varies
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uniform delivered pricing
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where the small company sells its merchandise to customer on the condition that they pay all shipping costs
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F.O.B. factory pricing
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reduction from normal list prices, to move stale, outdated, damaged, or slow-moving merchandise
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discounts/markdowns
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a limited duration discount that declines over time, is superior to a standard (hi-lo) discount, a common tactic in which a company offers frequent discounts off of its standard prices
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steadily decreasing discount (SDD)
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a promotional technique that offers customers discounts if they purchase in quantity
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multiple unit pricing
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grouping together several products or services, or both, into a package that offers customers extra value at a special price
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bundling
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involves selling the base product for one price but selling the options or accessories at a much higher percentage markup
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Optional-product pricing
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the grandaddy of all pricing tactics, in which the basic product is useless without the appropriate accessories
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Captive-product pricing
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a technique in which the revenues from the sale of by-products allow a firm to be more competitive in its pricing of the main products
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By-product pricing
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the difference between the cost of a product or service and its selling price
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markup (or markon)
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the average markup required on all merchandise to cover the cost of the items, all incidental expenses, and a reasonable profit
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initial markup
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a pricing technique commonly used by manufacturers who establish a price composed of direct materials, direct labor, factory overhead, selling and administrative costs, plus the desire profit margin
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cost-plus pricing
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direct materials and direct labor plus a portion of fixed and variable factory overhead absorbed into the finished products total cost
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absorption costing
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Encompasses direct materials, direct labor, and factory overhead costs that vary with the level of the company's output of the finished goods
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variable (or direct) costing
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the amount of money remaining that contributes to covering fixed expenses and earning a profit
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contribution margin
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a key customer benefit or a product or service that sets it apart from its competition
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unique selling proposition (USP)
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used to support and promote a nonprofit cause or charity that is important to the company and its customers and raise the visibility of their company in the community at the same time
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cause marketing
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measured the number of paid subscribers a particular medium attracts
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audience
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small rectangular ads that reside on Web sites and when site visitors click it they go straight to the advertiser's homepage
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banner ads
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occurs every time an ad appears on a Web page, whether or not the user clicks on the ad to explore it
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impression
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calculated by dividing the number times a customer actually clicks the banner ad by the number of impressions for that ad
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click-through rate
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when a small business spends its advertising budgets consistently across time
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continuous advertising
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when a small business concentrates its ad expenditures in carefully timed batches
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flighting advertising
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when small companies make some expenditures consistently across the year but concentrates the rest of its ad expenditures in carefully timed pulses
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pulsing advertising
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products so new that they transform the industry
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revolutionary products
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products that involve enhancements/improvements to products already on the market
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evolutionary products
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products that companies introduce to keep up with competition
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me-too products
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the total number of people exposed to an ad at least once in a period of time
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reach
