Marketing Essentials Vocabulary – Flashcards
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Market
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People who share similar needs and wants and are capable of buying products.
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consumer market
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Consumers who purchase goods and services for personal use.
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industrial market
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Businesses that buy products to use in their operations; also called the business-to-business market.
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market share
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A company's percentage of total sales volume generated by all competition in a given market.
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target market
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A group of people identified as those most likely to become customers.
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customer profile
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A list of information about a target market, such as age, income level, ethnicity, occupation, attitudes, lifestyle, and geographic residence.
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marketing mix
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The four basic marketing strategies, called the four Ps: product, place, price, and promotion.
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marketing plan
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A formal written document communicating the goals, objectives, and strategies of a company
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executive summary
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A brief overview of an entire marketing plan.
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situation analysis
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The study of the internal and external factors that affect marketing strategies.
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marketing strategy
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Identification of target markets and determination of marketing mix choices that focus on those markets.
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sales forecasts
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The projection of probable future sales in units or dollars.
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performance standards
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An expectation of performance that reflects a company's goals and marketing plan objectives.
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market segmentation
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The process of analyzing and classifying customers in a given market to create smaller, more precise target markets.
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demographics
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Statistics that describe a population in terms of personal characteristics such as age, gender, income, marital status, ethnicity, education, and occupation.
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disposable income
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The money left over after taxes are taken out of a consumer's income.
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discretionary income
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The money left over from a consumer's income after paying for basic living necessities such as food, shelter, and clothing.
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geographics
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Segmentation of the market based on where people live.
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pyschographics
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Studies of consumers based on social and psychological characteristics
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mass marketing
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Use of a single marketing plan to reach all customers.
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factors of production
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Economic term for the four categories of resources: land, labor, capital, and entrepreneurship.
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infrastructure
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The physical development of a country, including its roads, ports, sanitation facilities, and utilities.
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entrepreneurship
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The process of starting and operating your own business.
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scarcity
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The difference between what consumers want and need and what the available resources are.
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traditional economy
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The answers to the basic economic questions of what, how, and for whom are based on traditions and rituals.
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command economy
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An economic system in which the government decides what, when, and how much will be produced and distributed.
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gross domestic product (GDP)
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The output of goods and services produced by labor and property located within a nation.
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gross national product (GNP)
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The total dollar value of goods and services produced by a nation.
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inflation
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a period of rising prices
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consumer price index (CPI)
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Measurement of the change in price over a period of time of approximately 400 retail goods and services used by the average urban household.
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producer price index (PPI)
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Measurement of wholesale price levels in the economy.
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business cycle
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Recurring changes in economic activity, such as the expansion and contraction of an economy; expansion, peak, recession, trough, and recovery
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expansion
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A time when the economy is flourishing; also called prosperity.
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recession
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A period of economic slowdown that lasts for two quarters, or six months.
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depression
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A period of prolonged recession.
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recovery
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A period of renewed economic growth followed by a recession or depression.
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exports
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Goods and services sold to other countries.
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balance of trade
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The difference in value between a nation's exports and its imports.
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free trade
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Commercial exchange between nations that is conducted on free market principles, without tariffs, import quotas, or other restrictive regulations.
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tariff
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A tax on imports; also known as a duty.
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quota
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A limit on either the quantity or monetary value of a product that may be imported.
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embargo
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A total ban on specific goods coming into and leaving a country.
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protectionism
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A total ban on specific goods coming into and leaving a country.
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World Trade Organization (WTO)
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A global coalition of more than 140 governments that makes rules governing international trade.
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North American Free Trade Agreement (NAFTA)
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An international trade agreement among the United States, Canada, and Mexico.
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European Union (EU)
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European trading bloc
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licensing
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The process of letting another company (licensee) use a trademark, patent, special formula, company name, or some other intellectual property for a fee or royalty.
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contract manufacturing
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The process of hiring a foreign manufacturer to make products according to certain specifications.
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joint venture
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A business enterprise that different companies set up together; often, the venture involves a domestic company and a foreign company.
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foreign direct investment (FDI)
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Investments in factories, offices, and other facilities in another country that are used for a business's operations.
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multinationals
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large corporations that have operations in multiple countries
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mini-nationals
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Midsize or smaller companies that have operations in multiple countries.
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globalization
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The process of selling the same product and using the same promotion methods in all countries.
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adaptation
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Changing an existing product and/or promotion to better suit the characteristics of a targeted country or region.
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customization
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The process of creating products or promotions for certain countries or regions.
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trademark
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A brand name, brand mark, trade name, trade character, or a combination of these elements that is given legal protection by the federal government.
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copyright
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The exclusive right to reproduce or sell a work authored by an individual, such as writings, music, and artwork.
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competition
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The struggle between companies to attract new customers, keep existing ones, and take away customers from other companies.
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price competition
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The sale price of a product; the assumption is that consumers will buy the product with the lowest price.
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non-price competition
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Competition based on factors that are not related to price, such as product quality, service and financing, business location, and reputation.
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monopoly
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Exclusive control over a product or the means of producing it.
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nonprofit
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An organization that can function like a business but uses the money it makes to fund the cause identified in its charter.
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business risk
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The possibility of financial loss.
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profit
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The money earned from conducting business after all costs and expenses have been paid.
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supply
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The amount of goods producers are willing to make and sell.
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demand
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Consumer willingness and ability to buy products.
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domestic business
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A business that sells its products only in its own country.
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global business
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A business that sells its products to more than one country.
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for-profit business
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A business that seeks to make a profit from its operations.
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non profit organization
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An organization that can function like a business but uses the money it makes to fund the cause identified in its charter.
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public sector
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Local, state, and federal government agencies and services, such as public libraries and state universities.
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industry
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A group of establishments primarily engaged in producing or handling the same product or group of products or in rendering the same services.
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derived demand
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The demand for industrial goods based on the demand for consumer goods and services.
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wholesalers
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Channel of distribution that obtains goods from manufacturers and resells them to industrial users, other wholesalers, and retailers.
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retailers
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Channel of distribution that buys goods from wholesalers or directly from manufacturers and resells them to the consumer
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production
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The process of creating, expanding, manufacturing, or improving on goods and services.
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management
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The business function of planning, organizing, and controlling all available resources to achieve company goals.
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finance
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A business function that involves money management.
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accounting
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The discipline that keeps track of a company's financial situation.
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equal employment opportunity commission (EEOC)
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Federal agency responsible for the fair and equitable treatment of employees with regard to hiring, firing, and promotions.
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Occupational Safety and Health Admin (OSHA)
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Federal agency that provides guidelines for workplace safety and enforces those regulations.
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Securities and Exchange Commission (SEC)
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Federal agency that regulates the sale of securities (stocks and bonds), licenses brokerage firms and financial advisers, and investigates dealings among corporations.
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Environmental Protection Agency (EPA)
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Federal agency that protects human health and our environment.
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Federal Trade Commission (FTC)
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Federal agency responsible for enforcing the principles of a free enterprise system and protecting consumers from unfair or deceptive business practices.
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flextime
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A program that allows workers to choose their work hours
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telecommuting
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A program that involves working at home, usually on a computer, with completed jobs transmitted by e-mail or mail-in disk
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Ad Council
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A nonprofit organization that helps produce public service advertising campaigns for government agencies and other qualified sponsors.
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green marketing
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Producing and promoting environmentally safe products
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ethics
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Basic values and moral principles that guide the behavior of individuals and groups.
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Better Business Bureau (BBB)
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One of the oldest nonprofit organizations that establishes self-regulation among businesses.
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price gouging
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Pricing products unreasonably high when there is a high demand resulting from a monopoly or a natural disaster.
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whistle-blowing
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Reporting an illegal action by one's employer.
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feedback
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A receiver's response to a message.
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barriers
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Obstacles that interfere with the understanding of a message
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distractions
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Things that compete with the message for the listener's attention.
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emotional barriers
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Biases against the sender's opinions that prevent a listener from understanding.
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jargon
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Specialized vocabulary used by members of a particular group.
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persuade
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The process used to convince someone to change a perception in order to get them to do what you want.
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enumeration
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listing items in order
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generalization
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a statement that is accepted as true by most people
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spreadsheet programs
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Software applications used to organize, calculate, and analyze numerical data.
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desktop publishing programs
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A software application that is part word processor and part graphics application, and enables users to edit and manipulate both text and graphics in one document.
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communications programs
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Software applications that enable users to electronically communicate through computers with people around the world.
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ethics
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Basic values and moral principles that guide the behavior of individuals and groups.
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equity
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The concept of equal rights and opportunities for everyone.
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negotiation
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The process of working with different parties to find a resolution to their conflict.
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empathy
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An understanding of a person's situation or frame of mind
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cross-training
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A process that prepares a team member to do many different activities.
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top management
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Managers who make decisions that affect the whole company
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middle management
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Managers who implement the decisions of top management
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supervisory level management
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Managers who supervise the activities of employees who carry out the tasks determined by middle and top management.
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horizontal organization
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A structure where top management shares decision making with self-managing teams of workers who set their own goals and make their own decisions.
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empowerment
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Encouragement of team members to contribute and take responsibility for the management process.
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planning
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The process of setting goals and determining how to reach them
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organizing
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Establishment of a time frame in which to achieve a goal, assigning employees to the project, and determining a method for approaching the work.
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controlling
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The process of setting standards and evaluating performance.
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mission statement
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A brief paragraph or two that describes the ultimate goals of a company
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remedial action
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Using preventive discipline or corrective discipline to encourage appropriate workplace behavior.
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exit interview
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An interview arranged by the human resources department when an employee leaves a company.
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telemarketing
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The process of selling over the telephone.
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consultative selling
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the process of providing solutions to customers' problems by finding products or services that meet their needs.
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feature benefit selling
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The process of matching the characteristics of a product to a customer's needs and wants.
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product features
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Basic, physical or extended attributes of a product or service.
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customer benefits
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Advantages or personal satisfaction a customer will get from a good or a service.
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rational motive
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A conscious, logical reason for a purchase.
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emotional motive
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A feeling experienced by a customer through association with a product or a service.
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extensive decision making
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A decision-making process a customer goes through when there is little experience with a product or a service and there is a high degree of perceived risk or a high value.
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limited decision making
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The process used when a person buys goods and services that he or she has purchased before but not regularly.
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routine decision making
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The process used when a person needs little information about a product to make a decision because he or she buys it regularly.
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pre-approach
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The preparation for the face-to-face encounter with potential customers.
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prospect
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A potential customer; also known as a lead.
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referrals
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The names of other people who might buy a product, given to salespeople by satisfied customers.
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endless chain method
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The process of asking previous customers for names of potential customers.
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cold canvassing
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The process of locating as many potential customers as possible without checking out leads beforehand.
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sales quotas
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Dollar or unit sales goals set for the sales staff to achieve in a specified period of time.
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merchandise approach
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A way to approach a customer that focuses on making a comment or asking questions about a product in which the customer shows interest.
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nonverbal communication
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Expressing oneself without the use of words.
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open-ended questions
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The amount of money left for buying goods after all purchases received and on order have been considered.
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objection analysis sheet
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A document that lists common objections and possible responses to them.
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substitution method
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A selling method that involves recommending a different product that would still satisfy the customer's needs.
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boomerang method
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A selling method that converts a customer's objection into a selling point.
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superior-point method
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A selling technique that permits the salesperson to acknowledge objections as valid yet still offset them with other features and benefits
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third-party method
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A selling method that involves using a previous customer or other neutral person who can give a testimonial about the product.
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trial close
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An initial effort to close a sale.
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which close
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A method of closing a sale that encourages a customer to make a decision between two items.
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standing-room-only close
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A method of closing a sale that is used when a product is in short supply or when the price will be going up in the near future.
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direct close
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A closing method in which a salesperson asks for the sale
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service close
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A way to close a sale in which a salesperson explains services that overcome obstacles or problems.
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suggestion selling
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A method of selling in which the salesperson recommends additional goods or services to the customer.
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customer relationship management (CRM)
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A list of information about a target market, such as age, income level, ethnicity, occupation, attitudes, lifestyle, and geographic residence.
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on-approval sale
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An agreement permitting a customer to take merchandise (usually clothing) home for further consideration.
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cash-on-delivery (COD) sale
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A transaction that occurs when a customer pays for merchandise at the time of delivery.
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sales tax
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A percentage fee placed by the government on the sale of goods and services.
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allowance
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A partial return of the sale price for merchandise that the customer has kept.
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universal product code (UPC)
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A combination bar code and number used to identify a product and manufacturer.
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point-of-sale system
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The process of combining a cash register with a computer, making it possible to capture information about the transaction at the time of sale, then applying it to different functions.
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till
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cash draw of cash register
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opening cash fund
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A limited amount of money for the cash register provided by a manager or other designated person at the beginning of each business day.
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purchase order (PO)
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A legal contract between a buyer and a supplier to purchase a specified number of products at a specified price.
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invoice
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An itemized list of goods that includes prices, terms of sales, total, taxes and fees, and amount due
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terms of delivery
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The final delivery arrangement between the buyer and seller
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free-on-board (FOB)
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The price for goods includes delivery at the seller's expense to a specified point and no further.
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institutional promotion
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Communication process used to create a favorable image for a business which in turn helps sales efforts.
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advertising
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form of nonpersonal promotion
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direct marketing
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A type of advertising directed to a targeted group of potential customer through the mail or through e-mail.
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sales promotion
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all marketing activities
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PR
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Activities that enable an organization to influence a target audience
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news release
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A newsworthy announcement sent to appropriate media outlets
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publicity
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One tactic used by public relations professionals to bring information to the public's attention through a process called placement.
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promotional mix
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A combination of strategies and a cost-effective allocation of resources
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push policy
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a promotion process that involves a promotional mix used to promote a product to large retailers. This is often used by manufacturers with large retailers to convince them to stock certain products. This process relies on persoanl selling and sales promotion.
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pull policy
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A process that directs promotion towards consumers.
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sales promotions
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All marketing activities--other than personal selling, advertising, and public relations--that are used to stimulate purchasing and sales.
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trade promotions
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Sales promotion activities designed to get support for a product from manufacturers, wholesalers, and retailers.
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consumer promotions
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Sales strategies that encourage customers and prospects to buy a product or service.
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coupons
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Certificates that entitle customers to discounts on goods and services.
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premiums
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Low-cost items given to consumers at a discount or for free.
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incentives
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Products earned or given away through contests, sweepstakes, and rebates.
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promotional tie-ins
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Sales promotional arrangements between one or more retailers or manufacturers; also known as cross-promotion and cross-selling campaigns.
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storefront
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The exterior of a business that includes a store's sign or logo, marquee, outdoor lighting, banners, planters, awnings, windows, the exterior design, ambiance, landscaping, and lighting of the building
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marquee
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An architectural canopy that extends over a store's entrance
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store layout
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The ways that stores use floor space to facilitate and promote sales and serve customers
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fixtures
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The principal installations in a store; permanent or movable store furnishings that hold and display merchandise.
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point-of-purchase display
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A sales promotion device; manufactured units with bold graphics and signage that hold, display, or dispense products.
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kiosks
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Interactive point-of-purchase displays that are typically four feet high, have pedestal- mounted high-tech screens, and take up only a few square feet of floor space.
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color wheel
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A circular illustration of the relationships between colors.
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media
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The avenues through which messages are delivered; also known as channels.
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print media
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Newspapers, magazines, direct mail, signs, and billboards used in advertising.
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transit advertising
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Advertising found on public transportation
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broadcast media
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radio and television
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online advertising
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A form of advertising that uses either e-mail or the World Wide Web.
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specialty media
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Relatively inexpensive, useful items featuring an advertiser's name or logo that are given away; also known as giveaways or advertising specialties.
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media planning
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The process of selecting the advertising media and deciding the time or space in which the ads should appear to accomplish a marketing objective.
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audience
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The number of homes or people exposed to an ad.
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impression
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A single exposure to an advertising message.
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frequency
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The number of times an audience sees or hears an ad.
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cost per thousand (CPM)
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The media cost of exposing 1,000 readers or viewers to an advertising impression.
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rack jobbers
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Wholesalers that manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays.
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drop shippers
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Businesses that own the goods they sell but do not physically handle the products.
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retailers
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Channel of distribution that buys goods from wholesalers or directly from manufacturers and resells them to the consumer.
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brick-and-mortar retailers
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Traditional retailers that sell goods to customers from physical stores, rather than over the Internet.
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e-tailing
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Retailers selling products over the Internet to the customer; also known as online retailing.
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agents
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Intermediaries who bringing buyers and sellers together and do not own the goods they sell.
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direct distribution
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Sales of goods or services directly to the customer, with no intermediaries.
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indirect distribution
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Sales of goods or services to the customer through one or more intermediaries
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exclusive distribution
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Sales involving protected territories for distribution of a product in a given geographic area.
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integrated distribution
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A distribution system in which manufacturers act as wholesaler and retailer for their own products.
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selective distribution
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A limited number of outlets in a given geographic area are used to sell the product.
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intensive distribution
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Sales involving the use of all suitable outlets to sell a product.
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e-marketplace
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The online shopping location where products are sold to customers and industrial buyers through the use of the Internet.
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common carriers
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Trucking companies that provide transportation services to any business in their operating area for a fee.
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contract carriers
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For-hire trucking companies that provide equipment and drivers for specific routes.
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private carriers
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Trucking companies that transport goods for an individual business.
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exempt carriers
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Trucking companies that are free from direct regulation of rates and operating procedures.
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freight forwarders
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Private companies that combine less than carload or truckload shipments from several businesses and deliver them to their destinations.
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storage
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A marketing function that refers to the holding of goods until they are sold.
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private warehouse
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A facility designed to meet the specific needs of its owner.
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public warehouse
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Storage and handling facilities offered to any individual or company that will pay for its use.
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distribution center
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A warehouse designed to speed delivery of goods and to minimize storage costs.
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bonded warehouse
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Public or private warehouses that store products requiring the payment of a federal tax.
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open-to-buy (OTB)
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The amount of money left for buying goods after all purchases received and on order have been considered.
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centralized buying
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Buying process for all branches in a chain store operation, usually done in a central location, such as company headquarters
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decentralized buying
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Local chain store managers or their designated buyers who are authorized to make special purchases for their individual stores.
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want slips
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Customer requests for items that are not carried in the store
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consignment buying
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Paying for goods only after the final customer purchases them
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memorandum buying
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A buying process in which the supplier agrees to take back any unsold goods by a certain pre-established date.
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reverse auction
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A process in which companies post what they wantto buy and suppliers bid for the contract.
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direct check method
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The merchandise is checked directly against the actual invoice or purchase order.
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spot check method
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The receiver of a delivery conducts a check of one carton in a shipment to see if the right kind and quantity of goods were delivered
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quality check method
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The merchandise is checked to determine whether the quality of goods received matches the quality of the products, which were ordered
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source marking
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The seller or manufacturer marks the price before delivering the merchandise to the retailer; the marking often uses a universal product code (UPC).
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preretailing marking method
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A method of marking merchandise in which pricing information is marked in advance of a purchase order and entered on the buyer's computer system.
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inventory
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All the goods stored by a business before they are sold.
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inventory management
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The process of buying and storing materials and products while controlling costs for ordering, shipping, handling, and storage.
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just-in-time (JIT) inventory system
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An inventory system that controls the flow of parts and material into assembly and manufacturing plants.
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physical inventory system
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An inventory system where every so often, stock is visually inspected or actually counted to determine the quantity on hand.
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perpetual inventory system
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An inventory system that tracks the number of items in inventory on a constant basis.
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$ control
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The planning and monitoring of the total inventory investment that a business makes during a stated period of time
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unit control
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A method of stock control that measures the quantities of merchandise that a business handles during a period of time.
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inventory turnover
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The number of times the average inventory has been sold and replaced in a given period of time.
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basic stock list
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A list used for those staple items that should always be in stock.
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model stock list
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An inventory monitoring plan used for merchandise that quickly goes out of fashion.
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never out list
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An inventory monitoring plan used for best-selling products that make up a large percentage of sales volume
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real-time inventory system
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An Internet technology that connects applications, data, and users in real time.
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market share
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A company's percentage of total sales volume generated by all competition in a given market.
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break-even point
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The point at which sales revenue equals the costs and expenses of making and distributing a product.
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demand elasticity
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The degree to which demand for a product is affected by its price.
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law of diminishing marginal utility
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An economic law stating that consumers will buy only so much of a given product, even though the price is low.
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price fixing
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When competitors agree on certain price ranges within which they can set their own prices.
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price discrimination
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Charging different prices to similar customers in similar situations.
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unit pricing
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Including price information for a standard unit or measure so that consumers can compare prices more easily.
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loss leader
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An item priced at or below cost to draw customers into a store.
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one-price policy
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All customers are charged the same price for the goods and services offered for sale.
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flexible-price policy
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A price policy that lets customers bargain for merchandise
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skimming price
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A pricing policy that sets a very high price for a new product.
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penetration pricing
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A pricing policy that sets the initial price for a new product very low
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product mix pricing strategies
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Adjusting prices to maximize the profitability for a group of products rather than just one item.
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price lining
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A special pricing technique that sets a limited number of prices for specific groups or lines of merchandise.
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bundle pricing
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A pricing technique in which a company offers several complementary products in a package that is sold at a single price
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geographical pricing
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A pricing technique that makes price adjustments because of the location of the customer for delivery of products.
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segmented pricing policy
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A pricing strategy that uses two or more different prices for a product, even though there is no difference in the item's cost.
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prestige pricing
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A pricing technique that sets higher-than-average prices to suggest status and high quality to the consumer
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everday low prices (EDLP)
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Consistently low prices with no intention of raising them or offering discounts in the future.
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promotional pricing
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A pricing technique in which prices are reduced for a short period of time, generally used in conjunction with sales promotions.
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employee discounts
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Discounts offered by employers to their workers.
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database marketing
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A process of designing, creating, and managing customer lists that contain information about an individual's characteristics and transactions with a business; also known as customer relationship management (CRM).
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database
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An electronic collection of related information about a specific topic
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attitude research
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A type of research designed to obtain information on how people feel about certain products, services, companies, or ideas; also known as opinion research.
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market intelligence
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Information about the size and location of a market, the competition, and the segmentation within the market for a particular product or service.
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media research
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A type of research focusing on the issues of media effectiveness, selection, frequency, and ratings; also known as advertising research.
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product research
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The evaluation of product design, package design, product usage, and consumer acceptance of new and existing products.
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secondary data
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Data that has already been collected for some purpose other than the current study.
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point-of-sale research
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A form of research that combines natural observation with personal interviews to get people to explain buying behavior.
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experimental method
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A research technique in which a researcher observes the results of changing one or more marketing variables while keeping certain other variables constant under controlled conditions.
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data analysis
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The process of compiling, analyzing, and interpreting the results of primary and secondary data collection.
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validity
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When questions asked on a questionnaire measure what was intended to be measured.
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reliability
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When a research technique produces nearly identical results in repeated trials
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open-ended questions
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Questions that require respondents to construct their own answers.
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forced-choice questions
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Questions that ask respondents to choose answers from possibilities given on a questionnaire
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product line
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A group of closely related products manufactured or sold by a business
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product width
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The number of different product lines a business manufactures or sells
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product depth
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The number of items offered within each product line
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product modification
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An alteration in a company's existing product.
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product life cycle
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The stages that a product goes through during its life.
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product positioning
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The image a product projects that sets it apart from the competition
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category management
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A process that involves managing product categories as individual business units
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planogram
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A computer-developed diagram that shows retailers how and where products within a category should be displayed on a shelf at individual stores.
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trade name
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A phrase or symbol that identifies and promotes a company or a division of a particular corporation; also known as a corporate brand.
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brand mark
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A unique symbol, coloring, lettering, or other design elements.
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trade character
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A specific type of brand mark, one with human form or characteristics.
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trademark
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A brand name, brand mark, trade name, trade character, or a combination of these elements that is given legal protection by the federal government.
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national brands
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Brands that are owned and initiated by national manufacturers or service companies; also known as producer brands.
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private distributor brands
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Brands that are developed and owned by wholesalers and retailers; also known as private brands, store brands, dealer brands, or private labels.
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generic brands
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Products that do not carry a company identity
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brand extension
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A branding strategy that uses an existing brand name to promote a new or improved product in a company's product line.
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brand licensing
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A legal authorization by a trademarked brand owner to allow another company (the licensee) to use its brand, brand mark, or trade character for a fee.
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mixed brand
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A combination of manufacturer, private distributor, and generic brands as a strategy to sell products.
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co-branding
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A combination of one or more brands in the manufacture of a product or in the delivery of a service.
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mixed bundling
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The practice of packaging different products and services together.
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price bundling
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Two or more similar products are placed on sale for one package price
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blisterpacks
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Packaging with preformed plastic molds surrounding individual items arranged on a cardboard backing.
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aseptic packaging
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A food storage process that keeps foods fresh without refrigeration for up to six months.
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cause packaging
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Packaging that is used by companies to promote social and political causes.
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full warranty
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A warranty that guarantees that if a product is found to be defective within the warranty period, it will be repaired or replaced at no cost to the purchaser.
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limited warranty
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A warranty that excludes certain parts of the product from coverage or requires the customer to bear some of the expense for repairs resulting from defects.
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implied warranty
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A warranty that takes effect automatically by state law whenever a purchase is made.
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warrant of merchantability
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The seller's promise that the product sold is fit for its
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warranty of fitness of a particular purpose
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A warranty used when the seller advises a customer that a product is suitable for a particular use, and the customer acts on that advice.
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disclaimer
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A statement that contains exceptions to and exclusions from a warranty.
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credit
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The opportunity for businesses or individuals to obtain products or money in exchange for a promise to pay later.
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30-day accounts
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Accounts that enable customers to charge purchases during a month and pay the balance in full within 30 days after they are billed.
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installment accounts
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Accounts that allow for payment over a period of time; also known as time payment accounts.
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revolving accounts
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Charge accounts where the retailer determines the credit limit and payment terms.
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budget accounts
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Accounts that allow the payment of a purchased item over a certain time period without a finance charge.
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franchise
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A legal agreement to sell a parent company's product or services in a designated geographic area.
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sole proprietorship
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A business owned and operated by one person
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unlimited liability
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A business owner's financial liability is not limited to investments in the business, but extends to his or her total ability to make payments.
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partnership
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A legal agreement between two or more people to be jointly responsible for the success or failure of a business.
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general partnership
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A way to organize a business in which each partner shares in the profits and losses.
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corporation
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A legal entity created by either a state or a federal statute authorizing individuals to operate an enterprise.
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stockholders
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The owners of a corporation with limited liability.
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limited liability
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The personal assets of the owners cannot be taken if the company does not meet its financial obligations.
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foreign corporation
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A company that is incorporated under the laws of a state that differs from the one in which it does business.
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limited liability company (LLC)
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A relatively new form of business organization that is a hybrid of a partnership and corporation.
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Doing Business As (DBA)
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The registration by which a county government officially recognizes that a new proprietorship or partnership exists.
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Articles of Incorporation
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A document filed with a state department of commerce that identifies the name and address of a new corporation, its purpose, the names of the initial directors, and the amount of stock that will be issued to each director.
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economic risks
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Risks that result from changes in overall business conditions.
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natural risks
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Risks that result from natural occurrences, such as an earthquake or bad weather.
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human risks
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Risks that are triggered by errors or omissions as well as the unpredictability of customers or working environment.
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insurance policy
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A contract between a business and an insurance company to cover a specific business risk.
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extended coverage
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An endorsement that provides protection against types of loss that may not be covered under a basic property insurance policy.
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fidelity bonds
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A type of insurance that protects a business from employee dishonesty.
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performance bonds
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A type of insurance that provides financial protection for losses that might occur when a construction project is not finished due to the contractor's impaired financial condition; also known as surety bonds.
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trading area
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The geographical area from which a business draws its customers.
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buying behavior
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The process individuals use to decide what they will buy, where they will buy it, and from whom they will buy it.
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job description
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Written statements listing the requirements of a particular job and the skills needed to fulfill those requirements.
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equity capital
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The process of raising money from within your company or by selling part of the interest in the business.
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debt capital
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borrowed funds that must be repaid
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collateral
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Something of value that a person pledges as payment for a loan in case of default.
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credit union
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A cooperative association formed by labor unions or groups of employees for the benefit of its members.
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liability
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A debt that a person owes to others, such as credit card debt, school loans, car payments, or taxes.
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net worth
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The difference between the assets of a business and its liabilities.
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startup costs
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Projections of how much money a new business owner will need for the business's first year in operation.
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income statement
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A summary of income and expenses during a specific period of time; also known as profit and loss statement.
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gross sales
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The total of all sales for a given period of time.
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net sales
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amount left after gross sales have been adjusted for returns and allowances.
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net income
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The amount left after the total expenses are subtracted from gross profit.
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interest
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The money paid for the use of money borrowed or invested
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principal
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Money that is borrowed, sometimes to start a business
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balance sheet
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A summary of a business's assets, liabilities, and owner's equity.
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cash flow statement
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A monthly plan that tracks when a person anticipates that cash will come into their business and when they expect to pay out cash.
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Occupational Outlook Handbook (OOH)
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A publication that describes what workers do on the job, working conditions, the training and education needed, earnings, and expected job prospects in a wide range of occupations.
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O*NET
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An online database that includes information on skills, abilities, knowledge, work activities, and interests associated with occupations.
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public employment agencies
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Employment agencies that are supported by state or federal taxes and offer free services to both job applicants and employers.
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private employment agencies
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Employment agencies that are not supported by taxes and must earn a profit to stay in business.
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