Acceleration effect This term is used when the demand for an industrial product increase decreases more than the demand for consumer products. SOF Arbitration Use of an independent, third party person, called arbitrator, who is legally appointed to settle a dispute between two parties. The decision of the arbitrator is final and legally binding, Auetions There are three major type of auctions: English auctions have one seller and many buyers, An item offered by a seller goes to the buyer who makes the highest price bid. The other type of auction, called Dutch or reverse auction, is reverse of English auction, It has one buyer and many suppliers, with the order going to a company that makes lowest price bid. The third type is sealed-bid auction Balanced scorecard It is a framework that translates a company’s mission and strategy into a set of performance measurements. Basic Customer Service It is a service that accompanies a core product or service and is provided free of charge by a supplier to a customer. Bivariate analysis Bivariate analysis involves the analysis of the relationship between two variables only. Some of the techniques of bivariate analysis include scatterplot diagrams, correlation, and regression. Brand A brand identifies the seller. It is defined as a name, symbol, term, sign, design, or a combination of them, intended to identify the goods or services of one seller and differentiate them from those of competitors. Brand equity _Itis the added value of a brand. Brand equity results in customers showing a preference for one product over another when they are fundamentally similar. Brand hierarchy It isa part of the brand strategy in which a company decides which of the following four levels or options it should aim at: (1) corporate brand, (2) family brand, (3) individual (product) brand, or (4) a combination of the above. Branding _ It is the process of creating a unique identity for a product. It transforms a product into a brand, It endows a product or service with the power of a brand. Break-even volume It is the sales quantity at which there is nil profit. The break-even analysis is used in the pricing decisions to determine the level of sales to cover all relevant costs. Bring-your-own-device (BYOD) Personal smart phones and tables used in the work places made adaptable for B2B services.574 Business Marketing Bull-whip effect In this, fluctuations in orders increase as they move up the supply chain from dealers/retailers to distributors to manufacturers to suppliers. Business market customers Organisations or firms buying raw materials, components, plant and equipment, and services, for consumption, use, or resale. Business marketing Marketing of products and services to business organisations, such as commercial organisations, government undertakings, and institutions (like hospitals and colleges). Business-to-Business (B2B) In B2B, the transactions happen between two business organisations. For example, transactions between FedEx and Cisco. Business-to-Consumers (B2C) In Business-to-Consumers (B2C), transactions are conducted electronically between companies and consumers over the Internet, For instant, customers purchasing books from Amazon.com. Buyclasses These are the type of buying situations, i.e. new task, modified rebuy and straight rebuy. Buygrid framework/model It combines buying situations (i.e, buyclasses) with eight phases (or stages) of buying decision process (i.e. buyphases) for better understanding of organisational buying process. Buying centre or Decision making unit (DMU) _It includes individuals and groups who participate in the buying decision, and share common objectives and risks. Buying orientation This is one of the purchasing orientations or concepts adopted by business buying firms. The purchasing firm, in this orientation, has a short-term focus and follows the practices of buying from the lowest price supplier, gaining power over the suppliers, and avoiding risks in buying Buyphases Organisational buying process consisting of eight sequential activities or phases, called ‘buyphases, starting with problem recognition and ending with performance feedback and evaluation. Channel positioning _Itis the process of establishing and sustaining the manufacturer's (or supplier's) reputation of delivering superior value among targeted intermediaries (or resellers). Closed/Sealed tender/bidding Often government units follow ¢losed or sealed tender or bidding process, which includes invitation to potential suppliers (typically through newspaper advertisements of tender notices) to submit written, sealed bids for supply of specified products, by particular date and time. All bids are thereafter opened, in the presence of representatives of the suppliers, and then the prices are read out. Orders are placed on the lowest price bidder, if the bidder meets with the product specifications and the delivery requirements Cloud computing The cloud computing is a technology that uses the Internet and central remote servers to maintain business data and applications. It allows consumers and businesses to ust applications without installation and access their personal files at any computer with Internet access. This technology allows for much more efficient computing by centralized data storage and processing. Cluster analysis Cluster analysis is a multivariate statistical technique which is used to identify similarity in perception or behaviour. It involves the grouping together of units which have similar responses on a set of variables. The clusters so obtained can then be analysed to identify behavioural profiles. In particular, cluster analysis is a common technique used in customer profiling.575 Cobranding/dual branding When two or more well-known brands are combined in a product or a service, it is called cobranding or dual branding. For instance, IBM personal computers using Intel processors. Collaborative/Partnering relationship The objectives of collaborative or partnering relationship between a customer firm and a supplier firm are to deliver superior value to the customer's customers and to have a long-term mutually beneficial relationship. These objectives are achieved by working together through joint problem solving teams to find creative solutions. This relationship is based on commitment and trust. It is a kind of strategic alliance, with agreements between selected suppliers, customers, and intermediaries | Collaborative Commerce (c-Commerce) Business partners collaborate along the supply chain electronically Commercial enterprises Profit seeking companies like distributors, original equipment manufacturers, and users. Commission merchants These intermediaries deal with bulk commodities like iron ore and coal They have a short-term representation of suppliers for arranging inspection, negotiating prices, and closing the sale. They are paid commission by manufé turers or suppliers for the services provided. Company’s sales forecast It is calculated by multiplying the market potential by the company’s estimated market share. It is also referred to as ‘company’s current demand,’ or ‘current organisational demand’. Competitive advantage It is analysed from competitors’ or customers’ point of view. A competitors- oriented analysis compares the company’s capabilities and product/service offerings with those of competitors. A customer-based analysis of competitive advantage focuses on customer benefits or needs, and how can the company offer superior value to customers in relation to competitors. A Competitive advantage can be sustained through continuous improvement. In short, competitive advantage provides superior value when compared to other suppliers’ offering: Competitive forces Profit performance of an industry is impacted by five competitive forces-viz. rivalry among existing firms, threat of new entrants, threat of substitute products, bargaining power of suppliers and bargaining power of buyers. Concentrated marketing strategy defined segment. It means focusing all marketing effort on a single, carefully Conjoint analysis Conjoint analysi is a multivariate statistical technique which is used to determine the contribution of each attribute of a product to the total utility/satisfaction of the product. It uses the preference rankings of a set of products with different combinations of attributes to do this. It is especially used to determine which combination of attributes is most preferred (for better product design). ‘Consultative selling method Consultative salespeople or sales teams understand and analyse in- depth the customer's problems or needs, and use the resources and functions within or outside the organisation to solve the customer's problem. These salespeople create value for their customers. Consumer marketing Marketing of goods and services to household consumers and individuals.576 Business Marketing Consumers-to-Consumers (C2C) A consumer sells a product or service to other consumer electronically or a consumer exchanges a product with another consumer. For example, consumers auctioning in eBay.com. Co-operative societies These are cooperative organisations which are owned and managed by an association of persons, who are members, with profits or benefits shared among them. Examples are cooperative sugar mills, cooperative banks. Core competence A combination of most important skills and knowledge to do something successfully. C.K. Prahlad and Hamel have defined it as “a complex harmonisation of individual technologies and production skills” Correlation Correlation is a measure of the strength or degree of relatedness of two variables. The simplest form of correlation is linear correlation, as measured by Pearson’s product-moment coefficient of correlation, which measures how closely-linearly-related two variables are Cross-elasticity of demand Responsiveness of the sales (or demand) of one product to a price change in another product. For instance, demand for aluminium is related to the prices of wood and steel which are substitutes for aluminium door and window frames. customs, language, music and art valued by a Culture A set of common beliefs and shared values. group of people. A consumer's culture influences his buying decisions Customer interaction management (CIM) It is software that helps to collect and manage information to measure and optimise customer experience about after-sales efforts of a company. Customer lifetime value It is an estimate of the net present value of the total current and future revenues from a customer less the cost of acquiring and serving the customer. Customer relationship management (CRM) _CRMisnot only getting a software, but also developing customer strategy, business processes, and customer-oriented culture of the employees of the firm, for the purpose of improving the customer loyalty and corporate profitability. The CRM system integrates sales, marketing, and customer service functions and gives to all customer interacting persons and departments access to share customer data in real time. vices Customer service It accompanies the core offering and includes basic and supplementary Customer value proposition Difference between the benefits and costs of an offer (or proposition) made by a supplier to its target customer. It should answer the question: “why should the target customer buy from the company rather than its competitors?” Demand analysis Demand analysis analyses the extent to which demand for a product is influenced by the price. The demand for industrial products are mostly inelastic and hence it is relatively less sensitive to price Demand chain management It is a broader view, which states that a company should first think of the demand of the target market and then design the supply chain backward from that point Derived demand Demand for industrial products and services are derived from ultimate demand for consumer products and services. Industrial demand is, therefore, called derived demand. For example demand for steel is derived from (or originated from) demand for cars, refrigerators, washing machines, and so on, where steel is used.=< " Ft | 576 Business Marketing Consumers-to-Consumers (C2C) A consumer sells a prodvet or Sex to other consumer Slectronically or a consumer exchanges a product with another consumer For example, consumers auctioning in eBay.com. Co-operative societies ‘These are cooperative organisations which are owned and managed by an cceoctation of persons, who are members, with profits or benefits shared among them, Examples are cooperative sugar mills, cooperative banks. Core competence A combination of most important skills and knowledge to do something successfully. CK. Prahlad and Hamel have defined it as “a complex harmonisation of individual technologies and production skills” | Correlation Correlation is a measure of the strength or degree of relatedness of two variables. The | simplest form of correlation is linear correlation, as measured by Pearson's product-moment coeffici sfeotrelation, which measures how closely-linearly-related two variables are. nt | Cross-clasticity of demand Responsiveness of the sales (or demand) of one product to a price change sn another product. For instance, demand for aluminium is related tothe prices of wood and steel which are substitutes for aluminium door and window frames: Culture A set of common beliefs and shared values, customs, language, music and art valued by a coup of people. A consumer's culture influences his buying decisions Customer interaction management (CIM) It is software that helps to collect and manage ‘formation to measure and optimise customer experience about aftersales efforts of a company. Customer lifetime value It is an estimate of the net present value of the total current and future revenues from a customer less the cost of acquiring and serving the customer Customer relationship management(CRM) _CRMisnotonly getting software, but also developing ‘and customer-oriented culture of the employees of the firm, for ind corporate profitability. The CRM system integrates customer strategy, business processes, the purpose of improving the customer loyall sales, marketing, and customer service functions and gives to all customer interacting Persons and departments access to share customer data in real time: Customer service Tt accompanies the core offering and includes baste and supplementary services. Customer value proposition Difference between the benefits and costs of an offer (or proposition) made by a supplier to its target customer. It should answer the question “why should the target customer buy from the company rather than its -ompetitors Demand analysis Demand analysis analyses the extent to which demand for a products influenced by the price. The demand for industrial products are mostly inelastic and hence it is relatively lesssensitive to price. Demand chain management It is a broader view, which states that a company should first think of the demand ofthe target market and then design the supply chain backward from that point Derived demand Demand for industrial products and services are derived from ultimate demand for consumer products and services. Industrial demand is, therefore, called derived demand. For example demand for steel is derived from (or originated from) demand for cars, refrigerators, washing machines, and so on, where steel is used.Glossary of Key Terms 577 Descriptive measures Descriptive measures are statistical measures that describe certain characteristics of frequency distributions. Measures of central tendency (such as the mean, the median, and the mode) are descriptive measures that identify the average or representative value of the variable, around which the distribution seems to cluster. Measures of dispersion (such as the standard deviation, the quartile deviation, and the mean deviation) are measures of the spread in the data around the central values. Measures of skewness (such as the moment coefficient of skewness, Bowley’s coefficient of skewness, and Pearson's coefficient of skewness) measure the asymmetry in the distribution around the central values. Finally, measures of kurtosis (such as the moment coefficient of kurtosis) measure the flatness/peakedness of the distribution around the central values, Differentiated marketing strategy In this strategy, a firm decides to serve two or more segments with different or distinctive marketing strategies, avoiding other segments, The objective is to achieve higher sales volume and a stronger position in the chosen market segments. Diplomacy The skill and tact used to resolve conflicts through discussion between representatives of two parties. Direct channel When the manufacturer performs all the sales and distribution functions (or activities) to create sales and deliver products to the customer, it is called direct channel structure, which does not use intermediaries. Examples are the manufacturer's sales force and direct marketing channels like the internet, telemarketing, and direct mail. Direct marketing Direct marketing uses direct channels to reach and deliver goods and services to customers without using intermediaries. These channels include direct mail, telemarketing, the internet (or websites), catalogs, kiosks, interactive TV, and mobile devices. Discriminant analysis Discriminant analysis is a multivariate statistical technique which is used to identify the set of variables that maximally distinguish between two or more classes of units. Forexample, in order to identify critical performance parameters in the operation of systems, one would take performance measurements of systems that are operating well, as well of systems that are not operating well; discriminant analysis would be able to identify the performance parameters that distinguish these two classes, which would be interpreted as the critical performance parameters. Distribution channels Also called marketing channels, sales channels, or trade channels, these are sets of interdependent organisations that make products or services available to customers for use or consumption. Distribution-fitting Distribution-fitting is a set of statistical methods that involves identifying the probability distribution and the generation process of a given random phenomenon. This is done by comparing the distribution of sample data from the random process with the distribution of values as expected from the model. Diversification strategy It is a growth strategy by which an organisation aims to serve new markets with new products that are related to the organisation's business strengths or core competencies. Domain name A domain name identifies a website on the internet including the server that handles web browser requests the specific organisation associated with the domain name, and the general category in which the organisation operates. For instance, wwwalliancebacademy.org,———— 578 Business Morketing Dumping Selling products in an overseas market below the cost in the domestic market. Dutch auction Also called descending bids ot reverse auction, it involves one buyer who invites bids from several interested suppliers. The order goes to the supplier who makes the lowest price bid e-Channel Electronic channel (or e-channel) is a part of direct marketing channel and is also known ts the internet, It can be used to provide information, online buying/selling, and relationship building e-Commerce e-Commerce is buying and selling of products and services by businesses and cngumers through an electronic medium, particularly using the Internet Italso enables intra- or inter- organisational activities that facilitate the exchange of products and services. e-Commerce uses the digital technology for trading and transmitting information between individuals and organisations as well as B2B. Feonomies of scale Reduction of costs per unit due to large scale (or size) of production or operation, equipment and facilities. resulting from large capital investment Efficiency control Itexamines whether the resources are used efficiently in each element of marketing strategy, if the firm fails to achieve its yearly goals or targets For instance, it examines advertising effectiveness of each media used by the firm, contribution of product items, and discount structure in the pricing policy. EFT (Electronic Fund Transfer) Electronic fund transfer (EFT) is an application that electronically routes the funds, debits, credits, charges and payments between the banks and customers using tele- communication networks. e-Governance (or E-Government) |The use of electronic commerce to deliver information and public services to citizens, business partners and other organisations. Electronic catalogue It is vendor's catalogue containing the details and specifications of all the products and services offered in the Internet (E-Commerce website). Electronic Data Interchange (EDI) EDLis the communication between the applications running in two or more number of computers. It communicates specially formatted standard business information Tike purchase orders bills, invoices, approvals of credit, shipping notices and confirmation between the computer system of companies, banks, government agencies and logistic companies English auction Also called forward auction oF ascending bid, in this auction there is one seller and many buyers. The seller offers an item for sale to interested buyers. The item goes to the buyer who makes the highest price bid. e-Procurement _E-Procurement (also known as Electronic-procurement) is a way of using the Internet to make it easier, faster, and less expensive to purchase the goods ‘and services the organisations require. Estimation Estimation is a set of statistical methods that involves identifying sample statistics which ane to be used as estimators of the population parameters. Often, rather than using point estimators, which provide a single-value estimate for a parameter, an interval estimator may be preferred. An Jnterval estimator isa range within which the population parameter lies with certain special properties for example, a confidence interval is an interval estimator of a parameter, with the property that the true value of the population parameter lis inthe interval with a pre-determined probability a.Glossary of Key Terms 579 Exchange It is a market place where many sellers and buyers gather to do the business. It is also referred as e-market place, e-hub or portal Exclusive distribution In this strategy, the manufacturer decides to have a very few intermediaries, in order to ensure superior sales and service efforts. It includes exclusive arrangements in which the intermediaries do not carry competing products. Examples are from automobiles and appliances industries. Ex-factory pricing It is a part of geographical pricing, in which the freight and transit insurance costs are to the buyer's account, or that the prices are those prevailing at the seller's factory gate. Extranet It is a secure network that links the business partners and Intranets over the Internet by providing access to areas of each other's corporate Intranets. F.O.R. destination pricing It is a part of geographical pricing, in which the seller's quoted prices includes the freight (or transportation) costs up to the buyer's destination. FO.R. destination means free on road up to destination. Factor analysis Factor analysis is a multivariate statistical technique which is used to identify factors from a given set of variables. These factors are obtained by combining highly correlated sets of variables, and are interpreted as the underlying dimensions of the phenomenon in question. For example, the five dimensions of service quality arise as factors from the overall set of variables that look at different aspects of services quality, Financial leases These are long-term contracts or agreements between a buyer and a seller, non- cancellable, and are fully amortised. Flexible pricing _It means adjusting the prices or profitability for certain products and services, when the firm faces dynamic marketing environment, including demand slow-down, extreme competition, and high inflation. Focus group It is a method of collecting primary data from a small group of people who are invited to discuss a specific issue or topic, under the direction of a professional moderator. Force Majure A clause used in most contracts, absolving the supplier of liability/penalty due to acts beyond ones control like acts of nature, natural disasters, etc. Forecasting Forecasting is the process of studying past and present data to estimate/predict/project future values of variables of interest. In particular, demand forecasting and sales forecasting are important as starting points for the entire planning process. Formula method It is based on the stimulus response thinking, and is also called as formulated approach or mental states selling. The salesperson, in this method of sales presentation, assumes that most customers can be led through mental states of the buying process, which uses a well-known formula: attention, interest, desire, and action (AIDA). Forward auction Also called ‘English auction’, it involves one seller who offers an item for sale to many interested buyers and the sale goes to the buyer making the highest bid. Franchising A form of licence where the user (franchisee) uses the name and other aspects of the business of the franchisor to provide products or services as in hotels, restaurants, and other industries.580 Business Marketing Frequency distribution A frequency distribution expresses the pattern of variation of a variable in a population or a sample, associating with each value or range of values of the variable the frequency with which it occurs in the data. The frequency distribution of a variable can be represented in tabular form as a frequency table, pr in diagrammatic or graphical form, depending upon the nature of the variable Gatekeepers They are the individuals (e.g. purchase officers) who control the flow of information to, or salespersons’ meetings with, members of buying centre. Geographical pricing It means how to price the company’s product to customers who are located in different geographic areas. For this, a company has two options: (1) ex-factory pricing, or (2) for. destination pricing Hard and soft benefits Benefits sought by customers are of two types: (1) hard (or tangible), (2) soft (or intangible). Hard benefits include product quality, product feature or design, production rate of a machine, or performance, which are tangible. Soft benefits consist of company reputation, customer service, warranty period, customer training, timely delivery, and payment terms. Hierarchy of effects It is the individual buyer’s mental stages or process of buying. There are a number of models which describe the buyer's mental stages from awareness to buying action, High-tech products and marketing Major characteristics of high-technology (i.e. high-tech) products are high technological uncertainty and high-market uncertainty. It covers products from various industries, such as telecommunications, computers, software, consumer electronics, and biotech. Marketing of high-tech products is called high-tech marketing Hybrid/Multi-channel/Mixed system Hybrid channel system (or multi-channel/mixed system) includes a channel structuie that is made from two or more channels, which are required to serve various market segments. For instance, a business marketing firm may use its own sales force to serve key accounts, distributors to serve small and medium-sized enterprises (SMEs), telemarketing and the internet for prospective customers. Hypothesis testing Hypothesis testing is a set of statistical methods which involve the use of sample statistics to ascertain the validity of statistical hypotheses, i.e. assumptions regarding the population distribution of the variable of interest. Statistical hypotheses are usually constructed in pairs, viz. a null hypothesis (Ho), representing a conservative assumption (typically of “no difference,” “no change,” or “no effect"), as against an alternative hypothesis (Hi), which asserts some form of difference or change. Once the null and alternative hypotheses are specified, a test statistic, which distinguishes between the null and alternative hypotheses, and a critical region, which represents the range of values of the test statistic for which the null hypothesis would be rejected, are constructed. Most hypothesis tests are constructed as significance tests: the critical region is constructed so that the probability of type L error (i.e. that of rejecting the null hypothesis even though it is true) is fixed at a value, called the level of significance. Once the test statistic and the critical region are constructed, a random sample is taken from the population, the “calculated value” of the test statistic is computed, and the decision to reject the null hypothesis or not is taken by comparing the calculated value of the test statistic with the critical value. IaaS Infrastructure as a Service (laaS) provides a large number of virtual machine with the ability to scaling services up and down according to the consumers varying requirements.Glossary of Key Terms 581 Indenting The process of generating a purchase intent from a buyer. Indirect channel In indirect channel structure, the intermediaries (e.g. distributors, manufacturer's representatives) are involved in sales and distribution activities or functions. Industrial distributors/dealers They are the most important intermediary. They are independent business firms serving a geographic market, performing various functions or tasks, such as selling, promoting, inventory carrying, financing, delivering goods, and so on, for which they are given trade discounts (or margins) on list prices Informediaries An informediary is a computer based system that provides specialised information on behalf of producers of goods and services and their potential customers in a web. Ingredient branding _Itisatype of co-branding that is used as a branding strategy by the manufacturers of materials or parts, which lose their identity as they enter the final or finished products of their customers. These manufactures establish ingredient brands that increase awareness and preference for their materials or parts, provided the material is an important part of the finished product. For example, Intel processors used in the personal computers. Innovation It is any product, service, idea, method, or process that is perceived by Someone as new It is creation of something new, or improvement of something to make more useful. Inseparability Services are typically produced and consumed (or used) simultaneously, but in case of products there is a time gap between production and consumption. Inside salespeople They work from within the supplier organisation and support the efforts of outside salespersons, who visit customers. Inside salespeople are organised into customer service, tele~ prospecting, and tele-selling groups. Institutional customers There are organisations, Such as hospitals, colleges, universities, and hotels, who buy produets and services. Intangibility It means “unable to be touched.” Services cannot be touched. Produets are tangible, as they can be touched. Most market offerings include a combination of tangible and intangible elements, like hotels, personal computers, and goods transportation. Integrated marketing communication (IMC) _It is a comprehensive marketing communication plan which combines (or integrates) the various marketing mix and service mix elements as well as communication tools (or elements) and messages in order to provide clarity, consistency, and maximum communications impact at a minimal cost. These communication tools are advertising, direct marketing, personal selling, sales promotion, public relations, and sponsorship marketing. Integrative growth strategy An organisation achieves its strategic growth objective by integrating backward, forward, or horizontally within that industry. In backward integration strategy, the company acquires the business of its one or more suppliers, or sets up its own manufacturing to supply the material to its other factories. In forward integration strategy, the company discontinues business with some of its distributors or agents, and sets up its own sales offices. In horizontal integration strategy, the company acquires the business of one or more of its competitors. Intellectual Property rights The right which enables the creator of an unique produet/process to benefit by allowing the creator exclusive rights over the product/process. They could be licensed to ‘oftware, Music, ete others on agreed terms, Example: Design,——=<<—- ——— Business Marketing 582 ‘This strategy is used by the firms when their customers expect availability of Jeaning powder) near their plants. Business marketers place distributors or outlets as possible. Intensive distribution certain products (like electric lamps and cl frequently purchased products at as many ic growth objective with current businesses, Intensive growth strategy A company achieves its stratcgi tudes: (1) market lising intensive growth strategy (or product-market expansion grid), which in penetration strategy, (2) market-development strategy, and (3) product-development strategy dependent firms between the manufacturer and its customers, performing Intermediaries They are in the various activities, to make a product or service available to customers. ernet software and TCP/IP protocol in essence Intranet Intranet is a private network that uses Int 4s various servers, clients, database with an organisation network (corporate LAN). Intranet interconnec! programs like ERP and other devices in the entire organisation. sophy When sales and marketing persons, who are employees of the company, they have adopted intrapreneurial philosophy, which means Intrapreneurial p! behave and act like owners of the company, entrepreneur within the company. Inventory earrying cost Inventory carrying cost (or inventory costs) includes (1) storage space costs, (2)eost of capital, (3)taxes and insurance, and (4) inventory risk costs (e.g. damage, pilferage, Sbeolescence), Inventory cost should be calculated for each product, instead of using @ rule-of-thumb, se it varies from 12 to 36 per cent of the value of the produet in stock for one year. Inventory oPsts tnerease at a faster rate as the customer service level approaches 100 per cent. It is computed by ‘multiplying the inventory carrying cost percentage by the average inventory value. are the organisations whose primary business is to provide ity customers with connections to the Internet. An ISP might provide dial-up servict, cable, DSL, ot other types of Internet access. Some ISPs are local while others are national. A national ISP will provide access throughout most of the nation, while local ISP will only serve subscribers in a limited ISP (Internet Service Provider) ISPs geographical region. tures of typically bulk products like iron Jobbers They are intermediaries, who represent manufact sell, but do not handle, stock, or deliver ore, coal, and chemicals. They take title to the products they the products. ful if other product also exists and Joint demand A situation when one industrial product is us p can be used for pumping water only hence, both products are demanded together. For instance, a pum if'a motor or diesel engine is available. Just-in-time (JIT) system _ In JIT system, suppliers are required to deliver the produets at the precise time, in the exact quantity, and as per the specifications needed by the customer. It minimis the inventory, increases the quality and productivity of the customer. The advantage t0 the JIT-suppliers is increasing share of business from the J[T-oriented customers. importance. It means an important customer and ic account, of a house account. Key accounts Key account It is defined as a customer of strategi is also called as major account, national account, strates have large or high sales volumes. athe aerateCC Glossary of Key Terms Key account management (KAM) _It is defined as seller initiated ' type of strategie alli * iance. It means management of Key accounts or major customers through a KAM programm. firm with increase in market share and customer satisfaction . It benefits the supplier Key account salesperson The sales person to whom large or high potential custom 'stomers are assigned, Knowledge Base A knowledge base is a centralised repository for information; in el Tommerce a knowledge base is a machine-readable resource for the dissemination of inform generally online or with the capacity to be put online. Knowledge base is an integral component of arnvledge management system, which is used to optimise information collection, organisation, and retrieval for an organisation, ot for the end users. LD. Clause It is liquidated damages (LD) clause that typically @ government buyer standard terms and conditions as a penalty against late delivery icludes in the Laggards They are the last group of people to adopt a new product because they are traditional and suspecious of any change. L-Commerce _It delivers the information about the goods and services based on their position or the location. Learninglexperience curve It is a relationship between unit costs and volume, When cumulative volume of production and sales increase, costs per unit can be reduced through the learning or experience that has occurred. This concept can be applied to other functions of management like accounts and marketing, Licensing Permission granted by a company to another to use their product design, process, know how ete in specified markets for agreed fees to be paid to the licensor. Life-cycle costing This concept is used by the buyer for buying capital items, by estimating the total cost of the equipment or machine over its life span. The total cost includes the price, freight, veaintenanee, energy, material and labour costs over the useful life of the equipment List price It is a statement of basic or base price of @ product, consisting of various sizes or specifications. It is also called price list. Logisties It is design and administration of movement and storage of materials made available for manufacturing and finished products made available for customers, a they are needed. It creates value for customers, and achieves logistical objective of superior customer service 2t lowest cost. Macroand microenvironment Both macroand micro environment are parts ofexternal environment Macro environment includes environmental factors like economic, demographic, technological political factors, which affect all organisations. Micro environment includes environmental factors like customers, competitors, and suppliers, which affect a particular company Management by objectives (MBO) It is asystem used by managers for setting objectives, reviewing the actual performance, finding causes of performance deviations and taking corrective actions (i.e. effective control tool). Manufacturers’representatives Also calledas agents, or manufacturers’ agents, they are independent businesses, who represent manufacturers in particular geographic areas (OF market segments). Typically they do not buy (or take ttle of) the produets, but they promote and sell, for which they get commission586 Business Marketing Operating lease These are short-term contracts or agreements between a buyer and a seller, which are cancellable and not fully amortised. Operational management It focuses on day-to-day (or short-term) issues like cost, revenues, and profits, and maintains the direction given by strategic management. Operational effectiveness means performing similar activities better than the firm’s competitors. Operational excellence means performing different activities compared to competitors so as to provide a marketing offering at a lower total cost Original equipment manufacturer (OEM) _ Isa manufacturer of equipment, which includes products or components of other manufacturers. For instance, Tata Motors which manufactures trucks includes components like tyres from tyer manufactures, who consider Tata Motors as an OEM customer Outsourcing Where a company agrees to let another agency or firm carry out a function or process- manufacturing, marketing, recruitment, etc. Outsourcing means buying goods and services from outside vendors, if they are cheaper and better: Partial correlation Partial correlation is used to isolate the true correlation between two variables in multi-variable situation may be inter-related, controlling for variation in other variables, ;, where several variables Patents Protection granted to the creators of unique products, designs, ete Penetration pricing strategy Th charging relatively low initial prices to attract as many customers as po: term profitability through larger market share. strategy is used by a company for pricing a new product by ible. The pricing objective, in this case, is lon, Perceptual mapping/map It isa technique that helps in deciding positioning strategy for a company, Platform as a Service (PaaS) It is a category of cloud computing service that provides a computing platform as a service to the customers. PIMS (Profit Impact of Marketing Strategy) It is a data-base, consisting of a sample of over 2000 businesses, with a finding that product and service quality strategy has maximum impact on the profitability of a firm, Portfolio analysis These are analytical models or tools that are used for decision mal BCG and GE models ig, such as Positioning It is designing the company’s value proposition and image in the minds of target customers, in relation to its competitors. It should answer the question: “why should target customers do business with the company rather than the competitors.” Price elasticity of demand _It is the ratio of the percentage change in sales (or the quantity demanded) relative to the percentage change in price. Demand is elastic if the percentage change in price brings about an even larger percentage change in the quantity demanded, and it is inelastic if the percentage change in quantity demanded is less than the percentage change in price. Procurement orientation It is one of the purchasing orientations or concepts adopted by business buying firms. In this orientation, the purchasing firm has a long-term focus, and follows the practiGlossary of Key Terms 587 of collaborative relationships with major suppliers and works closely with ot! organisation in order to achieve the objectives of cost reductions et functions within the and quality improvements, Product life-eycle (PLC) Like a human being, a product has a life cyele, which is ina bell-shaped curve that is divided into four stages: introduction, growth, maturity, ribed or shown and de ne Prospecting It means identifying or searching for prospective or potential customers. A prospect is an individual, a family, or an organisation who needs the product or the service, and to buy. also has an ability Reciprocity It is the reciprocal dealing between a buyer and a seller. It is a special case of buying from one’s customers and selling to one’s suppliers. However, caution must be exercised to keep it at a minimum level Regression Regression is a set of statistical methods which uses independent variables to explain variation ina given response/dependent variable. The simplest of regression techniques is simple linear regression, in which only one independent variable is used explain variation in the dependent variable. in the form of a linear model. This can be extended to consider more complex functional forms, for example in polynomial regression, or more variables, for example in multiple linear regression. A regression model may be used for both explanatory and predictive purposes. However, even though regression models analyse relationships between variables, they do not test for causality between the variables: i.e. which of variables cause changes in the other variables. Relationship marketing It focuses on collaborative or partnering relationships between customer and supplier firms. It aims to build mutually satisfying long-term relationships between key parties customers, suppliers, distributors—in order to gain and retain business. This is achieved by building economic, social, and technical (or structural) ties for forming strong customer bond or loyalty Relationship selling It is a process which builds a long-term supplier-customer relationship that achieves mutual benefits. This is particularly important for high business potential key accounts, where the key accounts salesperson has a major role to play in relationship selling, which is a part of relationship marketing. Response hierarchy models These are same as hierarchy-of-effects models, such as AIDA model, Innovation-Adoption model, and communication model. These models describe an individual buyer's mental stages of buying—from cognitive (e.g, awareness) stage, through affective (e.g. attitude or interest) stage, to behaviour (e.g. purchase) stage. Reverse-elasticity of demand This is a short-term reaction, in which a price increase can cause an increase in demand, and a price decrease would be followed by decrease in the demand, which is just opposite from what we would normally expe from business customers, Reverse auction Also called as ‘Dutch auction’, it involves one buyer who invites bids from several suppliers, with the order going to the supplier company that bids the lowest price. Reverse bidding _In this process, the buying firm first sets the highest possible bidding price and then asks suppliers to offer its prices below the set price Risk-purchase clause This clause is included in some government tenders. If the supplier fails to complete the order given by the government organisation (i.e. the buyer), then the buyer can cancela 588 Business Marketing the order on the supplier and purchase the same material from other supplier(s) at the risk and cost to the first supplier. That is, if the prices are higher from other suppliers compared to the purchase order prices of the first supplier, then the difference in the value of prices are recovered from the fist supplier alongwith any other costs incurred, from the security deposit bank guarantee furnished by the supplier to the buyer. Role playing It is a popular method of sales training, in which one trainee plays the role of (i.e activities of) a salesperson and another trainee acts as a customer, in a business situation. Itis performed live or videotaped for a group of trainee observers, who then do critical assessment of the role play. 200d role-play session is learning selling skills by doing R Real time gross settlement system is the fastest possible interbank money transfer facility available through secure banking channels in India Sales budget The sales budget is the estimate of expected sales volume in units or revenues from the company’s products and services and the selling expenses. Sales budgets are generally set slightly lower than the sales forecast, in order to avoid excessive risk. Sales budget is used for making purchasing, production, manpower and cash flow decisions. The sales budget goes into complete details of expected sales of each product item. Sales forecast The sales forecast (or company sales forecast) is the estimated company sales of a given product or service, under a proposed marketing plan, in given market, for a specific period of time, There is a relationship between the company’s sales forecast and proposed marketing expenditure (or marketing plan). A company may make a sales forecast for an entire product line (such as transformer from Crompton Greaves) or a product item (such as power transformer). Sales potential and sales forecast are usually not the same. Sales potential is what a company would achieve under ideal conditions. Typically, the sales forecast is less than the sales potential, for different reasons, such as limited production facilities, and inadequate financial resources. Sales potential The sales potential (or company sales potential) is the best possible (or maximum) estimated sales of a given product or service for a company in a given geographic area for a specific period of time. Sales potential is also defined as the maximum share (or percentage) of market potential that is expected to be achieved by a company. For instance, the sales potential of ICICI-Prudential is expected to be close to five per cent of the gross premium collection of life insurance industry in India in coming years. Sampling distribution ‘The sampling distribution of a sample statistic is defined to be the probability distribution of the values of the statistic taken over all possible samples of a fixed sample size. The sampling distribution of a sample statistic contains information about the population distribution’ population parameters, through which it is possible to determine the properties of estimators and to construct test statistics in order to test statistical hypotheses Scatterplot diagram A scatterplot diagram is a convenient two-dimensional graphical representation lysis used to examine the relationship between two variables. It is particularly useful in exploratory ar ofthe relationships between variables, in identifying which variables may be related to a given variable, and the nature/form of the relationships.Glossary of Key Terms 589 select a few channel Selective distribution It is the strategy used by business marketers to carefully members in a particular geographic area, based on specific criteria Selling process (Personal selling process/Sales process) _ If a salesperson follows the steps involved in effective selling process, the chances of success are good. These steps are prospecting and qualifying, preapproach, approach, presentation and demonstration, overcoming objections, trial close/closing the sale, follow-up and service, Sensitivity analysis Also referred to as T-groups, D-groups, and action-centered groups, it is a laboratory training method, using groups of trainees, to achieve the objectives of personal development and becoming an effective group member. The major process variables used in sensitivity training are: (1) learning how to learn, (2) growth in effective membership, (3) learning how to give help, and (4) becoming sensitive to ‘oup processes. It focuses on training of attitudes towards people. Service differentiation Differentiation of services offered by several suppliers in terms of innovative features, service delivery, efficient physical environment, specifications, and experience, Service variability ‘The quality of service output may vary each time it is provided, depending on who provides, when and where the service is provided, Shared values (or Core values) It means employees of the company sharing the same guiding values like respecting all individuals, and trying to achieve excellence in all activities. ingle sourcing Some business customers select one supplier, even though alternative suppliers exist Skimming strategy This pricing strategy is adopted by a company for pricing a high-tech or capital intensive new product by charging relatively high initial price, which is reduced later to reach other market segments that are price sensitive. The pricing objective is short-term profitability to recover investment made in product and market development. Software as a Service (SaaS) Also referred as “on-demand software,” it is a software delivery model in which software and associated data are centrally hosted on the cloud. Souree credibility In communication theory, source credibility means the reputation of the s company (e.g. source). It determines the credibility (or believability) of the persuasive communication from the company. Source effect _It is the degree (or extent) to which the effectiveness of a given message is increased or reduced by the reputation of the source (e.g. the company). Standard industrial classification (SIC) The standard industrial classification is a system for classifying economic activities into industries by a coding scheme. It categorises the economy into different divisions, denoted by a letter code; within each division into major industry groups, denoted by a two-digit code; within each industry group into industry subgroups, denoted by a three-digit code; and so forth. It is used mainly as a tool for the identification of groups of businesses that produce the same type of product Statistical inference Statistical inference is a branch of statistics that is concerned with the drawing of inferences/conclusions about a population on the basis of data collected from a sample. The object of statistical inference is the population, i.c. the set of all units which are being studied, or, more590 Business Marketing specifically, the population distribution of the variables of interest, and population parameters, ic characteristics of the population distributions, which generally tend to be unknown. Information about the population is obtained from a sample, i.e. a subset of the population, the set of units on which observations are taken, in the form of sample statisties, i.e. functions of the sample observations, which are used to extract information about the population distribution Stimulus response method Also known as canned approach, memorised or prepared sales presentation, in this sales presentation method the salesperson assumes that if he/she makes the right stimuli (e.g. sales presentation, communication), the response from the prospect could be favourable. However, this method may not be effective always, as the salesperson does not find out the prospect’s needs. Straight rebuy In this situation, the buying firm has continuous requirement, which is fulfilled by purchasing from the same suppliers repeatedly, with slight variations in the purchase terms. Strategic alliance It is a formal long-term agreement or linkage between two (or more) parties to work together to achieve agreed objectives. Strategic business unit (SBU) It is a business unit that has (1) a distinct mi strategic planning; (2) a set of products, customers, and competitors; (3) an executive to a term goals and objectives, and is relatively independent of other business units. ion, objectives, and hhieve long- Strategic control It is periodical review of the firm’s long-term goals, strategies, and marketing effectiveness by using tools like marketing audits and marketing effectiveness reviews Strategic management It gives a direction to the firm and concentrates on developing strategies to achieve long-term objectives and goals. Strategic planning gap _It isa gap between the firm's desired sales and projected sales in future. This gap is filled by the corporate management of a company by using one or more of the following growth strategies: (I) intensive growth, (2) integrative growth, and (3) diversification growth. Supplementary Service It is an additional service that also accompanies a core service or product, for which a supplier may charge an extra amount to a customer. Supply chain management (SCM) _ It is a planning and coordinating the flows of products, services and information among suppliers, manufacturers, and channel intermediaries, so as to deliver superior value to the final customer. It extends logistical integration beyond the company’s boundaries to supplier's suppliers and customer's customers. Supply chain management orientation This is one of the purchasing orientations or concepts adopted by business buying firms. In this orientation, the purchasing firm has a long-term view and it focuses on improving the value chain from raw materials to end products, in addition to practising collaborative relationships with major suppliers SWOT analysis The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT analysis, which is a foundation of strategic planning process. After the SWOT analysis, a company develops specific goals (i.e. quantified objectives) for the period of planning, Systems selling/Systems marketing When business buyers prefer to buy total solution to their problem from one supplier, the selling firm decides to adopt the strategy of systems selling. It is useda Glossary of Key Terms 591 in bidding for large and complex projects, such as steel factories, irrigation systems and sanitation systems. It is an important business marketing strategy used by firms who undertake large scale industrial projects, as it reduces the costs for both buying and selling firms. The buying firm can hold | one supplier responsible, as the system may have subcomponents from several contractors or vendors, | For instance, IBM includes in some of its systems, maintenance, training services, and emergency repairs. ‘Target marketing Once the company identifies various segments, the next step is evaluating and selecting the target segments, which is called target marketing or market targeting Team selling Business marketers use team selling approach to meet the needs of high potential key accounts. The team consists of a group of persons, such as a national accounts manager, outside and | inside salespersons, technical support, and logistical persons. The team handles a key account with a | common performance goal commitment. | Technology adoption life-cycle _It is a modified model of new product adoption life-cycle. It indicates | how individuals differ in adopting new technology products. The model shows a bell-shaped curve with five new technology adopter groups: innovators, early adopters, early majority, late majority, and laggards. Total quality management (TQM) Developed by Japan, it is an organisation wide approach to continuously improve the quality of all the firm’s processes, products, and services. Trademark A symbol, logo, name, tagline or other such unique idenfiers used exclusively by a company and its products. When a brand name or brand mark is legally protected through registration with the Patent and Trademark Office, it becomes a trademark. Trial close It is one of the steps of the selling process. It is used after the salesperson makes a sales presentation and answered the prospective customer's objections. Trial close is used to check the attitude or the opinion of the prospect, before asking for the order, Transactional/territory salesperson These salespersons are responsible for serving medium and/or low business potential customers, performing traditional selling activities like understanding customer needs, submitting proposals, making sales presentations, negotiating, getting orders, and making post- sales calls. They should create value to customers and profitability for the company. Transactional account A customer with low and/or medium sales potential usually served by individual salesperson, who performs traditional selling activities, without any efforts to build long- term relationship. Transactional relationship It is a short-term relationship between a buyer and seller, in which the supplier offers a product with basic properties at a lower price, meeting the availability requirement of the customer. Typical example is a government customer who usually places orders on lowest price bidders. ‘Transfer Pricing The price at which the products are sold from one unit of a company to another unit Univariate analysis Univariate analysis involves the analysis of a single variable at a time, without considering relationships between variables. The basic purpose of univariate analysis is to understand the distribution of variables.592 Business Marketing Value-added relationship This strategy is used for customers whose business potential is medium or high value, Business marketers understand completely the needs of such customers and then satisfy thos share of business. needs (e.g, product quality, delivery service) better than competitors, in order to get maximum Value-added resellers (VARs) They are resellers of information technology (I.T.) products, and they add value by providing integrated systems to their customers by combining hardware and software, as per the needs of the customers. Value It is the customer's perception of benefits received in exchange for the cost incurred for a produet or service offering. It is measured by the ratio of benefits upon costs, or by benefits less costs Value proposition/Customer value proposition It isa statement of how the firm delivers superior value (i.e, benefits less costs) to its target customers. It should answer the question “Why should the | target customer buy from the company rather than its competitors. Value-based pricing In this method of price settin ofthe value of the product or market offering (and hence, it is also called as perceived-value approach) the price is based on the customer's perception VAN (Value Added Network) VANs are private networks that add value to the basic communication provided by common carriers by offering specialised services such as access to commercial databases, e-mail and video conferencing. BSNL broadband is an example of a VAN Vertical marketing system (VMS) _Itis a system, in which the manufacturer and intermediaries a ina unified manner, with common goals. It minimises channel conflicts and achieves superior customer service. VPN (Virtual Private Network) A VPN is a private network constructed within a public network infrastructure, such as the global Internet. World soureing It is a global, decentralised strategy that is designed to drive greater value by distributing a firm’s core functions across multiple global hubs of excellence WWW (World Wide Web) It is a portion of the Internet that ses the transport functions of the Internet, via client/server architecture, to handle all types of digital information