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BUSN70
Exam 1
| Question | Answer |
|---|---|
| What 3 issues all economic systems must address? | 1. How goods and services will be produced, by whom, and with what resources 2. The type and quantity of goods and services needed to satisfy consumers' needs 3. How goods and services will be distributed to consumers |
| the study of how resources are distributed for the production of goods and services within a social system is the definition of | economics |
| an economic system in which the govt. owns and operates basic industries but individuals own most businesses | socialism |
| ex of socialism | postal services, telephone, utilities, transportation, health care, banking, and some manufacturing |
| The primary goal of all businesses is to earn | a profit |
| _____ forces producers to offer the best products at the most reasonable price; those businesses that are unable to do so will not be able to stay in business | competition |
| the difference between what it costs to make and sell a product and what a customer pays for it is defined as ____ | profit |
| What are the 4 function of management? | 1. Planning 2. Leading 3. Organizing 4. Controlling |
| What are the two types of capitalism? | Modified capitalism Selective capitalism |
| In a free enterprise system, a business succeeds or fails based on | market demand |
| occurs when an economy is growing and people are spending more money. Their purchases stimulate the production of goods and services, which in turn stimulates employment | economic expansion |
| a condition characterized by a continuing rise in prices is the definition of | inflation |
| an economy in which economic activities occur between the country and the international community is a(n) | open economy |
| is an individual who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something | entrepreneur |
| The standards and principles used by society to define appropriate and inappropriate conduct in the workplace is referred to as | business ethics |
| What is the central issue of economics? | How to fill an unlimited demand for goods and services with a limited supply of resources? |
| individuals or organizations who try to earn a profit by providing products that satisfy people's needs | business |
| goods or services with tangible and intangible characteristics that provide satisfaction and benefits | products |
| To earn a profit, you must | 1. Act ethically 2. Adapt to change 3. Abide by the Law 4. Financial resources 5. Marketing expertise 6. Management skills |
| Groups that have a stake in the success and outcomes of a business | stakeholders |
| To achieve and maintain profitability, business must | produce quality products, operate efficiently, and be socially responsible and ethical in dealing with stakeholders |
| The focus of all activities to | satisfy customers |
| Why study business? | - Develop skills for career success - Become a well informed consumer and member of society |
| Economic foundations of business | 1. Natural resources (Land) 2. Human resources (Labor) 3. Financial resources (Capital) |
| natural resources ex | land, forests, mineral, water, all things not made by people |
| human resources ex | the physical and mental abilities people use to produce goods and services |
| financial resources ex | the funds used to acquire the natural and human resources needed to provide products |
| a description of how a particular society distributes its resources to produce goods and services | economic system |
| characteristics of communist society | - low standards of living - shortages of consumer goods - high prices - corruption and little freedom |
| A socialist society may have: | - higher standard of living - taxes and unemployment are generally higher |
| ex of communist countries | china, cuba |
| ex of socialist countries | Sweden, Israel, India |
| an economic sys in which individuals own the majority of businesses that provide goods and services | capitalism |
| happens when all economic decisions are made without govt intervention, also called laissez-faire capitalism | pure capitalism or free-market system |
| differs from pure capitalism in that the govt. intervenes and regulates business to some extent | modified capitalism |
| economies made up of elements from more than one economic system | mixed economies |
| no country practices pure capitalism, socialism, or communism | true |
| supply | the number of products businesses are willing to sell at diff prices at a specific time |
| demand | the number of products consumers are willing to buy at different prices at a specific time |
| equilibrium price | the price at which the number of products that business are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time |
| the forces of supply and demand | the forces prevent sellers who have to sell at higher prices and buyers who cannot afford to buy goods at the equilibrium from participating |
| rivalry among businesses for consumer's dollars | competition |
| the market structure that exists when there are many small businesses selling one standardized product | pure competition |
| fewer businesses than in a pure competition and the differences among the goods they sell are small | monopolistic competition |
| the market structure that exists when there are very few businesses selling a product | oligopoly |
| the market structure that exists when there is only one business providing a product in a given market | monopoly |
| a decline in production, employment, and income | recession |
| a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers | economic contraction |
| the condition in which a percentage of the population wants to work but is unable to find jobs | unemployment |
| when rising unemployment stifles demand forcing prices down | deflation |
| a condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced | depression |
| Gross Domestic Product (GDP) | - the sum of all goods and services produced in a country during a year - does not incl profits from companies' overseas operations |
| the condition in which a nation spends more than it takes in from taxes | budget deficit |
| the difference btwn our exports and our imports. if the balance is negative, as it has been since the mid-1980s, it is called a trade deficit and is generally viewed as unhealthy for our economy | trade balance |
| measure changes in price of goods and services purchased for consumption by typical urban households | consumer price index |
| indicated the income level of "average" Americans. useful in determining how much "average" consumers spend and how much money Americans are earning | per capita income |
| indicated how many working-age Americans are not working who otherwise want to work | unemployment rate |
| monitors price increases in consumer goods and services over specified periods of time. used to determine if costs of goods and services are exceeding worker compensation over time | inflation |
| worker productivity | the amount of goods and services produced for each hour worked |
| marketing strategy | a plan of action for developing, pricing, distributing, and promoting products |
| a grp of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas | a market |
| a more specific group of consumers on whose needs and wants a company focuses its marketing efforts | target market |
| dividing the market into groups whose members have similar characteristics | market segmentation |
| What is included in promotion? | 1. publicity 2. personal selling 3. sales promotion 4. advertising |
| political, legal, regulatory, social, competitive, economic, and technological forces comprise the | marketing environment |
| a systematic, objective process of getting information about potential customers to guide marketing decisions | market research |
| Functions of _______ incl buying, selling, transporting, and storing goods for an organization in order to accomplish objectives and generate exchanges | marketing |
| anyone who shops for products and decides whether and what to buy | consumer |
| Customer benefits - customer costs | customer value |
| In order to implement the marketing concept, which is essential to have? | good information about consumer desires |
| the act of giving up one thing (money, credit, labor, goods) in return for something else ( goods, services, or ideas) | exchange |
| What 4 elements make up the marketing mix? | 1. price 2. promotion 3. product 4. distribution |
| A marketing strategy has two major components: | selecting a target market and developing an appropriate marketing mix |
| marketing is NOT | - manipulating consumers to get them to buy products they do not want - just selling and advertising |
| intangibles ex | - capabilities/benefits gained from using a product - the image evoked by it - the brand name |
| marketing activities | - buying - selling - marketing research - transporting - financing - grading - storing -transporting |
| create value for the customer while satisfying the organization's needs | marketing concept |
| an approach requiring organizations to gather information about customer's needs, share that information throughout the firm, and use that information to help build long term relationships with customers | market orientation |
| B2B Markets | - other business can be your customer - customer populations in the business market are smaller than the consumer market - businesses also tend to buy in larger quantities than consumers |
| a collection of individuals, groups, or organizations who share one or more characteristics and thus have relatively similar product needs and desires | market segment |
| women are the largest market segment with 51% of the U.S. population | true |
| Total market approach | tries to appeal to everyone, assuming all buyers have similar needs |
| an approach whereby a company develops one marketing strategy for a single market segment | Concentration approach |
| an approach whereby the marketer aims its efforts at two or more segments, developing a marketing strategy for each | multi segment approach |
| an approach is for a narrow market segment focus when efforts are on one small, well-defined group that has a unique set of needs | niche approach |
| PRODUCT - a complete mix of tangible and intangible attributes that provide satisfaction and benefits | good: a physical entity you can touch service: the application of human and mechanical efforts to people or objects to provide intangible benefits to customers idea: a concept, philosophy, image, or issue |
| PRICE - a value placed on an object exchanged between a buyer and a seller | - relates directly to the generation of revenue and profits - can be changed quickly to stimulate demand or respond to competitors' actions |
| a persuasive form of communication that attempts to expedite a marketing exchange by influencing indiv, grps, and organizations to accept goods, services, and ideas | promotion |
| PLACE (DISTRIBUTION) - making products available to customers in the quantities desired | intermediaries, usually wholesalers and retailers, perform many of the activities required to move products efficiently |
| types of market research | primary secondary online |
| psychological variable = the process by which a person selects, organizes, and interprets information received from his or her senses | perception |
| Psychological variable - inner drive that directs a person's behavior toward goals | motivation |
| psychological variable - changes in a person's behavior based on information and experience | learning |
| psychological variable (attitude) | knowledge and positive or negative feelings about something influences their decision |
| psychological variable - the organization of an individual's distinguishing character traits, attitudes, or habits | personality |
| social variable - a set of expectations for individuals based on some position they occupy | role |
| social variable - groups with whom buyers identify and whose values they adopt | reference group |
| social variable - a ranking of people into higher or lower positions of respect | social classes |
| social variable - the integrated, accepted pattern of human behavior, incl thought, speech, beliefs, actions, and artifacts | culture |
| What are common pricing objectives? | - boosting market share - maintaining the status quo - maximizing profits and sales - survival |
| the ______ variable of the marketing mix is often the most visible and therefore of critical importance | product |
| a group of products that are physically similar or are intended for a similar market are referred to as a | product line |
| brands that do not carry the name of the manufacturer but carry a distributor or retailer name are called | private distributor brands |
| decisions regarding ____ are among the least flexible marketing mix decisions | distribution |
| 3 types of utility created by retailers | time utility ownership utility place utility |
| attempts to motivate intermediaries to push the product down to their customers. when a push strategy is used, the company attempts to motivate wholesalers and retailers to make the product available to their customers | push strategy |
| Firms use ____ for many reasons but typical objectives are to stimulate demand, to stabilize sales, and to inform, remind, and reinforce customers | promotion |
| Promotional positioning is the natural result of market segmentation | true |
| Product development order | Idea development New idea screening Business analysis Product development Test marketing Commercialization |
| involves designing a series of advertisements and placing them in various media to reach a particular target audience | advertising campaign |
| the most flexible of the promotional methods bc it gives marketers the greatest opportunity to communicate specific information that might answer an objection | personal selling |
| What do marketers hope to gain by developing at least one dimension of value in the marketing mix that surpasses all competitors in meeting customer expectations? | A competitive advantage |
| products created for household or family use intended for daily living | consumer products |
| Stages of the product life cycle | Introduction Growth Maturity Decline |
| makes products available to customers when and where they desire to purchase them | marketing channel |
| the planning and coordination of inbound and outbound as well as third-party services | logistics |
| Idea development stage | coming up with new commercial products |
| New idea screening stage | - reducing the number of ideas to the most promising and working on those |
| Business analysis stage | - assessing the potential profitability of the product - analyze the product's affect on sales, costs and profits |
| Product development stage | creating a prototype |
| test marketing stage | taking a product idea to consumers in a limited area that represent the market to test their reactions |
| Commercialization stage | promoting a product to distributors, retailers, and consumers to gain wide interest and distribution in the product |
| Integrated marketing communication (IMC) combines _____ into one comprehensive, unified promotional strategy | all the promotional tools |
| Characteristics of advertising | 1. non-personal communication 2. uses various media 3. transmitted through a mass medium |
| makes a product available in as many outlets as possible | Intensive distribution |
| - all the activities necessary to move products from producers to consumers - focuses on: transportation modes, warehousing, materials handling | physical distribution |
| all products offered by a company | product mix |
| Introductory stage | marketers focus on making consumers aware of the product and its benefits |
| Growth stage | the firm tries to strengthen its market position by emphasizing benefits |
| Maturity stage | severe competition and heavy costs |
| Decline stage | - eliminate models - cut costs - phase out products |
| a name, term, symbol. design or combination that identifies a product | brand |
| the part that can be spoken and consists of letters, words and numbers | brand name |
| the part of the brand that is a distinctive design | brand mark |
| a brand registered with the U.S. Patent and Trademark Office and is thus legally protected from use by any other firm | Trademark |
| manufacturer brand | initiated and owned by the manufacturer to identify products from the point of production to the point of purchase |
| generic brand | products with no brand name that often come in simple packages and carry only their generic name |
| - the external container that holds and describes the produce; influences consumers' attitudes - performs several functions: protection, economy, convenience and promotion | packaging |
| - the presentation of important information on a package; closely associated w packaging - contains info required by law such as ingredients, nutrition facts, warnings, instructions | labeling |
| the degree to which a good, service or idea meets the demands and requirements of customers | quality |
| the product's perceived value in the marketplace added to the production costs help determine price | pricing |
| Calculating the Value of a product steps | 1. Identify target customers 2. Identify their best alternative 3. Determine the product's difference 4. Calculate value based on its differentiation |
| Price penetration | low price designed to help a product enter the market and gain market share rapidly. Difficult to raise price later |
| Even/odd pricing | buy more of a product bc it seems to be a bargain at the odd price |
| - temporary price reductions often employed to boost sales - large quantity - season | discounts |
| intermediaries who buy products from manufacturers and sell them to consumers for home and household use rather than for resale or for use in producing other products | retailers |
| place utility | move products from producers to a convenient retail establishment |
| time utility | maintain hours of operation |
| ownership utility | assume the risk of inventories |
| intermediaries who buy from producers or from other wholesalers and sell to retailers | wholesalers |
| Distribution (transportation) | - expanding into new markets could mean complete change in distribution - competitors may come in to create more effective distribution system - the least flexible consideration |
| - only a small number of all available outlets are used to expose products - used most often when consumers buy only after shopping and comparing price, quality, and style | selective distribution |
| ex selective distribution | furniture, television, home appliances |
| ex intensive distribution | gum, soft drinks, beer, cigarettes, gas |
| the awarding by a manufacturer to an intermediary of the sole right to sell a product in a defined geographic territory | exclusive distrbution |
| ex exclusive distribution | luxury brands, cars |
| the shipment of products to buyers ex: railways, motor vehicles, inland waterways, pipelines, airways | transportation |
| the design and operation of facilities to receive, store and ship products | warehousing |
| the physical handling and movement of products in warehousing and transportation | materials handling |
| Distribution strategy | - growth of online retailing has increased customers' expectations for faster delivery, order status updates, and easy returns at no extra cost - often commit resources and establish contractual relationships that are slow to change |
| uses promotion to create and maintain an image of a product in buyers' minds | promotional positioning |
| a paid form of non personal communication transmitted through a mass medium, such as television commercials or magazine advertisements | advertising |
| direct, two way communication w buyers and potential buyers | personal selling |
| 3 categories of salesperson: | 1. order takers: retail sales clerks 2. creative salespersons: automobile sales 3. support salespersons: customer educators |
| 6 step process of personal selling | 1. prospecting: identifying potential buyers 2. approaching: referral/ cold call 3. presenting: demonstrating the product 4. handling objections: countering reasons 4 purchase 5. closing: asking 4 a purchase 6. following up: checking after purchase |
| non personal communication transmitted through mass media but not paid for directly by the firm | publicity |
| how do publicity and advertising differ? | purpose: advertising in informative, persuasive, or both; publicity is informative impact: advertising calls for action cost: companies pay for advertising, publicity = free duration: advertising is repeated often, publicity appears once |
| a variation of traditional advertising where marketers attempt to create a trend | buzz marketing |
| gets Internet users to pass on ads and promotions to others | viral marketing |
| uses promotion to create consumer demand so consumers exert pressure on marketing channel members to make it available | pull strategy |
| personal selling indicates a | push strategy |
| the exclusive use of advertising is a | pull strategy |
| In what ways does E-business differ from traditional business activities? | E business goals are carried out through the use of the Internet |
| electronic media that function using digital codes | digital media |
| Marketers who conduct marketing research have found that it is | fast and inexpensive |
| Which type of media is considered to be the most consumer driven? | digital media |
| The FTC has different rules for online marketing than for any other form of communication or advertising. | False |
| Intellectual property is usually protected by ________ | patents or copyrights |
| Which two of the following are regarded as the most important feature of apps? | 1. convenience for users 2. cost savings for users |
| What are 3 ways in which digital marketing differs from conventional marketing techniques? | 1. it provides a way for marketers to utilize new ways to communicate with customers 2. it allows for faster, more interactive communication 3. it helps marketers identify new target markets more easily |
| What 2 factors have given rise to consumer-generated information? | - the increase in consumers' tendencies to trust other consumers over corporations - the increase in consumers publishing their own thoughts and opinions through blogs or digital media |
| Characteristics of digital media | - fast and inexpensive communication - more interactive - easier comparison shopping - easier to conduct marketing research and advertise - internet markets are more similar to traditional markets than they are diff - lower cost of communication |
| Diff between digital media & marketing mix | - communications are richer, faster, and more interactive - companies can reach target markets more easily, affordably, and quickly - they help marketers utilize new resources in seeking out and communicating with customers |
| One aspect of marketing that has not changed w digital media is importance of achieving | right marketing mix |
| Digital media (product considerations) | - some products only available digitally - businesses can offer more online than in a retail store - Internet can make it easier to learn abt and anticipate consumer needs |
| the Internet is a new distribution channel for making products available at the right time, at the right place, and in the right quantities (distribution considerations) | - reduce inefficiencies, cost, and redundancies - increase speed throughout the marketing channel - shipping times and costs are important to customers |
| one of the best ways businesses can utilize digital media is for promotion purposes (promotion considerations) | - increasing brand awareness - connecting w consumers - generate positive publicity abt products - allows consumers to read customer reviews |
| Pricing considerations/digital media | - the most flexible - can enhance a product's value by providing service, information, and convenience - offer buying incentives like online coupons or free samples to generate consumer demands |
| paid media | - google adwords - retargeting - social media ads |
| earned media | - word of mouth - influencer relations - blogger relations - testimonials |
| owned media | - blog posts - whitepapers - website - eBooks |
| shared media | - twitter - Facebook -LinkedIn - Pinterest |
| a website where users can create a profile and interact with other users, post information, and engage in other forms of web-based communications | social networking |
| a web-based journal in which a writer can editorialize and interact w other Internet users | blogs |
| software that creates an interface which enables users to add to or edit content of some websites | wikis |
| allows virtually anybody to upload videos to the Internet | video sharing |
| allows users to upload, edit, and share photos | photo sharing |
| a marketing tool that uses the Internet, particularly social networking and video sharing sites, to spread a message and create brand awareness | viral marketing |
| an audio or video file that can be downloaded from the Internet w a subscription that automatically delivers new content to listening devices or personal computers | podcasts |
| consumers increasingly do their business and shopping from mobile devices and smartphones | mobile marketing |
| consumers who create their own media outlets | creators |
| Regularly update their Twitter feeds or status updates on social networking sites | conversationalists |
| people who comment on blogs or post ratings and review websites | critics |
| collect information and organize content generated by | collectors |
| incl all who become users of Twitter, Facebook, or other social networking sites | joiners |
| online users who do not participate in any digital online media, their numbers are dwindling | inactives |
| crowdsourcing | - marketers use digital media to find out the opinions or needs of the crowd - to gather input and feedback for marketing purposes |
| social media monitoring involves activities to track, measure, and evaluate | a firm's digital marketing initiatives |
| privacy | - cookies: an identifying string of text on users' computers - an online privacy "do not track" bill to protect consumers - FTC requires influencers to disclose any connection w brands they promote |
| when criminals obtain personal info that allows them to impersonate someone else in order to use their credit to access financial accounts and make purchases | Identity theft |
| includes any attempt to purposely deceive online | online fraud |
| Intellectual property incl | - songs, movies, books, and software - generally protected by patents and copyrights |
| consumers rationalize the pirating of software movies, videogames, and music for a number of reasons | illegal sharing of content |
| digital media's impact on marketing | - transition to digital media can be challenging - new media may require employees w new skills or additional training - correct blend of traditional and digital media in marketing mix takes time and consideration |
| the recording, measurement and interpretation of financial information | accounting |
| an individual who has been certified by the state in which he/she practices and has the right to express, officially, an unbiased opinion regarding accuracy of a client's financial statements | certified public accountant |
| reports the firm's financial condition on a specific date | balance sheet |
| A ratio analysis combines information from which 2 statements? | balance sheet income sheet |
| To be most effective, liquidity ratios should be examined in conjunction with | asset utilization ratios |
| ratios that measure how much debt an organization is using relative to other sources of capital such as owner's equity are | debt utilization |
| A ratio analysis calculates | an organization's financial health |
| the major activities of a firm, as shown on the statement of cash flows, include all of the following except | cash from taxes |
| What type of ratio measures the speed with which a company can turn its assets into cash in order to meets its debts? | liquidity ratio |
| Which report summarizes an organization's profitability over a specific period, which may be a week, a month, or a year? | income statement |
| Which of the following is the main distinguishing factor between accountants and bookkeepers? | Accountants analyze and interpret financial information, while bookkeepers do not |
| the internal use of accounting statements by managers in planning and directing the organization's activities | managerial accounting |
| economic resources owned by a firm | assets |
| a system of recording and classifying business transactions in separate accounts | double entry bookkeeping |
| the accounting cycle is most known as being a | 4 step process |
| - narrow and mechanical - obtain and record the information used by accountants - requires less training | bookkeeping |
| employed by large corporations, govt agencies, and other organizations to prepare and analyze their financial statements | private accountants |
| private accountants who, after rigorous examination, are certified by the National Association of Accountants and who have some managerial responsibility | certified management accountants |
| involves analyzing financial documents in search of fraudulent entries or financial misconduct | forensic accounting |
| the movement of money through an organization over a daily, weekly, monthly or yearly basis | cash flow |
| an internal financial plan that forecasts expenses and income over a set period of time | budget |
| a summary of a firm's financial information, products, and growth plans for owners and potential investors | annual report |
| used for filing income taxes, obtaining credit and reporting results to stockholders | financial statements |
| those signed off on by a certified public accountant | audited financial statement |
| the accounting equation | Assets = Liabilities + Owner's equity |
| Debts that a firm owes to others | liabilities |
| The accounting cycle | 1. examine source documents 2. record transactions 3. post transactions 4. prepare financial statements |
| the total amount of money received from the sale of goods or services, as well as from related business activities | revenue |
| cost of goods sold | the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies |
| Cost of Goods sold | = beginning inventory + Interim purchases - ending inventory |
| revenues minus the cost of goods sold required to generate the revenues | gross profit |
| the costs incurred in day-to-day operations of an organization | expenses |
| ex of expense accounts: | 1. Research, development and engineering expenses 2. Sales and marketing 3. General and admin expenses |
| the total profit (or loss) after all expenses, incl taxes, have been deducted from revenue | net income |
| earnings per share | net income/outstanding # of shares |
| dividends per share | total dividends/ outstanding # of shares |
| category contains all of the money that had ever been contributed to the company that never has to be paid back | owner's equity |
| Comparison of Communism, Socialism, and Capitalism | - business ownership - competition - profits - product availability and price - employment options |
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fikott1
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