Z94.5 - Distribution & Marketing

Marketing is the revenue generating activity of a corporation.  As companies in the United States have increased their production capacity, many companies have found themselves with the capacity to produce more product than they can sell.  In such a surplus economy, marketing becomes very important to the success of the firm.  Marketing generally deals with all the activities that move the product from the producer to the consumer and includes such activities as:  product development, product design, market research, pricing, transportation, promotion, sales, advertising, public relations, and distribution.

With the development of surplus production capacity and surplus products, many companies have adopted what is called the marketing concept, which is to design products and services based on the needs, wants, and preferences of consumers.

Interest in marketing has expanded out of the business world into many non-business organizations.  Organizations and individuals such as charities, political candidates, art groups, hospitals and government agencies have incorporated marketing into their organizational activities.

In recent years, marketing has taken on strong quantitative orientations.  Statisticians, mathematicians, economists, and social scientists have been attracted to do research on marketing problems.

The definitions in this section are from the American Marketing Association’s Marketing definitions, as well as from several marketing text books and marketing reference books.

Michael D.Geurts
Professor of Marketing
Marriott School of Management
Brigham Young University
Provo, Utah

Kenneth D. Lawrence
Professor of Management and Marketing Science
School of Management
New Jersey Institute of Technology
Newark, NJ 07102

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ADOPTION PROCESS. The steps in a consumer’s decision-making process through which a product passes on its way to acceptance, i.e., awareness, interest, evaluation, trial, and adoption.

ADVERTISING.(1) Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. It involves the use of such media as the following: Magazine and newspaper space, Motion pictures, Outdoor (posters, signs, skywriting,  etc.), Direct mail, Novelties (calendars, blotters, etc.), Radio and television, Cards (car, bus, etc.), Catalogues, Directories and references, Programs and menus, & Circulars. This list is intended to be illustrative, not inclusive.  (2) A non-personal sales presentation, set at a predetermined level, aimed at an audience within a specific period of time, and paid for by an identifiable sponsor. Comment: Advertising is generally but not necessarily carried on through mass media.  While the postal system is not technically considered a “paid” medium, material distributed by mail is definitely a form of presentation that is paid for by the sponsor. For kindred activities see “Publicity” and “Sales Promotion.”

ADVERTISING.  A non-personal sales presentation, set at a predetermined level, aimed at an audience within a specific period of time, and paid for by an identifiable sponsor.

ADVERTISING EVALUATION. A group of techniques designed to reveal the relative effectiveness of various advertising strategies and tactics in the light of competitive activity.  (See MARKETING RESEARCH.)

ALLOWANCES. Discounts that are given to final consumers, customers, or channel members for doing “something” or accepting less of “something.”

AREA SAMPLING. A market research survey technique which uses geography, such as blocks in a city, as the basis for selecting a random sample test population.

AUTOMATIC SELLING. The retail sale of goods or services through currency operated machines activated by the ultimate-consumer buyer.    Comment. Most, if not all, machines now used in automatic selling are coin operated. There are reports, however, of promising experiments with such devices that may be activated by paper currency; machines that provide change for a dollar bill are already on the market.  Some service stations are in operation which accept debit cards or credit cards.

AVAILABLE STOCK. Amount of finished product in inventory that has not been committed to cover orders which have been placed. 

AVERAGE COST. Obtained by dividing total cost by the related quantity (i.e., the total quantity which causes the total cost).

AVERAGE FIXED COST. A figure obtained by dividing total fixed costs by the associated quantity.

AVERAGE INVENTORY. In a simple inventory system, this is the sum of half the lot size plus reserve stock; or half the maximum number of units in stock. 

AVERAGE REVENUE. A figure obtained by dividing total revenue by the associated quantity.

AVERAGE VARIABLE COST. Total variable costs divided by the relevant quantity.

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