Business Ownership Forms

Forms of Business Ownership

• Sole Proprietorship: A business owned by only one person.
• Partnership: An arrangement in which 2 or more people co-own the business.
• Partnership Agreement: A written document stating the terms of the partnership for the protection of each partner.
• Limited Partnership: A partnership in which some partners invest money or assets but have no managerial responsibilities or liability for losses.
• General Partner: A partner who participates in managing the business and has unlimited liability for its debts.
• Limited Partner: A partner who does not participate in managing the company and is liable for its indebtedness only to the extent of their investment in the firm.
• Corporation: An entity owned by stockholders, granted by government charter, with certain powers, privileges, and liabilities separate from those of individual stockholders.
• Board of Directors: A group of individuals selected by the corporation's stockholders to hire the CEO, make decisions about the corporation's stocks and dividends, and oversee major policy decisions.
• Merger: The result of two firms formally joining their assets, liabilities, and ownership.
• Vertical Merger: The combining of firms engaged in related businesses.
• Horizontal Merger: The joining of firms in the same industry.
• Conglomerate Merger: The combining of firms that do business in completely unrelated industries.
• Acquisition: The result of one firm simply buying the assets and obligations of another company.
• Tender Offer: An offer to the shareholders of a company to purchase all of their stock at a price above current market value.
• Hostile Takeover: Occurs when a firm acquires another company whose managers do not want the company to be sold.
• Master Limited Partnership: Similar to a limited partnership, except that shares of ownership can be traded on stock exchanges.
• S Corporation (Subchapter S): A form of business that is distinct from other corporations only in the way it is taxed; taxed similarly to sole proprietorships and partnerships.
• Cooperative: A business owned and managed by its customers or members, who pay annual dues or membership fees and share in any profits made.
• Joint Venture: An alliance in which two or more people or companies join together to undertake a specific, limited, or short-term project.

Marketing Principles

• Marketing: The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
• Exchange Process: Occurs when two or more parties exchange or trade things of value.
• Production Orientation: The philosophy that stresses the factory over the consumer.
• Sales Orientation: The philosophy that a company should change consumers' minds to fit the product.
• Marketing Concept: The philosophy that a company must be consumer-oriented in all matters and stress long-run profitability rather than short-term profits or sales volume.
• Marketing Mix: The result of management's efforts to creatively combine interrelated and interdependent marketing activities; consists of the four Ps of marketing: product, place, price, and promotion.
• Product: What the company offers its prospective customers.
• Place or Distribution: The location where customers buy the product; how products get to the customer, how quickly, and in what condition.
• Price: The amount of money, or sometimes goods or services, given in exchange for something.
• Demographics: The study of the size and composition of the population.
• Culture: The social values, beliefs, and institutions in a society.
• Social Values: Represent the goals a society views as important and express a culture's shared ideas about preferred ways of acting.
• Technology: The application of scientific knowledge to practical purposes.
• Marketing Strategy: Consists of determining basic long-range goals and committing to a marketing plan that explains how the goals will be achieved.
• Competitive Advantage: Anything that makes a company's product superior or different from competitors in a way that is important to the market.
• Market: A group of individuals who are potential customers for the product being offered for sale.
• Consumer Market: A market in which the buyers are individuals who will use the product to satisfy personal or household needs.
• Organizational or Business Market: A market in which the buyers are organizations that will use the product in their operations or resell it later.
• Market Segment: A portion of a larger market.
• Market Segmentation: Dividing a heterogeneous mass market into a number of smaller, more specific customer groups.
• Target Market: The specific group likely to buy the company's product.
• Demographic Variables: Variables that describe people, including sex, age, and marital status.
• Psychographic Variables: Lifestyle, personality, attitudes, and other psychological characteristics of consumers.
• Geodemographic Segmentation: Combining demographic variables with a geographic variable to characterize clusters of similar individuals.
• Environmental Scanning and Analysis: The diagnostic activity of interpreting environmental trends in light of the organization's ability to deal with change.
• SWOT: Acronym for strengths, weaknesses, opportunities, and threats.
• Market Position or Competitive Position: Represents the way consumers think about a brand relative to its competition.
• Marketing Objective: A statement about the level of performance the company or a product is expected to achieve.
• Consumer Behavior: Consists of the activities in which people engage when selecting, purchasing, and using products and services.
• Marketing Research: The systematic and objective process of gathering information for aid in making marketing decisions.
• Primary Data: Data gathered and assembled specifically for the project at hand.
• Secondary Data: Data previously collected and assembled for some purpose other than the project at hand.

Products, Brands, and Prices

• Product: A bundle of customer benefits.
• Core Product: The essential benefits common to most competitive offerings.
• Product Positioning Concept: Defines the central idea underlying the product features and key benefits that appeal to the target market.
• Product Differentiation: Calling buyers' attention to aspects of the product that set it apart from its competitors.
• Convenience Product: A product that is relatively inexpensive, is purchased on a regular basis, and is bought without a great deal of thought.
• Shopping Product: A product that generates a great deal of consumer effort.
• Specialty Product: A product perceived as having a particular attraction other than price.
• Derived Demand: Demand for a product that depends on the demand for some other product.
• Intangibility: The characteristic of something that makes it unable to be seen, felt, smelled, heard, or tasted.
• Inseparability: A characteristic requiring that producer and consumer be present in the same place at the same time for the service transaction to occur.
• Idea Generation Stage: Product ideas that are consistent with target market needs and with the company's objectives.
• Idea Screening Stage: The stage in which managers evaluate which ideas are good and which are bad.
• Business Analysis: A critical examination of the new-product idea from all important company viewpoints.
• Product Development Stage: The stage in which the proposed new-product idea is transformed from a product concept to a working model or product prototype.
• Test Market: A city or small geographical area where a new product is sold in a typical retail setting.
• Commercialization: The process of going into full-scale production and the marketing process of launching the new product.
• Product Life Cycle: A graphic depiction of a product's sales history from its "birth" to its "death", or withdrawal from the market.
• Brand Name: The verbal part of a brand intermediary.
• Brand Mark: Anything that symbolically represents a product.
• Trademark: A legally registered brand name or brand mark.
• Manufacturer Brand (National Brand): A brand name owned and advertised by the firm that manufactures the product.
• Distributor Brand (Private Brand): A product whose name is owned by a retailer or other distributor.
• Generic Brand: A general product name that any company can use.
• World Brand: An individual brand name common to all countries.
• License: A contractual agreement with some other firm that allows the second firm to use the company's trademark.### Product and Packaging
• A product item is a specific version of a particular good or service.
• A product line is a group of a firm's products that are fairly closely related.
• Depth of product line describes the number of different product items offered in a product line.

Pricing

• Value measures the power one product has to attract another product in exchange.
• Price is the amount of money or other consideration given in exchange for a product or service.
• Breakeven point is the point at which total costs and revenues meet.
• Skimming price is a relatively high introductory price that marketers plan to systematically lower as the product matures.
• Penetration price is a low introductory price.
• Prestige pricing is pricing a brand at high levels so that consumers believe that brand differs from other brands.
• Captive pricing is pricing a basic product low but charging a compensating high markup on related supplies required to operate the product.
• Loss leader is a product that the seller prices at a loss to attract customers who might buy other goods.

Promotion

• Promotion is communication applied to business.
• Brand image is the symbolic meaning associated with a particular brand.
• Positioning campaign is promoting a brand's position in relation to its competitors to get consumers to view the brand from a particular perspective.

Selling

• Personal selling is a person-to-person communication between the seller and the prospective buyer.
• Field selling occurs when an "outside" salesperson travels to the prospective account's place of business.
• Telemarketing is using the telephone as the primary means of communicating with prospective customers.
• Inside selling occurs when salespeople sell from the company's premises.
• Creative selling process involves locating and qualifying the prospect, approaching the prospect, creating awareness, arousing interest, making the specific proposal, handling objections and complaints, closing the sale, and following up to keep customers.

Advertising

• Selective advertising attempts to create selective demand for a particular brand or store by promoting the brand's or store's attributes, benefits, uses, and images.
• Primary demand advertising encourages generic demand for an entire product category.
• Institutional advertising promotes an industry or organization as a whole, stressing goodwill, corporate image, or contributions to society.
• Communications media are the means used to broadcast or print advertising messages.
• Media schedule is a time schedule identifying the exact media and the dates advertisements are scheduled to appear.

Publicity and Public Relations

• Publicity involves unpaid messages.
• Public relations involve activities that actively manage publicity (and sometimes other promotional elements).

Sales Promotion

• Point of purchase materials are items given to retailers to serve as reminders at the point of sale.
• Trade allowance is a reduction in price, a rebate, merchandise, or something else given to a wholesaler or a retailer for performance of a specific activity or in consideration for a large order.
• Trade show is an event at which a group of manufacturers (or other marketers) jointly exhibit their products in a convention hall.

Promotional Mix

• Promotional mix is the particular combination of all the elements of promotion-personal selling, advertising, publicity and public relations, and sales promotion-that will achieve the company's promotional objectives.

Strategies

• Push strategy emphasizes promotional efforts aimed at members of the channel of distribution.
• Pull strategy focuses promotional efforts at the ultimate consumer or industrial buyer located at the end of the channel of distribution.
• Internal marketing aims marketing efforts at the marketer's own employees to help them recognize their role in the organization's effort to create customer satisfaction.

Deception

• Bait and switch involves advertising a product at an amazingly low price to draw consumers to the store and then switching them to another, high-priced item by claiming that the advertised item is no longer available.
• Puffery involves making slight exaggerations.