Definitions Flashcards
advertising
Any form of communication paid by a sponsor for the purpose of informing and persuading the target market about products, services, organizations, or ideas. By using advertising. an organization can control what is said about its products or services, and when and where the
information appears.
advertising agency
A company that specializes in delivering the services required to design, execute, and place advertising messages in the various print and broadcast media. Ad agencies may also serve as consultants in developing marketing strategies.
AIDAS
An acronym for the five successive stages of consumer responsiveness in the selling process. The letters of the acronym .stand for Attention. Interest, Desire, Action, and Satisfaction.
asset
A use of funds (loan, investment, and so on), which represents money due to the bank.
asset-liability committee (ALCO)
The committee charged with ensuring that the bank’s risk,
funding needs, funding sources, and gaps are managed effectively.
attrition
The rate at which customer loss occurs.
audience research
The process of surveying consumers for their recollection of and reaction to an advertisement delivered in print or through a broadcast medium.
bank elasticity
The likelihood that customers will change banks in response to a change in the price of services.
basis point
One-hundredth (1/100) of one per cent, used in connection with interest rates. For example, a yield of 4.06% is 6 basis points higher than a yield of 4.00%.
behavior modification pricing
Setting a price that encourages consumers to alter their buying behavior.
brand story
A compelling way to integrate a brand into the organization; a 30-second “commercial” telling the story of the organization and containing common knowledge for the entire staff.
call center
The place where the majority of customer service calls and contact takes place (commonly referred to as the call or contact center).
cannibalization
The potential reduction in demand for existing products when a new service is introduced.
CAN-SPAM act
Legislation enacted in 2003 that requires unsolicited commercial e-mail messages to be labeled and to include opt-out instructions and the sender’s physical address. CAN-SPAM stands for Controlling the Assault of Non-Solicited Pornography and Marketing,
captive finance company
A credit-granting subsidiary whose principal business is to finance consumer purchases of the parent company’s products, such as automobiles or major appliances,
captive financing
Financing offered by the manufacturer and related entities directly through the dealer.
channel of distribution
The means through which goods and services move from seller to buyer. See also marketing channel.
Check 21
Legislation enacted in 2003 that establishes a uniform understanding of and process for electronic check clearing.
check imaging
(See image processing.)
collateral material
Literature in the form of brochures, counter cards, and posters that describes the range of available products to a customer or prospective customer.
Community Reinvestment Act (CRA)
A 1977 law requiring financial institutions to meet the
credit needs of low- and moderate-income segments of communities they serve, to inform the target market of their availability, and to report on the extent of their investment in the areas they serve. A 1989 policy statement expanded the way regulators evaluate banks’ CRA programs,
community relations
Active participation in and financial support of community projects by an organization for the purpose of fostering good will and gaining public esteem.
competitor
A rival business selling identical or similar products in the same market.
compliance
The interpretation and application of banking laws, regulations, and guidelines.
concentrated marketing
The practice of designing a single product and marketing strategy to appeal to one market segment (also known as
single-segment marketing).
concept testing
The process of trying out a new product or marketing approach on a selected group of consumers. It measures reactions to an idea rather than actual buying behavior. (See also test marketing.)
consumer buying behavior
The actions individuals take in deciding which goods and services to purchase.
consumerism
A movement originating in the early 1960s to protect consumers from bad products. poor service, and misrepresentation by businesses about their products and warranties.
control
In discussions of the strategic planning process, measuring performance against objectives and taking corrective action, if necessary, to stay on course.
core deposits
That portion of a bank’s deposits that, despite seasonal and cyclical fluctuations and interest rate changes, is relatively stable and has a predictable cost. Consumer savings and time deposits make up the largest portion of core deposits.
corporate objectives
A broad statement that gives direction to the business decisions made to strengthen an organization’s long-term financial position.
credit card
A card issued by a financial institution or company that, when used to make purchases or withdraw cash, debits a line of credit established for the customer.
cross-selling
The practice of promoting financial services in addition to the one currently being used by a customer.
cue
Information that arouses interest—such as an advertisement, unusual packaging, or a product display.
customer profile
A description of the distinctive attitudes and personal characteristics of the typical consumer who buys a product.
customer relations
The policies and practices for handling all customer contacts—including one-on-one transitions with employees, complaint resolution, and written communications — in a professional manner that results in a favorable image of the organization.
debit card
A card issued by a financial institution to its customers that, when used to make purchases or withdraw cash, debits a customers checking or savings account.
decentralized market
The process of spreading the responsibility for marketing activities across the organization, typically divided into
geographic areas, rather than having marketing management consolidated in a central location.
demarketlng
The use of marketing strategy to decrease demand for a product or service.
demographics
The study and analysis of population characteristics such as age, income, education, occupation, sex, and race.
deregulation
The removal or liberalization of legal restrictions to promote competition—such as price deregulation (removal of intere.st rate ceilings), product deregulation (regulatory approval allowing banks to offer more diversified products and services), and geographic deregulation (removal restrictions that prohibited expansion across state lines).
differentiated marketing
The practice of designing unique products and specialized marketing strategies to meet the needs of two or more market segments (also known as segmental ion). A variation is to offer one basic product but use distinctive marketing strategies to appeal to each segment.
direct channel
In distribution, the personal contact between the buyer and the seller.
direct marketing
The promotion and selling of goods and services through the mail, over the phone, and in advertising that includes a customer-response mechanism (such as a coupon or
application).
distribution
The process of moving goods and services from the seller to the buyer.
distribution channel
(See channel of distribution.)
diversification
The development and sale of new products to new markets.
Do Not Call
Legislation engaged in 2002 creating a national “do not call” directory that prohibits firms from calling individuals who have listed their names and phone numbers. Most states have also enacted a state do-not-call legislation and directory listing.
early adopter
A consumer who, after innovators but before the early majority, accepts and uses a new product before it has established mass appeal.
early majority
Consumers who, unlike innovators and early adopters, are deliberate and cautious in their willingness to accept and use a new product before it has established mass appeal,
elastic
A condition in which demand changes quickly and dramatically in response to a change in price.
escheat
The reversion of property to the state when it remains unclaimed by the owner for a specified number of years.
evaluation
The process of determining whether an item or activity meets specified criteria.
exposure
The amount of loss that could be taken should a borrower default, excluding all unnamed amounts, such as finance charges, unpaid premiums, and dealer reserves. Exposure is essentially the net principal amount. Also called loss exposure.
external publics
The people outside an organization who have an indirect impact on the organization’s ability to do business and achieve its objectives—for example, the investment community, community organizations, consumer groups, the general public, and the media—where the organization does not have control over the reception of its communications to them,
family life cycle
The progressive stages of a typical family’s spending and investment behavior.
fixed costs
Expenses incurred regardless of the volume of goods produced or services provided.
focus group
A group of people brought together in an informal setting to be interviewed concerning their opinions of specific products, services, and marketing ideas. Responses may not be representative of a larger, scientifically selected population.
frequency
An indicator of how often (number of times) a target has received a communication from an organization.
fully allocated cost
The change in expenses resulting from increased production or added services, including both incremental costs of each service and the “fair share” of indirect expenses and other fixed costs.
functional organization
Organization of a marketing department so that specialists who supervise various functions (such as advertising, sales promotion, and research) are coordinated by a marketing head.
generational marketing
Using an understanding of the background of a group of people and the impact of life events on their outlook to present a more acceptable product or service to that
group of people.
goal
A broad statement of direction that succinctly describes what the organization wants to achieve.
Gramm-Leach-Bliley Act
Legislation enacted in 1999 that, among other things, gives banking institutions the ability to offer any financial product or service and prohibits nonbank entities from
owning and operating a banking institution.
heterogeneity
The degree to which quality of service may vary, depending on who provides the service, in what manner, and at which location.
hierarchy of needs
The theory, developed by psychologist Abraham Maslow, that five levels of need—physiological, sense of security, need to belong, sense of esteem, and self-actualization— motivate human behavior.
hypothesis
A proposition put forth to explain a phenomenon. In marketing research, the researcher proposes one or more hypotheses to explain, for instance, the behavior of a target market. The researcher then designs the research
to test whether the hypothesis is correct.
image processing
The electronic management and storage of paper checks (commonly referred to as check imaging). The checks are optically scanned, and an electronic image is created of both the front and back of the check, which can then be stored and quickly retrieved.
implementation
Putting a plan into action: turning a marketing plan into specific tasks to be performed at all levels and in all departments of the bank.
incremental cost
The amount by which the total cost of producing a good or providing a service increases when the volume of products sold increases or a new product is added.
inelastic
A condition where demand either changes slowly or not at all in response to a change in price.
innovators
The small number of consumers who are the first to accept and use a new product. Innovators tend to be younger and from higher socioeconomic groups.
intermediary
Distribution channel that in creases the availability or convenience of a service, increases its use or the revenues from its use, or helps maintain existing users, increase use among existing users, or attract new users.
internal publics
The people who have a direct impact on the organization’s ability to do business and achieve its objectives—for example, employees, directors, customers, and shareholders— where the organization has some control over the reception of its communications to them.
Internet
An international network of computer databases that can be accessed using various technologies called browsers and servers.
interstate banking
The establishment of a banking presence in another market across state lines for the purpose of taking deposits.
intranet
The use of Internet technology to connect everyone in a company by providing access to applications, information, data, and processes. It stores all functions in a single “warehouse” and allows everyone access using web servers and browsers.
investor relations
Communications with the bank’s shareholders, potential shareholders, and those who have the ability to affect activity in, and the price of, the bank’s stock. It involves preparation and presentation of financial reports and programs, including the annual report and quarterly earnings reports and the annual shareholders’ meeting.
laggard
The relatively small number of consumers who are among the last to accept and use a new product. Laggards tend to be from a lower socioeconomic standing, older, and more conservative.
late majority
Consumers who are likely to accept and use a new product only after the majority of the population has found it satisfactory.
liability
A source of funds (deposits, fed funds borrowed, and so on), which the bank must repay upon request.
local area network (LAN)
A group of linked personal computers that can communicate and share information with one another. This allows various units within an organization to access the same database. A LAN consists of a large-capacity personal computer (a server) that serves information down to the workstations.
macroenvironmental factor
(The prefix “macro” means large or great.) A major trend or force in society that influences market conditions. Macroenvironmental factors—such as demographics, economics, social and cultural factors, political and legal factors, technology, and the natural environment—are beyond a company’s control but must be monitored and responded to.
management
The process of planning, staff ing, organizing, allocating resources, initiating action, providing leadership, and evaluating performance in the pursuit of specific objectives.
market
A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.” (Philip Kotler, Marketing Management: Analysis, Planning, Imple mentation. and Control, llth ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1S>91), p- 8)
market expansion
Finding new markets for existing products.
market penetration
Selling more of existing products to current markets.
market profile
A description of the geography, housing, population, and economic activity in the primarily area (the densest concentration of customers) and secondary area (a sparser concentration of customers) where a product is sold.
market segmentation
The process of dividing a market into subgroups, each identifiable by its specific preferences or needs, so that distinctive products can be developed and sold profitably to each.
market share
One seller’s portion of the total sales of a product, usually slated as a percentage.
marketing
An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” (Marketingpower.com, American Marketing Association Web site)
marketing channel
As applied to services, any means of increasing the availability or accessibility of a service that also increases its use or the revenues from its use (also called a channel of distribution or distribution channel).
marketing concept
An approach to business that makes marketing a central element of the business: a methodology that enables all of an organization’s divisions to focus their efforts on those activities that satisfy customers’ needs by providing them with products and services they want and that earn appropriate margins for the company and its shareholders,
marketing customer information file (MCIF)
system
A software system that can sort and analyze customer information and serve as a customer information database.
marketing information system (MIS)
The people, computers, and procedures in an organization that are responsible for the collection and
analysis of market data and the subsequent distribution of this intelligence to marketing management for use in planning and decision making. It is a system that comprises both hardware and software. Because of its broad scope, tremendous capacity, and ability to process great quantities of information quickly, it is often called a universal marketing database or data warehouse.
marketing function
Various operating activities, including research, product development, advertising, and strategy that, together, constitute marketing.
marketing intermediary
A third party that helps the seller promote and distribute the product to the consumer.
marketing management
The planning, implementation, and evaluation of programs that sell goods and services in a way that both satisfies a consumer need and results in a profit for the seller, carried out in an integrated framework, and in a socially responsible manner.
marketing mix
The combination of four marketing activities—product development, pricing, promotion, and distribution—aimed at satisfying demand in the target market.
marketing objective
A written statement giving direction to an organizations short-term product, pricing, promotion, and distribution decisions.
marketing plan
A written statement of the product, pricing, promotion, and distribution strategies that will be implemented over a defined period (often one year) to achieve long-range goals.
marketing planning
The process of identify ing an action plan for attaining long-range marketing goals, of implementing that plan, and of measuring and evaluating its success.
marketing research
The function that links the consumer, customer, and public to the marketer through information—information used to
identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.” (American Marketing Association, Marketing Definitions, www.marketingpower.com).
marketing strategy
A process that encompasses the four “Ps” of the marketing mix - product, price, promotion, and distribution (place)—to attract the defined target audience.
mass market
A market that has not been differentiated on the basis of geography, demographics, psychographics, or other form of segmentation.
McFadden Act
A federal law enacted in 1927 that prohibits banks from establishing branches across state lines.
media
Means of communication that carry advertising—such as newspapers, television, radio, magazines, outdoor boards. and direct mail.
media relations
A coordinated program of policies, procedures, and written communications to foster good working relations with and favorable news coverage by the media.
media research
The process of identifying the number, characteristics, and buying behavior of consumers who are regularly exposed to a particular advertising medium, such as consumers
who read the city newspaper every day or who regularly listen to a particular radio station.
microenvironmental factor
(The prefix “micro” means small.) A key player or other factor in the immediate marketplace that affects a company’s ability to do lousiness. Microenvironmental factors—such as a company’s markets, competitors, producers and suppliers, marketing intermediaries, and publics—are “controllable” to the extent that a company can make business decisions about them (for example, which suppliers of raw materials will be selected, which marketing intermediary will be hired to help promote products, and what strategy will work best against a competitor).
micromarketing
The opposite of “mass marketing.” It is the identification, usually through the use of a marketing customer information file, of small (thus micro) markets characterized by similar needs, wants, and preferences. Direct selling, marketing, and sales promotion tactics are then aimed at the micromarkets.
