Key Terms (A) Flashcards
Absence blindness.
A cognitive bias that hinders a person’s ability to thing about what is not seen. This makes it difficult to think about bigger pictures. Good imagination, mastery of the subject at hand and extrapolation are needed to overcome this common weakness.
Accumulation.
- Assigning profit to a firm’s capital reserve instead of distributing it as dividends. Also known as retained earnings.
- Buying a commodity or security without subsequently selling it.
Addressability.
A measure of how easy it is to get in touch (propose, sell and deliver a product) with people who might want what you’re offering. It’s best to focus on more addressable customers.
Agency.
1 - An establishment engaged in doing business for another.
2 - The capacity, condition, or state of acting or of exerting power.
3 - A person or thing through which power is exerted or an end is achieved.
Akrasia.
1 - The experience of knowing a course of action would be in one’s best interest but still not following it. The word means “lack of control over oneself”.
Allowable Acquisition Cost (AAC)
The amount of money one can spend sensibly (always be sensible) spend on marketing to attract new customers. This variable is dependent on your customer’s Lifetime Value.
Calculation:
Establish the average customer’s Lifetime Value;
From it subtract your Value Stream (how much it costs to produce and deliver the product) costs;
Subtract your fixed costs per customer (Total overheads divided by number of customers);
Finally, multiply by “1 - your target profit margin”.
The higher the Lifetime Value, the higher this variable can be.
Alternatives.
The array of choices your customers face when deciding if they should buy your product or not.
Amortisation.
The process of spreading the cost of a resource investment over its estimated useful life. This can help you determine if a potential investment is worth it.
It is a prediction: it depends on an accurate assessment of useful life. If you’re wrong it may be misleading.
Using it is smart, but remember it’s a prediction, so act accordingly.
Amplification.
The phenomenon of effecting all-encompassing change to a system by making changes in its constituent units.
The bigger the system, the greater the phenomenon.
Analytical Honesty.
Measuring and analysing your data dispassionately.
The best way to maintain it is to have your measurements evaluated by someone who isn’t invested in your system.
Association.
The mechanism by which the human mind creates connections between ideas, even if those ideas are not locally connected.
The human mind stores information contextually.
Presenting positive connection to what you offer can influence what people think about it.
If this is well cultivated your customers will want what you have even more.
Attachment.
Becoming emotionally invested in a certain result, status, environment, or idea. The more of this you are to something, the more you limit your flexibility and reduce your chances of finding a better way.
Twists in life are bound to happen. It’s smart to live to fight another day.
Acceptance means applying the concept of Sunk Costs to yourself.
The way to deal with this is to accept that your idea is no longer feasible. Accept what happened and focus on ways to make it better.
Attention.
The most important rule of Marketing: this factor is limited. People are expert at filtering, because they can’t notice everything for long.
To be noticed you need to find a way to be more interesting or useful than your competition.
You don’t want just this factor. You want it from prospects who will ultimately purchase from you.
Business is about making sales, not winning a popularity contest.
Attribution Error
When others screw up, we blame it on them, but when we screw up, we blame the situation and circumstances.
When something isn’t working, find out more about the situation before blaming the person. Give people the benefit of the doubt until any faults become a pattern.
Audience Aggregation
Capturing the attention of a group of a people with similar characteristics, and then selling access to that audience to a third party.
This benefits the audience by providing something worthy of their attention.
It benefits the advertiser because it gives him attention, which leads to sales.
How to get it and capitalise:
1 - Identify a group of people with common characteristics or interests.
2 - Create and maintain some way of consistently attracting that group’s attention.
3 - Find third parties who are interested in buying the attention of that audience.
4 - Sell access to that audience without alienating the audience itself.
