Agency Cost – The dollar reduction in welfare experienced by the principal due to inherent nature of the agency relationship with management.
Agency of Record (AOR) – An advertising agency assigned specific media buying responsibilities by a client.
Agency Theory – A theory of the firm that seeks to explain corporate activities as arising out of the natural conflicts between the principals (stockholders) and agents (managers) of a firm.
Agent – 1. (sales definition) A person acts as a representative of a firm or individual. 2. (retailing definition) A business unit that negotiates purchases, sales, or both but does not take title to the goods in which it deals. 3. (retailing definition) A person agent; one who represents the principal (who, in case of retailing, is the store or merchant) and who acts under authority, whether in buying or bringing the principal into business relations with the third parties. 4. (global marketing definition) A company or individual that represents a company in a particular market. Normally an agent does not take title to goods.
Agents and Brokers – Independent middlemen (intermediaries) who do not take title to the goods they handle, but do actively negotiate the purchase or sale of goods for their clients.
Aggregation – A concept of market segmentation that assumes that most consumers are alike. Retailers adhering to concept focus on common dimensions of the market rather than uniqueness, and the strategy is to focus on the broadest possible number of buyers by an appeal to universal product themes. Reliance is on mass distribution, mass advertising, and a universal theme of low price.
Aging – 1. In retailing, aging is the length of time merchandise has been in stock. 2. The aging of certain products is part of the curing – e.g., tobacco, liquor, cheese. 3. The classification of accounts receivable according to the number of days outstanding.
AIDA – An approach to understanding how advertising and selling supposedly work. The assumption is that the consumer passes through several steps in the influence process. Firs, Attention must be developed, to be followed by Interest, Desire, and finally Action as called in for a message.
Aisle Table – A table in a major store aisle, between departments, used to feature special promotional values.
All-Purpose Revolving Account – A regular 30-day charge account. If paid in full withing 30 days from date of statement, the account has no service charge, but when installment payments are made on the balance at the time of next billing.
All-you-can Afford Budgeting – An approach to the advertising budget that establishes the amount to be spent on advertising as the funds remaining after all necessary expenditures and investments have been covered in the comprehensive budget for the business or organization.
Alliance – A long-term relationship maintained by a commitment among two or more firms to voluntarily give up some of their operational autonomy in an effort to jointly pursue specific goals. The alliance goal is to cooperatively build upon the combined resources of participating firms to improve the performance quality and competitiveness of the channel.
Alliances – The pooling of complimentary resources by two firms in an arrangement that falls short of a full merger or acquisition. Alliances typically involve coordinated activity from very early in the process of new technology development.
Allocation – A sorting process that consist of breaking a homogeneous supply down into smaller and smaller lots.
Alteration Cost – The net cost of altering goods for customers for repair items in stock. The cost includes labor, supplies, and all expenses, including costs for this service when purchased outside the store.
Alteration Room – A section, run in conjunction with one or more selling departments, that alters merchandise to customers’ wishes, especially for men’s and women’s apparel.
Analog Approach – A method of trade area analysis that is also known as the similar store or mapping approach. The analysis divided into four steps: 1) describing the current trade areas by using a technique known as customer spotting, 2. plotting the customer on a map; 3. defining the primary trade zone, secondary trade zone, and tertiary trade zone; and 4. matching the characteristics of stores in the trade areas with a potential new store to estimate its sales potential.
Analysis of Selected Cases – An intensive study of selected examples of the phenomenon of interest.
Analysis of Variance – (ANOVA) A statistical test employed with interval data to determine if k (k>2) samples came from populations with equal means.
Analytic Hierarchy Process (AHP) – A three-step process for making resource allocation decisions. First, the organization’s objectives, sub objectives and strategies are organized hierarchically. Next the decision maker evaluates, in a pairwise fashion, each of the elements in a particular stratum of the hierarchy with respect to its importance in accomplishing each of the elements of the next-higher stratum. Finally, a model is applied to these pairwise judgments that produces a st of importance (or priority) weights for each elements of each stratum in the hierarchy. Areas of application in marketing include the product of portfolio decision, selection of new products to develop, and generation and evaluation of various marketing mix strategies.
Anchor – The reference price or reference product in consumer’s comparison.
Anchor Store – A large and well-known retail operation located in a shopping center and serving as an attracting force to draw consumers to the center.
Anchoring Effect – The result when buyers make comparisons of prices or products against a reference product. the result of this comparison is usually weighted toward the anchor, creating an anchor bias, anchoring effect.
Ancillary Service – 1. (physical distribution definition) A service offering provided by modal operators in addition to basic transportation services. The provision of such services typically includes sorting, storing product prior to delivery, marking or tagging the product, and collecting rate shipment. 2. 9retailing definition) The service such as layaway, gift wrap, credit and others not directly related to the actual sale of a specific product within the store. Some of these services are charged for and some are not.
Anticipation – A discount in addition to the cash discount if a bill is paid prior to the expiration of the cash discount period, usually at the rate of 6 percent per annum- e.g., at this rate, for 60 days prepayment, which is 1/6 of an interest year, the anticipation ratio would be 1 percent of the face amount.
Anticompetitive Leasing Agreement – A lease that limits the type and amount of competition a particular retailer faces within a trading area or shopping center.
Antidumping Duties – The penalty duties on goods that have been declared in violation of antidumping laws. the duties that take the form of special additional import charges equal to the dumping margin.
Antitrust Laws – Federal antitrust policy is set forth in four laws: the Sherman Antitrust Act,
Arc of Fashion – A description of the course through time of fashion. It is said to begin with early acceptors who will pay high prices for new concepts. As popularity for the style increases, these are followed by early followers, general acceptors, and decline laggards in that order and as price decreases as mass merchandisers enter the supply pattern.
Area Sample – Used in marketing research, it is a sample of persons derived by marking the study universe off into grids and then selecting a number of grids at random. An attempt is made to interview all the people or consuming units in the selected grids. There is a reasonable statistical probability that the selected grids represent a cross-section of the area.
Area Structure – Natural resource specialization based on the expected marketing returns on them leading to a particular location for each institution in the agency structure. See: Primary Trading Area, Secondary Trading Area, Zone Indifference
Arithmetic Address – A specific location in an ADF unit that is used for the results of computations. See: Address
Armorply – Plywood or lumber coated with a metal veneer.
Array – (1) An arrangement of values ordered by magnitude. (2) A group of numbers arranged in sequence from lowest to highest or from highest to lowest. See: Median
Artificial Obsolescence – The decline in market acceptance of one product brought about by change in that product or a new model of the product introduce to supersede the old one on the logic that it is better to lose sales of a product to a new one of one’s own firm than to that of a competitor. See: Planned Obsolescence