(J-P) marketing and finance glossary J-P

Marketing:-

New product	A new product can be defined as a good, service or idea that is “perceived” by some potential customers as new. It may have been available for some time, but many potential customers have not yet adopted the product nor decided to become a regular user of the product.
Niche marketing	Niche marketing refers to the exploitation of comparatively small market segments by businesses that decide to concentrate their efforts. Niche segments exist in nearly all markets – for example the self-build sports car segment of the motor industry
Non-personal communication	Methods of promotion that do not generate any personal feedback. Advertising is the best example of this
Normal goods	Normal goods have a positive income elasticity of demand so as income rise more is demand at each price level

Objectives	Measurable aims of a business set for a given period (e.g. marketing objectives for the next year)
Occasion segmentation	A basis of segmenting a market based on occasions when buyers get the idea to make a purchase, actually buy, or use a purchased item.
Opportunities	Opportunities are any feature of the external environment which creates conditions that a business can exploit to its advantage. If the business is successful in exploiting opportunities, then it will be better placed to achieve its objectives.
Own-label brand	Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”. Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product range will be own-label. However, more often, the distributor will mix own-label and manufacturers brands

Packaging	The activities of designing and producing the container or wrapper for a product
Penetration pricing	Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share
Penetration strategy	A marketing strategy based on low prices and extensive advertising to increase a product's market share. For penetration strategy to be effective the market will have to be large enough for the seller to be able to sustain low profit margins.
Personal selling	Oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale
Porter’s Five Forces Model	An analytic model developed by Michael E. Porter. The five forces in terms of which the model analyses businesses and industries are: Buyers, Suppliers, Substitutes, New Entrants and Rivals
Portfolio planning	Portfolio planning is the process of managing groups of brands and product lines
Positioning	Positioning is how a product appears in relation to other products in the market
Pre-emptive pricing	Pre-emptive pricing is a strategy involves setting low prices in order to discourage or deter potential new entrants to the suppliers market. It is especially suited to markets in which the supplier does not hold a patent, or other market privilege and entry to the market is relatively straightforward.
Prestige pricing	Prestige pricing refers to the practice of setting a high price for an product, throughout its entire life cycle – as opposed to the short term ‘opportunistic’, high price of price ‘skimming’. This is done in order to evoke perceptions of quality and prestige with the product or service
Price	The price of a product may be seen as a financial expression of the value of that product
Price discrimination	Price discrimination occurs when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated with costs
Price elasticity of demand	Price elasticity of demand measures the responsiveness of a change in demand for a product following a change in its own price
Price sensitivity	Price sensitivity is the effect a change in price will have on customers
Price skimming	Price skimming involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market
Primary research data	Primary market data is data collected specifically for the market research project and obtained directly from the relevant source
Problem/Need recognition	The first stage in the buying process where the potential customer recognises that a problem or a need can be met by buying a product or a service
Product	A product is defined as anything that is capable of satisfying customer needs
Product class	Product class is a broad category of product such as cars, washing machines, newspapers.
Product form	Within a product class, there are different forms that the product can take. For example, people carriers or two-seater sports cars are product forms within the motor cars product class
Product group	A product group (or product line) is a group of brands that are closely related in terms of their functions and the benefits they provide
Product life cycle	The course of a product's sales and profitability over its lifetime. The model describes five stages, each of which represents a different opportunity for the marketer: - Development - Introduction - Growth - Maturity - Decline
Product map	A product map defines the market in terms of the way buyers perceive key characteristics of competing products
Product mix	The set of all product lines and items that a particular business offers for sale to buyers
Product quality	The ability of a product to perform its functions (“fit for purpose”). Quality is a function of several factors including reliability and ease of use
Promotion	One of the four “P’s” of the marketing mix. Promotion is all about businesses communicating with customers
Promotional mix	The promotional mix consists of a blend of five main kinds of promotional tools: advertising; direct marketing; personal selling; sales promotion and public relations
Psychographic segmentation	Psychographic (or “lifestyle”) segmentation seeks to classify people accordingly to their values, opinions, personality characteristics and interests.
Public relations	The planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics
Publicity	Promotional activities designed to promote a business and its products by obtaining media coverage not paid for by the business
Pull promotion	Pull promotion, in contrast to Push promotion, addresses the customer directly with a view to getting them to demand the product, and hence “pull” it down through the distribution chain. It focuses on advertising and above the line activities. See also 'push promotion'
Purchase decision	The stage in the customer buying process when the purchase decision is actually made
Push promotion	Push promotion relies on the next link in the distribution chain - e.g. a wholesaler or retailer - to “push” out products to the customer. It revolves around sales promotions - such as price reductions and point of sale displays - and other below the line activities. See also 'Sales Promotion'

Finance :-

J

Junk bond A bondwith a credit rating of BB+ or lower. These debts are considered very risky by the ratings agencies. Typically the bonds are traded in markets at a price that offers a very high yield(return to investors) as compensation for the higher risk of default.

K

Keynesian economics The economic theories of John Maynard Keynes. In modern political parlance, the belief that the state can directly stimulate demand in a stagnating economy, for instance, by borrowing money to spend on public works projects such as roads, schools and hospitals.

L

Lehman Brothers A US investment bank, whose collapse in September 2008 sparked the most intense phase of the financial crisis.

Leverage Leverage, or gearing, means using debt to supplement investment. The more you borrow on top of the funds (or equity) you already have, the more highly leveraged you are. Leverage can increase both gains and losses. Deleveraging means reducing the amount you are borrowing.

Liability A debt or other form of payment obligation, listed in a company's accounts.

Libor London Inter Bank Offered Rate. The rate at which banks in London lend money to each other for the short-term in a particular currency. A new Libor rate is calculated every morning by financial data firm Thomson Reuters based on interest rates provided by members of the British Bankers Association.

Limited liability Confines an investor's loss in a business to the amount of capital they invested. If a person invests £100,000 in a company and it goes under, they will lose only their investment and not more.

Liquidation A process in which assets are sold off for cash. Liquidation is often the outcome for a company deemed irretrievably loss-making. In that case, its assets are sold off individually, and the cash proceeds are used to repay its lenders. In liquidation, a company's lenders and other claimants are given an order of priority. Usually the tax authorities are the first to be paid, while the company's shareholders are the last, typically receiving nothing.

Liquidity How easy something is to convert into cash. Your current account, for example, is more liquid than your house. If you needed to sell your house quickly to pay bills you would have to drop the price substantially to get a sale.

Liquidity crisis A situation in which it suddenly becomes much more difficult for banks to obtain cash due to a general loss of confidence in the financial system. Investors (and, in the case of a bank run, even ordinary depositors) may withdraw their cash from banks, while banks may stop lending to each other, if they fear that some banks could go bust. Because most of a bank's money is tied up in loans, even a healthy bank can run out of cash and collapse in a liquidity crisis. Central banks usually respond to a liquidity crisis by acting as "lender of last resort" and providing emergency cash loans to the banks.

Liquidity trap A situation described by economist John Maynard Keynesin which nervousness about the economy leads everybody to cut back on their spending and to hold cash, even if the cash earns no interest. The widespread fall in spending undermines the economy, which in turn makes households, banks and companies even more nervous about spending and investing their money. The problem becomes particularly intractable when - as in Japan over the last 20 years - the weak spending leads to falling prices, which creates a stronger incentive for people to hold onto their cash, and also makes debts more difficult to repay. In a liquidity trap, monetary policy can become useless, and Keynes said that the onus is on governments to increase their spending.

Loans-to-deposit ratio For financial institutions, the sum of their loans divided by the sum of their deposits. It is used as a way of measuring a bank's vulnerability to the loss of confidence in a liquidity crisis. Deposits are typically guaranteed by the bank's government and are therefore considered a safer source of funding for the bank. Before the 2008 financial crisis, many banks became reliant on other sources of funding - meaning they had very high loan-to-deposit ratios. When these other sources of funding suddenly evaporated, the banks were left critically short of cash.

M

Mark-to-market (MTM) Recording the value of an asseton a daily basis according to current market prices. So for a Greek governmentbond, the MTM is how much it could be sold for today. Banks are not required to mark to market investments that they intend to hold indefinitely (in what is called the "banking book" in accounting jargon). Instead, these investments are valued at the price at which they were originally purchased, minus any impairment charges - which might arise following a defaultby the borrower.

Monetary policy The policies of the central bank. A central bank has an unlimited ability to create new money. This allows it to control the short-term interest rate, as well as to engage in unorthodox policies such as quantitative easing - printing money to buy up government debts and other assets. Monetary policy can be used to control inflation and to support economic growth.

Money markets Global markets dealing in borrowing and lending on a short-term basis.

Monoline insurance Monolines were set up in the 1970s to insure against the risk that a bondwill default. Companies and public institutions issue bonds to raise money. If they pay a fee to a monoline to insure their debt, the guarantee helps to raise the credit rating of the bond, which in turn means the borrower can raise the money more cheaply.

Mortgage-backed securities (MBS) Banks repackage debts from a number of mortgages into MBS, which can be bought and traded by investors. By selling off their mortgages in the form of MBS, it frees the banks up to lend to more homeowners.

MPC The Monetary Policy Committee of the Bank of England is responsible for setting short-term interest rates and other monetary policy in the UK, such as quantitative easing.

N

Naked short selling A version of short selling, illegal or restricted in some jurisdictions, where the trader does not first establish that he is able to borrow the relevant asset before selling it on. The aim with short selling is to buy back the asset at a lower price than you sold it for, pocketing the difference.

Nationalisation The act of bringing an industry or assetssuch as land and property under state control.

Negative equity Refers to a situation in which the value of your house is less than the amount of the mortgage that still has to be paid off.

O

OECD The Organisation for Economic Co-operation and Development is an association of industrialised economies, originally set up to administer the Marshall Plan after World War II. The OECD provides economic research and statistics, as well as policy recommendations, for its members.

Options A type of derivativethat gives an investor the right to buy (or to sell) something - anything from a share to a barrel of oil - at an agreed price and at an agreed time in the future. Options become much more valuable when markets are volatile, as they can be an insurance against price swings.

P

Ponzi scheme Similar to a pyramid scheme, an enterprise where funds from new investors - instead of genuine profits - are used to pay high returns to current investors. Named after the Italian fraudster Charles Ponzi, such schemes are destined to collapse as soon as new investment tails off or significant numbers of investors simultaneously wish to withdraw funds.

Preference shares A class of shares that usually do not offer voting rights, but do offer a superior type of dividend, paid ahead of dividends to ordinary shareholders. Preference shareholders often also have somewhat better protection when a company is liquidated.

Prime rate A term used primarily in North America to describe the standard lending rate of banks to most customers. The prime rate is usually the same across all banks, and higher rates are often described as "x percentage points above prime".

Private equity fund An investment fund that specialises in buying up troubled or undervalued companies, reorganising them, and then selling them off at a profit.

PPI The Producer Prices Index, a measure of the wholesale prices at which factories and other producers are able to sell goods in an economy.

Profit warning When a company issues a statement indicating that its profits will not be as high as it had expected. Also profits warning.