If you are unsure of what a particular marketing term used on this blog, on the web, or by other business people means, you now have a resource to confirm the meaning. Just use this small business marketing terms dictionary. Be sure to bookmark this page as, this dictionary will be updated with additional terms and definitions over time.
Capacity – the amount of products or services a company can produce in a given period of time, which an upper limit that is dictated by the availability of space, machinery, labour, materials or capital. Capacity can be expressed in units, weight, size, sales dollars, man-hours, etc.
Capital or Capital Investment – Money invested into the business
Click Through Rate – a calculation used to measure the effectiveness of any marketing email, calculated by dividing the number of recipients to click on one or multiple links within the email by the number of emails opened
Click Through Rate On Emails Sent – a calculation used to measure the effectiveness of any marketing email, calculated by dividing the number of recipients to click on one or multiple links within the email by the number of emails sent
Conversion Rate – the percentage of the group marketed to that take the desired action. Shown mathematically it is (# of customers)/(# of impressions) from any given marketing activity. So for example if business runs a news paper ad that is seen by 10 people and 1 person who sees the newspaper ad buys as a result of the ad, then your conversion rate would be 1/10 = 10%.
Cost Per Click (CPC) – is an Internet advertising model used on websites, in which advertisers pay only when their ad is clicked, not each time an ad is shown.
Cost Per Impression (CPM) – is an advertising model, in which advertisers pay for the number of times an ad is show regardless of whether it is clicked on or not. Cost per impression can also refer to the cost per unit in which an ad is viewed by someone for any marketing method. The formula to calculate cost per impression is the total cost of a marketing initiative divided by the total number of impressions delivered by the same marketing initiative.
Cross-selling – selling a different product or service to an existing customer, one which they currently don’t buy
Customer Relationship Management (CRM) – methodologies, software, processes and tools that help an enterprise manage customer relationships in an organized way. Often these systems will track all information for a customer including contact information, a communication record and sales history for each particular customer all in one system.
Customer Acquisition Costs – The amount of money spent to obtain a customer. This can be looked at for each marketing or sales activity showing the different customer acquisition costs or projected acquisition costs by activity or it can be looked at across all activities to generate an acquisition cost average.
Demographic – a statistic characterizing human populations, or segments of populations, broken down by certain characteristics. Some common characteristics used in demographic information are gender, age, city, position title, business size but can be any population statistic.
Direct Mail – advertising sent directly to prospective customers via mail or courier. This can include letters, post cards, inserts, larger parcels, anything that can be sent in the mail. With direct mail it can be generic or it can be personalized to the specific recipient using some form of variable printing
Expected Value – is the weighted average of all possible values of outcomes that a particular event can have. This number is what the average outcome would be if the event was done multiple times
Expected Lifetime Value Of A Customer – This is how much profit you expect to make on any customer over the entire lifetime of your business. To calculate this you need to determine how much profit you make on your average customer and how long on average your customers buy from you. The formula looks like the below
Expected Lifetime Value Of A Customer = Profit Per Year x Average Customer Duration In Years
A more advanced and accurate way to calculate this figure is to calculate the net present value of the cash flows generated over future years on average by a customer. This is a complicated calculation so I would not worry about this unless you understand present values.
Fixed Costs – business expenses that are not dependent on the level of goods or services produced by the business. An example would be the rent of an office space.
Frequency (When Used In The Context Of Advertising Campaigns) – the number of times you touch each person in a defined group, with your marketing message
Gross Margin – gross profits as a percentage of sales or the difference between the cost price and the selling price expressed as a percentage. The formula is (Selling Price – Cost Price)/(Selling Price).
Impressions – the number of times a marketing material is viewed
Margins – Margins can refer to any measure of profit such as gross margin, contribution margin, profit margin, etc
Marketing – the management process through which goods and services move from concept to the customer. As a practice, it consists in coordination of identifying, selecting and developing a product, determining the products price, selecting the distribution channel to reach the customers and the development and implementation of a promotional strategy.
Marketing Initiative – for the purposes of this blog I use this term to refer to any one specific promotional activity. For example an online advertisement would be a marketing initiative. A direct mail campaign and an ad in a local newspaper would be 2 marketing initiatives.
Marketing Plan – a marketing plan outlines the specific actions a company intends to carry out to interest and hopefully persuade potential and existing clients to buy the companies product and/or services.
Marketing Strategy – an elaborate and systematic plan of action, which indicates how resources should be deployed to optimize the effectiveness of a company’s commercial processes involved in promoting, selling and distributing a product or service versus the competition
Open Rate – a calculation used to measure the effectiveness of any marketing email, calculated by dividing the number of emails opened by the number of emails sent
Positioning – how your product or service is viewed by the market in relation to your competition. It is what your brand means to people and what it stands for in their minds and hearts. Positioning is how you differentiate your product or service from that of your competitors
Public Relations (PR) – cultivating a good relationship with press representatives in order be featured or mentioned in the news or business press to carry positive stories about your company, products or services in hopes that it will generate awareness and purchase interest within your market
The 4 P’s Of Marketing – the four P’s of marketing are price, place, promotion and product.
ROI (Return On Investment) – a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit or return of an investment is divided by the cost of the investment. The formula for ROI is (gain from investment – cost of investment)/cost of investment
Search Engine Optimization (SEO) – is the process of improving the visibility of a website or a web page to search engines so that the particular webpage will be ranked higher in the search results via the “natural” or un-paid (“organic” or “algorithmic”) search results.
Segment – a sub group of a larger group. Segments are often used in marketing to break down a market into segments of like people or businesses sharing specific characteristics, wants or needs that allow for a more targeted and efficient marketing campaign. Market segments generally respond in a much more predictable manner to a marketing campaign or promotional offer compared to the entire market.
Strategy – a plan of action that dictates how, when and against what activities resources will be deployed to achieve a particular goal.
Synergies – the interaction of two or more agents or forces so that their combined effect is greater than the sum of their individual parts. In business for example if you combine two marketing activities together you may get greater return then if each was executed separately and the results were added together from the two separate initiatives. Another example might be that a company could save or make additional money by adding a specific customer beyond that of the additional revenue generated from that customer because of some additional benefit of having that customer.
Target Market – a group of customers that a business has decided to aim its marketing efforts at to increase the amount of sales generate from this particular group of people or businesses.
Unique Impressions – The number of people who view a marketing material. So if 2 people each view a marketing material 5 times the unique impressions would be 2. This is different from the total impressions which would be 10.
Up-selling – a technique of offering products to a customer which have a higher value or are more advanced than the ones the customer currently purchases. This can technique can also include selling add-ons or or upgrades.