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  • Abandonment - As in the phrase "call abandonment". This refers to people who, being placed on hold in an incoming call, elect to hang up ("abandon") the call. Call centers monitor closely the "abandonment rate" as a measure of their inefficiency.
  • Abatement - Practices to limit or reverse environmental damages. See also: abatement policy.
  • Abatement policy - A policy designed to reduce environmental damages. See also: abatement.
  • Absolute advantage - A person or country has this in the production of a good if the inputs it uses to produce this good are less than in some other person or country. See also: comparative advantage.
  • Abundance mindset - A belief centered on the idea that opportunities are boundless. Individuals with such beliefs tend to engage in higher levels of risk taking.
  • Accountability - The obligation of a decision-maker (or body) to be responsive to the needs and wishes of people affected by his, her or its decisions.
  • Accounting Cycle - A term that describes the steps when processing transactions (analyzing, journalizing, posting, preparing trial balances, adjusting, preparing financial statements) in a manual accounting system. Today many of the steps occur simultaneously when using accounting software.
  • Accounting cycle - A term that describes the steps when processing transactions (analyzing, journalizing, posting, preparing trial balances, adjusting, preparing financial statements) in a manual accounting system. Today many of the steps occur simultaneously when using accounting software.
  • Accounting period - The time for which profits are being calculated, normally months, quarters or years.
  • Accounts - Businesses are obligated to produce an annual set of accounts. If they are listed on the stock exchange, they must also show half-year profits (information regarding profits six months into the financial year).
  • Accounts payable (ap or a/p) - Accounts payable refers to an account within the general ledger that represents a company's obligation to pay off a short-term debt to its creditors or suppliers. Business owners may choose to pay its outstanding bills as close to their due dates as possible in order to improve cash flow.
  • Accounts Payable (ap) - This current liability account will show the amount a company owes for items or services purchased on credit and for which there was not a promissory note. This account is often referred to as trade payables (as opposed to notes payable, interest payable, etc.)
  • Accounts Receivable - A current asset resulting from selling goods or services on credit (on account). Invoice terms such as (a) net 30 days or (b) 2/10, n/30 signify that a sale was made on account and was not a cash sale.
  • Accounts receivable (ar or a/r) - Accounts receivables is another business finance term that means the money owed to your small business by others for goods or services rendered. These accounts are labeled as assets because they represent a legal obligation for the customer to pay you cash for their short-term debt.
  • ACD - Automatic Call Distributor. A complex machine used in modern call centers for incoming calls. It routes calls to available agents, holds overflow calls, gives and takes messages, provides reports. A must for modern database marketing.
  • Acquisition - The purchase of one company or resources by another.
  • Active listening - Active listening requires you to listen attentively to a speaker, understand what they're saying, respond and reflect on what's being said, and retain the information for later. This keeps both listener and speaker actively engaged in the conversation.
  • Actuary - An actuary is a person employed by pension providers and insurance companies. Their role is to calculate accident rates, life expectancy and the relevant payouts.
  • Acyclical - No tendency to move either in the same or opposite direction to aggregate output and employment over the business cycle.
  • Ad-hoc report - A reporting method which permits you to ask questions like: How may women over 60 have bought more than $200 from us in the last 4 months?
  • Adaptability - Adaptability in the workplace means being flexible and able to change in order to become successful
  • Address - A computer term for the location on a disk or in memory of a piece of information. Addresses help the computer to find things rapidly, and to store them for later retrieval.
  • Adjustment gap - The lag between some outside change in labour market conditions and the movement of the economy to the neighbourhood of the new equilibrium.
  • Administration - There are two meanings relating to this word in business. (1) The organisation and running of a business. (2) A business going into administration, meaning that a business has gone bankrupt and its creditors can get in touch to try and claim any money they are owed.
  • Administrative Expenses - Administrative expenses are part of the operating expenses (along with selling expenses). Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries and fringe benefits of the company president, human resource personnel, accounting, information technology, the depreciation expense for equipment and space used in administration, as well as supplies, utilities, etc. Under the accrual basis of accounting, administrative expenses appear on the income statement for the period in which they occurred (not the period in which they were paid).
  • Administrative expenses - Administrative expenses are part of the operating expenses (along with selling expenses). Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries and fringe benefits of the company president, human resource personnel, accounting, information technology, the depreciation expense for equipment and space used in administration, as well as supplies, utilities, etc. Under the accrual basis of accounting, administrative expenses appear on the income statement for the period in which they occurred (not the period in which they were paid).
  • Administratively feasible - Policies for which the government has sufficient information and staff for implementation.
  • Adverse selection - The problem faced by parties to an exchange in which the terms offered by one party will cause some exchange partners to drop out. An example is the problem of asymmetric information in insurance: if the price is sufficiently high, the only people who will seek to purchase medical insurance are people who know they are ill (but the insurer does not). This will lead to further price increases to cover costs. Also referred to as the ‘hidden attributes’ problem (the state of already being ill is the hidden attribute), to distinguish it from the ‘hidden actions’ problem of moral hazard. See also: incomplete contract, moral hazard, asymmetric information.
  • Advertising Expense - Advertising Expense is the income statement account that reports the dollar amount of ads run during the period shown in the income statement. Advertising Expense will be reported under selling expenses on the income statement.
  • Advertising expense - Advertising Expense is the income statement account which reports the dollar amount of ads run during the period shown in the income statement. Advertising Expense will be reported under selling expenses on the income statement.
  • Affiliate marketing - A retailer or service provider advertising its goods or services via a third party in return for a commission on any sales.
  • Affinity - People who are similar in lifestyle
  • Affinity Analysis - A process of finding relationships between customer purchases. People who buy skis buy snow tires.
  • Affinity Matrix - A cross tab showing cross buying patterns by customers who did or did not buy Products A, B, C, and D.
  • Affluents - Households with 30% or more than the cost of living plus taxes.
  • Aged Debt, Aged Debtors, and the Aged Debtors Report - Aged debt is money that is overdue to be paid back (based on the agreed payback period, which is commonly 14 days, 30 days, 60 days, or 90 days). An aged debtors report is a common accounting report which lists out your aged debtors and their aged debt, typically grouping that aged debt by how overdue it is
  • Agent - The word for a telephone operator in a modern inbound call center in a company that takes a lot of customer service and sales calls.
  • Aggregate demand - The total of the components of spending in the economy, added to get GDP: Y = C + I + G + X – M. It is the total amount of demand for (or expenditure on) goods and services produced in the economy. See also: consumption, investment, government spending, exports, imports.
  • Aggregate output - The total output in an economy, across all sectors and regions.
  • All things being equal - A frequent caveat employed by economists. It is used to indicate that any changes made to a system should not be assumed to have secondary effects.
  • Allocation - A description of who does what, the consequences of their actions, and who gets what as a result.
  • Alpha - The percentage by which a particular stock outperformed the overall market. An alpha of 10 means that the stock grew 10% faster than the market.
  • Altruism - The willingness to bear a cost in order to benefit somebody else.
  • Ambition - Having ambition at work means having the desire to improve in the workplace. This may mean not conforming to the way things have always been done. Ambitious people orient their efforts on goals and ways to achieve them, regardless of what others do.
  • Analog - Regular telephone service comes over analog lines. Modern improved service (often used for data lines) comes over DIGITAL lines in which all the sounds are converted to 1's and 0's. For database marketing computer communications, digital is better.
  • Analytical skills - Analytical skills are a wide-ranging set of professional qualities that include the ability to think critically, analyze data, make difficult decisions, and solve complex problems. These important skill sets all involve taking in new information and mentally processing it in a productive manner.
  • Anchor - Information that leads market participants to decrease or increase their estimates of a good's value.
  • ANI - Automatic Number Identification. A system whereby you can learn the number of a person who is calling you on the telephone. Can be linked to a database to find the person's name and address.
  • Annual equivalent rate (aer) - A quote of what interest paid on savings and investments would be. It is calculated by adding each interest payment to the original deposit, then working out the next interest payment, compounding the interest.
  • Annual recurring revenue - The amount of income that a given account delivers to a vendor over the course of a year.
  • Annual Report - Annual report that an LLC must file with the secretary of state.
  • Annual report - Annual report that an LLC must file with the secretary of state.
  • Annuity - This is a type of insurance policy. Upon retirement a lump sum is paid into it and the insurance company then provide a regular income.
  • Antitrust policy - Government policy and laws to limit monopoly power and prevent cartels. Also known as: competition policy.
  • Appended - Data process whereby a customer file has data appended to it (such as age, income, home value) from some external data file. See overlay.
  • Appraisal - An estimation of an item's value, usually provided by a particularly knowledgeable party.
  • APR - Short for annual percentage rate, this is the interest charged on your loan every year, plus all fees and costs associated with the loan. Keep in mind that advertised interest rates may just be where interest rates start; you’ll need to submit information for a rate check to find out what you should expect for your small-business loan’s APR.
  • Arbitrage - The process by which a person or business takes advantage of the difference in price of a share or a currency.
  • Articles of Dissolution - A document that formalizes the end of a corporation's existence.
  • Articles of dissolution - Document that formalizes the end of a corporation's existence
  • Articles of Organization - The Articles of Organization are the documents filed with the state to formally create an LLC. In some states, the articles are called a "certificate of organization." The Articles of Organization are similar to the Articles of Incorporation for a corporation.
  • Articles of organization - The Articles of Organization are the documents filed with the state to formally create an LLC. In some states, the articles are called a "certificate of organization." The Articles of Organization are similar to the Articles of Incorporation for a corporation.
  • Artificially scarce good - A public good that it is possible to exclude some people from enjoying. Also known as: club good.
  • ASCII - American Standard format for data storage on magnetic media (tape or disk).
  • Asset - In business, assets are anything with value, tangible or intangible, owned by the company. Business assets can be cash, are cash on hand, accounts receivable, commercial property, equipment, inventory, and anything else that can be sold for cash.
  • Asset price bubble - Sustained and significant rise in the price of an asset fuelled by expectations of future price increases.
  • Assignment - The transfer of legal rights to another person or entity.
  • Assignment - The transfer of legal rights to another person or entity.
  • Asymmetric information - Information that is relevant to the parties in an economic interaction, but is known by some but not by others. See also: adverse selection, moral hazard.
  • Attrition - Model A model that predicts which customers are most likely to leave. Usually expressed as a percentage of likelihood.
  • Attrition Rate - The opposite of retention rate. The percentage of customers this year who are no longer buying next year.
  • Audit - An official inspection of a company’s, or individual’s, accounts.
  • Austerity - A policy where a government tries to improve its budgetary position in a recession by increasing its saving. See also: paradox of thrift.
  • Automated card payments - Automated card payments are a method of making recurring payments for a product or service (for example, your Netflix subscription). To facilitate this, the customer will provide their credit or debit card details to the business, who will securely store those details, and authorise them to take recurring payments from that card automatically.
  • Automated Card Payments - Automated card payments are a method of making recurring payments for a product or service (for example, your Netflix subscription). To facilitate this, the customer will provide their credit or debit card details to the business, who will securely store those details, and authorise them to take recurring payments from that card automatically.
  • Automatic stabilizers - Characteristics of the tax and transfer system in an economy that have the effect of offsetting an expansion or contraction of the economy. An example is the unemployment benefits system.
  • Automation - The use of machines that are substitutes for labour.
  • Autonomous consumption - Con­sumption that is independent of current income.
  • Autonomous demand - Components of aggregate demand that are independent of current income.
  • Autosexing - A computer process for finding the sex and appending titles (Mr. Ms.) to a file of names.
  • Average cost - The total cost of the firms’s output divided by the total number of units of output.
  • Average margin per user - Revenue divided by cost per sale. Commonly used by cellphone companies.
  • Average product - Total output divided by a particular input, for example per worker (divided by the number of workers) or per worker per hour (total output divided by the total number of hours of labour put in).
  • Average selling price - The mean cost at which an item was purchased by buyers.
b
  • B2b - Business to business.
  • B2c - Business to consumer.
  • Back end - As in phrase "back end analysis" refers to the results of actions with people who have responded to your initial offer.
  • Bad debt (or written-off debt) - Bad debt is money that a business is owed by a customer, but which the customer is unable to pay.
  • Bad Debt (or Written-off Debt) - Bad debt is money that a business is owed by a customer, but which the customer is unable to pay.
  • Balance of payments (bp) - This records the sources and uses of foreign exchange. This account records all payment transactions between the home country and the rest of the world, and is divided into two parts: the current account and the capital and financial account. Also known as: balance of payments account.
  • Balance sheet - One of the main financial statements. The balance sheet reports the assets, liabilities, and owner's (stockholders') equity at a specific point in time, such as December 31. The balance sheet is also referred to as the Statement of Financial Position.
  • Balance Sheet - One of the main financial statements. The balance sheet reports the assets, liabilities, and owner's (stockholders') equity at a specific point in time, such as December 31. The balance sheet is also referred to as the Statement of Financial Position.
  • Bank - A firm that creates money in the form of bank deposits in the process of supplying credit.
  • Bank bailout - The government buys an equity stake in a bank or some other intervention to prevent it from failing.
  • Bank balance - The amount in a bank account according to the bank's records.
  • Bank Balance - The amount in a bank account according to the bank's records.
  • Bank money - Money in the form of bank deposits created by commercial banks when they extend credit to firms and households.
  • Bank overdraft - A negative balance in the bank's records for the company's checking account.
  • Bank Overdraft - A negative balance in the bank's records for the company's checking account.
  • Bank run - A situation in which depositors withdraw funds from a bank because they fear that it may go bankrupt and not honour its liabilities (that is, not repay the funds owed to depositors).
  • Bank statement reconciliation - The process of comparing the amounts in the Cash account in the general ledger to the amounts appearing on the bank statement. The objective is to be certain that there is consistency between the amounts and that the company's amounts are accurate and complete.
  • Bank Statement Reconciliation -

    The process of comparing the amounts in the Cash account in the general ledger to the amounts appearing on the bank statement. The objective is to be certain that there is consistency between the amounts and that the company's amounts are accurate and complete.

  • Bankruptcy - The inability to pay off debts with existing assets.
  • Bargaining gap - The difference between the real wage that firms wish to offer in order to provide workers with incentives to work, and the real wage that allows firms the markup that maximizes profits given the degree of competition.
  • Bargaining power - The extent of a person’s advantage in securing a larger share of the economic rents made possible by an interaction.
  • Barrier to entry - Something that prevents new competition in a marketplace. Examples include: high fixed cost investments, red tape and switching costs.
  • Barrier to exit - Something that prevents a producer from exiting a marketplace.
  • Base money - Cash held by households, firms, and banks, and the balances held by commercial banks in their accounts at the central bank, known as reserves. Also known as: high-powered money.
  • Base rate - Set each month by the Bank of England, this is the country’s base rate of interest. This influences financial products and services when they set their own cost of borrowing.
  • Basic accounting equation - Assets = Liabilities + Owner's Equity. For a corporation the equation is Assets = Liabilities + Stockholders' Equity. For a nonprofit organization the accounting equation is Assets = Liabilities + Net Assets. Because of double-entry accounting this equation should be in balance at all times. The accounting equation is expressed in the financial statement known as the balance sheet.
  • Basic Accounting Equation - Assets = Liabilities + Owner's Equity. For a corporation the equation is Assets = Liabilities + Stockholders' Equity. For a nonprofit organization the accounting equation is Assets = Liabilities + Net Assets. Because of double-entry accounting, this equation should be in balance at all times. The accounting equation is expressed in the financial statement known as the balance sheet.
  • Batch mode - If you have received 10,000 replies to a mailing, you can update your master file with these replies in one batch. This is the fastest and cheapest way to update records. The opposite is On-Line updating.
  • BATNA - Acronym for 'best alternative to negotiated agreement.' It is the next most desirable choice a potential customer has with respect to your offering. The more alluring the BATNA, the lower your pricing power becomes. Note that 'doing nothing' can be a BATNA.
  • Baud rate - A measure of line transmission speed. 28.8 thousand Baud is a good speed for terminals and PC's connected to a marketing database. Speeds can go up to 56,000 or more.
  • Bear - An investor who believes that securities are set to decrease in price.
  • Begging - A request for payment, generally from a person with minimal pricing power and dubious value offered in return.
  • Bellwether - A leading indicator that suggests a change in a marketplace.
  • Benchmarking - Checking your company’s standards by comparing them with certain criteria, e.g. a competitor’s activities.
  • Best response - In game theory, the strategy that will give a player the highest payoff, given the strategies that the other players select.
  • Beta - A measure of a particular investment's volatility compared to the overall market. A beta greater than one is more volatile, a beta less than one is less volatile.
  • Beveridge curve - The inverse relationship between the unemployment rate and the job vacancy rate (each expressed as a fraction of the labour force). Named after the British economist of the same name.
  • Bid-offer spread - The buying (offer) and selling (bid) price of shares, bonds or currency. The ‘spread’ is the difference between those two prices.
  • Big Mac Index - A report produced by The Economist that shows the relative cost of a McDonald's hamburger in different countries. It was intended as a measure of purchasing power parity.
  • Bill of materials - A listing of the materials included in a product. A bill of material could be thought of as a bakery's recipe for producing one of its products.
  • Bill of Materials - A listing of the materials included in a product. A bill of material could be thought of as a bakery's recipe for producing one of its products.
  • Bill payable - An amount owed on bill or invoice from a vendor or supplier of goods or services.
  • Bill Payable - An amount owed on bill or invoice from a vendor or supplier of goods or services.
  • Billing software - Billing software is software which helps enable the payment process for businesses, through features like the electronic generation and sending of quotes and invoices. Billing software is also commonly referred to as invoicing software, and the functionality it provides is often contained within accounting software.
  • Billing Software - Billing software is software which helps enable the payment process for businesses, through features like the electronic generation and sending of quotes and invoices. Billing software is also commonly referred to as invoicing software, and the functionality it provides is often contained within accounting software.
  • Biodiversity loss (rate of) - Proportion of species that become extinct every year.
  • Biological survival constraint - This shows all the points that are ‘biologically feasible’. See also: biologically feasibile.
  • Biologically feasible - An allocation that is capable of sustaining the survival of those involved is biologically feasible.
  • Bitcoin - A cryptocurrency released by Satoshi Nakamoto in 2009.
  • Bits - If a byte is like an atom in computer language, a bit is like an electron. A bit is either on or off. It is either a 1 or a zero. Eight bits make up one byte.
  • Black market - The sale of goods and services in an unsanctioned manner. Note: Though the sale is illegal, this does not imply that the items for sale are illegal. Many items are sold on the black market to avoid government taxation.
  • Black swan - Financial events that are difficult to predict. It is called this because before people ventured to Australia, swans were assumed to only be white. No one had seen a black one until then.
  • Block - The smallest reported unit in the 1990 U.S. Census. About 14 households in a block.
  • Block group - The smallest reported unit in the 1980 U. S. Census. About 340 households on average.
  • Blue chip - This term originates from poker as blue chips are traditionally the highest-valued. Therefore, a blue-chip company is one that is large and considered to be safe or prestigious.
  • Blue ocean strategy - A theory and book developed by W. Chan Kim and Renée Mauborgne. The authors suggest that moving into markets without competition (blue oceans) can be far more advantageous than entering proven, but competitive, markets (red oceans).
  • Blue sky laws - Laws governing the sales of securities.
  • Bond - An agreement made when money is borrowed from an investor at a set rate of interest. It is repaid over a set period of time. Bonds are rated from the safest (AAA) to the riskiest (D), also known as 'junk bonds'.
  • Bonds payable * - Generally a long term liability account containing the face amount, par amount, or maturity amount of the bonds issued by a company that are outstanding as of the balance sheet date.
  • Bonds Payable * - Generally a long term liability account containing the face amount, par amount, or maturity amount of the bonds issued by a company that are outstanding as of the balance sheet date.
  • Book balance - Book balance is a company's cash balance according to its accounting records. Book balance can include transactions that have yet to settle or clear through the bank account. At the end of an accounting period, a company's book balance is reconciled with the bank balance via the monthly bank statement.
  • Book Balance - Book balance is a company's cash balance according to its accounting records. Book balance can include transactions that have yet to settle or clear through the bank account. At the end of an accounting period, a company's book balance is reconciled with the bank balance via the monthly bank statement.
  • Book depreciation - The depreciation computed for financial reporting purposes—as opposed to income tax depreciation.
  • Bookkeeper - A bookkeeper sets up the foundation for accountants, tracking finances by recording transactions. This gives a holistic view of your business so you can easily see the amount of money coming into and leaving your business.
  • Bootstrapping - (1) Building a start-up company with very little money, often relying on personal savings and pushing for the lowest possible operating costs, while implementing cost-saving systems such as fast inventory turnaround. (2) Making a forecast beyond a certain period by using the forecasted data for that period.
  • Bottom line - The bottom line is the net income for a business. The term comes from the layout of an income statement - the bottom line on these statements is where the net income is calculated.
  • Bounce back - The practice of sending another identical (or similar) catalog back to someone who has just ordered something from one of your catalogs.
  • Brand Managers - Most packaged goods companies organize themselves by brand. The brand manager is responsible for advertising, marketing and sales of the product. The brand manager is typically the main obstacle to database marketing which is customer focussed rather than product focussed.
  • BRC or BRE - Business Reply Card or Business Reply Envelope
  • Break-even point - The point in time when you will have paid back all your debts, or when revenues exactly match expenses.
  • Breakeven - The point at which aggregate costs are equal to aggregate revenue. A firm that has reached a breakeven status may find itself with a much improved strategic position, such as one that has sold enough widgets to cover the cost of the factory that produced them.
  • Bretton woods system - An international monetary system of fixed but adjustable exchange rates, established at the end of the Second World War. It replaced the gold standard that was abandoned during the Great Depression.
  • Bridging loan - This loan is taken out by people who need access to finance while their property is being sold.
  • Broad money - The stock of money in circulation, which is defined as the sum of bank money and the base money that is in the hands of the non-bank public. See also: bank money.
  • Brokerage Commission - The commission (usually 20%) paid by a list owner to a broker to handle the rental of a list.
  • Brown good - Consumer electronics. These goods are named for the wood paneling that was commonly used on such devices.
  • Bubble - The inflation of a good's selling price above the intrinsic value. Two famous examples are the Dutch tulip mania of the 1600s and the American dot com bubble around 2000.
  • Budget constraint - An equation that represents all combinations of goods and services that one could acquire that exactly exhaust one’s budgetary resources.
  • Bugs - Errors that crop up in software. Caused by inability of programmers to predict all possible ways that the code in their programs will be used to process data.
  • Bull - An investor who believes that securities are set to increase in price.
  • Bull trap - Evidence that is sufficient to convince investors (bulls) that a given security will increase in price, when, in actuality, the security's price is set to decrease.
  • Bundle pricing - The selling of multiple products as a single collection for a single price (usually at a price below the sum of costs for each item).
  • Burn rate - This is the rate that a company is losing money, figuratively describing cash as being ‘burned.’ Typically, the burn rate is expressed as a monthly figure, and it can be synonymous with negative cash flow
  • Business agility - Business agility refers to the ability for a business to make decisions and act on them quickly. Where these actions require money to undertake, poor cash flow can prevent a business from being agile, potentially leaving it less able to take advantage of opportunities and avoid risks.
  • Business angel - Also known as an angel investor. An individual who provides capital for a business start-up in return for a stake in the company.
  • Business cycle - The tendency for economies to experience peaks and troughs that follows a cyclical pattern – known colloquially as ‘boom and bust’. Governments are tasked with smoothing the peaks and troughs and limiting the effect of these cycles on consumers and businesses.
  • Business debt coverage - This ratio measures your company’s ability to repay business debt, providing a snapshot of the overall financial health of your business. To calculate, divide your annual business cash flow by the annual business loan payments, including the anticipated payments you would make on the loan you’ve applied for. Learn more here: What is business debt coverage.
  • Business debt usage - Also referred to as the debt-to-equity ratio, business debt usage compares your total outstanding business debt to annual business revenue or total business assets.
  • Business entity - A business entity is an organization that one or more people form to conduct business activities. How a business entity is organized and operates is crucial because it will determine how it is taxed and who will be liable for paying its debts and obligations.
  • Business license - A government-issued permit to transact business.
  • Business lines of credit - Business lines of credit are very similar to credit cards and can be used to purchase inventory or equipment, invest in marketing, or manage fluctuations from seasonal sales. They have a maximum limit you can borrow and repay.You’ll be charged interest for the amount of money you draw, not on the maximum limit
  • Business plan - A business plan is a document that outlines a business’s long-term goals. This might include purchasing a new building in the next 10 years, or hiring 50 more employees within the next fives years.
  • Business revenue trends - Simply put, the business revenue trend is a percentage that reflects the revenue growth of your business over time. It illustrates how your sales have increased (or decreased) over your years in business. For more information, visit the SmartBiz Blog: Is your business growing?
  • Business structure - Form a business takes, with characteristics addressing legal liability and tax considerations. These forms include sole proprietorship, partnership, corporation, and LLC.
  • Business writing - Business writing is a type of writing that is used in a professional setting. It is a purposeful piece of writing that conveys relevant information to the reader in a clear, concise, and effective manner. It includes client proposals, reports, memos, emails, and notices. Proficiency in business writing is a critical aspect of effective communication in the workplace.
  • Buyer's premium - Additional costs (over and above the winning bid) that must be paid by the winner of the auction. This money is accrued by the auction house and not by the owner of the item being auctioned.
  • Byproduct - A product that emerges with other products in a common process; however, this product does not have a significant value. (If it had significant value, it would be a joint product.)
c
  • C corporation - A C corporation is a corporation which has not made the Subchapter S election to be taxed as a partnership. In other words, it is a regular corporation which is subject to two levels of taxes. One tax is at the corporate level (for corporate profits), and one is at the shareholder level (for dividends).
  • Call center - The word for an inbound telephone division in a company. The operators are called Agents. The call center uses an ACD (automatic call distributor) to manage the calls efficiently.
  • Call price definition - The amount at which the holder of preferred stock or bonds must sell the stock or bonds back to the issuing corporation. The call price is disclosed in the indenture. The call price might be the face or par amount plus one year's interest or dividend.
  • Call Tracking - Keeping track of what happened to customer calls.
  • Calor licitantis - Latin for "bidder's heat." It refers to the irrational tendency for the auction participants to bid more than the value of a good's price, simply out of an emotional desire to win the auction.
  • Cannibalize - The attraction of sales for an offering that would have gone to another offering available from the same firm. Cannibalization is often seen as undesirable.
  • Cap and trade - A policy through which a limited number of permits to pollute are issued, and can be bought and sold on a market. It combines a quantity-based limit on emissions, and a price-based approach that places a cost on environmentally damaging decisions.
  • Capacity utilization rate - A measure of the extent to which a firm, industry, or entire economy is producing as much as the stock of its capital goods and current knowledge would allow.
  • Capacity-constrained - A situation in which a firm has more orders for its output than it can fill. See also: low capacity utilization.
  • Capital - Money invested into a company or project by its owners.
  • Capital asset - A non-liquid (or non-cash) property, tangible or intangible, held by a business. Generally not counted as inventory, these assets are often used by the business, rather than sold as part of routine operations. Company cars, office computers, or retail storefronts are all common types of capital assets.
  • Capital contribution (llc) - Capital contributions are the money, property or services contributed by an LLC member in exchange for an allocation of the voting power and future profits of the company.
  • Capital expenditure (capex) - Money spent to create future benefits. Capital expenditure is money spent by a company either to buy fixed assets or to add to the value of existing fixed assets with a useful life that extends beyond the taxable year. With regard to tax, capital expenditure cannot be deducted in the year the money is paid. Compare with operating expenditure (OPEX), which refers to ongoing costs to run a product, service or system.
  • Capital gains tax - A tax on profits made by the sale or disposal of a business asset, encompassing everything from property to shares.
  • Capital goods - The durable and costly non-labour inputs used in production (machinery, buildings) not including some essential inputs, e.g. air, water, knowledge that are used in production at zero cost to the user.
  • Capital intensity (of production) - The amount of capital goods per worker.
  • Capital productivity - Output per unit of capital good. See also: labour productivity.
  • Capital-intensive - Making greater use of capital goods (for example machinery and equipment) as compared with labour and other inputs. See also: labour-intensive.
  • Capitalism - An economic system in which the main form of economic organization is the firm, in which the private owners of capital goods hire labour to produce goods and services for sale on markets with the intent of making a profit. The main economic institutions in a capitalist economic system, then, are private property, markets, and firms.
  • Capitalist revolution - Rapid improvements in technology combined with the emergence of a new economic system.
  • Captive market - A business environment in which consumers choose from relatively few competing producers. The lack of choice generally strengthens the bargaining position of producers to the detriment of consumers.
  • Care/Caring - Behavior that reflects concern, empathy, and consideration for the needs and values of others and a level of responsibility for someone’s well-being.
  • Career growth - Delegating tasks to lower-level employees provides them with the experience and skills development needed for potential promotions within the organization.
  • Cargo culting - The often incorrect belief that emulating a successful party's superficial behaviors will inevitably lead to the same successes.
  • Cartel - A group of firms that collude in order to increase their joint profits.
  • Cash account - The general ledger account Cash that reports currency, coins, undeposited checks, and the checking accounts of a company. (Could also be a reference to a customer required to pay cash for purchases.)
  • Cash accounting - Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively.
  • Cash conversion ratio - The amount of time between when a business pays for its inventory (cost of goods sold) and receives payment from its customers is the cash conversion ratio
  • Cash cow - An offering with extremely high profit margins and very low costs to the producer.
  • Cash discount - A reduction in price in exchange for payment by a certain date.
  • Cash equivalent - A good with extremely high liquidity. For instance, the savings in a checking account would be a cash equivalent.
  • Cash flow - Cash flow is a measure of the amount of funds coming into a business in a given time period (typically a month). Cash flow may be either positive or negative, depending on whether the business is bringing in more or less money than it spends in that period. While positive cash flow is a good sign, having a very high cash flow could indicate a business isn’t investing enough in its own growth.
  • Cash flow budget - The cash flow budget is quite simply a report on your business cash flow, showing how much money is entering and exiting the business. The cash flow budget shows how much cash you’ll have on hand at any given period of time.
  • Cash flow forecast - A cash flow forecast is an estimation of a business’ cash flow in a given future time period (typically 12 months). It informs the business’ financial planning and highlights potential problems before they happen, allowing it to take pre-emptive action. There are several different methods that can be used to forecast cash flow, and businesses can benefit from forecasting various hypothetical scenarios, to be ready for what actually happens. Specialised software exists to help businesses forecast their cash flow with ease and accuracy.
  • Cash flow per share (cfps) - Cash from operating activities divided by the number of shares outstanding
  • Cash flow position (or cash position) - A cash flow position, also referred to as a cash position, is a measure of how much money a business has at a specific point in time. It may measure more than just cash in the bank, sometimes including other highly liquid assets. Like cash flow, having a positive cash flow position is a good sign, however a very high cash flow position could indicate a business isn’t investing enough in its own growth
  • Cash flow statement - One of the main financial statements (along with the income statement and balance sheet). The cash flow statement reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified in the heading of the statement. The cash flow statement is also known as the statement of cash flows.
  • Cash from financing activities - The second section of the statement of cash flows
  • Cash from operating activities - The first section of the statement of cash flows.
  • Catch-up growth - The process by which many (but far from all) economies in the world close the gap between the world leader and their own economy.
  • Categorical inequality - Inequality between particular social groups (identified, for instance, by a category such as race, nation, caste, gender or religion). Also known as: group inequality.
  • Causality - A direction from cause to effect, establishing that a change in one variable produces a change in another. While a correlation is simply an assessment that two things have moved together, causation implies a mechanism accounting for the association, and is therefore a more restrictive concept. See also: natural experiment, correlation.
  • Caveat emptor - A Latin phrase that means "let the buyer beware." It is a warning to potential customers that no guarantee or warranty should be expected for a given purchase.
  • CD - A banking term for certificate of deposit. Also: a compact disk, a form of digitized data storage. (as in CD-ROM)
  • Cell code - After completing RFM analysis, every customer is assigned a Cell Code which identifies her recency frequency and monetary level of buying. The cell code is often used in mailing. Sometimes used interchangeably with the term Source Code.
  • Central bank - The only bank that can create base money. Usually part of the government. Commercial banks have accounts at this bank, holding base money.
  • Certificate of deposit - Also known as a CD. A bank time deposit (savings deposit) that cannot be withdrawn until a specified date. For example, a CD might mature in 6, 9, 12, or 18 months. If the amount deposited in a CD needs to be withdrawn prior to its maturity date, a penalty is assessed by the bank.
  • Certified public accountant - A designation awarded by one of 50 U.S. states or five jurisdictions to a college graduate who has passed the rigorous Uniform CPA Exam and has met the required work experience.
  • Ceteris paribus - Economists often simplify analysis by setting aside things that are thought to be of less importance to the question of interest. The literal meaning of the expression is ‘other things equal’. In an economic model it means an analysis ‘holds other things constant’.
  • CFO - Chief financial officer. The man in charge of budgets.
  • Channel (1) - An input-output device as part of a mainframe computer.
  • Channel stuffing - A method of increasing the appearance of manufacturer profits by forcing distributors to accept a larger quantity of products than can be reasonably sold. Certain automobile manufacturers are often accused of doing this.
  • Chargeback - The return of funds from vendor to buyer through forcible means by a third party in the financial realm. This may be in response to overt fraud, faulty provision of service or inability to match the value promised. The term is often, though not exclusively, used to refer to actions taken with credit cards companies.
  • Charging order - A court order directed at an interest in an LLC.
  • Cheapskate - Someone who avoids paying for anything to the extent possible
  • Checkbook - The record of checks issued or written, deposits, bank charges, bank credits and the resulting balance. Also referred to as the check register.
  • Cheddar - A slang term for money
  • Cheshire Label - A type of plain paper label used in mailing. Requires a Cheshire machine to affix to mailing material. The most common computer label.
  • Chip - The thing in the center of a computer that makes it work. On a PC a 486 chip is a fast chip. A Pentium is faster. Faster and faster chips keep coming out. Chips are the size of your fingernail, and hold millions of circuits shrunk by photographic methods to tiny size.
  • Churn - The speed at which a firm's existing repeat customers make a decision to shop elsewhere.
  • Churning - The practice of customers switching to another supplier based on special discount offers. Particularly used in the cellular telephone or credit card industries.
  • Chutzpah - What the Presidents of direct response agencies need to have to be successful at database marketing. Audacity, Guts, Boldness, Willpower.
  • CIF - Customer Information File usually in banks and financial institutions. A consolidation of many different accounts held by a household or individual, used for marketing purposes.
  • Clarity - Organizational clarity is a two-way street; everyone has to participate equally. The most important thing is to make the effort. If you manage to foster a culture of clarity inside of your organization, you'll see fewer problems, better execution, and happier, more productive teams.
  • Cleaning Names - A process whereby names and addresses on a customer or prospect list are corrected (addresses standardized; zips corrected; spelling and punctuation corrected; duplicates consolidated, etc.)
  • Clearing account - A general ledger account which serves to summarize similar transactions. For example, all of the closing entries involving operating expenses might be posted to an operating expense clearing (or summary) account.
  • Club good - See also: artificially scarce good, public good.
  • Cluster - A way of dividing all households in the country into about sixty different types, such as "Blue Blood Estates" and "Shotguns and Pickups." Usually called lifestyle groups. Useful for file segmentation. Clustering systems are provided by Claritas, Equifax, Donnelley, CACI. In Canada by Compusearch.
  • Co-insurance - A means of pooling savings across households in order for a household to be able to maintain consumption when it experiences a temporary fall in income or the need for greater expenditure.
  • Coaching - Coaching refers to a method of training, counselling or instructing an individual or a group how to develop skills to enhance their productivity or overcome a performance problem. The supervisor is called a coach while the learner is called the coachee.
  • Codified knowledge - Knowledge that can be written down in a form that would allow it to be understood by others and reproduced, such as the chemical formula for a drug. See also: tacit knowledge.
  • Collaboration - The act of working together cooperatively, especially in the case management of a patient or client; including sharing responsibilities for solving problems and making decisions to formulate and carry out plans for patient care.
  • Collaborative - Practice in health care occurs when multiple health workers from different professional backgrounds provide comprehensive services by working together synergistically along with patients, their families, caregivers, and communities to deliver the highest quality of care across settings.
  • Collateral - An asset that a borrower pledges to a lender as a security for a loan. If the borrower is not able to make the loan payments as promised, the lender becomes the owner of the asset.
  • Collateralized debt obligation - A collection of debts that are sold to investors as a potential stream of income.
  • Collateralized debt obligation (cdo) - A structured financial instrument (a derivative) consisting of a bond or note backed by a pool of fixed-income assets. The collapse in the value of the instruments of this type that were backed by subprime mortgage loans was a major factor in the financial crisis of 2007–2008.
  • Collusion - Agreements between players in a market, often made to increase the market power of the agreeing parties. These agreements are often tacit and generally illegal.
  • Combined debt coverage - This ratio adds together your annual personal and business cash flow and compares them against your combined annual personal and business debts. Learn why debt coverage matters on the SmartBiz Blog: Combined Debt Coverage Explained.
  • Commodities - Physical goods traded in a manner similar to stocks. They include metals such as gold and silver, and agricultural products such as coffee and sugar, oil and gas. Sometimes more generally used to mean anything produced for sale.
  • Commodity - This is any item which can be freely bought and sold. Examples include gold, food products and coffee beans.
  • Commodity good - An offering that is virtually indistinguishable from that of the competition. This lack of differentiation leads to a situation in which sellers have no pricing power and become price takers rather than price makers. Note that the idiom hot commodity uses the term in a way that is contradictory to the established meaning in modern economics.
  • Common costs - Costs that are common to several products, processes, activities, departments, territories, etc. Often common costs are subsequently allocated to each of the joint products, joint processes, etc. in order to determine the cost of each.
  • Common currency area - A group of countries that use the same currency. This means there is just one monetary policy for the group. Also known as: currency union.
  • Common-pool resource - A rival good that one cannot prevent others from enjoying. Also known as: common property resource.
  • Comp - A good given for free to a gambler by a casino. Comps are given to encourage gamblers to continue placing wagers.
  • Comparative advantage - A person or country has comparative advantage in the production of a particular good, if the cost of producing an additional unit of that good relative to the cost of producing another good is lower than another person or country’s cost to produce the same two goods. See also: absolute advantage.
  • Comparative disadvantage - A vendor's inability to produce a specific item of value at a lower opportunity cost than another vendor can. This does not imply anything about the absolute costs for each vendor.
  • Competition policy - Government policy and laws to limit monopoly power and prevent cartels. Also known as: antitrust policy.
  • Competitive equilibrium - A market outcome in which all buyers and sellers are price-takers, and at the prevailing market price, the quantity supplied is equal to the quantity demanded.
  • Compiled financial statements - Financial statements prepared by an accountant based on the amounts provided by a client. The accountant does not review or audit the amounts provided and therefore does not provide any assurances regarding the validity of the amounts.
  • Compiled list - Names and addresses taken from directories, newspapers, public records. People who have something in common. Compiled lists are usually the least useful or responsive for direct marketing. Response lists are better.
  • Complementary good - An offering for which demand is directly proportional to another offering. For example, hamburger buns are complementary goods with respect to hamburger patties.
  • Complements - Two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the other. See also: substitutes.
  • Compound annual growth rate (cagr) - The average annual compound growth rate over a given time period.
  • Comprehensive income - Comprehensive income consists of the following two components (which are reported on the statement of comprehensive income): Net income (or loss) from the income statement, and Other comprehensive income (some additional items that are not reported on the income statement).
  • Computation Period - The number of years from now that you can safely project customer lifetime value. The period is short for products that soon become obsolete.
  • Concave function - A function of two variables for which the line segment between any two points on the function lies entirely below the curve representing the function (the function is convex when the line segment lies above the function).
  • Concentration - This is an important term for small businesses that have a few big clients. It describes how much of your revenue comes from a specific customer. Businesses that have a handful of customers or partners that generate most of their revenue are considered over-concentrated, which is obviously more risky because losing one customer could have a big effect on earnings. Keeping concentrations low and spread evenly across your customers ensures a balanced foundation for business stability.
  • Confidence - The quality of being certain of your abilities or of having trust in people, plans, or the future:
  • Confidentiality - Agreement An agreement which precedes any contract with an outsourcing agency. It says that your secrets will not be revealed to others.
  • Conflict resolution -
  • Conscientiousness - Conscientiousness is a trait that is commonly associated with awareness. Typically, conscientious people are well organised, demonstrate self-control and can plan their time very well. They are known as great team players and diligent workers.
  • Consigned goods - Merchandise that is not owned by the party in possession of the goods. For example, a craftsperson might have produced 100 ornate wood items. In order to sell the items, the person asks a local merchant to take five of the items on consignment. This means that the merchant has possession of the five items and will attempt to sell them for a commission, but the merchant does not own the items. Those five items are consigned goods. (When the merchant sells one of the items, the merchant might be required to remit 80% of the selling price to the craftspersons and can keep 20% as a commission.) The merchant is the consignee and the craftsperson is the consignor.
  • Consolidated financial statements - Financial statements that reflect the total economic entity.
  • Conspicuous consumption - The purchase of goods or services to publicly display one’s social and economic status.
  • Constant prices - Prices corrected for increases in prices (inflation) or decreases in prices (deflation) so that a unit of currency represents the same buying power in different periods of time. See also: purchasing power parity.
  • Constant returns to scale - These occur when doubling all of the inputs to a production process doubles the output. The shape of a firm’s long-run average cost curve depends both on returns to scale in production and the effect of scale on the prices it pays for its inputs. See also: increasing returns to scale, decreasing returns to scale.
  • Constrained choice problem - This problem is about how we can do the best for ourselves, given our preferences and constraints, and when the things we value are scarce. See also: constrained optimization problem.
  • Constrained optimization problem - Problems in which a decision-maker chooses the values of one or more variables to achieve an objective (such as maximizing profit) subject to a constraint that determines the feasible set (such as the demand curve).
  • Consumable good - An item that gets "used up" and reduced in quantity in the normal course of events. Consumables are the opposite of durable goods.
  • Consumer durables - Consumer goods with a life expectancy of more than three years such as home furniture, cars, and fridges.
  • Consumer price index (cpi) - A measure of the general level of prices that consumers have to pay for goods and services, including consumption taxes.
  • Consumer surplus - The consumer’s willingness to pay for a good minus the price at which the consumer bought the good, summed across all units sold.
  • Consumption (c) - Expenditure on consumer goods including both short-lived goods and services and long-lived goods, which are called consumer durables.
  • Consumption function (aggregate) - An equation that shows how consumption spending in the economy as a whole depends on other variables. For example, in the multiplier model, the other variables are current disposable income and autonomous consumption. See also: disposable income, autonomous consumption.
  • Consumption good - A good or service that satisfies the needs of consumers over a short period.
  • Contingent gain - Financial statements that reflect the total economic entity. For example, on a consolidated income statement a corporation having several subsidiaries would report the total of all of its companies' sales that were made to customers outside of its group.
  • Contingent liability - The operating activities of a company, excluding the major segments of the company that are being discontinued.
  • Contingent loss - A potential loss that is dependent upon some future event occurring or not occurring. If the loss is probable and the amount can be estimated, then the loss and a liability are recorded with a journal entry. If the loss is only reasonably possible (not probable), then a journal entry is not recorded but a disclosure should be made in the notes to the financial statements. If the loss is remote, then neither a journal entry nor a disclosure is required.
  • Contingent valuation - A survey-based technique used to assess the value of non-market resources. Also known as: stated-preference model.
  • Continuation - A mailing to the same list following a successful test of a portion of the list. A continuation becomes a "rollout" when the entire list is mailed.
  • Continuity - Products or services bought as a series of small purchases, rather than all at one time. Book of The Month Club, or other products shipped on a regular schedule.
  • Continuity. - If you are busy with other tasks or absent from work, other employees can complete some or all of your duties to ensure continued productivity and efficiency.
  • Contract - A legal document or understanding that specifies a set of actions that parties to the contract must undertake.
  • Contractor - These are individuals/individual businesses hired to do a task that contributes to the overall completion/success of a project. Generally speaking, contractors are not regularly employed by the company running the project.
  • Contributed capital - Sometimes used as a heading in place of paid-in capital.
  • Contributions - The revenue classification used by nonprofit organizations to account for the amounts received as donations. It is also an expense classification for the donations made to another nonprofit organization. Contributions may be in the form of cash, securities, other property, as well as unconditional promises to give assets at a later date. Contributions made by a donor without conditions attached are referred to as unrestricted contributions. Contributions with donor-imposed restrictions are either temporarily restricted or permanently restricted.
  • Control Group - Every database promotion should include a control group of customers who are not exposed to the promotion. The success of the promotion is measured by the difference in response of the promoted group compared to the control group (after subtracting the cost of the promotion).
  • Controller - A device for managing the data input and output from several devices which are connected with a mainframe. These devices can include terminals or disks or tape drives. Controllers usually have a small computer inside them which permits them to manage the flow of instructions from the computer to the units in an organized way. They make the computer more powerful.
  • Conversion rate - The percentage of responders who become customers.
  • Convert business - By choosing this option, your limited liability company will assume all of the assets, liabilities and obligations of your existing sole proprietorship or partnership. The current owner(s) of the existing business will automatically become members of the limited liability company.
  • Convertible bond - A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is issued. The holder of the bond enjoys the potential for a gain if the stock price increases.
  • Coop mailing - A mailing in which two or more offers -- usually from different companies -- are included in the same envelope, and share the costs.
  • Cooperation - Participating in a common project that is intended to produce mutual benefits.
  • Cooperative firm - A firm that is mostly or entirely owned by its workers, who hire and fire the managers.
  • Coordination game - A game in which there are two Nash equilibria, of which one may be Pareto superior to the other. Also known as: assurance game.
  • Copy - The text of your direct mail piece.
  • Copyright - Ownership rights over the use and distribution of an original work.
  • Corner the market - To acquire control of a significant portion of outstanding stock in order to raise its price
  • Corporate social responsibility - Corporate social responsibility (CSR) is a form of self-regulation, where companies integrate social, environmental and ethical policies into their overall business strategy. Companies embracing CSR should take responsibility for their actions and take a proactive approach to having a minimal negative impact on the world.
  • Corporation - A group of individuals authorized by law to act as a single person.
  • Corporation tax - Tax paid on your profits – currently 19%.
  • Correlation - A statistical association in which knowing the value of one variable provides information on the likely value of the other, for example high values of one variable being commonly observed along with high values of the other variable. It can be positive or negative (it is negative when high values of one variable are observed with low values of the other). It does not mean that there is a causal relationship between the variables. See also: causality, correlation coefficient.
  • Correlation coefficient - A measure of how closely associated two variables are and whether they tend to take similar or dissimilar values, ranging from a value of 1 indicating that the variables take similar values (‘are positively correlated’) to –1 indicating that the variables take dissimilar variables (‘negative’ or ‘inverse’ correlation). A value of 1 or –1 indicates that knowing the value of one of the variables would allow you to perfectly predict the value of the other. A value of 0 indicates that knowing one of the variables provides no information about the value of the other. See also: correlation, causality.
  • Cost accounting - The accounting focused on determining the cost per unit of a manufacturer in order to value inventory and cost of goods sold. It is also used to determine unit costs of items processed in service businesses, such as a bank's cost to process a check or deposit.
  • Cost behavior - The change in total costs in response to the change in some activity. For example, some of the costs of owning and operating a vehicle will increase in total with an increase in miles driven. These are referred to as variable costs and include gasoline and tires. Some other costs will not change in total with a reasonable increase in miles driven. These costs are referred to as fixed costs and include insurance and parking. Other costs might be part variable and part fixed. These are referred to as mixed costs and an example might be depreciation.
  • Cost of goods purchased - For a merchandiser this is the cost of merchandise purchased after deducting purchase returns, purchase allowances, and purchase discounts but after adding freight-in.
  • Cost of goods sold - The total cost of acquisition or production of a good. This cost explicitly excludes costs relating to the selling of this good to other parties.
  • Cost ratio - In estimating the ending inventory under the retail method the cost ratio is the cost of goods available divided by the retail value of the goods available.
  • Costs of entry - Startup costs that would be incurred when a seller enters a market or an industry. These would usually include the cost of acquiring and equipping new premises, research and development, the necessary patents, and the cost of finding and hiring staff.
  • Countercyclical - Tending to move in the opposite direction to aggregate output and employment over the business cycle.
  • CPI - Cost per inquiry
  • CPO - Cost per order
  • CPU - Central Processing Unit. The heart of a mainframe.
  • Creative destruction - Joseph Schumpeter’s name for the process by which old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market. In his view, the failure of unprofitable firms is creative because it releases labour and capital goods for use in new combinations.
  • Creativity - Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.
  • Credit limit - A credit limit is the maximum value of goods or services a business will supply a customer before payment must be made. Appropriate credit limits ensure a business controls the risk of not being paid on time (or in the worst case scenario - at all).
  • Credit ratings agency - A firm which collects information to calculate the credit-worthiness of individuals or companies, and sells the resulting rating for a fee to interested parties.
  • Credit rationing - The process by which those with less wealth borrow on unfavourable terms, compared to those with more wealth.
  • Credit terms - Credit terms are the rules, agreed between a business and their customer, which dictate when payment must be made. They are also commonly referred to as ‘payment terms’. Typical credit terms include payment being due 30, 60, or 90 days after goods or services have been delivered (however, as long as the business and customer both agree on them, any period could be used).
  • Credit-constrained - A description of individuals who are able to borrow only on unfavourable terms. See also: credit-excluded.
  • Credit-excluded - A description of individuals who are unable to borrow on any terms. See also: credit-constrained.
  • Creditor - A person or firm that has lent your business money or to whom you owe money.
  • Critical success factor - A critical success factor is an element that must occur in order for a business to achieve its ultimate goal.
  • Cross-Selling - Encouraging customers to buy products from other departments or categories
  • Crowding out - There are two quite distinct uses of the term. One is the observed negative effect when economic incentives displace people’s ethical or other-regarding motivations. In studies of individual behaviour, incentives may have a crowding out effect on social preferences. A second use of the term is to refer to the effect of an increase in government spending in reducing private spending, as would be expected for example in an economy working at full capacity utilization, or when a fiscal expansion is associated with a rise in the interest rate.
  • Cryptocurrency - A type of money that uses complex mathematical functions to ensure that only one party can claim ownership of a given unit of value at one time.
  • Cui bono - Latin for "good for whom." A person will typically only take part in a business agreement if he believes that he will benefit in some way.
  • Current account (ca) - The sum of all payments made to a country minus all payments made by the country. See also: current account deficit, current account surplus.
  • Current account deficit - The excess of the value of a country’s imports over the combined value of its exports plus its net earnings from assets abroad. See also: current account, current account surplus.
  • Current account surplus - The excess of the combined value of its exports and net earnings from assets abroad over the value of its imports. See also: current account, current account deficit.
  • Custom report - A database report designed by the marketing staff which exactly meets the marketing needs of the company. Once programmed, it can be run daily or weekly for very little cost.
  • Customer acquisition cost - The amount of money required to convince each customer to purchase a good. This cost includes costs that are directly spent upon the individual and fixed costs that are related to more general marketing activities.
  • Cyclical unemployment - The increase in unemployment above equilibrium unemployment caused by a fall in aggregate demand associated with the business cycle. Also known as: demand-deficient unemployment. See also: equilibrium unemployment.
d
  • Danegeld - Literally "Danish tribute." A payment made by British and French to Danish Vikings. It was intended to convince the Vikings not to attack their lands.
  • Data Enhancement - A process whereby a customer file has data appended to it (such as age, income, home value) from some external data file. See overlay.
  • Data entry Also called Keypunching. - Entering names and addresses and other data into magnetic media such as tape.
  • Database - Marketing Collecting data on customers and using it to provide recognition and services to customers, resulting in increased customer loyalty and repeat sales.
  • DBA Database Administrator. - A person who controls a marketing database. The DBA should be someone from marketing or sales who has the budget for the database.
  • DDA - A banking term for checking account balances.
  • De Dupe - Identifying and consolidating duplicate names usually done in a merge/purge operation.
  • Deadweight loss - A loss of total surplus relative to a Pareto-efficient allocation.
  • Dealer Training - A process whereby dealers are trained to handle your product.
  • Debt - That which is owed from one party to another.
  • Debtor - A person or firm that owes money to you or your business.
  • Decile - One tenth of a mailing, usually divided by percentage of response.
  • Decision-making - Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions. Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.
  • Decoy - A unique name added to a mailing list used to spot unauthorized use of the list.
  • Decoy effect - Consumers' purchasing preferences can change when vendors introduce an additional option even when no consumers purchase this item.
  • Decreasing returns to scale - These occur when doubling all of the inputs to a production process less than doubles the output. Also known as: diseconomies of scale. See also: increasing returns to scale.
  • Default risk - The risk that credit given as loans will not be repaid.
  • Deferred expense - A cost that has been recorded in the accounting records and reported on the balance sheet as an asset until matched with revenues on the income statement in a later accounting period.
  • Deferred income taxes - Often a liability representing the differences between the income tax expense associated with the revenues and expenses reported on a corporation's income statements and the actual income tax appearing on the corporation's income tax returns.
  • Deferred revenues - A balance sheet liability account that reports amounts received in advance of being earned. For example, if a company receives $10,000 today to perform services in the next accounting period, the $10,000 is unearned in this accounting period. It is deferred to the next accounting period by crediting a liability account such as Unearned Revenues. Next period (when it is earned) a journal entry will be made to debit the liability account and to credit a revenue account.
  • Deflation - A decrease in the general price level. See also: inflation.
  • Delegation - Delegation is when managers use their authority to assign responsibility to others in their workplace, such as their direct reports or co-workers. Delegating tasks is important because the higher-level strategic planning you're responsible for takes time and energy. You won't have either of those if you're bogged down with busywork.
  • Demand curve - The curve that gives the quantity consumers will buy at each possible price.
  • Demand shock - An unexpected change in aggregate demand, such as a rise or fall in autonomous consumption, investment, or exports. See also: supply shock.
  • Demand side - The side of a market on which those participating are offering money in return for some other good or service (for example, those purchasing bread). See also: supply side.
  • Demand side (aggregate economy) - How spending decisions generate demand for goods and services, and as a result, employment and output. It uses the multiplier model. See also: supply side (aggregate economy).
  • Democracy - A political system, that ideally gives equal political power to all citizens, defined by individual rights such as freedom of speech, assembly, and the press; fair elections in which virtually all adults are eligible to vote; and in which the government leaves office if it loses.
  • Democratic accountability - Political accountability by means of elections and other democratic processes. See also: accountability, political accountability.
  • Demographic transition - A slowdown in population growth as a fall in death rate is more than balanced by a fall in birth rates.
  • Demographics - Demographic data usually refers to the data which the Census Bureau or Canada Stats collects on a neighborhood such as income, education level, etc. This data can be appended to a household record. It isn't necessarily accurate for any particular household since it is the average for households in that block. But it is usually the only data available.
  • Demsetz auction - A competition that awards the right to perform a service to the lowest bidder.
  • Depletion - The systematic allocation of the cost of a natural resource from the balance sheet to the income statement.
  • Depreciation - The reduction in value of assets over time, usually due to wear and tear.
  • Derivative - A financial instrument in the form of a contract that can be traded, whose value is based on the performance of underlying assets such as shares, bonds or real estate. See also: collateralized debt obligation.
  • Determination - Determination provides guidance and motivation. Determined employees are actively engaged and want the best for themselves, their team and the company. Their determination gives them the drive to push ahead and do better.
  • Developmental state - A government that takes a leading role in promoting the process of economic development through its public investments, subsidies of particular industries, education and other public policies.
  • Differentiated product - A product produced by a single firm that has some unique characteristics compared to similar products of other firms.
  • Diffusion - The spread of the invention throughout the economy. See also: diffusion gap.
  • Diffusion gap - The lag between the first introduction of an innovation and its general use. See also: diffusion.
  • Digital line - A type of telephone transmission service that is much more reliable than the normal analog line. All data is converted into bits before it is transmitted. A regular telephone line is called an Analog Line.
  • Diminishing average product of labour - A situation in which, as more labour is used in a given production process, the average product of labour typically falls.
  • Diminishing marginal product - A property of some production functions according to which each additional unit of input results in a smaller increment in total output than did the previous unit.
  • Diminishing marginal returns to consumption - The value to the individual of an additional unit of consumption declines, the more consumption the individual has. Also known as: diminishing marginal utility.
  • Diminishing marginal utility - A property of some utility functions according to which each additional unit of a given variable results in a smaller increment to total utility than did the previous additional unit. Also known as: diminishing marginal returns to consumption.
  • Diminishing returns - A situation in which the use of an additional unit of a factor of production results in a smaller increase in output than the previous increase. Also known as: diminishing marginal returns in production
  • Direct access - A disk is a direct access device. Tape drives are not direct access because to find data on them, you have to read all the way through thousands of records to find the one you want. With direct access, you have all data stored at particular addresses. You can access each piece of data directly.
  • Direct cost - The wages and salaries of the employees working exclusively in a manufacturer's maintenance department are direct costs of the maintenance department. (However, these costs are indirect product costs, since they will need to be allocated to the products manufactured.)
  • Direct Cost Percent - The percentage of revenue that is applied to the cost of the product plus overhead, fixed costs, etc.
  • Direct Marketing - Interactive marketing that produces a measurable response or purchase. The data is stored on a database.
  • Direct Response - Advertising or promotion that seeks not just to provide information, but to generate an inquiry, order or visit.
  • Disaster loans - These low-interest loans are offered directly from the SBA and can be used to recover from a declared disaster. Businesses may use disaster loans to repair or replace real estate, machinery and equipment, and inventory and business assets that were damaged or destroyed.
  • Disclosure - An accounting guideline that requires information pertinent to an investing or lending decision to be included in the notes to financial statements or in other financial reports.
  • Discount - A reduction in price.
  • Discount rate - A measure of the person’s impatience: how much the person values an additional unit of consumption now relative to an additional unit of consumption later. It is the slope of the person’s indifference curve for consumption now and consumption later, minus one. Also known as: subjective discount rate.
  • Discounted cash flow - A method used to value an investment by discounting its future expected cash flows to find their value today, or net present value. The discount rate is chosen to reflect the risk of the investment. Possible discount rates are the weighted average cost of capital or the discount rate from similar projects.
  • Discounting future generations’ costs and benefits - A measure of how we currently value the costs and benefits experienced by people who will live in the future. Note that this is not a measure of individual impatience about one’s own future benefits and costs.
  • Discretionary income - Income minus taxes and existing obligations.
  • Diseconomies of scale - These occur when doubling all of the inputs to a production process less than doubles the output. Also known as: decreasing returns to scale. See also: economies of scale.
  • Diseconomy of scale - An increasing marginal cost of production.
  • Disequilibrium process - An economic variable may change either because the things that determine the equilibrium value of that variable have changed (an equilibrium process), or because the system is not in equilibrium so that there exist forces for change that are internal to the model in question (a disequilibrium process). The latter process applies when the economy moves towards a stable equilibrium or away from a tipping point (an unstable equilibrium).
  • Disequilibrium rent - The economic rent that arises when a market is not in equilibrium, for example when there is excess demand or excess supply in a market for some good or service. In contrast, rents that arise in equilibrium are called equilibrium rents.
  • Disinflation - A decrease in the rate of inflation. See also: inflation, deflation.
  • Disk - Magnetic disks are attached to computers. They hold information (records) which can be retrieved very rapidly if the computer knows the address of the information on the disk (Direct Access). In relational databases, the address of records and information within records are kept on indexes which make access to the records very rapid.
  • Dismal science - Another name for economics
  • Disposable income - Income available after paying taxes and receiving transfers from the government.
  • Disposal cost - The expense associated with the lifting of title to an asset. The associated costs may include expenses such as environmental cleanup, transportation and contractual fees.
  • Distributionally neutral - A policy that is neither progressive or regressive so that it does not alter the distribution of income. See also: progressive (policy), regressive (policy).
  • Distributions - Money paid out to owners of a corporation or limited liability company.
  • Diversification - When new products, services, customers or markets are added to your company’s portfolio. Diversification usually occurs as a risk reduction strategy.
  • Dividend - Money paid regularly by a company to its shareholders.
  • Dividend - Optional reward paid to shareholders if a firm reports particularly high profits.
  • Dividend payments - CF can be used to fund dividend payments to investors
  • Dividends - Profits distributed to shareholders of a corporation. In addition to cash, a dividend can also be paid in shares of stock or other property.
  • Division of labour - The specialization of producers to carry out different tasks in the production process. Also known as: specialization.
  • DLC - Upsells that take place post purchase and are used to add or unlock portions of a software system. The technique is most commonly used for video games.
  • DNIS - Dialed Number Identification. A system whereby you can learn in a call center what number the incoming callers dialed to reach you. Important because many call centers handle calls from many incoming numbers for many purposes, but use the same bank of agents to take the calls. They have to know what number people were dialing so they can react properly to the call.
  • Dominant strategy - Action that yields the highest payoff for a player, no matter what the other players do.
  • Dominant strategy equilibrium - An outcome of a game in which every player plays his or her dominant strategy.
  • Dominant technology - A technology that produces the same amount at lower cost than alternative technologies irrespective of the prices of inputs. It is capable of producing the same amount of output as the alternative technology with less of at least one input, and not more of any input.
  • Dominated - We describe an outcome in this way if more of something that is positively valued can be attained without less of anything else that is positively valued. In short: an outcome is dominated if there is a win-win alternative.
  • Doorbuster - A product offered at an extreme discount in order to attract potential customers. This quantity of such items are typically limited to very small numbers.
  • Down payment - A sum of money delivered upfront as partial fulfillment of a loan's terms. This payment helps reduce the risk of loss that the lender may suffer, should the lendee default.
  • Down round - A fundraising round in which a startup’s valuation is lower than in previous rounds.
  • Downsizing - Moving a function from a mainframe computer to a smaller computer such as a Mini, a LAN or a PC.
  • Drip pricing - A marketing scheme in which buyer interest is acquired via low advertised prices, but fees and surcharges are added in small increments as the purchasing process progresses.
  • DUMB - A model used for analyzing pricing power. It was created by Adam Juda.
  • Dump - Printed display of the contents of a tape or data file. You should look at a dump of some records in our customer database to check accuracy.
  • Dumping - A pricing strategy that involves selling a product abroad below the rate of production or the prevailing rate in the producer's locale.
  • Duopoly - A market dominated by exactly two competing producers. For example, the airplane market is dominated by Boeing and Airbus.
  • Duplicate - The same name occurring twice or more on the same file. All very large databases contain duplicates because name or address spelling may vary slightly. Good service bureaus can reduce but never totally eliminate duplicates.
  • Duplication Factor - The % of names on one list that are also on another list. It is a measure of affinity in the lists.
  • Durable good - A product with a long useful lifespan. Major appliances and cars are two common examples of durable goods.
  • Dynamic pricing - A system that alters prices based upon changes in customer demand. Airline ticketing systems are often used as the classic example of this.
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  • Earning before interest and taxes (ebit) - Measures a company’s revenue that includes all expenses (except for interest and income tax expenses). Used as an alternative to Gross Profits (see below) as a measure of company performance and financial standing, often by potential investors.
  • Earnings - Wages, salaries, and other income from labour.
  • EBCDIC - A protocol for putting data on a tape. All IBM mainframes use EBCDIC. Most others use ASCII.
  • Ebit - A form of operating profit. Stands for Earnings Before Interest and Tax.
  • EBITA - A measure of company earnings that excludes interest, taxes, and amortization. EBITA is an acronym for "earnings before interest, taxes, and amortization."
  • Ebitda - Another form of operating profit. Stands for Earnings Before Interest, Tax, Depreciation and Amortisation and is a measure of a company’s overall financial performance.
  • Economic accountability - Accountability achieved by economic processes, notably competition among firms or other entities in which failure to take account of those affected will result in losses in profits or in business failure. See also: accountability, political accountability.
  • Economic cost - The out-of-pocket cost of an action, plus the opportunity cost.
  • Economic growth - This is the term used to describe an increase in the amount of goods and services produced by the county, known as gross domestic product (GDP).
  • Economic profit - A firm’s revenue minus its total costs (including the opportunity cost of capital).
  • Economic rent - A payment or other benefit received above and beyond what the individual would have received in his or her next best alternative (or reservation option). See also: reservation option.
  • Economic system - A way of organizing the economy that is distinctive in its basic institutions. Economic systems of the past and present include: central economic planning (e.g. the Soviet Union in the twentieth century), feudalism (e.g. much of Europe in the early Middle Ages), slave economy (e.g. the US South and the Caribbean plantation economies prior to the abolition of slavery in the nineteenth century), and capitalism (most of the world’s economies today).
  • Economically feasible - Policies for which the desired outcomes are a Nash equilibrium, so that once implemented private economic actors will not undo the desired effects.
  • Economics - The study of how people interact with each other and with their natural surroundings in providing their livelihoods, and how this changes over time.
  • Economies of agglomeration - The advantages that firms may enjoy when they are located close to other firms in the same or related industries. See also: economies of scale.
  • Economies of scale - The cost advantages obtained by a business when buying an item in bulk. The price of an item usually decreases as the amount bought increases.
  • Economies of scope - Cost savings that occur when two or more products are produced jointly by a single firm, rather being produced in separate firms.
  • Economy of scale - The reduction of costs that accrue as more copies of an item are produced. This is often achieved by utilizing higher fixed (and lower variable) costs and by distributing those fixed costs over larger quantities of items.
  • Economy of scope - The reduction of costs that accrue as a firm specializes upon a collection of related offerings. This is often achieved by investing in shared fixed costs across its offerings.
  • Edit check - A software process whereby data to be entered into a marketing database is checked for logic before it goes into the database.
  • Effective tax rate on profits - This is calculated by taking the before-tax profit rate, subtracting the after-tax profit rate, and dividing the result by the before-tax profit rate. This fraction is usually multiplied by 100 and reported as a percentage.
  • Efficiency wages - The payment an employer makes that is higher than an employee’s reservation wage, so as to motivate the employee to provide more effort on the job than he or she would otherwise choose to make. See also: labour discipline model, employment rent.
  • Efficient market hypothesis - The belief that the price of any item reflects all available information.
  • Effort heuristic - The cognitive bias that leads people to assume that the value of a good is proportional to the effort required to create it.
  • Empathy - Empathy is the ability to emotionally understand what other people feel, see things from their point of view, and imagine yourself in their place.
  • Employee - Person who works for another under that person's control and direction.
  • Employee (part/full time) - An individual who works for a business under an employment contract (as opposed to a non-permanent labor contract — see Contractor).
  • Employee development. - When you delegate tasks to your team members, employees get a chance to improve their skills and demonstrate their abilities in a specific area, such as leadership and interpersonal skills.
  • Employee motivation. - Employees may be more driven to perform at their best when trusted with new responsibilities.
  • Employer identification number (ein) - Number issued by the Internal Revenue Service to identify businesses, such as an LLC, for tax purposes. An EIN is essentially a Social Security number for a business.
  • Employment protection legislation - Laws making job dismissal more costly (or impossible) for employers.
  • Employment rate - The ratio of the number of employed to the population of working age. See also: population of working age.
  • Employment rent - The economic rent a worker receives when the net value of her job exceeds the net value of her next best alternative (that is, being unemployed). Also known as: cost of job loss.
  • End user license agreement - The contract that grants the right for a customer to use a vendor's software system.
  • Endogenous - Produced by the workings of a model rather than coming from outside the model. See also: exogenous
  • Endowment - The facts about an individual that may affect his or her income, such as the physical wealth a person has, either land, housing, or a portfolio of shares (stocks). Also includes level and quality of schooling, special training, the computer languages in which the individual can work, work experience in internships, citizenship, whether the individual has a visa (or green card) allowing employment in a particular labour market, the nationality and gender of the individual, and even the person’s race or social class background. See also: human capital.
  • Endowment effect - People value belongings more highly than they otherwise would, had they not owned them.
  • Enhancement - Appending demographic or lifestyle data to a list.
  • Enterprise value - This is the market value of a business. It is calculated by market capitalisation times current share price, minus cash, plus debt.
  • Entrepreneur - A person who creates or is an early adopter of new technologies, organizational forms, and other opportunities.
  • Environment-consumption indifference curve - A curve on which all points are combinations of environmental quality and consumption that are equally valued by an individual or policymaker. The slope of the indifference curve is the ratio of the marginal disutility of lost consumption due to the cost of abating and of the marginal utility of environmental quality (a public good shared by all).
  • Equilibrium - A model outcome that is self-perpetuating. In this case, something of interest does not change unless an outside or external force is introduced that alters the model’s description of the situation.
  • Equilibrium (of a market) - A state of a market in which there is no tendency for the quantities bought and sold, or the market price, to change, unless there is some change in the underlying costs, preferences, or other determinants of the behaviour of market actors.
  • Equilibrium rent - Rent in a market that is in equilibrium. Also known as: stationary or persistent rents.
  • Equilibrium unemployment - The number of people seeking work but without jobs, which is determined by the intersection of the wage-setting and price-setting curves. This is the Nash equilibrium of the labour market where neither employers nor workers could do better by changing their behaviour. See also: involuntary unemployment, cyclical unemployment, wage-setting curve, price-setting curve, inflation-stabilizing rate of unemployment.
  • Equipment and real estate loans - The 504 loan program from the Small Business Administration provides businesses with long-term, fixed-rate financing for major assets. The maximum amount of an SBA 504 loan is $5.5 million, and these loans are available with 10- or 20-year maturity terms.
  • Equipment loans - Equipment financing is a type of term loan that can be used to purchase and spread out the cost of a large piece of machinery or equipment for your business. Usually, the equipment serves as collateral for the loan
  • Equity - Equity is used by analysts to work out how financially “healthy” a company is. It also represents what would be left if all of a businesses’ assets were liquidated and the debt paid off.
  • Equity financing - Using capital stock (common stock or preferred stock) instead of debt in order to finance an investment such as a plant asset.
  • Ersatz good - A good that is inferior to one that it has replaced.
  • Escrow account - Asset that a third party holds during the period in which two other parties are finishing a transaction
  • Ethical investment - Investments made in companies that are specifically chosen for their environmental or moral credentials. Defence contractors, or companies known to use contentious labour practices, will generally be avoided by ethical investors.
  • Ethical trade - Ethical trade can refer to many different things but is most often used as an umbrella term for any business practices that promote socially and/or environmentally responsible trading.
  • Etiquette - The set of rules or customs that control accepted behaviour in particular social groups or social situations.
  • Even pricing - A pricing method that uses round numbers (such as $10 rather than $9.99). This system tends to make offerings seem more expensive and is often used for premium products.
  • Event Driven Programs - Database programs which are triggered to produce output (usually communications) based on events: a birthday letter, anniversary letter, thank you letter, etc.
  • Evolutionary economics - An approach that studies the process of economic change, including technological innovation, the diffusion of new social norms, and the development of novel institutions.
  • Excellence - Behavior that adheres to, exceeds, or adapts best practices to provide the highest quality care; including engagement in continuous professional development.
  • Excess demand - A situation in which the quantity of a good demanded is greater than the quantity supplied at the current price. See also: excess supply.
  • Excess supply - A situation in which the quantity of a good supplied is greater than the quantity demanded at the current price. See also: excess demand.
  • Exchange rate - The number of units of home currency that can be exchanged for one unit of foreign currency. For example, the number of Australian dollars (AUD) needed to buy one US dollar (USD) is defined as number of AUD per USD. An increase in this rate is a depreciation of the AUD and a decrease is an appreciation of the AUD.
  • Excludable good - A product whose seller can prevent people who have not paid from deriving benefit from it.
  • Exit strategy - A plan to enable you to leave your business, either after achieving your goal or deciding you would like to move on to do something else while recouping any capital you invested when starting the company.
  • Exogenous - Coming from outside the model rather than being produced by the workings of the model itself. See also: endogenous.
  • Exogenous shock - A sharp change in external conditions affecting a model.
  • Expected inflation - The opinion that wage- and price-setters form about the level of inflation in the next period. See also: inflation.
  • Expense - Refers to the total cost of something; the opposite of profit. This can include money spent on bills, marketing, stocks, taxes, payroll, and other operating costs.
  • Expenses and losses - A classification on a single-step income statement for both operating and nonoperating expenses and losses that pertain to the time interval shown in the heading of the income statement.
  • Experience good - A product or service with a value that can not be ascertained until it is used.
  • Export - Selling your goods or services overseas.
  • Exports (x) - Goods and services produced in a particular country and sold to households, firms and governments in other countries.
  • Expropriation risk - The probability that an asset will be taken from its owner by the government or some other actor.
  • External benefit - A positive external effect: that is, a positive effect of a production, consumption, or other economic decision on another person or people that is not specified as a benefit in a contract. Also known as: external economy. See also: external effect.
  • External cost - A negative external effect: that is, the negative effect of production, consumption, or other economic decisions on another person or party, which is not specified as a liability in a contract. Also known as: external diseconomy. See also: external effect.
  • External diseconomy - A negative effect of a production, consumption, or other economic decision, that is not specified as a liability in a contract. Also known as: external cost, negative externality. See also: external effect.
  • External economy - A positive effect of a production, consumption, or other economic decision, that is not specified as a benefit in a contract. Also known as: external benefit, positive externality. See also: external effect.
  • External effect - A positive or negative effect of a production, consumption, or other economic decision on another person or people that is not specified as a benefit or liability in a contract. It is called an external effect because the effect in question is outside the contract. Also known as: externality. See also: incomplete contract, market failure, external benefit, external cost.
  • Externality - An effect on a third party (who is neither buyer nor seller). Although externalities are almost always described as a negative effect on a third party (such as pollution), positive externalities can also exist (a job training program may, for example, reduce crime in a given neighborhood).
  • Extract - A system for creating a sequential file from a relational marketing database. The extract can be used for preparing reports, or for sending data to other companies for their use.
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  • Face value - The public price of a good or service. Items are generally sold at or below this price.
  • Facilitation - In business, employers use facilitation to build teams and shape leaders. The main role of a facilitator is to add value to a group planning session or meeting by keeping a group on task and making progress, which saves the employer valuable time and money. Facilitators can also help resolve conflict and manage employee concerns. Facilitation can be done in individual sessions, or a facilitator may participate in a group event or meeting.
  • Factor rate - A factor rate is typically used for merchant cash advances and short-term business loans to determine how much you will owe in interest. Instead of a percentage, like with APRs, the interest rate for invoice factoring is expressed in decimal form. Your factor rate is determined by the industry your business is in, how long you’ve been in business, the stability of your business and your monthly credit card payment revenue. With factor rates, you generally pay more in interest than with loans that use APRs.
  • Factors of production - The labour, machinery and equipment (usually referred to as capital), land, and other inputs to a production process.
  • Fair market value - Fair market value is the price that the property, services or assets would sell for in an open market. If no reliable price quotes are available, then the fair market value is based on a good-faith estimate of the value.
  • Fairness - A way to evaluate an allocation based on one’s conception of justice.
  • Fairtrade - An organised movement enabling producers in developing countries to receive a fair price for the items they produce. Fairtrade certification is becoming much more common in many sectors, particularly food, with several large brands now stating that their products are ‘certified Fairtrade’ on their packaging.
  • Fallacy of composition - Mistaken inference that what is true of the parts (for example a household) must be true of the whole (in this case the economy as a whole). See also: paradox of thrift.
  • Fear of missing out - A need to ensure that one does not forgo an opportunity (often for profit). This can often be used to push buyers to make irrational decisions.
  • Feasible frontier - The curve made of points that defines the maximum feasible quantity of one good for a given quantity of the other. See also: feasible set.
  • Feasible set - All of the combinations of the things under consideration that a decision-maker could choose given the economic, physical or other constraints that he faces. See also: feasible frontier.
  • Fee - A quantity of money that is demanded in exchange for value.
  • Fees - Compare origination and underwriting fees along with closing costs. If you’re getting an SBA loan, expect an SBA loan guarantee fee. The lender pays this fee and has the option to pass it along to you at closing. Note that lenders can’t charge a separate origination fee on an SBA 7(a) loan, though they can charge packaging fees that are reasonable and customary for the services performed. Other fees associated with a small-business loan include late payment fees, check processing fees and prepayment fees, which are charged if you make early payments.
  • Ferengi Rules of Aquisition - A set of 285 business guidelines used by the mercantile race of Ferengi in the Star Trek franchise.
  • Fica tax payable - This current liability account reports the amount a company owes (must remit) for its employees' Social Security and Medicare taxes as of the date of the balance sheet.
  • FICO scoring system - Excellent Credit: 750+ Good Credit: 700-749 Fair Credit: 650-699 Poor Credit: 600-649 Bad Credit: below 600
  • Fictitious name - A name used by a business that is not its personal or legal name. A business can legally do business under a fictitious name if the proper requirements are met.
  • Fiduciary duty - Requirement or responsibility to work in the best interest of a person or organization
  • Final good - A product intended to be consumed, rather than to be used in the creation of another good.
  • Final income - A measure of the value of goods and services a household can consume from its disposable income. This is equal to disposable income minus VAT paid, plus the value of public services received.
  • Financial accelerator - The mechanism through which firms’ and households’ ability to borrow increases when the value of the collateral they have pledged to the lender (often a bank) goes up.
  • Financial deregulation - Policies allowing banks and other financial institutions greater freedom in the types of financial assets they can sell, as well as other practices.
  • Financial management - Planning, analysing, monitoring, organising, reviewing and controlling an organisation’s monetary resources. Responsibility for financial management often falls to the finance director, and by extension the financial department.
  • Financial statements * - The balance sheet reports information as of a date (a point in time). The income statement, statement of cash flows, statement of retained earnings, and the statement of stockholders' equity report information for a period of time (or time interval) such as a year, quarter, or month.
  • Financial year - A year as reckoned for taxing or accounting purposes.
  • Fire sale - The sale of something at a very low price because of the seller’s urgent need for money.
  • Firm - Economic organization in which private owners of capital goods hire and direct labour to produce goods and services for sale on markets to make a profit.
  • Firm-specific asset - Something that a person owns or can do that has more value in the individual’s current firm than in their next best alternative.
  • First copy costs - The fixed costs of the production of a knowledge-intensive good or service.
  • First mover advantage - The strategic benefit acquired from acting before any potential rival. The term is typically used when referring to the entrance into a new market or the offering of a new class of product.
  • Fiscal capacity - The ability of a government to impose and collect substantial taxes from a population at low administrative and other costs. One measure of this is the amount collected divided by the cost of administering the tax system.
  • Fiscal multiplier - The total (direct and indirect) change in output caused by an initial change in government spending. See also: fiscal stimulus, fiscal policy, aggregate demand.
  • Fiscal policy - Changes in taxes or government spending in order to stabilize the economy. See also: fiscal stimulus, fiscal multiplier, aggregate demand.
  • Fiscal stimulus - The use by the government of fiscal policy (via a combination of tax cuts and spending increases) with the intention of increasing aggregate demand. See also: fiscal multiplier, fiscal policy, aggregate demand.
  • Fiscal year - Also known as a financial year, the fiscal year is a set period used to calculate financial statements. The period used differs between countries and between businesses, although in the UK the year between 6th April and 5th April is most often used for personal taxation. The ‘official’ period for corporation tax runs from 1st April to 31st March, however companies can adopt any yearly period for corporation tax.
  • Fiscal year - A 12-month period used for accounting purposes and preparing a business’s financial documentation. Please note: the fiscal year does not always revolve around the calendar year.
  • Fiscal year (llc) - A fiscal year is any 12-month period used by an LLC as its accounting period. For example, the fiscal year could begin on July 1 and end on June 30. Many fiscal years follow the calendar year of January 1 through December 31.
  • Fisher equation - The relation that gives the real interest rate as the difference between the nominal interest rate and expected inflation: real interest rate = nominal interest rate – expected inflation.
  • Five finger discount - A 100% reduction in the purchase price of an item. This is necessarily the result of shoplifting.
  • Fixed assets - A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated.
  • Fixed cost - Any cost that remains the same in the short-term, despite changes in volume. Fixed costs usually include, for example, rent, interest and salaries.
  • Fixed costs - Costs of production that do not vary with the number of units produced.
  • Fixed field - Organization of a tape or data file in which each group of data (such as name, address, city, zip) has a fixed location and length within the file.
  • Fixed liabilities - Usually a type of payable debt (like mortgages, business loans, etc.) which carry a term that exceeds one year.
  • Flat file - Another name for a sequential name file. Contrasted with a database file (not flat because of the indexes).
  • Fleece - To trick someone out of a lot of money.
  • Flexible budget - A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company actually produces fewer units than planned.
  • Float - The time between when a check is written and when the check clears the bank account on which it is drawn.
  • Flow - A quantity measured per unit of time, such as annual income or hourly wage.
  • Focus group - A group of customers who are assembled together by an advertising agency in a conference room to discuss a particular product. Useful for learning what the public thinks of your product or message or company.
  • Forced bundling - A requirement that customers purchase multiple products in order to receive a desired item. For instance, many laptop manufacturers bundle copies of Microsoft Windows (even if customers do not want the operating system installed).
  • Foreign direct investment (fdi) - Ownership and substantial control over assets in a foreign country. See also: foreign portfolio investment.
  • Foreign portfolio investment - The acquisition of bonds or shares in a foreign country where the holdings of the foreign assets are not sufficiently great to give the owner substantial control over the owned entity. Foreign direct investment (FDI), by contrast, entails ownership and substantial control over the owned assets. See also: foreign direct investment.
  • Format - The way data (name and address) is organized on a disk or tape. There is no standard format. Every company has their own.
  • Fractional reserve lending - A system that allows banks to lend an amount in excess of its deposits. While a minority of economists consider this to be a form of fraud, it is the foundation of modern banking.
  • Franchise loans - Franchise loans can be used for standard business opening expenses and franchise-specific costs, such as marketing fees or the franchise fee, which you pay upfront to open a franchise. Some franchisors may offer funding to help you establish your franchise
  • Fraud - The use of intentional deception to derive benefit from a transaction.
  • Free cash flow to equity (fcfe) - FCFE represents the cash that’s available after reinvestment back into the business (capital expenditures).
  • Free good - An offering that is available in unlimited quantity at no cost (for example: sunlight).
  • Free ride - Benefiting from the contributions of others to some cooperative project without contributing oneself.
  • Free rider - A person who receives the benefits from a good or service without being required to pay.
  • Freeloader - A market participant who extracts value from a product without paying the vendor for the privilege.
  • Freemium - A pricing tier with zero cost to the user. Common goals for freemium models are to 1) increase the size of the user base 2) lower the barriers to entry for users. Many businesses utilize the strategy with the hope that freemium customers will convert into paying customers. Producers offering freemium products should be careful to provide significantly greater value at more expensive tiers, lest no user has reason to upgrade to a paid tier.
  • Frequency - A term for how many times a person buys from you.
  • Friction - The costs associated with a transaction that are not included in the purchase price. Examples include: taxes, fees, research and switching costs.
  • Friendliness - Friendliness is an important communication skill and helps others receive your message more readily. An example of practicing friendliness in the workplace is including personalized messages, such as wishing someone a good evening, when communicating.
  • FSI - Free Standing Insert. Usually a coupon or other promotion found in a magazine or newspaper. The least expensive way to distribute coupons.
  • Ftse 100 index - This list is made up of the 100 most highly capitalised blue-chip companies on the London Stock Exchange.
  • FUD - An acronym for "fear, uncertainty and doubt." An effective, though ethically questionable means of selling products. Rather than focusing on the benefits of a given product, sales materials focus on the negative emotions of the buyers.
  • Fulfillment - The process of responding to a customer request with literature or product. Fulfillment us usually outsourced to a fulfillment house.
  • Fundamental value - See also: fundamental value of a share.
  • Fundamental value of a share - The share price based on anticipated future earnings and the level of risk.
  • Funding gap - A measure of the shortfall a company has to overcome (how much more cash it needs)
  • Futures - These are financial contracts that secure a predetermined future date and price for an asset. The assets used in futures contracts include commodities, stocks, and bonds.
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  • Gacha - A Japanese word for a common monetization method in free to play video games. It allows players to spend money in order to receive a random item, power
  • Gains from exchange - The benefits that each party gains from a transaction compared to how they would have fared without the exchange. Also known as: gains from trade. See also: economic rent.
  • Galapagos syndrome - A reference to Charles Darwin's On the Origin of Species. It refers to the independent development of functionality within isolated markets.
  • Game - A model of strategic interaction that describes the players, the feasible strategies, the information that the players have, and their payoffs. See also: game theory.
  • Game theory - A branch of mathematics that studies strategic interactions, meaning situations in which each actor knows that the benefits they receive depend on the actions taken by all. See also: game.
  • Gatekeeping - The prevention of use or purchase of a given good. Some vendors perform this behavior to increase an item's exclusivity or prevent association with parties who share undesirable characteristics.
  • Gdp deflator - A measure of the level of prices for domestically produced output. This is the ratio of nominal (or current price) GDP to real (or constant price) GDP.
  • General partnership - A business that is owned by two or more persons.
  • General-purpose technologies - Technological advances that can be applied to many sectors, and spawn further innovations. Information and communications technology (ICT), and electricity are two common examples.
  • Geocoding - A system for assigning a census code to any name and address. Once a file is geocoded, you can append census data (income, race, etc.) to the records and assign cluster codes.
  • Geodemographics - Census data that can be appended to a household file once it has been geocoded. Includes such factors as income, education, home type, etc. Derived from the neighborhood of the household. Same as Demographics.
  • Geographic Information System (GIS) - Software that displays data on a computer generated map.
  • Gigabyte - A billion bytes (characters). A measure of the size of mainframe disk storage. A typical mainframe shop will have 100 gigabytes or more. "Her database used over 35 gig!"
  • Gini coefficient - A measure of inequality of any quantity such as income or wealth, varying from a value of zero (if there is no inequality) to one (if a single individual receives all of it).
  • Global financial crisis - This began in 2007 with the collapse of house prices in the US, leading to the fall in prices of assets based on subprime mortgages and to widespread uncertainty about the solvency of banks in the US and Europe, which had borrowed to purchase such assets. The ramifications were felt around the world, as global trade was cut back sharply. Goverments and central banks responded aggressively with stabilization policies.
  • Global greenhouse gas abatement cost curve - This shows the total cost of abating greenhouse gas emissions using abatement policies ranked from the most cost-effective to the least. See also: abatement policy.
  • Globalization - A process by which the economies of the world become increasingly integrated by the freer flow across national boundaries of goods, investment, finance, and to a lesser extent, labour. The term is sometimes applied more broadly to include ideas, culture, and even the spread of epidemic diseases.
  • Globalization I and ii - Two separate periods of increasing global economic integration: the first extended from before 1870 until the outbreak of the First World War in 1914, and the second extended from the end of the Second World War into the twenty-first century. See also: globalization.
  • Goal setting - Goal setting is a process that starts with careful consideration of what you want to achieve, and ends with a lot of hard work to actually do it. In between, there are some very well-defined steps that transcend the specifics of each goal. Knowing these steps will allow you to formulate goals that you can accomplish.
  • Going rate - The typical price for a commodity good.
  • Gold standard - The system of fixed exchange rates, abandoned in the Great Depression, by which the value of a currency was defined in terms of gold, for which the currency could be exchanged. See also: Great Depression.
  • Goldbricking - Producing less value than one is capable, while simultaneously appearing as though one is working diligently.
  • Golden age (of capitalism) - The period of high productivity growth, high employment, and low and stable inflation extending from the end of the Second World War to the early 1970s.
  • Golden hello - An attractive package (typically a bonus, or stock options) that are offered to a senior employee as an incentive to join the company.
  • Golden share - A golden share in a company is able to outvote all other shares in a specified circumstance.
  • Goods market equilibrium - The point at which output equals the aggregate demand for goods produced in the home economy. The economy will continue producing at this output level unless something changes spending behaviour. See also: aggregate demand.
  • Goodwill - The portion of the value that a firm possesses but is not attributable to a tangible good. Such measures are difficult to prove and are frequently used to inflate asset prices. Nevertheless, they can be a real, important, and overlooked source of business value.
  • Gossan's first law - Marginal utility trends lower as quantity increases.
  • Gossan's second law - Consumers will spend such that the marginal utility (relative to price) of each item purchased will be equal.
  • Gossan's third law - An item cannot have economic value unless it is scarce.
  • Governing elite - Top government officials such as the president, cabinet officials, and legislative leaders, unified by a common interest such as membership in a particular party.
  • Government - Within a given territory, the only body that can dictate what people must do or not do, and can legitimately use force and restraints on an individual’s freedom to achieve that end. Also known as: state.
  • Government bond - A financial instrument issued by governments that promises to pay flows of money at specific intervals.
  • Government budget balance - The difference between government tax revenue and government spending (including government purchases of goods and services, investment spending, and spending on transfers such as pensions and unemployment benefits). See also: government budget deficit, government budget surplus.
  • Government budget deficit - When the government budget balance is negative. See also: government budget balance, government budget surplus.
  • Government budget surplus - When the government budget balance is positive. See also: government budget balance, government budget deficit.
  • Government debt - The total amount of money owed by the government at a specific point in time.
  • Government failure - A failure of political accountability. (This term is widely used in a variety of ways, none of them strictly analogous to market failure, for which the criterion is simply Pareto inefficiency).
  • Government spending (g) - Expend­iture by the government to purchase goods and services. When used as a component of aggregate demand, this does not include spending on transfers such as pensions and unemployment benefits. See also: government transfers
  • Government transfers - Spending by the government in the form of payments to households or individuals. Unemployment benefits and pensions are examples. Transfers are not included in government spending (G) in the national accounts. See also: government spending (G)
  • Grandfather - Permission for existing customers to continue paying for an offering according to their original price structure.
  • Graphical User Interface (GUI) - Software that permits users to access their data by manipulating a mouse.
  • Great depression - The period of a sharp fall in output and employment in many countries in the 1930s.
  • Great moderation - Period of low volatility in aggregate output in advanced economies between the 1980s and the 2008 financial crisis. The name was suggested by James Stock and Mark Watson, the economists, and popularized by Ben Bernanke, then chairman of the Federal Reserve.
  • Great recession - The prolonged recession that followed the global financial crisis of 2008.
  • Greater fool theory - The pricing of an asset based upon what a future buyer will pay.
  • Green adjustment - Accounting adjustment made to conventional measures of national income to include the value of natural capital.
  • Greenhouse gas - Gases—mainly water vapour, carbon dioxide, methane and ozone—released in the earth’s atmosphere that lead to increases in atmospheric temperature and changes in climate.
  • Gresham's law - A law that states that undervalued forms of money will not be used in the marketplace, but overvalued forms will.
  • Grey knight - During a business takeover, this is a bidder who has no clearly stated intentions.
  • Gross - The total amount of money you have earned in a period of time before deductions such as taxes.
  • Gross domestic product (gdp) - GDP is the sum of all goods and services produced in the country’s economy. If it is up on the previous three months, the economy is growing. If GDP is down, the economy is contracting.
  • Gross income - Income net of taxes paid. Includes depreciation. See also: income, net income.
  • Gross margin - Gross margin is a broader term that business owners use to track money spent against money earned. It refers to the percentage of your total revenue that ends up as net income (what’s left when you subtract the direct costs) over a certain time. For example, if your company’s revenue is $100,000 in one quarter and your gross margin is 25 percent, then your net income is $25,000. The higher your gross margin, the more of each dollar in sales you can spend on overhead or keep as profit.
  • Gross profit - The sum of a company’s earnings, not taking into consideration expenses; Profits excluding taxes and operating costs. (Also see Net Profit)
  • Gross unemployment benefit replacement rate - The proportion of a worker’s previous gross (pre-tax) wage that is received (gross of taxation) when unemployed.
  • Group buy - A purchase that delivers a discount to buyers who combine their orders with those of other buyers. This discount may be intentionally offered by the vendor or (as is often seen in SAAS sales) a result of multiple buyers illicitly sharing a single account.
  • Group rate - A discounted price offered to buyers who collectively place a single order.
  • Growth capital - Funding that allows a company to accelerate its growth. For startups, this is the second stage of funding after seed money.
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  • Halo effect - A cognitive bias that causes observers to form a positive opinion of an item based upon a limited set of positive traits.
  • Hammer price - The winning bid at an auction. Note that this does not include other fees (such as the buyer's premium).
  • Hard sell - A forceful technique intended to strongly push a buyer into taking action. Such methods often involve limited time offers or incentives. Overly forceful pitches risk irritating the potential customer.
  • Hardware - Computers and disks, tape drives, printers, and other gear that are plugged into computers.
  • Hawthorne Effect - A psychological phenomenon whereby people (customers) act differently when they are being studied.
  • Hedge finance - Financing used by firms to fulfil contractual payment obligations using cashflow. Term coined by Hyman Minsky in his Financial Instability Hypothesis. See also: speculative finance.
  • Hedge funds - These investments are only open to professional investors, pension funds and insurance companies. They are considered risky bets although their aim is to beat falling markets. There are four main types of hedge fund:
  • Hedonic pricing - A method used to infer the economic value of unpriced environmental or perceptual qualities that affect the price of a marketed good. It allows a researcher to put a price on hard-to-quantify characteristics. Estimations are based on people’s revealed preferences, that is, the price they pay for one thing compared to another.
  • Hedonic treadmill - The human tendency to continuously adapt to a standard of living, such that increasing levels of wealth or comfort does not lead to permanent increases in happiness.
  • Hidden actions (problem of) - This occurs when some action taken by one party to an exchange is not known or cannot be verified by the other. For example, the employer cannot know (or cannot verify) how hard the worker she has employed is actually working. Also known as: moral hazard. See also: hidden attributes (problem of).
  • Hidden attributes (problem of) - This occurs when some attribute of the person engaging in an exchange (or the product or service being provided) is not known to the other parties. An example is that the individual purchasing health insurance knows her own health status, but the insurance company does not. Also known as: adverse selection. See also: hidden actions (problem of).
  • Hidden Layer - An group of internal nodes inside of a Neural Network which it uses to build a model. The less known about hidden layers by non statisticians, the better.
  • Holding costs - The penalty an entity experiences for maintaining ownership or control of as asset. For instance, many home owners are required to pay real estate taxes in order to maintain posession of their homes.
  • Horizontal merger - When two companies within the same industry and at the same stage in production merge together.
  • Hostile takeover - This is a takeover bid of a company that is deemed unacceptable or has unwelcome terms as deemed by the company’s board.
  • Hot commodity - An item for which there is extreme demand. The use of the word commodity in this context is the exact opposite of its normal use in economics.
  • House File - The organization's own file of active and former customers.
  • House poor - The description of a person who spends (or has spent) a significant portion of his wealth on the purchase of his home. While the person may have a strong balance sheet, he generally few assets of value, other than his house.
  • Householding - A process in which all people and their accounts are grouped by the house that they live in so that they only get one letter per house in a promotion.
  • Human capital - The stock of knowledge, skills, behavioural attributes, and personal characteristics that determine the labour productivity or labour earnings of an individual. Investment in this through education, training, and socialization can increase the stock, and such investment is one of the sources of economic growth. Part of an individual’s endowments. See also: endowment.
  • Hyperglobalization - An extreme (and so far hypothetical) type of globalization in which there is virtually no barrier to the free flows of goods, services, and capital. See also: globalization.
  • Hyperinflation - This is inflation that is rapid or out of control. It usually only occurs during wars or during severe political instability.
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  • ID Number - A number assigned to a record to help to relate it to other records in the computer which have the same ID.
  • Identification - The process whereby a customer identifies himself with the company which provides him with products or services
  • Idiosyncratic risk - A risk that only affects a small number of assets at one time. Traders can almost eliminate their exposure to such risks by holding a diverse portfolio of assets affected by different risks. Also known as: diversifiable risk.
  • Ikea effect - The tendency of consumers to place more value on items that required their own labor or ingenuity to create, assemble, or design.
  • Impatience - Any preference to move consumption from the future to the present. This preference may be derived either from pure impatience or diminishing marginal returns to consumption.
  • Import - Buying goods or services from overseas and bringing them into the country.
  • Imports (m) - Goods and services produced in other countries and purchased by domestic households, firms, and the government.
  • In-kind transfers - Public expenditure in the form of free or subsidized services for households rather than in the form of cash transfers.
  • Inactive population - People in the population of working age who are neither employed nor actively looking for paid work. Those working in the home raising children, for example, are not considered as being in the labour force and therefore are classified this way.
  • Inbound marketing - A sales technique that encourages potential buyers to contact a firm directly with no explicit outreach. An example of this is a blog.
  • Incentive - Economic reward or punishment, which influences the benefits and costs of alternative courses of action.
  • Inclusive trade union - A union, representing many firms and sectors, which takes into account the consequences of wage increases for job creation in the entire economy in the long run.
  • Income - The amount of profit, interest, rent, labour earnings, and other payments (including transfers from the government) received, net of taxes paid, measured over a period of time such as a year. The maximum amount that you could consume and leave your wealth unchanged. Also known as: disposable income. See also: gross income.
  • Income effect - The effect that the additional income would have if there were no change in the price or opportunity cost.
  • Income elasticity of demand - The percentage change in demand that would occur in response to a 1% increase in the individual’s income.
  • Income statement - Determines the net income/profit of a business. An annual summary of both income and expenses.
  • Incomplete contract - A contract that does not specify, in an enforceable way, every aspect of the exchange that affects the interests of parties to the exchange (or of others).
  • Increased productivity. - It allows employees to complete work faster since tasks are spread out among a group of individuals rather than a single individual completing all of the necessary steps.
  • Increasing returns to scale - These occur when doubling all of the inputs to a production process more than doubles the output. The shape of a firm’s long-run average cost curve depends both on returns to scale in production and the effect of scale on the prices it pays for its inputs. Also known as: economies of scale. See also: decreasing returns to scale, constant returns to scale.
  • Incremental innovation - Innovation that improves an existing product or process cumulatively.
  • Independence - Working independently is the ability to work self-sufficiently on assigned tasks. You might receive direction on projects from a supervisor or manager, but they can then trust you to accomplish tasks with little to no supervision.
  • Index - A measure of the amount of something in one period of time, compared to the amount of the same thing in a different period of time, called the reference period or base period. It is common to set its value at 100 in the reference period.
  • Indifference curve - A curve of the points which indicate the combina­tions of goods that provide a given level of utility to the individual.
  • Industrial output - This is an indicator of future economic growth as it is the manufacturing output of the nation.
  • Industrial revolution - A wave of technological advances and organizational changes starting in Britain in the eighteenth century, which transformed an agrarian and craft-based economy into a commercial and industrial economy.
  • Industry - Goods-producing business activity: agriculture, mining, manufacturing, and construction. Manufacturing is the most important component.
  • Inequality aversion - A dislike of outcomes in which some individuals receive more than others.
  • Infant industry - A relatively new industrial sector in a country that has relatively high costs, because its recent establishment means that it has few benefits from learning by doing, its small size deprives it of economies of scale, or a lack of similar firms means that it does not benefit from economies of agglomeration. Temporary tariff protection of this sector or other support may increase productivity in an economy in the long run.
  • Inferior good - A product that will see decreased demand as income levels rise. Note that this does not necessarily imply that the good is defective or made poorly.
  • Inflation - An increase in the general price level in the economy. Usually measured over a year. See also: deflation, disinflation.
  • Inflation targeting - Monetary policy regime where the central bank changes interest rates to influence aggregate demand in order to keep the economy close to an inflation target, which is normally specified by the government.
  • Inflation-adjusted price - Price that takes into account the change in the overall price level.
  • Inflation-stabilizing rate of unemployment - The unemployment rate (at labour market equilibrium) at which inflation is constant. Originally known as the ‘natural rate’ of unemployment. Also known as: non-accelerating rate of unemployment, stable inflation rate of unemployment. See also: equilibrium unemployment.
  • Influentials - In business-to-business, executives who have the authority to make or influence a purchase.
  • Information asymmetry - A situation in which parties to a transaction do not share equivalent information.
  • Infrastructure - The process of maintaining a database: nightly backup, cleaning, merge/purge, deduplication, update, etc.
  • Initiative - Taking initiative means thinking proactively about tasks— not just to check them off a list, but to get them done well. It's about going the extra mile on the basic tasks you're assigned, thinking through complications, and taking on work before someone asks you to
  • Innovation - The process of invention and diffusion considered as a whole.
  • Innovation rents - Profits in excess of the opportunity cost of capital that an innovator gets by introducing a new technology, organizational form, or marketing strategy. Also known as: Schumpeterian rents.
  • Innovation system - The relationships among private firms, governments, educational institutions, individual scientists, and other actors involved in the invention, modification, and diffusion of new technologies, and the way that these social interac­tions are governed by a combination of laws, policies, know­ledge, and social norms in force.
  • Inquisitiveness - The quality of wanting to discover as much as you can about things, sometimes in a way that annoys people.
  • Insider trading - The trading of shares based on knowledge that no one else has. It was made illegal in the UK in 1980.
  • Insolvency - When a company becomes unable to pay off its creditors, or its liabilities exceed its assets.
  • Insolvent - Being without enough assets or income to pay debts.
  • Inspirational abilities - The Inspirational Leadership competency is the ability to inspire, to guide people to get the job done, to bring out their best. With inspiration, you can articulate a shared mission in a way that motivates, and offer a sense of common purpose beyond people's day-to-day tasks.
  • Institution - The laws and informal rules that regulate social interactions among people and between people and the biosphere, sometimes also termed the rules of the game.
  • Institutional investor - A professional money manager who works for private investors and invests via pension and life insurance funds.
  • Intellectual property - Any works or inventions that are original creative designs. The individual or company responsible for the designs will be entitled to apply for a copyright or trademark on the designs.
  • Intellectual property rights - Patents, trademarks, and copyrights. See also: patent, trademark, copyright.
  • Interest rate - The price of bringing some buying power forward in time. See also: nominal interest rate, real interest rate.
  • Interest rate (short-term) - The price of borrowing base money.
  • Interest Rates - Interest rates vary from card to card. As mentioned above, it’s a good idea to go for a card that has an initial 0% APR (annual percentage rate). That way you have a year without any interest whatsoever. As of April 2018, the common APRs offered online for business credit cards was 14%, which is about 2.5 points lower than average for personal cards.
  • Intergenerational elasticity - When comparing parents and grown offspring, the percentage difference in the second generation’s status that is associated with a 1% difference in the adult generation’s status. See also: intergenerational inequality, intergenerational mobility, intergenerational transmission of economic differences.
  • Intergenerational inequality - The extent to which differences in parental generations are passed on to the next generation, as measured by the intergenerational elasticity or the intergenerational correlation. See also: intergenerational elasticity, intergenerational mobility, intergenerational transmission of economic differences.
  • Intergenerational mobility - Changes in the relative economic or social status between parents and children. Upward mobility occurs when the status of a child surpasses that of the parents. Downward mobility is the converse. A widely used measure of intergenerational mobility is the correlation between the positions of parents and children (for example, in their years of schooling or income). Another is the intergenerational elasticity. See also: intergenerational elasticity, intergenerational transmission of economic differences.
  • Intergenerational transmission of economic differences - The processes by which the economic status of the adult sons and daughters comes to resemble the economic status of the parents. See also: intergenerational elasticity, intergenerational mobility.
  • Interim profit statement - This updates shareholders on a company’s unaudited profits for the first half of the financial year.
  • Intermediate good - A product that has been refined and is used as an ingredient, input, or component of other products.
  • Introspection - The ability to evaluate your thoughts and emotions.
  • Invention - The development of new methods of production and new products.
  • Inventory - Goods held by a firm prior to sale or use, including raw materials, and partially-finished or finished goods intended for sale.
  • Investment (i) - Expenditure on newly produced capital goods (machinery and equipment) and buildings, including new housing.
  • Investment function (aggregate) - An equation that shows how investment spending in the economy as a whole depends on other variables, namely, the interest rate and profit expectations. See also: interest rate, profit.
  • Investment trust - A company on the stock exchange that only invests in other companies.
  • Invisible hand - An idiom first coined by Adam Smith. In modern usage, it refers to the tendency of decisions by individuals to maximize the aggregate benefit to society.
  • Invoice factoring - Invoice factoring involves a business selling its invoices on to a third party, who will then add their own fee to the charges and seek the money from the debtor.
  • Invoice financing - If your small business struggles with cash flow because you’re waiting on invoices to be paid, you can use invoice financing, also known as factoring
  • Irrational exuberance - A process by which assets become overvalued. The expression was first used by Alan Greenspan, then chairman of the US Federal Reserve Board, in 1996. It was popularized as an economic concept by the economist Robert Shiller.
  • IS - Information Systems (Also MIS) - the part of the company responsible for the central data processing operations.
  • Isocost line - A line that represents all combinations that cost a given total amount.
  • Isoprofit curve - A curve on which all points yield the same profit.
  • Isototal benefits curve - The combinations of the probability of innovation and the total benefits to society from a firm’s innovation that yield the same total benefits.
  • Issuance - New membership interests may be created, issued and sold to new members.
  • IVR - Interactive Voice Response a piece of equipment connected with an ACD which permits inbound callers to a call center to choose their own routing of the call ("Push 1 for Sales, Push 2 for Service...)
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  • Jack of all trades, master of none - A person, business, or other entity who has become a generalist. Due to a lack of specialization, a jack of all trades will usually find himself unable to match the efficiency, quality, and ability offered by a master.
  • Japanese auction - A bidding system in which price continually rises until only one bidder is willing to pay. He then pays the highest price that attracted at least one other bidder.
  • Jevons paradox - The result of research on coal usage by William Stanley Jevons. It states that increasing efficiency of the use of an item will cause more of that item to be used.
  • Joint surplus - The sum of the economic rents of all involved in an interaction. Also known as: total gains from exchange or trade.
  • Joule - A unit of energy or work, originally defined as the amount of energy necessary to lift a small apple vertically 1 metre.
  • Juda Principle - People prefer to maximize the appearance of acquired skills and expended effort over the creation of actual value.
  • Junk silver - A silver item that has no value over and above the value of the metal itself.
  • Justification letter - A document intended to convince the recipient to act in a specific manner. The letter will generally focus on the benefits of a desired course of action.
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  • Key performance indicator - A key performance indicator (KPI) is a measure of performance to assess the success of a company or a certain activity the company is taking part in.
  • Keyline Or Match Key - A combination of numbers and letters usually beginning with the zip code, which is used as a rough household duplicate eliminator.
  • Keynesian beauty contest - A thought experiment that questioned the workings of the stock market. It described a hypothetical situation in which judges who were tasked with selecting the most beautiful participants in a beauty contest would vote differently than judges who were tasked in predicting the votes of the other judges.
  • Keypunching - The process whereby someone enters names and addresses and other data from hard copy (paper forms) onto a computer tape or disk. It is done on a typewriter-like keyboard into a small computer. Same as Data Entry.
  • Kickback - A secretive payment in exchange for an action to the detriment of a third party.
  • Kill fee - A feature common to freelance writing contracts. It ensures that a partial payment will be made to authors whose work has been requested but is not ultimately used.
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  • Labor - Engaging in a physical or mental activity that generally produces a product, good, or service.
  • Labour discipline model - A model that explains how employers set wages so that employees receive an economic rent (called employment rent), which provides workers an incentive to work hard in order to avoid job termination. See also: employment rent, efficiency wages.
  • Labour force - The number of people in the population of working age who are, or wish to be, in work outside the household. They are either employed (including self-employed) or unemployed. See also: unemployment rate, employment rate, participation rate.
  • Labour market - In this market, employers offer wages to individuals who may agree to work under their direction. Economists say that employers are on the demand side of this market, while employees are on the supply side. See also: labour force.
  • Labour market equilibrium - The combination of the real wage and the level of employment determined by the intersection of the wage-setting and the price-setting curves. This is the Nash equilibrium of the labour market because neither employers nor workers could do better by changing their behaviour. See also: equilibrium unemployment, inflation-stabilizing rate of unemployment.
  • Labour market matching - The way in which employers looking for additional employees (that is, with vacancies) meet people seeking a new job.
  • Labour productivity - Total output divided by the number of hours or some other measure of labour input.
  • Labour-intensive - Making greater use of labour as an input in production as compared with machines and other inputs. See also: capital-intensive.
  • Lagging indicator - Evidence that can be used to support a conclusion but is only available after the fact.
  • Laissez faire - A method of market governance characterized by limited government involvement.
  • LAN - Local Area Network. A system for linking several PCs into a single system with a File Server PC that keeps a central database. Some databases are located on LANs.
  • Laser letter - A letter produced on a Laser Printer. Very clean and neat looking. Possible to have unlimited personalization of the text of the letter.
  • Law of demand - As the price of a good rises, the demand for that good will fall. Note that there are exceptions to this law (such as Veblen goods).
  • Law of one price - Holds when a good is traded at the same price across all buyers and sellers. If a good were sold at different prices in different places, a trader could buy it cheaply in one place and sell it at a higher price in another. See also: arbitrage.
  • Law of supply - As the price of an offering increases, the quantity supplied will increase.
  • Lead - A prospect who has responded is called a Lead.
  • Lead Conversion Rate - The percentage of leads which become customers.
  • Lead Tracking - The process of keeping up with what has happened to a lead (prospect who has expressed an interest in your product or service). Lead tracking is very difficult because salesmen hate to report on the status of leads.
  • Leading indicator - Evidence that can be used to predict an occurence.
  • Learning by doing - This occurs when the output per unit of inputs increases with greater experience in producing a good or service.
  • Legal tender - Coins or banknotes that must be accepted in payment of a debt.
  • Lending rate (bank) - The average interest rate charged by commercial banks to firms and households. This rate will typically be above the policy interest rate: the difference is the markup or spread on commercial lending. Also known as: market interest rate. See also: interest rate, policy rate.
  • Leontief paradox - The unexpected finding by Wassily Leontief that exports from the US were labour-intensive and its imports capital-intensive, a result that contradicts what the economic theories predicted: namely that a country abundant in capital (like the US) would export goods that used a large quantity of capital in their production.
  • Lettershop - An independent company that handles all the details of printing and mailing letters.
  • Leverage - See also: leverage ratio.
  • Leverage ratio (for banks or households) - The value of assets divided by the equity stake in those assets.
  • Leverage ratio (for non-bank companies) - The value of total liabilities divided by total assets.
  • Leveraged buyout - When a company is acquired using borrowed funds. The debt is usually repaid by money made by the acquired company.
  • Liabilities - Liabilities, on the other hand, are obligations owed by the business. Accounts payable, representing bills you must pay every month, are liability accounts, as are any long-term debts owed by the business.
  • Liability - The legal responsibility to pay for an injury.
  • Libor rate - Libor stands for the London interbank offered rate and provides the average interest rate at which major global banks borrow from one another. It is based on five currencies:
  • Lifestyle - Lifestyle data about a neighborhood comes from clustering. If a significant number of people in a given cluster have taken a foreign trip, it is assumed that all similar households have done this. It is a lifestyle attribute. Included are magazines read, TV programs watched, etc.
  • Lifetime value - The contribution to overhead and profit made by a customer during her total relationship with your company. Abbreviation: LTV.
  • Lift - The improvement in response from a mailing due to modeling and segmentation. Divide the response from a segment by the overall response, subtract 1 and multiply by 100.
  • Limit order - An announced price and quantity combination for an asset, either to be sold or bought.
  • Limited company - In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company.
  • Limited liability company (llc) - A type of legal structure set up to conduct a business owned and run by members. Like a corporation, an LLC is considered a legal (but not a natural) person.
  • Limited partnership (lp) - A business that is owned by two or more persons of which one or more is liable for the debts of the business and one or more has no liability for the debts.
  • Linear regression line - The best-fitting line through a set of data.
  • Liquid - Assets held as cash, or easily convertible to cash; liquidity measures a company’s cash on hand or Cash flow. (Also see Capital Assets)
  • Liquid asset - Any asset which can be easily converted into cash.
  • Liquidity - Ease of buying or selling a financial asset at a predictable price.
  • Liquidity risk - The risk that an asset cannot be exchanged for cash rapidly enough to prevent a financial loss.
  • List broker - A service which brings list owners and prospective list renters (users) together.
  • List maintenance - Keeping a mailing list current through correcting and updating the addresses and other data.
  • List rental - The process of renting (for one time use, or other periods) a list of names of customers owned by some other organization for an agreed upon cost per thousand.
  • Loan Amounts - The loan amount — or credit line — that you can get with a credit business card depends totally on the type of card, your personal credit history, your business credit history (if you have any), and your business itself. However, the highest business credit limit right now probably tops out around $50,000.
  • Loan limits - If the lender doesn’t offer loans in the amount you need, find one that will. Settling for a lower amount could burden you with a loan that falls short of adequately addressing your capital needs.
  • Loan term - Your loan’s repayment term is the time frame you have to repay the loan. Short-term business loans have higher monthly payments, but you may pay less in total interest. If you take out a loan with a longer repayment term, your monthly payments may be lower, but you may have to pay more in total interest over the life of the loan.
  • Loan types - Find a company that offers the type of loan you’re looking for, such as a term loan or line of credit. To save time and ensure you get enough capital to start or grow your small business, consider what you need the funding for. For example, you might get a different loan for payroll than you would for real estate.
  • Lock in - The switching costs that customers experience when moving from an existing product to an alternative. The higher the switching costs, the more pricing power a vendor has over existing customers. Note that switching costs need not be monetary in nature.
  • Lock-in - A consequence of the network external effects that create winner-take-all competition. The competitive process results in an outcome that is difficult to change, even if users of the technology consider an alternative innovation superior.
  • Log scale - See also: ratio scale
  • Logarithmic scale - A way of measuring a quantity based on the logarithm function, f(x) = log(x). The logarithm function converts a ratio to a difference: log (a/b) = log a – log b. This is very useful for working with growth rates. For instance, if national income doubles from 50 to 100 in a poor country and from 1,000 to 2,000 in a rich country, the absolute difference in the first case is 50 and in the second 1,000, but log(100) – log(50) = 0.693, and log(2,000) – log(1,000) = 0.693. The ratio in each case is 2 and log(2) = 0.693.
  • Long run (model) - The term does not refer to a period of time, but instead to what is exogenous. A long-run cost curve, for example, refers to costs when the firm can fully adjust all of the inputs including its capital goods; but technology and the economy’s institutions are exogenous. See also: technology, institutions, short run (model), medium run (model).
  • Long-run equilibrium - An equilibrium that is achieved when variables that were held constant in the short run (for example, the number of firms in a market) are allowed to adjust, as people have time to respond the situation.
  • Loot box - An item that provides players with something of value within a video game. The nature of the value provided is often unknown to the player and randomly selected by the game. Loot boxes are purchased with either real or in game currency and are commonly found in free to play games.
  • Lorenz curve - A graphical representation of inequality of some quantity such as wealth or income. Individuals are arranged in ascending order by how much of this quantity they have, and the cumulative share of the total is then plotted against the cumulative share of the population. For complete equality of income, for example, it would be a straight line with a slope of one. The extent to which the curve falls below this perfect equality line is a measure of inequality. See also: Gini coefficient.
  • Loss aversion - Most people would be upset with a loss far more than they would appreciate an equivalent gain
  • Loss leader - A good sold at a price below the current market cost. This pricing is often used to lure shoppers into a store so that they are more likely to buy the vendor's other products.
  • Low capacity utilization - When a firm or economy could increase output by increasing employment utilizing the existing capital goods.
  • Low touch - A sales process that does not require significant human interaction.
  • Loyalty - Customer loyalty is measured as Retention. A loyal customer is one who keeps buying from you.
  • Loyalty Programs - Rewards that encourage customers to keep being customers longer, or to purchase more.
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  • Macroeconomics - This is a part of economics that seeks to simplify and show the progress of whole economies rather than focus on individuals or groups (which is microeconomics).
  • Mail shop - An independent company which specializes in preparing materials for mailing. They affix labels, sort for bulk rates, prepare bagtags, insert in postal bags.
  • Mailing list - A list of customers or prospects used to mail catalogs or sale announcements. It is not a marketing database because it does not provide for a two-way communication with customers.
  • Mainframe - The largest computers used in business applications. They require raised floors, special air conditioning. Mainframes are recommended for marketing databases because of their power, input-output capability and speed measured in MIPS.
  • Make it rain - Slang terminology to express an eagerness to spend significant sums of money. The idiom refers to the visual appearance of paper currency, when thrown into the air by a spendthrift individual.
  • Managed fund - There are two ways in which a fund can be controlled:
  • MAND - Money, Authority, Need and Desire -- the requisites of a qualified lead.
  • Manufacturer's suggested retail price - A price suggested by the producer of a good. It can act as a pricing anchor as sellers will find it difficult to charge more than this price and will often be reluctant to charge less.
  • MAP - A price floor for vendors. There is often an implicit threat that manufacturers will cease supplying vendors who advertise prices below the specified floor.
  • Margin - The difference between the cost and the selling price of a product or service
  • Margin - A profit margin is how much money a company made. For example, a gross profit of £1m on sales of £10m is a 10% profit margin. Companies can compare profit margins with others to see how they are doing.
  • Marginal cost - The effect on total cost of producing one additional unit of output. It corresponds to the slope of the total cost function at each point.
  • Marginal external cost (mec) - The cost of producing an additional unit of a good that is incurred by anyone other than the producer of the good. See also: marginal private cost, marginal social cost.
  • Marginal private benefit (mpb) - The benefit (in terms of profit, or utility) of producing or consuming an additional unit of a good for the individual who decides to produce or consume it, not taking into account any benefit received by others.
  • Marginal private cost (mpc) - The cost for the producer of producing an additional unit of a good, not taking into account any costs its production imposes on others. See also: marginal external cost, marginal social cost.
  • Marginal product - The additional amount of output that is produced if a particular input was increased by one unit, while holding all other inputs constant.
  • Marginal product of labor - The increased output produced when one aditional person is hired. Note that this can be negative.
  • Marginal productivity of abatement expenditures - The marginal rate of transformation (MRT) of abatement costs into improved environment. It is the slope of the feasible frontier. See also: marginal rate of transformation, feasible frontier.
  • Marginal propensity to consume (mpc) - The change in consumption when disposable income changes by one unit.
  • Marginal propensity to import - The change in total imports associated with a change in total income.
  • Marginal rate of substitution (mrs) - The trade-off that a person is willing to make between two goods. At any point, this is the slope of the indifference curve. See also: marginal rate of transformation.
  • Marginal rate of transformation (mrt) - The quantity of some good that must be sacrificed to acquire one additional unit of another good. At any point, it is the slope of the feasible frontier. See also: marginal rate of substitution.
  • Marginal revenue - The change in revenue obtained by increasing the quantity from Q to Q + 1.
  • Marginal social benefit (msb) - The benefit (in terms of utility) of producing or consuming an additional unit of a good, taking into account both the benefit to the individual who decides to produce or consume it, and the benefit to anyone else affected by the decision.
  • Marginal social cost (msc) - The cost of producing an additional unit of a good, taking into account both the cost for the producer and the costs incurred by others affected by the good’s production. Marginal social cost is the sum of the marginal private cost and the marginal external cost.
  • Marginal utility - The additional utility resulting from a one-unit increase of a given variable.
  • Market - A way that people exchange goods and services by means of directly reciprocated transfers (unlike gifts), voluntarily entered into for mutual benefit (unlike theft, taxation), that is often impersonal (unlike transfers among friends, family).
  • Market cap - An estimation of the value of a company. It is equal to the shares outstanding multiplied by the share price.
  • Market capitalization rate - The rate of return that is just high enough to induce investors to hold shares in a particular company. This will be high if the company is subject to a high level of systematic risk.
  • Market failure - When markets allocate resources in a Pareto-inefficient way.
  • Market for lemons - The paper that earned economist George Akerlof a Nobel Prize. It predicted that all honest used car firms would be forced to leave the market if buyers (but not sellers) could not differentiate between good and bad used cars.
  • Market Penetration - The percentage of buyers you have as compared with the total households or businesses in the area you have selected as your market.
  • Market power - An attribute of a firm that can sell its product at a range of feasible prices, so that it can benefit by acting as a price-setter (rather than a price-taker).
  • Market Rate of Interest - The cost of borrowing money by your company from banks or other institutions. In discount rate computations, this amount is usually doubled to account for risk.
  • Market Research - Statistical analysis of customer data to draw overall conclusions as a basis for action.
  • Market segmentation - A market segment is a division of a market with similar characteristics (e.g. age, gender, religion) that cause them to demand similar products and/or services. For example, in an area with a large Jewish community, kosher foods are likely to be in greater demand.
  • Market share - The percentage or portion of the overall market controlled by one company.
  • Market-clearing price - At this price there is no excess supply or excess demand. See also: equilibrium.
  • Marketing mix - The combination of marketing elements used by a company to encourage consumers to purchase its product or service. Also known as the seven Ps: product, price, promotion, place, people, process, physical evidence.
  • Markup - Markup describes how much you add to the direct costs of your product or service to cover additional expenses and make a profit. For example, if your business sells custom T-shirts for $20 each and the cost of a blank T-shirt plus the labor and materials to customize each one comes to $12, your markup for that product is $8.
  • Mass market - Intended for use by or sale to the undifferentiated majority.
  • Mass Marketing - Selling to everyone through mass media such as radio, TV, or a newspaper, as opposed to database marketing which is aimed at a small selected audience.
  • Match code - A keyline. An extract of the name and address used to identify a specific record. Used in de-duping.
  • Matching market - A market that matches members of two distinct groups of people. Each person in the market would benefit from being connected to the right member of the other group. Also known as: two-sided market.
  • Maturity transformation - The practice of borrowing money short-term and lending it long-term. For example, a bank accepts deposits, which it promises to repay at short notice or no notice, and makes long-term loans (which can be repaid over many years). Also known as: liquidity transformation
  • Maximum retail price - A price ceiling applied to a vendor and set by a manufacturer.
  • Media - Communications channels that convey messages, such as radio, TV, magazines, direct mail.
  • Median voter - If voters can be lined up along a single more-versus-less dimension (such as preferring higher or lower taxes, more or less environmental protection), the median voter is the one ‘in the middle’—that is (if there is an odd number of voters in total), with an equal number preferring more and preferring less than what he or she does. See also: median voter model.
  • Median voter model - An economic model of the location of businesses applied to the positions taken in electoral platforms when two parties compete that provides conditions under which, in order to maximize the number of votes they will receive, the parties will adopt positions that appeal to the median voter. See also: median voter.
  • Medium run (model) - The term does not refer to a period of time, but instead to what is exogenous. In this case capital stock, technology, and institutions are exogenous. Output, employment, prices, and wages are endogenous. See also: capital goods, technology, institution, short run (model), long run (model).
  • Megabyte - A million bytes. Disks are rated in megabytes.
  • Member - in the context of a limited liability company, an individual or group that has partial ownership in the LLC
  • Memory - The amount of information that a computer can hold in its head while it is doing work. The more memory, the faster a computer can work, and the more complicated programs it can handle. New computers today have 32 megabytes of memory, which can be expanded.
  • Mentorship - A mentor may share with a mentee (or protege) information about his or her own career path, as well as provide guidance, motivation, emotional support, and role modeling. A mentor may help with exploring careers, setting goals, developing contacts, and identifying resources.
  • Menu costs - The resources used in setting and changing prices.
  • Merchandise trade - Trade in tangible products that are physically shipped across borders.
  • Merchant cash advances - With a merchant cash advance, the lender provides you with a lump sum based on your future sales, usually at a high cost. With invoice factoring, you sell your unpaid invoices to a lender at a discount
  • Mere - exposure effect Consumers will prefer offerings that are familiar over those that are unfamiliar.
  • Merge/purge - A software system used to merge many different input tapes in differing formats and put them into a common format for a mailing. Merge/Purge detects duplicates.
  • Merger - When two or more companies are combined into one.
  • Merit goods - Goods and services that should be available to everyone, independently of their ability to pay.
  • Micro - Micro-computer. Another name for a PC.
  • Microeconomics - This is a part of economics that concentrates on the actions of individuals and groups, rather than of whole economies (which is macroeconomics).
  • Microloan program - New or expanding small businesses are eligible for loans of up to $50,000. These loans can be used for working capital or purchasing inventory, equipment, furniture, supplies or machinery. Microloans can’t be used to pay existing debts or to purchase real estate.
  • Migration - The process of moving your database from one platform (such as an external service bureau) to another (such as your in-house mainframe). When you outsource, you should look ahead and be sure that you can migrate at some later date.
  • MINI - Smaller than Mainframe computers. They may also need raised floors and air conditioning. They are less expensive than Mainframes, and, generally do not have the power or input-output capability to manage a large marketing database.
  • Minimum acceptable offer - In the ultimatum game, the smallest offer by the Proposer that will not be rejected by the Responder. Generally applied in bargaining situations to mean the least favourable offer that would be accepted.
  • Minsky moment - The point in time when the value of a speculative asset class massively drops in value.
  • MIPS - Millions of Instructions Per Second. A measurement of the relative speed of a Mainframe computer.
  • MIS - Abbreviation for Management Information Systems. This term is used in many companies to refer to the data processing staff that runs the central company mainframe computer.
  • Missing market - A market in which there is some kind of exchange that, if implemented, would be mutually beneficial. This does not occur due to asymmetric or non-verifiable information.
  • Modeling - A statistical technique whereby you determine which pieces of data in your customer database explains the behavior of your customers. The output of a model is a series of weights which can be multiplied by customer data (income, age, length of residence) to create a score which predicts likelihood to respond to an offer.
  • Modem - A device permitting a PC or terminal to send information over a telephone line. You have to have a modem at both ends. Modems are rated in Baud rate.
  • Momentum trading - Share trading strategy based on the idea that new information is not incorporated into prices instantly, so that prices exhibit positive correlation over short periods.
  • Monetary policy - Central bank (or government) actions aimed at influencing economic activity through changing interest rates or the prices of financial assets. See also: quantitative easing.
  • Money - Money is something that facilitates exchange (called a medium of exchange) consisting of bank notes and bank deposits, or anything else that can be used to purchase goods and services, and is generally accepted by others as payment because others can use it for the same purpose. The ‘because’ is important and it distinguishes exchange facilitated by money from barter exchange in which goods are directly exchanged without money changing hands.
  • Money back guarantee - A promise by a vendor to refund the purchase price of a good, should the customer be unsatisfied. This reduces risk, thus increasing the price that he can charge. Many companies attach significant limitations upon such guarantees in order to reduce their own risk exposure while presenting an image to the contrary.
  • Money wage - The amount of money an employer pays to a worker. Also known as: nominal wage.
  • Monopolized market - Market in which a single firm produces all the goods that are sold.
  • Monopoly - A firm that is the only seller of a product without close substitutes. Also refers to a market with only one seller. See also: monopoly power, natural monopoly.
  • Monopoly power - The power that a firm has to control its own price. The fewer close substitutes for the product are available, the greater the firm’s price-setting power. See also: monopoly.
  • Monopoly rents - A form of economic profits, which arise due to restricted competition in selling a firm’s product. See also: economic profit.
  • Monopsony - A market characterized by many vendors but only one buyer.
  • Moral hazard - This term originated in the insurance industry to express the problem that insurers face, namely, the person with home insurance may take less care to avoid fires or other damages to his home, thereby increasing the risk above what it would be in absence of insurance. This term now refers to any situation in which one party to an interaction is deciding on an action that affects the profits or wellbeing of the other but which the affected party cannot control by means of a contract, often because the affected party does not have adequate information on the action. It is also referred to as the ‘hidden actions’ problem. See also: hidden actions (problems of), incomplete contract, too big to fail.
  • Mortgage (or mortgage loan) - A loan contracted by households and businesses to purchase a property without paying the total value at one time. Over a period of many years, the borrower repays the loan, plus interest. The debt is secured by the property itself, referred to as collateral. See also: collateral.
  • Mortgage-backed security (mbs) - A financial asset that uses mortgages as collateral. Investors receive payments derived from the interest and principal of the underlying mortgages. See also: collateral.
  • Motivational skills - Every organization needs motivated people. They need to have the right kind of motivator for every situation. Motivation in the workplace is important for a variety of reasons.
  • Mouse - A small switch on a wheel used to control a PC
  • MRI - Mediamark Research, Inc. is a nationwide survey organization that distributes consumer purchase behavior data.
  • MRR - An acronym for 'monthly recurring revenue.' It is literally the quantity of funds that are received by a firm on an ongoing monthly basis. One time fees, non routine income is excluded from this number.
  • Multi-buyer - A person who crops up on two or more independent rented lists. Multi-buyers usually respond better to a direct offer than other buyers.
  • Multiple Regression - A statistical technique used in modeling whereby you develop a formula which explains the relationship between several variables in explaining customer behavior.
  • Multiplier - See also: fiscal multiplier.
  • Multiplier model - A model of aggregate demand that includes the multiplier process. See also: fiscal multiplier, multiplier process.
  • Multiplier process - A mechanism through which the direct and indirect effect of a change in autonomous spending affects aggregate output. See also: fiscal multiplier, multiplier model.
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  • Nagware - Software that routinely reminds users to pay money for it. The reminders are often in the form of popup messages.
  • Nash equilibrium - A set of strategies, one for each player in the game, such that each player’s strategy is a best response to the strategies chosen by everyone else.
  • National accounts - The system used for measuring overall output and expenditure in a country.
  • National insurance - National insurance is a form of tax which everyone currently employed must pay in order to qualify for benefits, including the state pension.
  • Natural experiment - An empirical study exploiting naturally occurring statistical controls in which researchers do not have the ability to assign participants to treatment and control groups, as is the case in conventional experiments. Instead, differences in law, policy, weather, or other events can offer the opportunity to analyse populations as if they had been part of an experiment. The validity of such studies depends on the premise that the assignment of subjects to the naturally occurring treatment and control groups can be plausibly argued to be random.
  • Natural logarithm - See also: logarithmic scale.
  • Natural monopoly - A production process in which the long-run average cost curve is sufficiently downward-sloping to make it impossible to sustain competition among firms in this market.
  • NCOA - National Change of Address, a US Postal Service system under which about twenty service bureaus nationwide have exclusive use of the change of address forms filed by persons or businesses who are moving. These forms are keypunched, and can be used by the service bureau to update your tape of prospects to obtain their correct current address. A worthwhile service for mailers
  • Negative equity - When the value of an asset you have already bought becomes worth less than what you initially paid.
  • Negative feedback (process) - A process whereby some initial change sets in motion a process that dampens the initial change. See also: positive feedback (process).
  • Negative gearing - A descriptive term for an income producing investment that generates insufficient wealth to pay for the cost of the money that has been borrowed to purchase it. Investors sometimes use negative gearing when they expect the market price of the asset to rise significantly (as is common in financial manias).
  • Nepotism - Favoritism that rewards based upon friendship and association rather than merit.
  • Net - The amount of profit remaining when deductions – such as tax – have been made.
  • Net asset value - A way of measuring investment trusts. Take the total number of its assets minus its liabilities.
  • Net capital flows - The borrowing and lending tracked by the current account. See also: current account, current account deficit, current account surplus.
  • Net cash flow - The net cash flow refers to the balance remaining once the company’s inflow and outflow has been deducted.
  • Net change in cash - The change in the amount of cash flow from one accounting period to the next. This is found at the bottom of the Cash Flow Statement.
  • Net income - Gross income minus depreciation. See also: income, gross income, depreciation.
  • Net names - The actual names used in a mailing, after removing the duplicates and matches to your customer list. In some cases, you can rent names on a net-name basis.
  • Net present value - Calculating the value of a business by building a DCF Model and calculating the net present value (NPV)
  • Net profit - Measures a company’s profitability after expenses; commonly called the Bottom Line, as it expresses the overall financial performance of the company. (Also see Gross Profit)
  • Net worth - Assets less liabilities. See also: balance sheet, equity.
  • Network economies of scale - These exist when an increase in the number of users of an output of a firm implies an increase in the value of the output to each of them, because they are connected to each other.
  • Network effect - An effect that causes some products to increase in value as others buy additional units. The classic example is a phone. The more people who own a phone, the more value each owner receives from his own (he can call and be called by more people).
  • Network external effects - An external effect of one person’s action on another, occuring because the two are connected in a network. See also: external effect.
  • Networking - Networking usually involves meeting new people, who share a profession, industry, or interests. Networking involves exchanging ideas and information between these individuals. Unrelated to computer networking, professional networking often takes place in informal settings.
  • Neural Network - A type of modeling software on a PC which permits a marketer to determine the weights that should be applied to a large number of variables to predict the response or purchases by a target audience.
  • New deal - US President Franklin Roosevelt’s program, begun in 1933, of emergency public works and relief programs to employ millions of people. It established the basic structures for modern state social welfare programs, labour policies, and regulation.
  • Niche market - A way of finding a special product that appealed to only one group, and selling that product very profitably only to that group, ignored by others.
  • Nickel and dime - To charge significant prices via a series of small, seemingly inconsequential, charges.
  • Nickle - A five cent coin. Also slang for $500.
  • Niesr - National Institute of Economic and Social Research.
  • Nixie - A direct mail letter which has been returned to the sender because the address was wrong. Also, any undelivered piece of mail. Nixies are used to correct a list.
  • No bid contract - A contract awarded to a single vendor without any competitive process. It is generally used when there is an urgent need for timeliness or only a single vendor can be relied upon for a given need. Many observers see such contracts as a sign of potential ethical lapses, as they may be misused to funnel money to specific vendors with minimal oversight or transparency.
  • No reserve auction - An auction with no minimum sales price.
  • No true Scotsman - A commonly used argument intended to define the characteristics of a group in order to demonstrate that no member of that group would ever engage in a specified behavior.
  • Nominal interest rate - An interest rate that isn’t adjusted for inflation.
  • Nominal values - These values do not take inflation into account.
  • Nominal wage - The actual amount received in payment for work, in a particular currency. Also known as: money wage. See also: real wage.
  • Non compete clause - A section of a contract that limits one or more signatories from engaging in activities that may harm one or more other signatories.
  • Non-compete contract - A contract of employment containing a provision or agreement by which the worker cannot leave to work for a competitor. This may reduce the reservation option of the worker, lowering the wage that the employer needs to pay.
  • Non-excludable public good - A public good for which it is impossible to exclude anyone from having access. See also: artificially scarce good.
  • Non-executive director - This is a director who helps the company and offers an independent view on strategies and performance but is not actively involved in the day-to-day running.
  • Non-rival good - A good that, if available to anyone, is available to everyone at no additional cost. See also: rival good, non-excludable public good.
  • Normal profits - Corresponds to zero economic profit and means that the rate of profit is equal to the opportunity cost of capital. See also: economic profit, opportunity cost of capital.
  • Nth name - A software system whereby you can pick every 3rd or 4th or 250th name out of a file to use as a valid test of the file. To test a file of 400,000 with a test mailing of 40,000, you would pick every10th name.
o
  • Odd pricing - A pricing method that uses values below (but near) a round number. For instance, many firms select $19.95 rather than $20.00. Likewise, many in the housing market select prices like $199,000 instead of $200,000.
  • Off-line - An off-line database is kept on magnetic tape or cartridge. You cannot call up a record instantly from an off-line database.
  • Offer - What you are offering in your direct mail: 10 for only $19.95.
  • Offshore account - Funds which are managed outside of the UK.
  • Offshoring - The relocation of part of a firm’s activities outside of the national boundaries in which it operates. It can take place within a multinational company or may involve outsourcing production to other firms.
  • Okun’s law - The empirical regularity that growth of GDP is negatively correlated with the rate of unemployment. See also: Okun’s coefficient.
  • Oligopoly - A market where only a few firms control the percentage of total sales.
  • Oligopsony - A market characterized by many sellers but only a handful of buyers.
  • On-line - An on-line database is one in which all the customer records can be called up on your screen instantly when you want them. On-line databases are kept on disk. The opposite of on-line is off-line (or Batch) which usually means that the database is kept on magnetic tape.
  • On-Pack Offers - Communications with customers by making an offer on the package that they purchase.
  • Open-mindedness - Open-minded team members learn things they wouldn't on their own and participate in greater solutions than they could come up with alone. Being open-minded helps you work through interpersonal or intra-team conflicts that arise when people work in close quarters.
  • Operating expenditure (opex) - On-going costs for running a business, service or system that includes day-to-day expenditure such as sales and administration. Compare with capital expenditure, which is money spent on fixed assets or extensions to already-owned fixed assets. A photocopier, for example, would involve capital expenditure whereas toner and paper for the photocopier would be operating expenditure.
  • Operating profit/loss - The profit or loss a company makes. These figures reflect how the business is performing.
  • Opportunity cost - When taking an action implies forgoing the next best alternative action, this is the net benefit of the foregone alternative.
  • Opportunity cost of capital -
  • Optimism - Optimism is formally defined as an individual's expectancy of positive outcomes. The importance of optimism in the workplace is having the mindset of seeing the glass as half full — and it's one of the keys to boosting well-being and engagement.
  • Order book - A record of limit orders placed by buyers and sellers, but not yet fulfilled.
  • Order qualifier - An aspect of an offering that is necessary to compete in a marketplace.
  • Order winner - An aspect of an offering that allows a product to dominate a marketplace.
  • Ordinary share - Also known as common shares, this is one unit of a businesses share capital.
  • Osborne effect - Named after an infamous misstep by the Osborne Computer Corporation. The firm announced a revolutionary model of computer prior to actual availability. As a result, sales of existing models collapsed, and the company went bankrupt due to lack of revenue.
  • Out of pocket - Money that has been spent from the account of a given party.
  • Outbound marketing - A sales technique that involves active effort by vendors to contact potential buyers. An example of this is cold calling.
  • Outsourcing - The process of having various database functions handled by external service bureaus. Typically, functions are outsourced to direct response agencies, computer service bureaus, data entry houses, mailshops, fulfillment houses, telemarketing companies.
  • Outsourcing - The process of subcontracting work to outside vendors.
  • Overheads - Costs that do not vary regardless of the level of production and are not usually directly involved with the cost of production, such as rent.
  • Overlayed Data - A process whereby a customer file has data appended to it (such as age, income, home value) from some external data file. See Enhancement.
  • Overspending - It’s understandable that any new business owner would be excited to get their company up and running as soon as possible and make it the absolute best it can be. However, many small business owners go overboard by purchasing goods and services they don’t need or can’t afford yet.
  • Owner’s draw - The business owner takes funds out of the business for personal use. Draws can happen at regular intervals, or when needed.
  • Owner’s equity - Once you form a business, you’ll contribute cash, equipment, and other assets to the business. When you contribute assets, you are given equity (ownership) in the entity, and you may also take money out of the business each year.
  • Ownership - The right to use and exclude others from the use of something, and the right to sell the thing that is owned.
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  • Package - The envelope or container or look of your outgoing direct mail piece.
  • Pain point - A problem that customers wish to eliminate or reduce.
  • Par value - The face value of a security, stamp or other good.
  • Paradox of choice - The finding that additional choices made available for consumers tends to increase customer anxiety and decrease consumer happiness.
  • Paradox of thrift - If a single individual consumes less, her savings will increase; but if everyone consumes less, the result may be lower rather than higher savings overall. The attempt to increase saving is thwarted if an increase in the saving rate is unmatched by an increase in investment (or other source of aggregate demand such as government spending on goods and services). The outcome is a reduction in aggregate demand and lower output so that actual levels of saving do not increase.
  • Paradox of value - The disconnect between utility and price in a marketplace. The classic example involves diamonds and water. Diamonds generally cost more than water, but water is much more important to consumers.
  • Pareto criterion - According to the Pareto criterion, a desirable attribute of an allocation is that it be Pareto-efficient. See also: Pareto dominant.
  • Pareto dominant - Allocation A Pareto dominates allocation B if at least one party would be better off with A than B, and nobody would be worse off. See also: Pareto efficient.
  • Pareto efficiency - A state in the market such that there is no other way to reallocate resources without making at least one party worse off. Note that this does not imply that a Pareto efficient market maximizes total efficiency or production.
  • Pareto efficiency curve - The set of all allocations that are Pareto efficient. Often referred to as the contract curve, even in social interactions in which there is no contract, which is why we avoid the term. See also: Pareto efficient.
  • Pareto efficient - An allocation with the property that there is no alternative technically feasible allocation in which at least one person would be better off, and nobody worse off.
  • Pareto improvement - A change that benefits at least one person without making anyone else worse off. See also: Pareto dominant.
  • Participation rate - The ratio of the number of people in the labour force to the population of working age. See also: labour force, population of working age.
  • Partnership - The process of two or more entities sharing ownership of a particular business and its assets, profits, or losses.
  • Pass-through entities - A business entity (such as a sole proprietorship, partnership, or S corporation) whose income is taxed as the owner's personal income at the individual rate rather than as business income for federal income taxes
  • Patent - A right of exclusive ownership of an idea or invention, which lasts for a specified length of time. During this time it effectively allows the owner to be a monopolist or exclusive user.
  • Pay the price - To be subjected to a punishment as a consequence of a prior misdeed.
  • Pay what you want pricing - A misguided form of pricing. Instead of the producer setting a price, he asks the "buyer" to set his own price. In most cases this will result in significantly lower income and an influx of cheapskates.
  • Paye - Pay as you earn. A method of collecting income tax on behalf of the Government by taking it directly from your employees’ weekly/monthly pay.
  • Payoff - The benefit to each player associated with the joint actions of all the players.
  • Payroll - An inventory of everyone a company must pay (employees, contractors, and anyone else in a labor agreement with the company), as well as a record of what each person must be paid including salary, wages, and benefits.
  • Paywall - A barrier preventing access to information on an internet site. Websites implementing a paywall will generally require users to provide an email address, a payment, or both before information may be accessed.
  • PC - Personal Computer. The versatile desktop workstation used for hundreds of applications. They can be used to access a marketing database resident on a mainframe.
  • PEG ratio - A method to value a share of stock that takes expected growth into account. It is calculated by dividing a company's P/E ratio by its annual earnings per share growth. The lower the result, the better for the buyer. A result of 1 is considered break
  • Penetration - Ratio Your customers as a percentage of the universe that defines your customer's type of household or business. "We had a penetration ratio in that zip code of 8%."
  • Penetration pricing - The temporary use of exceedingly low prices in order to enter a new market with strong competition.
  • Penny auction - An auction that requires the payment of a fee for each bid a participant places.
  • Penny stock - A stock noted for its low price and often sold sold over the counter, rather than on an exchange. The current American threshold is $5 per share.
  • People management - People management is defined as a set of practices that encompass the end-to-end processes of talent acquisition, talent optimization, and talent retention while providing continued support for the business and guidance for the employees of an organization.
  • Perfect competition - A market in which all producers sell commodity goods and none have substantial pricing power. Thus each is forced to accept the market price.
  • Perfectly competitive equilibrium - Such an equilibrium occurs in a model in which all buyers and sellers are price-takers. In this equilibrium, all transactions take place at a single price. This is known as the law of one price. At that price, the amount supplied equals the amount demanded: the market clears. No buyer or seller can benefit by altering the price they are demanding or offering. They are both price-takers. All potential gains from trade are realized. See also: law of one price.
  • Performance-related pay - A pay which varies, at least partially, with a worker’s performance. See also: piece-rate work.
  • Persona - A profile of a fictional individual whose traits characterize a group of real people (often customers or users). These profiles allow stakeholders to better understand the motivations and needs of their buyers/users.
  • Personalization - The process of including personal references in an outgoing mail piece such as "Thank you for your order of Feb. 23 for six boxes of hard candy, Mrs. Williams." With laser letters, personalization does not cost more than non-personalized letters.
  • Perverse incentive - Motivation for another to perform a specified action but unexpectedly leads to an undesirable result
  • Philanthropy - Making donations to charities in order to improve human wellbeing.
  • Phillips curve - An inverse relationship between the rate of inflation and the rate of unemployment.
  • Piece-rate work - A type of employment in which the worker is paid a fixed amount for each unit of the product made.
  • Pigouvian subsidy - A government subsidy to encourage an economic activity that has positive external effects. (For example, subsidizing basic research.)
  • Pigouvian tax - A tax levied on activities that generate negative external effects so as to correct an inefficient market outcome. See also: external effect, Pigouvian subsidy.
  • Pigovian tax - A surcharge on activity that causes negative externalities.
  • Piracy - The unauthorized duplication of intellectual property.
  • Planned obsolescence - A vendor's intentional design, engineering, and support decisions that reduce an offering's useful life span.
  • Plunge protection team - A controversial governmental working group that is focused on maintaining confidence in the financial markets. It was created by President Ronald Reagan and consists of the Secretary of the Treasury, the chairman of the Federal Reserve, the chairman of the Security and Exchange Commission and the chairman of the Commodity Futures Trading Commission.
  • Plunger - An older term for a speculator
  • Poa - Priced on agreement
  • Policy (interest) rate - The interest rate set by the central bank, which applies to banks that borrow base money from each other, and from the central bank. Also known as: base rate, official rate. See also: real interest rate, nominal interest rate.
  • Political accountability - Accountability achieved by political processes such as elections, oversight by an elected government, or consultation with affected citizens. See also: accountability, economic accountability.
  • Political institutions - The rules of the game that determine who has power and how it is exercised in a society.
  • Political rent - A payment or other benefit in excess of the individual’s next best alternative (reservation position) that exists as a result of the individual’s political position. The reservation position in this case refers to the individual’s situation were he or she to lack a privileged political position. See also: economic rent.
  • Political system - A political system determines how governments will be selected, and how those governments will make and implement decisions that affect all or most members of a population.
  • Polluter pays principle - A guide to environmental policy according to which those who impose negative environmental effects on others should be made to pay for the damages they impose, through taxation or other means.
  • Population of working age - A statistical convention, which in many countries is all people aged between 15 and 64 years.
  • POS - Point of Sale. A cash register.
  • Positioning - Underlying brand message
  • Positive economics - A study of what occurs in a marketplace.
  • Positive feedback (process) - A process whereby some initial change sets in motion a process that magnifies the initial change. See also: negative feedback (process).
  • Positive thinking - Positive thinking helps with stress management and can even improve your performance at work.
  • Post experience good - An offering whose value can not be determined prior to use or even during use. Its value can only be determined after use.
  • Postal pre-sort - Sorting outgoing letters in a special way to take advantage of postal discounts.
  • Postwar accord - An informal agreement (taking different forms in different countries) among employers, governments, and trade unions that created the conditions for rapid economic growth in advanced economies from the late 1940s to the early 1970s. Trade unions accepted the basic institutions of the capitalist economy and did not resist technological change in return for low unemployment, tolerance of unions and other rights, and a rise in real incomes that matched rises in productivity.
  • Potemkin village - The use of deliberately falsified evidence in order to convince a third party as to an item's greatness and desirability. Named after an eighteenth century attempt to convince Catherine II of the great wealth in Crimea via the use of fake, but impressive
  • Power - The ability to do (and get) the things one wants in opposition to the intentions of others, ordinarily by imposing or threatening sanctions.
  • Preapproval letter - Documentation from a lending institution that provides a non binding estimate of the total amount that a mortgage seeker can borrow.
  • Precautionary saving - An increase in saving to restore wealth to its target level. See also: target wealth.
  • Predatory pricing - A pricing strategy characterized by low prices intended to prevent competition from other suppliers.
  • Predictive Model - A model which predicts the response to a promotion.
  • Predistribution policy - Government actions that affect the endowments people have and their value, including the distribution of market income and the distribution of privately held wealth. Examples include education, minimum wage, and anti-discrimination policies. See also: redistribution policy.
  • Preferences - A description of the benefit or cost we associate with each possible outcome.
  • Present Discounted Value - A financial process for calculating the present value of an amount of money to be received or paid in the future. The formula is PDV = V / (1 + i)n where V = future value, i = market rate of interest, n = time in years.
  • Present value - Comparison of the money available to the company in the future with the value of money it currently holds, e.g. due to interest.
  • Prestige pricing - The strategy of charging excessively high prices in order to improve a good's image and desirability. Not to be confused with price gouging.
  • Price - The cost of a good or service.
  • Price ceiling - The maximum price allowed. The lower the price, the greater the shortages that will be experienced by the market.
  • Price discrimination - A selling strategy in which different prices are set for different buyers or groups of buyers, or prices vary depending on the number of units purchased.
  • Price elasticity - A measure of the effect of price changes on consumer demand. The greater the effect, the more elastic the pricing.
  • Price elasticity of demand - The percentage change in demand that would occur in response to a 1% increase in price. We express this as a positive number. Demand is elastic if this is greater than 1, and inelastic if less than 1.
  • Price fixing - A collusion between producers to maintain prices at a certain level. This business practice is illegal in the United States, but some foreign cartels such as OPEC utilize this strategy. Price fixing schemes often unravel because participants are incentivized to cheat by selling excess inventory at below
  • Price floor - The minimum price allowed.
  • Price gap - A difference in the price of a good in the exporting country and the importing country. It includes transportation costs and trade taxes. When global markets are in competitive equilibrium, these differences will be entirely due to trade costs. See also: arbitrage.
  • Price gouging - The practice of charging excessive prices for items after a sudden increase in demand.
  • Price increase letter - Written notification from vendor to customer used to soften the blow when the amount charged is set to go up
  • Price justification letter - Written information that can be used to help convince buyers that an offering is worth its cost
  • Price maker - A vendor that can set prices independent of the going rate.
  • Price markup - The price minus the marginal cost divided by the price. It is inversely proportional to the elasticity of demand for this good.
  • Price skimming - A strategy that involves setting a high initial price in order to maximize the per unit income from each sale. Over time the price is reduced in successive cuts so as to continually maximize the per unit income from the remaining pool of potential buyers.
  • Price taker - A vendor of a commodity who is forced to sell its wares at the going rate.
  • Price-based environmental policy - A policy that uses a tax or subsidy to affect prices, with the goal of internalizing the external effects on the environment of an individual’s choices.
  • Price-setting curve - The curve that gives the real wage paid when firms choose their profit-maximizing price.
  • Price-taker - Characteristic of producers and consumers who cannot benefit by offering or asking any price other than the market price in the equilibrium of a competitive market. They have no power to influence the market price.
  • Pricing power - The ability of a firm to increase its prices without losing customers.
  • Primary deficit - The government deficit (its revenue minus its expenditure) excluding interest payments on its debt. See also: government debt.
  • Primary labour market - A market in which workers are typically represented by trade unions, and enjoy high wages and job security. See also: secondary labour market, segmented labour market.
  • Primary markets - See also: secondary and primary markets
  • Principal agent problem - A statement about misaligned incentives. The representative of an organization may optimize his decisions for his own benefit, not that of the organization that he represents. A statement about misaligned incentives. The representative of an organization may optimize his decisions for his own benefit, not that of the organization that he represents.
  • Principal–agent relationship - This relationship exists when one party (the principal) would like another party (the agent) to act in some way, or have some attribute that is in the interest of the principal, and that cannot be enforced or guaranteed in a binding contract. See also: incomplete contract. Also known as: principal–agent problem.
  • Prioritization - Prioritization is the activity that arranges items or activities in order of importance relative to each other. In the context of medical evaluation it is the establishment of the importance or the urgency of actions that are necessary to preserve the welfare of client or patient.
  • Prisoners’ dilemma - A game in which the payoffs in the dominant strategy equilibrium are lower for each player, and also lower in total, than if neither player played the dominant strategy.
  • Private equity - Funds and investors that directly invest in private companies.
  • Private good - A good that is both rival, and from which others can be excluded.
  • Private limited company - A type of legal company structure that, among other features, limits the personal liability of the company owners so that they can’t be made bankrupt by company debts.
  • Private property - Something is private property if the person possessing it has the right to exclude others from it, to benefit from the use of it, and to exchange it with others.
  • Privatisation - The process of moving state-owned assets into the private sector.
  • Proactiveness - Proactive Attitude (PA) is a personality characteristic which has implications for motivation and action. It is a belief in the rich potential of changes that can be made to improve oneself and one's environment.
  • Procedural judgements of fairness - An evaluation of an outcome based on how the allocation came about, and not on the characteristics of the outcome itself, (for example, how unequal it is). See also: substantive judgements of fairness.
  • Process innovation - An innovation that allows a good or service to be produced at lower cost than its competitors.
  • Procyclical - Tending to move in the same direction as aggregate output and employment over the business cycle. See also: countercyclical.
  • Producer price index - A measure of inflation in goods bought and manufactured by British-based industry.
  • Producer surplus - The price at which a firm sells a good minus the minimum price at which it would have been willing to sell the good, summed across all units sold.
  • Product elasticity of demand (ped) - The degree to which demand for products or services changes with the price. Essential goods, such as food, do not experience an increase in demand when the price changes, and are deemed “inelastic”, but non-essential goods do.
  • Product innovation - An innovation that produces a new good or service at a cost that will attract buyers.
  • Production - A function in an advertising agency of producing letters and other direct mail pieces. Also the programmers in a service bureau who work on such direct mail pieces.
  • Production function - A graphical or mathematical expression describing the amount of output that can be produced by any given amount or combination of input(s). The function describes differing technologies capable of producing the same thing.
  • Production possibilities frontier - The set of outputs that maximize a party's output. Many examples depict a country's potential output of two items: guns and butter.
  • Productized service - A service that has been packaged as a product. The benefits of doing so include ease of marketing and specialization.
  • Profile - A way of describing your typical customer. You create a profile by modeling your database. The profile could tell you that your typical customer was a woman of 35-54 with an income of $25-$50K.
  • Profit - Accountants define profit as the difference between income and expense. Economists also subtract opportunity costs from income.
  • Profit and loss account - A financial statement that shows any incomes or outgoings of a company over a certain period of time so as to show the net profit or loss for that time.
  • Profit and loss statement - Report outlining the total amount of sales (rev­enues) and total costs (expenses). The difference between these figures is your profit.
  • Profit margin - The difference between the price and the marginal cost.
  • Progressive (policy) - An expenditure or transfer that increases the incomes of poorer households by more than richer households, in percentage terms. See also: regressive (policy).
  • Project management - Project management is the application of processes, methods, skills, knowledge and experience to achieve specific project objectives according to the project acceptance criteria within agreed parameters. Project management has final deliverables that are constrained to a finite timescale and budget.
  • Property rights - Legal protection of ownership, including the right to exclude others and to benefit from or sell the thing owned.
  • Prospect - A potential customer who you have targeted.
  • Prospecting - Mailing or telemarketing to prospects who are not yet your customers.
  • Protectionist policy - Measures taken by a government to limit trade; in particular, to reduce the amount of imports in the economy. These are designed to protect local industries from external competition. They can take different forms, such as taxes on imported goods or import quotas.
  • Prudential policy - A policy that places a very high value on reducing the likelihood of a disastrous outcome, even if this is costly in terms of other objectives foregone. Such an approach is often advocated where there is great uncertainty about the conditions under which a disastrous outcome would occur.
  • Psychographics - A way of grouping people by wealth, orientation, hobbies and interests.
  • Psychological pricing - A method to reduce the perceived price of an item by reducing its least significant digits so that the total price falls below a traditional price threshold. For instance, psychological pricing may be used by a retailer to reduce the price of an item from $20 to $19.97. Although the price is essentially unchanged, consumers will subconsciously evaluate the item as being significantly cheaper.
  • Public bad - The negative equivalent of a public good. It is non-rival in the sense that a given individual’s consumption of the public bad does not diminish others’ consumption of it.
  • Public good - A good for which use by one person does not reduce its availability to others. Also known as: non-rival good. See also: non-excludable public good, artificially scarce good.
  • Pull - The percent response to your offer by mail or phone.
  • Pull demand forward - To encourage sales to customers who would have bought at a later date. This usually requires additional expense and effort upon the part of the vendor. Short term cash flow will increase (due to a higher number of sales). On the other hand, sales in subsequent periods will be reduced as those who would have placed orders in those time periods will have already made their purchases. term cash flow will increase (due to a higher number of sales). On the other hand, sales in subsequent periods will be reduced as those who would have placed orders in those time periods will have already made their purchases.
  • Pump and dump - A marketing technique for those with questionable morals. It consists of a push to artificially increase the perceived value of an item (pump), and then the sale of a massive quantity of that good quickly at an inflated price (dump) before anyone catches on. Often used in the context of financial stocks (especially penny stocks).
  • Purchasing power - A measure of the strength of a currency. The larger the measure, the more goods that can be bought by a unit of currency.
  • Purchasing power parity - A ratio of the value of two different currencies.
  • Purchasing power parity (ppp) - A statistical correction allowing comparisons of the amount of goods people can buy in different countries that have different currencies. See also: constant prices.
  • Pure impatience - This is a characteristic of a person who values an additional unit of consumption now over an additional unit later, when the amount of consumption is the same now and later. It arises when a person is impatient to consume more now because she places less value on consumption in the future for reasons of myopia, weakness of will, or for other reasons.
  • Purge - To eliminate undesirable names from a list.
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  • Qualify - In business-to-business, a process whereby respondents to an ad or a mailing are determined (usually by a telephone interview) to be worth a salesman's time and attention. In efficient operations, a telemarketer will qualify an incoming lead before the name is sent to a salesman for action.
  • Quantitative easing - This is a policy used by authorities in extreme circumstances to ease pressure placed on banks. The authorities buy bonds from the banks and from the commercial sector to make sure banks have enough cash to continue operating.
  • Quantitative easing (qe) - Central bank purchases of financial assets aimed at reducing interest rates on those assets when conventional monetary policy is ineffective because the policy interest rate is at the zero lower bound. See also: zero lower bound.
  • Quantity discount - A reduction in total price given in exchange for an agreement to purchase many items.
  • Quantity-based environmental policy - Policies that implement environmental objectives by using bans, caps, and regulations.
  • Query - A question designed to retrieve information from a database. The result can be a count, a cross tab or a report.
  • Quid pro quo - Latin for "something for something." It refers to the practice of trading something of value for another thing of value in business dealings.
  • Quintile - One fifth of a mailing, usually divided by percentage of response. "Our top quintile gave us 70% of our total revenue."
  • Quota - A limit imposed by the government on the volume of imports allowed to enter the economy during a specific period of time.
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  • Race to the bottom - Self-destructive competition between national or regional governments, resulting in lower wages and less regulation to attract foreign investment in a globalized economy.
  • Rack rate - The full, publicly listed price for a good or service. This is almost always the maximum price charged for the offering.
  • Radical innovation - Innovations based on a broad range of knowledge from different sectors, recombining this to create new and very different products.
  • Raid - Redundant Array of Inexpensive Disk, a new technique for storing records on PCs and Mainframes. Greatly reduces the cost of disk storage.
  • Random Access - Modern computer disks can access database records in random fashion. The opposite is sequential access. Random access makes database marketing possible.
  • Rate of return - This is represented as a percentage and is the annual income an investment makes back.
  • Ratio scale - A scale that uses distances on a graph to represent ratios. For example, the ratio between 3 and 6, and between 6 and 12, is the same (the larger number is twice the smaller number). In a ratio scale chart, all changes by the same ratio are represented by the same vertical distance. This contrasts with a linear scale, where the distance between 3 and 6, and between 6 and 9, is the same (in this case, 3). Also known as a log scale (in for example, Microsoft Excel).
  • Rational actor - A person who acts in his own best interests.
  • Rationed goods - Goods that are allocated to buyers by a process other than price (such as queueing, or a lottery).
  • Razoo - A fictitious coin without monetary value. This term is most commonly used in Australia.
  • Reactivation - A program which encourages lapsed customers to start buying again.
  • Real estate loans - A commercial mortgage is a term loan used to buy, develop or refinance commercial property, such as a warehouse, mixed-use building or retail center
  • Real interest rate - The rate of interest minus the current rate of inflation.
  • Real values - Real values show how relative particular prices are to prices in general. They are adjusted according to inflation.
  • Real wage - The nominal wage, adjusted to take account of changes in prices between different time periods. It measures the amount of goods and services the worker can buy. See also: nominal wage.
  • Rebadge - To relabel or rebrand an item so as to obfuscate its history, producer or customer base
  • Recency - A term for how recently a person has bought from your company. It is well established that people who have bought most recently are more likely to buy from you again on your next promotion than people who bought from you longer ago.
  • Recession - The US National Bureau of Economic Research defines it as a period when output is declining. It is over once the economy begins to grow again. An alternative definition is a period when the level of output is below its normal level, even if the economy is growing. It is not over until output has grown enough to get back to normal. The latter definition has the problem that the ‘normal’ level is subjective.
  • Reciprocity - A preference to be kind or to help others who are kind and helpful, and to withhold help and kindness from people who are not helpful or kind.
  • Record - A collection of fields that describe all the information on a customer.
  • Redistribution policy - Taxes, monetary, and in-kind transfers of the government that result in a distribution of final income that differs from the distribution of market income. See also: predistribution policy.
  • Referral Rate - The percentage of new customers that begin buying this year as a result of encouragement from last year's customers. Expressed as a percentage of last year's customers. If we had 4,000 customers last year, and they recommended new customers to us, of whom 240 became customers, the referral rate would be 6%.
  • Reformatting - Changing the format of a rented list to a new record format that matches a desired arrangement.
  • Registered agent - An individual or entity that has been designated by your business to receive service of process documents linked to legal actions, as well as compliance-related notices and other state government correspondence.
  • Registered office - A physical location where the registered agent of a limited liability company can receive legal papers for the company.
  • Regression - Used in the phrase Multiple Regressions. It is a statistical technique, part of modeling, whereby you try to discover a mathematical formula which will explain trends in a set of data, and which variables determine response. A multiple regression might tell you that your best customers live in condominiums, have no children, and have income over $75K, for example.
  • Regressive (policy) - An expenditure or transfer that increases the incomes of richer households by more than poorer households, in percentage terms. See also: progressive (policy).
  • Relational - A relational database is what is needed for database marketing. Such a database is kept on disk and consists of related files (name and address, orders) which are related to each other by ID numbers and accessed by indexes.
  • Relationship Marketing - The process of building a relationship with customers which results in the customers becoming more loyal, buying more, and staying as customers. Another word for Database Marketing.
  • Relative price - The price of one good or service compared to another (usually expressed as a ratio).
  • Reliability - Reliability is defined as the probability that a product, system, or service will perform its intended function adequately for a specified period of time, or will operate in a defined environment without failure.
  • Remittances - Money sent home by international migrant workers to their families or others in the migrants’ home country. In countries which either supply or receive large numbers of migrant workers, this is an important international capital flow.
  • Rent ceiling - The maximum legal price a landlord can charge for a rent.
  • Repeated game - A game in which the same interaction (same payoffs, players, feasible actions) may be occur more than once.
  • Research and development - Expenditures by a private or public entity to create new methods of production, products, or other economically relevant new knowledge.
  • Reservation indifference curve - A curve that indicates allocations (combinations) that are as highly valued as one’s reservation option.
  • Reservation option - A person’s next best alternative among all options in a particular transaction. Also known as: fallback option. See also: reservation price.
  • Reservation price - The lowest price at which someone is willing to sell a good (keeping the good is the potential seller’s reservation option). See also: reservation option.
  • Reservation wage - What an employee would get in alternative employment, or from an unemployment benefit or other support, were he or she not employed in his or her current job.
  • Reserve price - The minimum acceptable price for an item at auction. This number is not necessarily revealed to bidders.
  • Reserves (natural resource) - The amount of a natural resource that is economically feasible to extract given existing technologies. See also: resources (natural).
  • Residual claimant - The person who receives the income left over from a firm or other project after the payment of all contractual costs (for example the cost of hiring workers and paying taxes).
  • Resilience - Resilience is associated with greater job satisfaction, work happiness, organizational commitment and employee engagement. Raising resilience contributes to improved self-esteem, sense of control over life events, sense of purpose in life and improved employee interpersonal relationships.
  • Resources (natural) - The estimated total amount of a substance in the earth’s crust. See also: reserves (natural resource).
  • Respect - Behavior that shows regard for another person with esteem, deference, and dignity. It is a personal commitment to honor other peoples' choices and rights regarding themselves and includes sensitivity and responsiveness to a person's culture, gender, age, and disabilities.
  • Respectfulness - Respect is defined as to feel or show esteem or honor for someone or something.
  • Respondent - Someone who has answered a direct response letter or advertisement.
  • Response Device - On every outgoing direct mail piece, there is included a response device which usually shows up in the "window" in the envelope to provide the name and address. The response device is an order or donation form. It is important because it usually contains the prospect number, and a source code that identifies the offer, package, list, segment, etc.
  • Response rate - The percentage of people who responded to your offer. A typical direct mail response rate to prospects is 2%.
  • Retained earnings - The net income that a firm has earned and kept within its possession.
  • Retainer agreement - A pact in which one party pledges prepayment for services that the other party will render in the future.
  • Retention - The tendency to keep customers buying. Success is measured by retention of customers.
  • Retention Budget - A budget for a program to keep customers from leaving.
  • Retention Rate - The percentage of customers who continue to make purchases from you in a second period, such as a year. If you had 4,000 customers who bought from you last year and this year 3,000 of those same people also make purchases, your retention rate would be 75%.
  • Return on investment - The income received from a transaction. Often displayed as a percentage, rather than in absolute terms. Note that the return need not be purely monetary. Many companies see other factors such as goodwill or entrance into new markets to be an excellent return on investment.
  • Return on Investment (ROI) - A key measure of the success of any direct marketing activity. It is the total net profit from a direct marketing initiative, divided by the total cost of the entire operation. ROI from an initial offer is often negative. But when customer lifetime value is taken into account, it often becomes positive.
  • Return on investments (roi) - Measures a business’s gains and/or losses generated by spending activities; a standard profitability ratio. The ratio calculates the value of the investment as a percentage of the original cost.
  • Revealed preference - A way of studying preferences by reverse engineering the motives of an individual (her preferences) from observations about her or his actions.
  • Revenue - Amounts of money received by (or owed to) a company for goods or services provided.
  • Reverse causality - A two-way causal relationship in which A affects B and B also affects A.
  • RFM - Stands for Recency, Frequency, Monetary. It is a method for segmenting or rating your customers. The best customers are those who have bought from you recently, buy many times, and in large amounts.
  • RFP - Request for Proposals; the document which is used to get external database service bureaus to bid on maintaining your marketing database.
  • Risk - The likelihood and severity of an event. Although risk usually applies to undesirable outcomes, some fields (such as project management) routinely utilize the term 'risk' to also apply to desirable outcomes as well.
  • Risk Management - Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These risks stem from a variety of sources including financial uncertainties, legal liabilities, technology issues, strategic management errors, accidents and natural disasters.
  • Risk premium - A sum of money used to compensate a party for accepting exposure to potential losses.
  • Rival good - A good which, if consumed by one person, is not available to another. See also: non-rival good.
  • Rollout - After a direct mail test of a few thousand letters, a rollout is the mailing to the rest of the names on the successful lists. It may be preceded by a second test or "continuation".
  • ROP - Run of press, or Run of Paper. Advertising space purchased which the paper may insert wherever they see fit.
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  • S corporation (llc) - An S corporation elects to be taxed as a "pass-through" entity, so profits and losses are passed through directly to the shareholders. This eliminates the double taxation problem associated with C corporations. S corporations are subject to limitations not applicable to regular corporations, including a limit on the number of shareholders and the classes of stock.
  • SAA - System Application Architecture. An IBM term for a system whereby PC's can be connected to and used to run mainframes by cooperative processing.
  • Salary - The business owner determines a set wage or amount of money for themselves, and then cuts a paycheck for themselves every pay period.
  • Satisfaction Survey - A survey of customers designed as much to learn something about customers for relationship building purposes as it is to learn about good and bad features of your servicing of the customers.
  • Saturated Market - A situation in which everyone has the product, and the market is essentially a replacement market. For example, tires, batteries, room air conditioners, television.
  • Saving - When consumption expenditure is less than net income, saving takes place and wealth rises. See also: wealth.
  • Sawbuck - Slang for a $10 currency note.
  • Say's law - A good's availability creates its own demand sufficient to clear the market
  • Scalar principle - The scalar principle means that there should be a clear definition of authority in the organization and that this authority flows, one link at a time, through the chain of command.
  • Scalper - A person who buys an item with the expectation that he will be able to sell it for a large profit in the near future. In many markets, such behavior is illegal.
  • Scarcity - A good that is valued, and for which there is an opportunity cost of acquiring more.
  • Scarcity mindset - A belief centered on the idea that opportunities are limited. Individuals with such beliefs tend to engage in lower levels of risk taking.
  • SCF - Sectional Center Facility. The first three digits of the U. S. Zip Code.
  • Schumpeterian rents - Another, equivalent way to refer to innovation rents. Also known as: innovation rents.
  • Scrip - An alternative currency, often used for employees in remote locations.
  • Search cost - The calculated sum of the resources required in order to find and evaluate a potential purchase. The greater the search cost, the less likely a purchase will be made.
  • Search good - A product or service with a value that can be determined with confidence prior to purchase.
  • Secondary and primary markets - The primary market is where goods or financial assets are sold for the first time. For example, the initial sale of shares by a company to an investor (known as an initial public offering or IPO) is on the primary market. The subsequent trading of those shares on the stock exchange is on the secondary market. The terms are also used to describe the initial sale of tickets (primary market) and the secondary market in which they are traded.
  • Secondary labour market - Workers typically on short-term contracts with limited wages and job security. This might be due to their age, or because they are discriminated against by race or ethnic group. See also: primary labour market, segmented labour market.
  • Securities - Interests in a business such as stock or bonds.
  • Security deposit - Money given by a party to reserve the right to purchase, lease or otherwise utilize a product or service. In some cases a security deposit is considered forfeit if further conditions are not met.
  • Seeds - Names of yourself, friends, relatives, or employees inserted in a direct mail mailout to track delivery and quality, and to safeguard against unauthorized mailings. Also called "decoys".
  • Segmentation - To divide outgoing direct mail into coded groups for testing or to improve response. Also used to classify customers into groups for varying tactics.
  • Segmented labour market - A labour market whose distinct segments function as separate labour markets with limited mobility of workers from one segment to the other (including for reasons of racial, language, or other forms of discrimination). See also: primary labour market, secondary labour market.
  • Self-awareness - Self-awareness is the ability to focus on yourself and how your actions, thoughts, or emotions do or don't align with your internal standards.
  • Self-dealing - Situation in which a fiduciary makes a decision on behalf of the corporation that benefits either that fiduciary or a person with whom they have a relationship
  • Self-enhancement bias - Self-enhancement bias has been studied from 2 perspectives: L. Festinger's (1954) social comparison theory (self-enhancers perceive themselves more positively than they perceive others) and G. W. Allport's (1937) self-insight theory (self-enhancers perceive themselves more positively than they are perceived by others.
  • Self-insurance - Saving by a household in order to be able to maintain its consumption when there is a temporary fall in income or need for greater expenditure.
  • Self-regulation - Self-regulation is the ability to understand and manage your own behaviour and reactions. Self-regulation helps children and teenagers learn, behave well, get along with others and become independent.
  • Self-starter - A person who begins work or undertakes a project on his or her own initiative, without needing to be told or encouraged to do so.
  • Sell someone a bill of goods - An idiom for convincing another party that a lie is the truth.
  • Separation of ownership and control - The attribute of some firms by which managers are a separate group from the owners.
  • Sequential - The way records are arranged on a tape. The opposite is random order, or a relational database.
  • Sequential game - A game in which all players do not choose their strategies at the same time, and players that choose later can see the strategies already chosen by the other players, for example the ultimatum game. See also: simultaneous game.
  • Share - A part of the assets of a firm that may be traded. It gives the holder a right to receive a proportion of a firm’s profit and to benefit when the firm’s assets become more valuable. Also known as: common stock.
  • Share index - Tracks the value of shares on the exchange to demonstrate their performance.
  • Share options - A right to buy shares in a company in the future, at a favourable price, in addition to a regular salary if the person meets specific performance targets or predetermined criteria.
  • Shareholder - An owner of shares in a company.
  • Shares - Issued as a part of Equity Financing. Refers to a specific form of equity ownership in a company; stock prices refer to the price of an individual share unit.
  • Shill bid - An offer to purchase made without intent to purchase. They are often used to incite willing buyers to make higher offers.
  • Shock - An exogenous change in some of the fundamental data used in a model.
  • Short run (model) - The term does not refer to a period of time, but instead to what is exogenous: prices, wages, the capital stock, technology, institutions. See also: wages, capital, technology, institutions, medium run (model), long run (model).
  • Short selling - The sale of an asset borrowed by the seller, with the intention of buying it back at a lower price. This strategy is adopted by investors expecting the value of an asset to decrease. Also known as: shorting.
  • Short side (of a market) - The side (either supply or demand) on which the number of desired transactions is least (for example, employers are on the short side of the labour market, because typically there are more workers seeking work than there are jobs being offered). The opposite of short side is the long side. See also: supply side, demand side.
  • Short squeeze - In finance, some parties sell stocks prior to purchasing them (shorting the market). Others may attempt to "squeeze" the shorters by buying up many shares of the stocks that were shorted. This causes the price of that stock to rise and forces the shorters to increase the amount of money they must spend to cover their positions.
  • Short term loans - Short term loans relatively small amounts of money that have to be paid back within three to 18 months. They’re often used as a stop-gap when a company is having cashflow problems, for emergencies, or to help companies take advantage of a business opportunity.
  • Short-run equilibrium - An equilibrium that will prevail while certain variables (for example, the number of firms in a market) remain constant, but where we expect these variables to change when people have time to respond to the situation.
  • Short-termism - This subjective term refers to the case when the person making a judgement places too much weight on costs, benefits, and other things occurring in the near future than would be appropriate.
  • Shrinkflation - A method to hide price increases. Rather than changing the retail price of their wares, producers reduce the quantity of goods provided.
  • Sic code - A coding system designed by the U. S. Department of Commerce for classifying the products and services produced by companies. It is a very inadequate system, but it is the only one around.
  • Signal - Evidence (real or faked) used to alter the recipient's opinion as to the quality, worthiness or appropriateness of a given product or service. For example, an endorsement from a celebrity is often used to increase the perception of quality of a good.
  • Simultaneous game - A game in which players choose strategies simultaneously, for example the prisoners’ dilemma. See also: sequential game.
  • Skinflint - A person who will go to great lengths in order to avoid spending money.
  • SKU - Stock Keeping Unit: a warehouse term for the products that a company produces. Each different product has its own SKU number.
  • Sliding scale fee - A price which is based not upon value provided, but upon the ability of the customer to pay. Depending upon situational specifics, this system may be intended as an act of charity or a means of increasing revenue.
  • Smart money - Investors who are more educated, knowledgeable or sophisticated with respect to the market. These people are often looked to as advanced indicators for future pricing changes in stocks and other other financial instruments.
  • Sme (small or medium sized enterprise) – - Any firm with fewer than 250 employees.
  • Smes - Small and medium-sized enterprises. A small business has fewer than 50 staff and a medium-sized business has fewer than 250 staff. Micro-businesses, with fewer than 10 staff, would also come under the term ‘SME’.
  • Social dilemma - A situation in which actions taken independently by individuals in pursuit of their own private objectives result in an outcome which is inferior to some other feasible outcome that could have occurred if people had acted together, rather than as individuals.
  • Social enterprise - Social mission driven businesses, with social and/or environmental aims, that use market-based strategies to achieve their goals. Social enterprises can be both non-profit and for-profit.
  • Social insurance - Expenditure by the government, financed by taxation, which provides protection against various economic risks (for example, loss of income due to sickness, or unemployment) and enables people to smooth incomes throughout their lifetime. See also: co-insurance.
  • Social interactions - Situations in which the actions taken by each person affect other people’s outcomes as well as their own.
  • Social norm - An understanding that is common to most members of a society about what people should do in a given situation when their actions affect others.
  • Social preferences - Preferences that place a value on what happens to other people, even if it results in lower payoffs for the individual.
  • Soft sell - A weak technique intended to push a buyer into considering action. Such methods are often long term in nature and push for an eventual (rather than immediate) sale. Overly soft pitches risk losing potential sales.
  • Software - Programs that run on computers. Programs tell the computer what to do in a step-by-step fashion.
  • Software as a service - A system of software sales. A vendor hosts a software package on his servers and allows customers to use it for a fee (typically requiring a monthly or yearly payment).
  • Sole proprietorship - This is perhaps the most simplest method chosen when it comes to starting a business. The term refers to an individual business owner who would rather run their company by his/herself than share the responsibilities with someone else.
  • Solvent - A firm or individual for which net worth is positive or zero. For example, a bank whose assets are more than its liabilities (what it owes). See also: insolvent.
  • Source code - A series of letters or numbers affixed to an outgoing advertisement or promotion that identifies the list, the offer, the package, and the segment (as well as the media) in which the promotion was made. Essential to testing the success of any direct marketing effort. The source code must appear on the response device (or in the case of telephone orders, must be asked for by the telemarketers).
  • Sovereign debt crisis - A situation in which government bonds come to be considered so risky that the government may not be able to continue to borrow. If so, the government cannot spend more than the tax revenue they receive.
  • Specialization - This takes place when a country or some other entity produces a more narrow range of goods and services than it consumes, acquiring the goods and services that it does not produce by trade.
  • Speculation - Buying and selling assets in order to profit from an anticipated change in their price.
  • Speculative finance - A strategy used by firms to meet payment commitments on liabilities using cash flow, although the firm cannot repay the principal in this way. Firms in this position need to ‘roll over’ their liabilities, usually by issuing new debt to meet commitments on maturing debt. Term coined by Hyman Minsky in his Financial Instability Hypothesis. See also: hedge finance.
  • Speculator - An individual who takes part in a transaction with the intention of selling the result for a higher sum.
  • Spendthrift - A person who makes purchases far beyond his means of repayment. There is usually a negative connotation suggesting extravagance and pride. A person who spends vast sums of money for antibiotics for poor children, for instance, would not be characterized as such.
  • Spiff - A payment made to a salesman upon the sale of a specific product
  • SQL - A query language used with the IBM software DB2 Often pronounced "sequal".
  • SRI - Stanford Research Institute. A leading research institution which pioneered Psychographics.
  • Stable equilibrium - An equilibrium in which there is a tendency for the equilibrium to be restored after it is disturbed by a small shock.
  • Stagflation - Persistent high inflation combined with high unemployment in a country’s economy.
  • Stakeholders - Any individual or party that has an interest in or may be affected by a business and/or its activities. This can include anyone, from shareholders to residents of the local community.
  • Statement - Stuffer An offer or newsletter included with a monthly invoice or statement to a customer.
  • Stationary state - In the absence of technological progress, the marginal contribution of additional capital goods to increased production would eventually become so small that the process of growth could cease. John Stuart Mill welcomed this prospect as ‘a very considerable improvement on our present condition’.
  • Statutory minimum wage - A minimum level of pay laid down by law, for workers in general or of some specified type. The intention of a minimum wage is to guarantee living standards for the low-paid. Many countries, including the UK and the US, enforce this with legislation. Also known as: minimum wage.
  • Sticker shock - A negative reaction from a potential customer, after he learns of a product's unexpectedly high price.
  • Sticky - Something that is apt to remain constant or unlikely to change. Menu prices are often thought of as sticky as changes require an expensive reprinting process. Similarly, demand for a product or service can be sticky, if switching costs are high.
  • Stock - A quantity is measured at a point in time. Its units do not depend on time.
  • Stock exchange - A financial marketplace where shares (or stocks) and other financial assets are traded. It has a list of companies whose shares are traded there.
  • Storage - The capacity which a computer has for storing names addresses and other data. Storage is usually on magnetic disks, and is measured in megabytes (for a PC) or gigabytes (for a mainframe).
  • Strategic complements - For two activities A and B: the more that A is performed, the greater the benefits of performing B, and the more that B is performed the greater the benefits of performing A.
  • Strategic interaction - A social interaction in which the participants are aware of the ways that their actions affect others (and the ways that the actions of others affect them).
  • Strategic substitutes - For two activities A and B: the more that A is performed, the less the benefits of performing B, and the more that B is performed the less the benefits of perfoming A.
  • Strategy - An action (or a course of action) that a person may take when that person is aware of the mutual dependence of the results for herself and for others. The outcomes depend not only on that person’s actions, but also on the actions of others.
  • Stratification - Adding demographics to a name and address file.
  • Straw purchase - A transaction in which one party acts to acquire an offering for a hidden third party. This term is often used when discussing the purchase of firearms.
  • Stress management - Stress management offers a range of strategies to help you better deal with stress and difficulty (adversity) in your life. Managing stress can help you lead a more balanced, healthier life. Stress is an automatic physical, mental and emotional response to a challenging event.
  • Subprime borrower - An individual with a low credit rating and a high risk of default. See also: subprime mortgage.
  • Subprime mortgage - A residential mortgage issued to a high-risk borrower, for example, a borrower with a history of bankruptcy and delayed repayments. See also: subprime borrower.
  • Subsidy - Money or resources given to a producer by a third party (often a government). Subsidies are often intended to increase production or decrease costs to consumers.
  • Subsistence level - The level of living standards (measured by consumption or income) such that the population will not grow or decline.
  • Substantive judgements of fairness - Judgements based on the characteristics of the allocation itself, not how it was determined. See also: procedural judgements of fairness.
  • Substitute good - A good or service that fills the same needs as another good. The closer to being a perfect substitute, the more price will serve as the sole derterminant as to which product is purchased.
  • Substitutes - Two goods for which an increase in the price of one leads to an increase in the quantity demanded of the other. See also: complements.
  • Substitution effect - The effect that is only due to changes in the price or opportunity cost, given the new level of utility.
  • Sucker's rally - A rapid increase in stock prices due to hype rather than increases in underlying value. In this context, the 'suckers' are uninformed buyers.
  • Sunk cost - Money that has already been spent.
  • Sunk cost fallacy - The common, but mistaken, belief that one should take previous money spent into account when considering a decision. This is due to a human tendency toward loss aversion. Previous spending and commitments to spend will be realized whether or not a given decision is made.
  • Supply chain - The different elements making up the process involved in producing and distributing an item or items.
  • Supply curve - The curve that shows the number of units of output that would be produced at any given price. For a market, it shows the total quantity that all firms together would produce at any given price.
  • Supply shock - An unexpected change on the supply side of the economy, such as a rise or fall in oil prices or an improvement in technology. See also: wage-setting curve, price-setting curve, Phillips curve.
  • Supply side - The side of a market on which those participating are offering something in return for money (for example, those selling bread). See also: demand side.
  • Supply side (aggregate economy) - How labour and capital are used to produce goods and services. It uses the labour market model (also referred to as the wage-setting curve and price-setting curve model). See also: demand side (aggregate economy).
  • Supply-side policies - A set of economic policies designed to improve the functioning of the economy by increasing productivity and international competitiveness, and by reducing profits after taxes and costs of production. Policies include cutting taxes on profits, tightening conditions for the receipt of unemployment benefits, changing legislation to make it easier to fire workers, and the reform of competition policy to reduce monopoly power. Also known as: supply-side reforms.
  • Supply-side problem - See also: supply side.
  • Suppression - Using names on one tape (a customer file) to suppress or drop names from another tape (a prospect file).
  • Surge pricing - A strategy that increases prices as demand increases and decreases prices as demand shrinks. Energy companies often use this strategy, as the cost of electricity will vary over the course of a day.
  • Surplus, joint - See: joint surplus.
  • Sustainability - The use of natural resources with a minimal impact on the environment; e.g. no depletion of resources. For example, a company that manufactured paper would be sustainable if it only made 100 percent recycled paper or planted a new tree for each one it cut down.
  • Sweepstakes - An offer promising a randomly drawn prize to all respondents, regardless of whether they buy your product. Those who do not buy, but still respond to the sweepstakes may be valuable names for rental or for other offers. In comparison to buyers, sweepstakes respondents are generally much less valuable.
  • Switching cost - The expense that a consumer will incur if he purchases a different good.
  • SWOT analysis - A method of characterizing an entity by its strengths, opportunities, weaknesses and threats. This methodology is taught in most business schools and is a useful tool to quickly characterize a firm's competitive advantages and disadvantages.
  • Sympathy - Sympathy is feeling bad for someone else because of something that has happened to them.
  • System Integrator - Someone who can integrate the functions that have been outsourced to several different companies.
  • Systematic risk - A risk that affects all assets in the market, so that it is not possible for investors to reduce their exposure to the risk by holding a combination of different assets. Also known as: undiversifiable risk.
  • Systemic risk - A risk that threatens the financial system itself.
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  • Tacit knowledge - Knowledge made up of the judgements, know-how, and other skills of those participating in the innovation process. The type of knowledge that cannot be accurately written down. See also: codified knowledge.
  • Takeover - The buying out of one company by another.
  • Tangency - When two curves share one point in common but do not cross. The tangent to a curve at a given point is a straight line that touches the curve at that point but does not cross it.
  • Tape - Magnetic tape is 1/2 inch wide, and holds about 300,000 customer records (depending on their size). Tape records are sequential (one after the other) whereas disk records can be in random order. Tape is the cheapest way to store information, but the data is hard to get at. Tape is used for backup and for sending information from one computer to another. Direct marketing tapes are 9 track, and 1600 or 6250 bytes per inch. They are ASCII or EBCDIC.
  • Target Marketing - A marketing strategy aimed at a particular individual or group rather than to mass media.
  • Target wealth - The level of wealth that a household aims to hold, based on its economic goals (or preferences) and expectations. We assume that households try to maintain this level of wealth in the face of changes in their economic situation, as long as it is possible to do so.
  • Tariff - A tax on a good imported into a country.
  • Tax identification number - Most LLCs are required to have a federal tax identification number (also known as an EIN). This number is needed to hire employees, open a bank account, report taxes and for state tax purposes. Even if you are converting your sole proprietorship or partnership and already have a tax ID number for that business, the IRS still requires you to obtain a new tax ID number for your company.
  • Tax incidence - The effect of a tax on the welfare of buyers, sellers, or both.
  • Tax status - An election made by a business owner or entrepreneur when they’re filing taxes. Individuals, for example, have the option to file single, married, and/or married but separate. Businesses on the other hand, can choose to file C (or S) corporation, limited partnership, or limited liability.
  • Taylorism - Innovation in management that seeks to reduce labour costs, for example by dividing skilled jobs into separate less-skilled tasks so as to lower wages.
  • Teamwork - Cooperative effort by the members of a group to achieve a common goal.
  • Technically feasible - An allocation within the limits set by technology and biology.
  • Technological progress - A change in technology that reduces the amount of resources (labour, machines, land, energy, time) required to produce a given amount of the output.
  • Technology - The description of a process using a set of materials and other inputs, including the work of people and machines, to produce an output.
  • Telemarketing - Talking on the telephone to prospects or customers. Inbound telemarketing is usually customers or prospects calling your toll free number. Outbound telemarketing is when you place the call to a prospect or customer. Telemarketing can be done by your in-house staff or by an external telemarketing company.
  • Term - Definition
  • Term loans - A business term loan offers a lump sum with a fixed term and repayment amount. With each payment, you'll pay the principal and interest
  • Terminal - A device that looks like a television screen with a keyboard which, when hooked up to a computer, enables to enter data into the computer, and receive data from it which you see on the screen. The alternative to a terminal is a PC.
  • Terms - The loan terms for short term loans are usually between three and 18 months.
  • Theory of price - The belief that the price of a good can be discovered through the relationship of supply and demand.
  • Third class - Over 85% of all U. S. mail carrying advertising or promotion is sent by third class. It is much less costly than first class. It usually requires postal pre-sort.
  • Tiered pricing - A pricing strategy used to increase revenue and customer count. It involves offering differing versions of a product or service at different price points. Ideally, customers with the highest ability and willingness to spend will purchase the versions with the highest costs, while those with lesser ability and willingness to pay will purchase less expensive versions.
  • Tiger - A Census system for mapping the entire United States by Blocks, complete with roads and other landmarks. Customers and prospects can be shown on a map using geodemographic codes to represent where they are.
  • Time and materials pricing - A pricing model that is based upon the amount of labor and materials used.
  • Time based pricing - A strategy that selects a price based upon the time of day. For instance, a restaurant will often charge less for the very same meal at lunch than at dinner. A strategy that selects a price based upon the time of day. For instance, a restaurant will often charge less for the very same meal at lunch than at dinner.
  • Time horizon - The period between the beginning and end of an investment. Typically, investors will demand higher returns for investments with longer time horizons.
  • Time To Funds - Unlike other sources of small business funding, credit cards are very quick to apply for. Once you’ve been approved, you can expect to have your card in hand within seven to 10 days.
  • Tipping point - An unstable equilibrium at the boundary between two regions characterized by distinct movements in some variable. If the variable takes a value on one side, the variable moves in one direction; on the other, it moves in the other direction. See also: asset price bubble.
  • Tipping point (environmental) - A state of the environment beyond which some process (typically a degradation) becomes self-reinforcing, because of positive feedback processes. On one side, processes of environmental degradation are self-limiting. On the other side, positive feedbacks lead to self-reinforcing, runaway environmental degradation. See also: positive feedback (process).
  • Tolerance - The capacity to endure continued subjection to something such as a drug or environmental conditions without adverse reaction.
  • Too big to fail - Said to be a characteristic of large banks, whose central importance in the economy ensures they will be saved by the government if they are in financial difficulty. The bank thus does not bear all the costs of its activities and is therefore likely to take bigger risks. See also: moral hazard.
  • Top line - The revenue reported on an income statement.
  • Top up auction - An auction in which the winner pays his winning bid, but each other bidder must pay the difference between his bid and the next lower bid.
  • Total surplus - The total gains from trade received by all parties involved in the exchange. It is measured as the sum of the consumer and producer surpluses. See: joint surplus.
  • Trade balance - Value of exports minus the value of imports. Also known as: net exports. See also: trade deficit, trade surplus.
  • Trade costs - The transport costs, tariffs or other factors incurred in trading between markets in two countries that mean that, for affected goods, the law of one price will not hold across each market. See also: law of one price.
  • Trade deficit - A country’s negative trade balance (it imports more than it exports). See also: trade surplus, trade balance.
  • Trade off - A change in one trait to improve another trait. For instance, an increase in production may lead to a decrease in quality.
  • Trade surplus - A country’s positive trade balance (it exports more than it imports). See also: trade deficit, trade balance.
  • Trade union - An organization consisting predominantly of employees, the principal activities of which include the negotiation of rates of pay and conditions of employment for its members.
  • Trademark - A logo, a name, or a registered design typically associated with the right to exclude others from using it to identify their products.
  • Tragedy of the commons - A social dilemma in which self-interested individuals acting independently deplete a common resource, lowering the payoffs of all. See also: social dilemma.
  • Transaction cost - The sum of related expenses over and above the sticker price of a good. An example of a transaction cost might include the cost of training users to understand a software application.
  • Transaction costs - Costs that impede the bargaining process or the agreement of a contract. They include costs of acquiring information about the good to be traded, and costs of enforcing a contract.
  • Transferable good - An item for which ownership can be sold or given from one party to another.
  • Trilemma of the world economy - The likely impossibility that any country, in a globalized world, can simultaneously maintain deep market integration (across borders), national sovereignty, and democratic governance. First suggested by Dani Rodrik, an economist.
  • Triple bottom line - People, planet, profit. The bottom line was originally considered as just profit. In recent years, with the growth in popularity of corporate social responsibility, businesses are increasingly measuring project success not only in monetary terms, but also by examining their social and environmental performance.
  • Tripwire - A product sold primarily for the purpose of building a relationship with a new customer rather than increasing the bottom line.
  • Troy ounce - A measurement for gold, silver and other precious metals. It is slightly more than 31.1 grams.
  • Turnover - The total sales of a business or company during a specified period.
  • Two and twenty - A common fee structure for hedge funds. Firms will often charge 2% of their funds' size each year plus 20% of any profits that are earned.
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  • Undercapitalized - A firm that lacks sufficient resources to engage in normal operations.
  • Unemployment - A situation in which a person who is able and willing to work is not employed.
  • Unemployment benefit - A government transfer received by an unemployed person. Also known as: unemployment insurance
  • Unemployment compensation - Payments to a former employee who was terminated from a job for a reason not based on his or her fault.
  • Unemployment rate - The ratio of the number of the unemployed to the total labour force. (Note that the employment rate and unemployment rate do not sum to 100%, as they have different denominators.) See also: labour force, employment rate.
  • Unemployment, involuntary - The state of being out of work, but pre­ferring to have a job at the wages and working conditions that other­wise identical employed workers have. See also: unemployment.
  • Uniform commercial code - A set of recommended rules to cover business transactions. They have been adopted (either wholesale or in modified form) to varying degrees by state legislatures in the United States.
  • Uniform limited liability company act - Set of standards for the regulation of limited ability companies to be voluntarily adopted
  • Unique bid auction - A type of auction in which the winner is the one with either the lowest or highest bid that is different from everyone else's bid. A fee is generally charged to each participant who offers a bid.
  • Unique selling proposition - The differentiation that a product's vendors can highlight at time of sale in order to increase customer interest.
  • Unit trust - A unit trust invests money in the stock market on behalf of a group of private investors that have put all their money together to invest and be managed by a fund manager.
  • Unquoted shares - Some companies choose to not be listed on the stock market, or they may not meet the listing requirements. Therefore the shares are ‘unquoted’.
  • Unstable equilibrium - An equilibrium such that, if a shock disturbs the equilibrium, there is a subsequent tendency to move even further away from the equilibrium.
  • Up Selling - Prompting customers to buy upgraded products when they had intended to buy something of lower value.
  • Update - To modify a database record to insert new information into it, or to delete it. Updating is either done in batch mode (fast and cheap) or on-line (slow and costly).
  • UPS - Uninterruptable Power Supply. A system of batteries that permits a mainframe to keep going even when the power fails. It is usually connected to a diesel generator that kicks in as soon as the batteries have begun to be needed.
  • Upsell - An attempt to increase a buyer's spending by offering upgrades, additions or modifications for an additional fee.
  • Utility - A numerical indicator of the value that one places on an outcome, such that higher valued outcomes will be chosen over lower valued ones when both are feasible.
v
  • Value added - For a production process this is the value of output minus the value of all inputs (called intermediate goods). The capital goods and labour used in production are not intermediate goods. The value added is equal to profits before taxes plus wages.
  • Value based pricing - A pricing methodology that involves setting prices based upon perceived value (rather than cost to the producer). Although its use can lead to high revenues per sale, the analysis required may prove too burdensome expensive for low
  • Value stream - The steps utilized to create a desirable good.
  • Variable cost - A cost that increases as the quantity of an item is produced. Common examples include the costs of ingredients, shipping and packaging
  • Vat (value-added tax) - A tax paid on most goods and services in the UK, currently 20%.
  • Vc (venture capital) - Capital invested into high-risk opportunities, often startups.
  • Veblen good - A product for which a higher price stimulates increased customer demand. Such items are used to advance the status of the purchaser and provide value other than direct functionality. Common examples include art, wine and jewelry.
  • Venture capital - Capital invested into projects with higher risks, usually start-up businesses.
  • Verifiable information - Information that can be used to enforce a contract.
  • Vertical merger - A merger between companies that are in the same industry but are not at the same production stage. For example, if a car manufacturer buys a tyre company. They are part of the car manufacturing industry, but now the car maker can reduce the cost of tyres.
  • Vig - The common abbreviation for vigorish
  • Vigorish - The interest rate on a loan from a loan shark.
  • Volume - The number of shares traded in a day on the London Stock Exchange.
  • VRIO - A resource based framework for understanding the strategic importance of various resources to an organization.
w
  • Wage inflation - An increase in the nominal wage. Usually measured over a year. See also: nominal wage.
  • Wage labour - A system in which producers are paid for the time they work for their employers.
  • Wage labour contract - See also: wage labour, contract.
  • Wage-price spiral - This occurs if an initial increase in wages in the economy is followed by an increase in the price level, which is followed by an increase in wages and so on. It can also begin with an initial increase in the price level.
  • Wage-setting curve - The curve that gives the real wage necessary at each level of economy-wide employment to provide workers with incentives to work hard and well.
  • WATS - Wide area telephone service. An "800" number whereby the call is free to the caller.
  • Weakness of will - The inability to commit to a course of action (dieting or foregoing some other present pleasure, for example) that one will regret later. It differs from impatience, which may also lead a person to favour pleasures in the present, but not necessarily act in a way that one regrets.
  • Wealth - Stock of things owned or value of that stock. It includes the market value of a home, car, any land, buildings, machinery or other capital goods that a person may own, and any financial assets such as shares or bonds. Debts are subtracted—for example, the mortgage owed to the bank. Debts owed to the person are added.
  • Weights - Numbers that are multiplied by database values to determine model or RFM scores.
  • Welfare state - A set of government policies designed to provide improvements in the welfare of citizens by assisting with income smoothing (for example, unemployment benefits and pensions).
  • What the market will bear - The price which an undifferentiated set of potential buyers will support. Vendors (especially smaller ones) will be better off focusing on marketing to small segments, rather than the market as a whole.
  • White elephant - An item that incurs maintenance costs far above its value, yet cannot be sold or disposed.
  • White good - Large household appliances so named due to the common use of enamel coating. Some authors use this term to refer to linens instead.
  • White mail - Mail received from a buyer or donor who has not included the response device, so you cannot determine the source code of the offer which promoted his purchase or gift.
  • Wholesale - The bulk sale of goods to retailers who will themselves sell to end users.
  • Willingness to accept (wta) - The reservation price of a potential seller, who will be willing to sell a unit only for a price at least this high. See also: willingness to pay.
  • Willingness to pay (wtp) - An indicator of how much a person values a good, measured by the maximum amount he or she would pay to acquire a unit of the good. See also: willingness to accept.
  • Winner-take-all competition - Firms entering a market first can often dominate the entire market, at least temporarily.
  • Winner's curse - The winner of an auction is (by definition) willing to pay more than any other bidder for a given good. This suggests that winning bidders may have overvalued their purchases.
  • Without-profits policy - An insurance policy that does not share in the profits of the business that issued it.
  • Work directing - Work directing is telling someone what to do and how to do it. There usually is much less freedom as to how the employee does the task, and many times is much less ownership, participation and learning on the part of the employee, as well.
  • Work in process - The investment in items that have not yet been sold but are intended for sale. The larger the investment, the lower a firm's ability to make investments. As a result, most firms are cautioned to keep work in progress to a minimum.
  • Work-life balance - The balance in demands of both life at work and personal life.
  • Worker’s best response function (to wage) - The optimal amount of work that a worker chooses to perform for each wage that the employer may offer.
  • Working capital - This is the capital a business uses in its day-to-day trading. It’s the difference between current assets and current liabilities. It provides an indication of liquidity and the businesses ability to meet its current obligations.
y
  • Yield - The income from an investment. Calculated by taking the annual dividend or interest payment, multiplying by 100 and dividing by the current market price.
z
  • Zero economic profit - A rate of profit equal to the opportunity cost of capital. See also: normal profits, opportunity cost of capital.
  • Zero lower bound - This refers to the fact that the nominal interest rate cannot be negative, thus setting a floor on the nominal interest rate that can be set by the central bank at zero. See also: quantitative easing.
  • Zero sum game - A game in which the payoff gains and losses of the individuals sum to zero, for all combinations of strategies they might pursue.
  • Zombie funds - More formally these are called closed funds. It’s a name given to a closed with-profits fund that no longer accepts new business until the existing policies mature.