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Definitions on Business

Definitions

C

Cost-Based Pricing
Intro
Cost-based pricing is a pricing strategy in which the price of a product or service is determined by adding a markup to the cost of producing or delivering it. This approach takes into account the various costs associated with the product or service, such as materials, labor, and overhead, and adds a profit margin to determine the final price. Cost-based pricing is a common approach in businesses that operate on thin margins or have a high level of competition, as it allows them to set prices that are competitive while still covering their costs and generating a profit. However, it can be challenging to determine the appropriate markup, and may not always result in the most profitable or competitive pricing strategy. Read more about Cost-Based Pricing

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Customer Acquisition Cost (CAC)
Intro
Customer acquisition cost (CAC) is the total cost that a business incurs in order to acquire a new customer. This includes all of the marketing and sales expenses associated with attracting, converting, and retaining customers, such as advertising, sales commissions, and customer service. CAC is typically calculated by dividing the total marketing and sales costs for a given period by the number of new customers acquired during that period. For example, if a business spends $100,000 on marketing and sales in a month and acquires 100 new customers, its CAC would be $1,000. CAC is an important metric for businesses, as it provides insight into the efficiency and effectiveness of their customer acquisition efforts. It can be used to compare the cost of acquiring customers through different channels or campaigns, and can help businesses identify areas for improvement. Read more about Customer Acquisition Cost (CAC)

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Customer Loyalty
Intro
Customer loyalty refers to a customer's willingness to continue doing business with a particular company or brand over time. It is a measure of the degree to which customers are committed to a company, and is typically based on factors such as satisfaction with the company's products or services, the quality of the customer experience, and the overall value of the company's offering. Companies that are able to cultivate customer loyalty can enjoy a number of benefits, such as increased repeat business, improved customer satisfaction, and greater customer advocacy. Read more about Customer Loyalty

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Customer Relationship Management (CRM)
Intro
Customer relationship management (CRM) is the practice of managing interactions with current and potential customers. It involves using technology, such as CRM software, to organize, automate, and synchronize business processes, such as sales, marketing, and customer service. The goal of CRM is to improve the customer experience and increase customer satisfaction, loyalty, and retention. CRM typically includes tools for managing customer data, tracking customer interactions and interactions, and analyzing customer behavior. It can be used to identify trends, forecast future sales, and personalize marketing messages. CRM is an important aspect of customer-centric businesses, as it helps them to build strong, long-lasting relationships with their customers. Read more about Customer Relationship Management (CRM)

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D

Demographics
Intro
In marketing, demographics refer to the statistical characteristics of a population, such as age, gender, income, education level, and geographic location. These characteristics are used to group individuals into specific categories, which can be useful for identifying potential customers and understanding their needs and preferences. Demographics are often used in market research and targeting, as they provide valuable insights into the makeup of a particular market and can help companies tailor their products and marketing messages to specific groups of consumers. Read more about Demographics

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Direct Competition
Intro
In marketing, direct competition refers to the competition between companies that offer similar products or services to the same target market. These companies are considered to be direct competitors because they are competing for the same customers and their products or services are substitutes for one another. Direct competition is an important concept in marketing because it helps companies to understand the market and develop strategies to differentiate themselves from their competitors. This can include things like pricing, branding, and product development. Read more about Direct Competition

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I

Ideal Customer Profile (ICP)
Intro
An ideal customer profile (ICP) is a detailed description of a business's ideal customer. This profile includes information about the customer's characteristics, such as their age, gender, income level, interests, and purchasing behavior. An ICP is typically used by businesses to help them identify potential customers and target their marketing efforts. By defining their ICP, businesses can focus their marketing efforts on the specific group of customers who are most likely to be interested in their products or services. This can help businesses save money and resources by only targeting customers who are likely to be interested in what they have to offer, rather than trying to reach a broader audience. Read more about Ideal Customer Profile (ICP)

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R

Return On Investment (ROI)
Intro
Return on investment (ROI) is a measure of the profit earned from an investment compared to the initial cost of the investment. It is typically expressed as a percentage, and is often used to compare the efficiency of different investments. The higher the ROI, the better the return on the investment. To calculate ROI, the net profit from the investment is divided by the initial cost of the investment, and the result is multiplied by 100 to express it as a percentage. For example, if an investment of $100 earns a net profit of $20, the ROI would be 20/100 * 100 = 20%. Read more about Return On Investment (ROI)

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S

Serviced Available Market (SAM)
Intro
Serviced Available Market (SAM) is a term used in marketing to refer to the portion of the Total Available Market (TAM) that a company can realistically target with its products or services. It represents the portion of the market that a company can effectively serve, based on its resources, capabilities, and other factors. Read more about Serviced Available Market (SAM)

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Share of Market (SOM)
Intro
Share of Market (SOM) is a term used in marketing to refer to the percentage of the total market for a product or service that a company controls. It represents the proportion of the market that a company's products or services account for, relative to the total market size. Read more about Share of Market (SOM)

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T

Total Available Market (TAM)
Intro
Total Available Market (TAM) is a term used in marketing to refer to the total market demand for a product or service. It represents the total revenue opportunity that exists within a specific market. In other words, it is the maximum potential size of a market, in terms of revenue. Read more about Total Available Market (TAM)

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