Theory
Direct marketing businesses must record the revenues and profits received from merchandise sales in order to satisfy basic legal requirements and calculate tax liabilities. Sales of individual items must be tracked in order to fulfill customer orders and manage inventories. As a result, the gross profit and profit margin for each item sold can be calculated as a means of determining which items are most profitable to the business and its owners.
The costs of producing and distributing mail-order catalogs can also be measured. These costs include graphic design, copywriting, photography, print production, postage, and mailing list rental. These costs are typically tracked and totaled for entire publications, rather than for individual items of merchandise offered for sale on the pages of the publication. Square-inch analysis provides the means of allocating these costs to individual items according to the amount of space their sales offers occupy on pages, on a percentage basis (as measured in square inches).
Read more about this topic: Square-inch Analysis
Famous quotes containing the word theory:
“Hygiene is the corruption of medicine by morality. It is impossible to find a hygienest who does not debase his theory of the healthful with a theory of the virtuous.... The true aim of medicine is not to make men virtuous; it is to safeguard and rescue them from the consequences of their vices.”
—H.L. (Henry Lewis)
“No one thinks anything silly is suitable when they are an adolescent. Such an enormous share of their own behavior is silly that they lose all proper perspective on silliness, like a baker who is nauseated by the sight of his own eclairs. This provides another good argument for the emerging theory that the best use of cryogenics is to freeze all human beings when they are between the ages of twelve and nineteen.”
—Anna Quindlen (20th century)
“Lucretius
Sings his great theory of natural origins and of wise conduct; Plato
smiling carves dreams, bright cells
Of incorruptible wax to hive the Greek honey.”
—Robinson Jeffers (1887–1962)