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:
“A theory of the middle class: that it is not to be determined by its financial situation but rather by its relation to government. That is, one could shade down from an actual ruling or governing class to a class hopelessly out of relation to government, thinking of gov’t as beyond its control, of itself as wholly controlled by gov’t. Somewhere in between and in gradations is the group that has the sense that gov’t exists for it, and shapes its consciousness accordingly.”
—Lionel Trilling (1905–1975)
“Every theory is a self-fulfilling prophecy that orders experience into the framework it provides.”
—Ruth Hubbard (b. 1924)
“Osteopath—One who argues that all human ills are caused by the pressure of hard bone upon soft tissue. The proof of his theory is to be found in the heads of those who believe it.”
—H.L. (Henry Lewis)