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:
“The things that will destroy America are prosperity-at-any- price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.”
—Theodore Roosevelt (1858–1919)
“A theory if you hold it hard enough
And long enough gets rated as a creed....”
—Robert Frost (1874–1963)
“... the first reason for psychology’s failure to understand what people are and how they act, is that clinicians and psychiatrists, who are generally the theoreticians on these matters, have essentially made up myths without any evidence to support them; the second reason for psychology’s failure is that personality theory has looked for inner traits when it should have been looking for social context.”
—Naomi Weisstein (b. 1939)