ENT FINAL EXAM TERMSAdvertising: Advertising and promotion are both used to create awareness for a company’s products and services and influence customers to buy; but they are NOT interchangeable terms. Advertising generally focuses on non-price benefits and targets end-users. It can also have some influence of the channels of distribution through which the customer will seek a product or service. In that sense, advertising is employed to pull the product through the distribution channel—called a PULL strategy. Viral Marketing: Viral Marketing emerged as a direct result of the Internet’s ability to replicate and distribute information quickly and efficiently. Its offline counterparts are “word-of-mouth” and “network marketing.” Even though the term Viral Marketing has negative connotations, it is widely used to describe a marketing strategy that entices customers to pass on the marketing message to others. An example would be Adobe and how they give away their software but put a link in the PDF document that sends the person to their website to download Adobe Reader, therefore letting the user know what Adobe has for sale.Affiliate Programs: One way to increase the traffic on a website is to use affiliate programs, which are basically strategic partnerships with other companies that offer complementary products and services. An example would be Banner exchange programs which posts the entrepreneur’s banner on other compatible internet sites. Relationship Marketing: Relationship Marketing is marketing activities that are aimed at developing and managing trusting and long-term relationships with larger customers.In relationship marketing, customer profile, buying patterns, and history of contacts are maintained in a sales database, and an account executive is assigned to one or more majorcustomers to fulfill their needs and maintain the relationship.Marketing Message:Publicity: Publicity and word of mouth (referrals) are two of the most effective entrepreneurial marketing tools around because they don’t cost the company any money. What they do require is a compelling story that will attract attention. Customer Relationship Management: One of the most rapidly growing areas of marketingis customer relationship management (CRM). CRM is a combination of technology, training, and business strategy that results in a system for gathering and using informationon current and prospective customers, with the goal of increasing profitability. Intangible Benefits: Subjective benefits that cannot be measured in monetary terms.Stages of Investment: 1. Emergence: the business model is being developed and tested with the first customers, seed funding is usually needed. This type of funding willnormally come from the founders and other sources of “friendly money.” (Friends and family, grants and customers)2. Transition: the business is requiring capital to grow on the basis of a proven business model. In fact, customer demand may require that the company grow, but it may be unable to grow rapidly enough solely using internal cash flows. At this stage, more types of capital are available than at startup because the venture has survived and appears to be growing. (Angels, venture capital, strategic investors, customers and debt)3. Rapid Growth: Rapid Growth calls for large sums of capital and perhaps a different type of money, termed mezzanine financing or bridge financing, to provide the entrepreneur with the funds required to get through an initial public offering. This phase can come relatively early in a startup’s life cycle or very late depending on the type of business and the industry in which the company operates. (Venture capital, strategic investors, debt and public offering)Liquidity Event: An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an exit strategy for an illiquid investment. Liquidity events are typically used in conjunction with venture capital/angel investors or private equity firms, which will aim to reach one within a reasonable amount of time afterinitially making an investment. The most common liquidity events are initial public offerings (IPOs) and direct acquisitions by other corporations or private equity firms.Early-Stage Money: “Friendly Money”-Friends and family, grants and customers. Angel Investors: Are informal risk-capital sources. Funding is between $10K-$500K, Angels are often well educated entrepreneurs who tend to invest within a short distance from home. Angels take an active role in the company.Factoring: Is one of the oldest forms of banking and accounts for more than $1 trillion a year in credit. Factoring is a particular type of receivable financing wherein the lender, called the factor, takes ownership of a receivable at a discount and then collects against it.Sources of Funding: Entrepreneur and family money, angels, VCs, strategic investors, customers, debtDebt Financing: When entrepreneurs choose a debt instrument to finance a portion of startup expenses, they typically provide a business or personal asset as collateral in exchange for a loan bearing a market rate of interest. The asset could be equipment, inventory, real estate, or the entrepreneur’s house or car. Sources would be commercial banks, commercial finance companies and small business administration loans.Equity: When someone invests money in a venture, it is normally done to gain an ownership share in the business. This ownership share is equity. It is distinguished from debt in that equity investors put their capital at risk; typically there is no guaranteed return and no absolute protection against loss. For this reason, most entrepreneurs with startup ventures seek investment capital from people they know who believe in them. Sources would be friends and family, private investors—Angels, Private PlacementMemorandum, Venture capital institutes and networks, and small business investment companies. Management Risk: The risks associated with ineffective, destructive or underperforming management, which hurts shareholders and the company or fund being managed. This term refers to the risk of the situation in which the company and shareholders would havebeen better off without the choices made by management. Technology Risk: Risk associated with technology.Business Model Risk: Risk associated with the business model.Term Sheet: Getting to a term sheet is a sign that the VC firm is serious,