Glossary- Developing New Business Ideas

Question 1

What is a ‘buyer’?

Answer 1

‘Any person who contracts to acquire an asset in return for some form of consideration’
Someone that will purchase something in return for something else.

Question 2

What is a ‘seller’?

Answer 2

The owner of goods that the buyer wishes to purchase.

Will sell their product/service for a return.

Question 3

What is a market?

Answer 3

A place where buyers and sellers meet to exchange goods or services for money.

Question 4

Define demand.

Answer 4

The amount of a product that consumers are willing and able to purchase at a given price.

Question 5

Define supply.

Answer 5

The amount of a product that a supplier will offer to the market at a given price.

Question 6

What is the Medium of Exchange?

Answer 6

The process by which people trade goods and services they have, for goods and services they require. Can be done by the transfer or money or bartering.

Question 7

Define competition.

Answer 7

The process by which businesses strive against other businesses to gain a larger market share.

Question 8

What is Competitive Advantage?

Answer 8

It is when business has a feature or selling point that other similar businesses do not have and therefore allows them to generate higher sales and gain more market share.

Question 9

What is a USP- and explain it?

Answer 9

Unique Selling Point (proposition)

It is a proposition offered by one company that no other company offers. Makes the company/product stand out above the rest and is appealing to consumers.
EG. Head & Shoulders- ‘You will get rid of dandruff’
Dominoes- ‘You get fresh, hot pizza delivered to your door in 30 minutes or less—or it’s free’

Question 10

What does the term ‘Interdependent’ mean?

Answer 10

Buyers need people to sell what they want. Sellers need people to buy what they want to sell.

Question 11

What is a Substitute?

Answer 11

A product that can be used to replace another product.

EG. L’Oreal shampoo and Tesco’s own shampoo

Question 12

What is a Complement?

Answer 12

2 or more products that will be used together. The price of one may affect the demand of the other.
EG. Cheese and Biscuits

Question 13

What is an inferior good?

Answer 13

Goods people buy as their income falls.

EG. Second hand clothes- Cheaper/smaller cars

Question 14

What is a normal good?

Answer 14

A good for which demand increases when income increases.

EG. NEW car, New clothes, New clothing

Question 15

What is marketing?

Answer 15

Marketing is the IDENTIFICATION, ANTICIPATION and SATISFACTION of customer requirements, in a profitable way.

Question 16

What is product orientation?

Answer 16

When a company designs a product and puts it on the market and hopes that it sells.
EG. Apple Ipad

Question 17

What is market orientation?

Answer 17

When a company is motivated by the customer and the market, and will produce and sell whatever is demanded to suit the needs of the customer.

Question 18

What is the mass market?

Answer 18

When a product is aimed at the majority of the market. There is high competition and small market shares.

Question 19

What is a niche market?

Answer 19

When a product is aimed at a small, target audience. There is less competition but less chance to make profit because there is a limit on the amount of buyers in the market.

Question 20

What is meant by product differentiation?

Answer 20

When a business changes a product specifically to meet the different types of people, and the different demand aspects of the product
EG. variety of flavours(Ice-cream) or colours(mobile phones)