Theme 1 Key Words Flashcards
Niche Market
Small area of the market with specific needs for specialised products or services. Addresses needs not being addressed by others. E.g. high quality chocolate
Mass Market
Large market where most people tend to buy same or similar products. E.g. laundry detergents
Market Size
Measured by either value or volume. Total sales of all producers
Market Share
Amount sold by a single business as a percentage of total market
Dynamic Market
Constantly changing market. Can be due to rising incomes, fashions or arrival of a superior competing product
Innovation
Bringing a new idea into existence and using it
Product Innovation
New technologies make it possible to create new products or to improve quality of existing ones
Process Innovation
Using new technology to improve production methods, so that costs are reduced. Change is often invisible to consumers, but it may result in price cuts
Competition
Lower prices, better quality, more choice, innovation, greater efficiency
Risk
Situations where the outcomes are known and can be quantified
Uncertainty
Where events are unpredictable. Caused by factors outside the control of the business
Product Orientation
Business will focus its efforts upon creating the product rather than responding to market needs. Make the product first then sell it. E.g. iPhone
Market Orientation
Business will focus on customer preferences and needs and responds to their needs. Involves expensive market research
Primary Research
Collecting new data first hand from original sources. E.g. questionnaires and in-depth interviews
Secondary Research
Gathering data from existing online and paper-based sources. E.g. government statistics
Quantitative Research
Analysis of numerical data
Qualitative Research
Customers’ genuine opinions. Aims to understand customer behaviour
Bias
If the sample includes disproportionate number of people from a particular market segment
Market Segmentation
An identifiable group of individuals where consumers share one or more characteristics/needs E.g. income level or gender
Product Differentiation
Distinguishing a product from competitors to make it more attractive to particular markets. Reduces PED
Market Map
Plots brands in the market according to how they meet customers’ needs. It uses two sets of criteria such as quality and prices
Competitive Advantage
Having an edge over rival products. May be based on low costs and keen prices or an innovative design feature
Adding Value
Difference between selling price and costs of its material inputs
Unique Selling Point
Distinctive feature that no competing product can match precisely
Supply
Amount of a good or service that producers are willing to provide at a given cost
Equilibrium Point
The quantity demanded is the same as the quantity supplied. There will be no unsold products
Elasticity
Responsiveness to change
Price Elasticity of Demand
Responsiveness of (quantity) demanded to a change in price
Price Elastic
Price Change causes proportionately bigger change in quantity demanded. Beyond -1
Unit Price Elasticity
Price change causes same change in quantity demanded. -1
Price Inelastic
Price change causes proportionately smaller change in quantity demanded. -1<x<0
Income Elasticity of Demand
Responsiveness of (quantity) demanded to a change in income
Income Elastic
Income change causes proportionately bigger change in quantity demanded. x>1
Unit Income Elasticity
Same proportional change in quantity demanded and income. x = 1
Income Inelastic
Income change causes proportionately smaller change in quantity demanded. 0 < x < 1
Luxury Good
Demand increases as income increases. E.g. Jaguar
Inferior Good
Demand decreases as income increases. E.g. Aldi Baked Beans
Design Mix
Function, Aesthetics, Cost
Social Trends
Way society as a whole behaves
Brand
A characteristic/name/symbol that differentiates/distinguishes a product from other suppliers
Promotion
Inform customers and potential customers about the product or service. Creates demand and awareness for their products
Product Branding
Single product is recognised by that name
Personal Branding
Individuals who have become their own brand
Viral Marketing
Strategy that encourages individuals to pass on a marketing message to someone else. Youtube has been very useful for this
Emotional Branding
Creation of brands that appeal to a customer’s emotional nature rather than their logical side
Pricing Strategies
range of ways in which a business might decide on the price of its product/service
Cost Plus Pricing
Adding certain percentage to the average total cost of the product
Premium Pricing
Ability to charge higher price than competition without losing sales
Price Skimming
Charging a very high initial price for the product
Competitive Pricing
Charging about the same as, or a little less than, the prices of competing products
Penetration Pricing
Used to enter a new market. Lower price is used to gain customers and penetrate the market
Psychological Pricing
Used to make the price seem more attractive than it really is
Predatory Pricing
Prices set at a very low level, possibly even below costs of production, in order to destroy competition. Effective but illegal
Distribution Channel
Route taken by the product as it moves from the producer to the customer
Product Life Cycle
Shows different stages that a product passes through. Development, Introduction, Growth, Maturity, Decline
Extension Strategies
Used when sales are slowing. This could be re-launching the product or re-branding
Product Portfolio
Range of products that a business produces
Boston Matrix
Analyses company’s products in terms of market share and growth potential
Star
Product with significant market share in a fast growing market
Problem Child
Small share of fast growing market. Need to be promoted or adapted to fit customer requirements more closely
Cash Cow
Large share of a slow growing or static market. Sells very well and doesn’t require much promotion
Dog
Low share of low growth market. Best strategy is usually to discontinue production
Business To Business
Process of selling products or services to other businesses
Business To Consumer
Involves selling directly to customers who are buying products or services for personal use
Marketing Objectives
Longer term marketing goals and targets
Flexible Workforce
Workforce that can adapt quickly, e.g. to a sudden change in customer demand
Multi-skilling
Practice of training employees so that they can do a range of tasks
Flexible Hours
Requires the employee to work a certain number of hours in a given time period but the employees can choose their own hours
Outsourcing
Where business tasks or processes are undertaken by an external provider
Dismissal
The worker is sacked
Redundancy
When the worker’s skills are no longer of use to the business
Individual Approach
Direct discussions between an employer and an individual
Collective Bargaining
Discussions between employers and representatives of employees, often a trade union
Internal Recruitment
Potential applicants are found within the organisation
External Recruitment
Potential candidates are found from outside the organisation, either by advertising or using recruitment agencies
Labour Turnover
Rate at which staff leave the business
Induction
Training given to new employees to familiarise them with the work environment and the requirements of the job
Organisational Structure
Framework which shows how a business arranges its lines of authority and communications
Hierarchy
Employees are ranked in layers, one above the other, in a typical pyramid shape
Delayering
Reducing the amount of middle managers
Span of Control
Number of employees a manager is responsible for
Centralised Structure
All decision-making is at the top of the hierarchy
Decentralised Structure
Businesses have moved the decision making process away from a central head office and spread it throughout the organisation
Matrix Structure
Individuals are assigned to teams according to their specialism
Taylor Scientific Management
Close supervision and bonuses rewarded to more productive employees
Mayo Human Relations
Focuses on addressing human needs, social and psychological factors
Maslow Hierarchy of Needs
Self-Actualisation
Self-Esteem
Social Needs
Safety Needs
Basic Physical Needs for Survival
Herzberg’s Two Factor Theory
Motivating factors and hygiene factors.
Hygiene factors can only dissatisfy employees if they are not met
Delegation
Allowing decisions to be taken at a lower level
Empowerment
Giving employees some discretion as to how they carry out their tasks
Leadership
Art of motivating and organising a group of people to achieve a common goal
Autocratic
Decision making is kept with managers who will direct subordinates with little consultation
Democratic
Leading a business based on decisions agreed by a majority. Consults with subordinates
Paternalistic
Behave like a parent might in making decisions by taking employee welfare into account. Consult early on and at every level and explain their reasons
Laissez Faire
Set the initial agenda and then give staff complete freedom to complete the task
Profit Maximisation
Achieved with biggest difference between sales revenue and cost
Profit Satisficing
Making enough profit to continue in business. They may not be interested in taking on the additional risk and effort involved in maximising profits
Business Objectives
Goals and Targets set by the business to achieve its aim/mission in the short/medium term
Entrepreneur Characteristics
Hard work, motivation, risk-taking, initiative, creativity, resilience, perseverance, market understanding
Sole Trader
Self-employed and runs his/her own business. Unlimited Liability
Partnership
Two or more people working together. Unlimited liability
Limited Company
Owned by its shareholders
Opportunity Cost
Cost of giving up something in order to do or buy something else. The next best alternative forgone
Trade-Off
A situation in which the benefits of one option are reduced in return for increased benefit of another option
Factors of Demand
Population, Income, Tastes and Preferences, Complementary Goods, Substitutes
online retailing/e-commerce
selling of goods or services over the Internet
marketing strategy
Methods used to achieve marketing objectives
Entrepreneur
A person who starts up and takes on the risk of a business for reward/profit
Franchise
A business established or operated under an authorization to sell or distribute a company’s goods or services in a particular area in return for royalties
Franchisee
an individual or business that is granted the right to sell another party’s product
Franchisor
the originator of a trade name, product, methods of operation, and the like that grants operating rights to another party to sell its product
Non-financial motivators
Promotion
Praise
Teamwork
Fringe Benefits
Job enlargement/ job rotation
Job enrichment
Non-financial motivation
These methods refer to all those motivation methods that do not involve a financial reward or remuneration of any kind; e.g. empowerment, recognition, teamwork, etc.
Financial Motivators
Commission
Piece Rate
Wages + Salaries
Performance Related Pay
Profit Share
Share Ownership
Financial motivation
A form of motivation that is based upon the want to gain financial rewards for good performance.
Ethical Sourcing
Using materials, components and services from suppliers that respect the environment, treat their workforce well and generally trade with integrity
Cost minimisation
A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality
market positioning
Influencing consumer perception of a brand or product, relative to competitors. Achieved through product differentiation and adding value
Tall organisational structure
An organisational structure with a narrow span of control and many levels of hierarchy (a long chain of command)
Flat organisational structure
An organisational structure that has a wide span of control, few management levels and a short chain of command
Specialisation
In business, the production of a limited range of goods
roles of an entrepreneur
Creating/setting up a business, running a business, expanding/developing a business, innovation, anticipating risk
Offshoring
Moving operations from the country where a company is headquartered to a country where pay rates are lower but the necessary skills are available
Market growth
An increase in the demand for a particular product or service over time
On-the-job training
Learning skills whilst at work doing the job
Off-the-job training
Internal or external training programs away from the workplace that develop any of a variety of skills or foster personal development
Demand
the quantity of a good or service that consumers are willing and able to buy at a given price in a given period of time
normal good
a good that consumers demand more of when their incomes increase
inferior good
a good that consumers demand less of when their incomes increase
corporate branding
Strategy that encourages a new product to be associated with a well-established company name. Can be used with any product that a business sells or a brand that represents the entire business
own-brand products
products sold by retailers under their own name and logo
job description
a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job
Person specification
A detailed list of the qualities, skills and qualifications that a successful applicant will need to have
Sales Maximisation
To achieve the highest achievable amount of sales either by volume or value
Market Share
The goal of controlling a specified minimum share of the market for a firm’s good or service
Cost efficiency
To control costs so that the maximum value of outputs is achievable with the lowest value of inputs. This is necessary to support an objective of profit maximisation
Employee welfare
To look after the economic and physical well being of the workforce, a motivated workforce will increase productivity. Helps maintain positive employer/employee relations
Customer satisfaction
To ensure that goods and services meets the needs and expectations of the customer. Helps to build a customer loyalty and repeat business maximizing sales in the long run
Social Objectives
A goal to benefit the community. Likely to be non-financial, such as to reduce the carbon emissions of a business or improve the quality of life for a local community
Survival
In some instances, profits, sales, and market share are less important objectives of the firm
Social Enterprise
A business that has aim/objectives which benefit society and its profits are reinvested into the community
Added value
the difference between the cost of purchasing raw materials and the price the finished goods are sold for
customer loyalty
when customers buy a product from the same supplier again and again - sometimes paying even more for it than they would for a competitive product
consultation
Employee feedback is sought when making decisions
