Unit 1 Investigating Small Business Key Terms Flashcards
What is a supplier?
A business who sells(or supplies) products to another business
What is a customer?
The person who buys or is supplied with a product
What is a Consumer?
The person who ultimately uses a product.
What is a market?
Where buyers and sellers meet to exchange goods or services
What are customer needs?
The wants and desire of buyers or a product or the customers of a business.
What is Market Research?
The process of gaining information about customers, competitors and market trends through collecting primary and secondary data.
What is Primary Research?
The gathering of new information, which has not been collected before. eg a survey
What is a survey?
Research involving asking questions of people of organisation.
What is a focus group?
A group of people brought together to answer questions and discuss a product, brand or issue.
What is Qualitative Data?
Qualitative Data is
Information about opinions, judgement and attitudes. Usually hard to put in charts.
What is Quantitative Data?
Data that can be expressed as numbers and can be statistically analysed. eg. “8 out of 10 users said their hair felt softer!”
What are Market Segments?
Part of markets that contains a group of buyers with similar buying habits, such as age or income.
Brand
A named product which customers see as being different from other products and which they can associate or identify with.
Franchising
The right given one business to another to sell goods or services using it’s name. eg. McDonalds and Subway are famous franchisors
Franchisee
A business that agrees to manufacture, distribute or provide a branded product, under license by a franchisor.. eg You can own your own KFC restaurant or Costa cafe as a Franchisee
Franchisor
The business that gives franchisees the right to sell its product in return for a fixed sum of money or a royalty payment. eg. McDonalds
What is secondary research?
The process of collecting data which has been collected before eg. Looking on the internet or reading a magazine
Why is the quality of products important?
A good quality product will reassure the customers that the business is the right place to be. People do not pay for items which do not meet standard
What is EPOS?
Electronic Point of Sale. eg. Barcodes and scanners at the checkout. This is monitoring tills to check the buying habits of customers
What is an example of observation?
Looking at cctv to see the buying habits of customers
Market Map (Perceptual Map or Positioning Map)
A diagram that shows the range of possible positions for two features of a product, such as low to high price and low to high quality.
Gap in the market
Occurs when no business is currently serving the needs of customers for a particular product.
Added Value
The increase worth that a business creates for a product; it is the difference between what a business pays to its suppliers and the price that is able to charge for the product/ service.
Unique selling point or USP
A characteristic of a product that make it different from other similar products being sold in the market such as design, quality or image.
Name 3 reasons why new business ideas come about
- Advances in technology eg. 4G
- Changes in what consumers want eg. gluten-free or dairy free products
- Products or services becoming obsolete eg. VHS tapes
Difference between e-commerce and m-commerce
E-commerce: using internet to do business
M-commerce: using mobile technology such as smartphones and tablets to do business
Entrepreneur
A person who owns and runs their own business and takes risks.
Enterprises
Another word for businesses.
Enterprise
A willingness by an individual or a business to take risks, show initiative and undertake new ventures.
Risk
The chance of damage or loss occurring as a result of making a decision.
Goods
Physical, tangible products like a car, a pair of scissors or a television set.
Services
Non-physical, intangible products like a taxi journey, a haircut or a television programme.
Competitive Advantage
An advantage a business has that enable it to perform better than its rivals in the market and which is both distinctive and defensible.
Calculated Risk
The probability of a negative event occurring.
Financial Objectives
Targets expressed in money terms such as making a profit, earning income or building wealth.
SMART
Specific, measurable, achievable, realistic and time-constrained.
Determination
The drive to succeed in business. To show commitment to an idea or setting up a business.
Initiative
To work independently and be able to make the first move in business.
Taking Risks
A skill shown by entrepreneurs. It can be risky to own your own business.
Making Decisions
To be in charge of making a good judgement. An entrepreneur will listen and take in information to ensure they make the right decision.
Planning
Planning is essential to any successful business. Clear objectives have to be set for the long term and how these objectives will be met in the short term.
Persuasion
A skill of an entrepreneur. To be able to convince a customer they should buy the product/ service. Or it could also mean negotiating with a supplier to lower their prices.
Revenues
Sales Revenue
Turnover
Sales Turnover
The amount of income received from selling goods or services over a period of time
TR = P x Q Total Revenue = Price x Quantity
Sales volume
The number of items or products or services sold by a business over a period of time.
Fixed costs
Costs which do not vary with the output produced such as rent, business rates, advertising costs, administration costs and salaries.
Total Costs
All the costs of a business; it is equal to fixed costs plus variable costs.
TC = FC + VC Total Costs = Fixed Costs + Variable Costs
Variable Costs
Costs which change directly with the number of products made by a business such as the cost of buying raw materials.
Profit
Occurs when the revenues of a business are greater than its costs over a period of time.
Loss
Occurs when the revenues of a business are less that the costs over a period of time.
Profit/ Loss Formula
Profit/ Loss = Total Revenue – Total Cost
Cash
Notes, coins and money in the bank
Cash Flow
The flow of cash into and out of a business
Inflow
The cash flowing into a business, its receipts
Outflow
The cash flowing out of a business, its payments
Net Cash Flow
The receipts of a business minus its payments
Insolvency
When a business can no longer pay its debts
Cash Flow Forecast
A prediction of how cash will flow through a business in a period of time in future
Opening Balance
The amount of money in a business at the start of the month
Closing Balance
The amount of money in a business at the end of the month
Cumulative Cash Flow
The sum of cash that flows into a business over time
Marketing Mix
The combination of factors which help the business to take into account customer needs when selling a product – usually summarised as the 4 Ps, which are price, product, promotion and place
Price
The amount of money customers have to give up to acquire a product
Product
A good or service produced by a business or organisation and made available to customers for consumption
Promotion
Communication between the business and customer, making the customer aware that the product is for sale, telling or explaining to them what is the product, making the customers aware of how the product will meet the customers’ needs and persuading them to buy it for the first time or again. eg. sponsorship, advertising, BOGOF deals
Place
The way in which a product is distributed – how it gets from the producer to the consumer
Sole trader (or sole proprietor)
The only owner of a business which has unlimited liability.
Unlimited liability
A legal obligation on the owner of a business to settle (pay off) all debts of the business. In law there is no distinction between what the business owes and owns and what the business owns and owes.
Limited liability
When shareholders of a company are not personally liable for the debts of the company; the most they can lose is the value of their investment in the shares of the company.
Companies
Businesses whose shareholders have limited liability.
