Unit 1 Key Terms Flashcards
Market
all of the buyers and sellers that trade a particular type of product in a particular place
Mass Market
a large unsegmented market where mass appeal products are on sale
Niche market
a small section of a market where customers have specific needs and wants
Market size
the total value of sales in a market over a period of time
the total number of consumers in that market
Market share
the percentage of the total market a business has in terms of sales volume or value
Brand
a unique design, sign, symbol, words, or logo which makes a business recognisable and differentiates it from its competitors
Dynamic market
a market subject to rapid and continuous change over a short period of time
Market growth
an increase in demand/sales for a particular product/service
Competition
the contest between organisations that provide similar or the same products/services
Risk
When the potential outcomes of a decision are known
Uncertainty
the inability to predict future events and outcomes
Product orientation
when a business focuses heavily on design, quality, and performance when creating and selling products
Market orientation
a business’s products/ services are based around meeting the needs and wants of the consumer
Market research
gathering, presenting, and analysing information about products and customers
Primary market research
collecting data about customers and the market first hand
Focus groups
a group of people who participate in a discussion as part of market research to give feedback and opinions about a product/service
Secondary market research
gathering and analysing data that already exists and has been collected for another purpose
Quantitative research
the data collected is numerical and is collected usually using methods such as questionnaires and surveys
Qualitative data
the data collected to find out the motivations behind consumer behaviour- this could be done through focus groups
Market segmentation
when a market is split up into identifiable groups where consumers share one or more characteristics or need
Market positioning
an effort to influence consumers perceptions of a brand/product relative to the perception of completing brands and products (maybe through differentiation or adding value)
Market mapping
the use of two-dimensional diagram that plots products/services in a market using two variables
Competitive advantage
a feature of a business that enable it to compete effectively with rivals
Product differentiation
making a product distinctive from competitor’s products or creating a USP
USP
a factor that differentiates a product from its competitors
Added value
the difference between the price the customer pays and the cost of inputs
Adding value
the process of turning factor inputs into something that will sell for more than it costs
Demand
the amount of goods and services consumers are willing and able to but at a given price
Substitutes
a product that can be used to replace another because customers see them as being very similar products
Complimentary goods
products which are bought and used together
External shocks
an unexpected change which takes place outside of a business and affects the economy
Seasonality
where the levels of business activity varies based on the time of year
Supply
The quantity of products that producers are willing and able to produce/provide at a given price
Indirect taxes
tax on goods and services rather than profit e.g. VAT
Government subsidies
any form of government support offered to producers (and occasionally consumers)
Equilibrium
when there is a balance between supply and demand, making the price stable
Price elasticity of demand
measures the responsiveness of demand to a change in price
Price inelastic of demand
demand for the product isn’t very dependent on price
Price elastic of demand
demand for the product is very dependent on price
Inferior goods
a product that has a negative income elasticity of demand
Necessity
products/services that consumers buy regardless of the changes in their income levels
Luxury goods
demand increases more than what is proportional as income rises
Product/ service design
The process of creating a new product that will be sold by the business
Design mix
the combination of factors needed in designing a product - aesthetics costs and function
Social trends
concerns from people in society over resource depletion, waste minimisation, recycling and ethical resourcing
Resource depletion
when natural resources are used quicker than the rate of replenishment
Recycling
the conversion of waste into renewable material
Re-use
using an item, whether for its original purpose or to fulfill a different function
Ethical sourcing
involves a business buying materials and products that are produced using fair working conditions and/or with no negative impact on the environment
Branding
involves creating an image or name that gives a product an identity that is recognisable and positive
Promotion
any type of marketing communication used to inform or persuade consumers to use or buy a particular brand
Advertising
paid for communication by a business to raise customer awareness of its products/services/brand
Sponsorship
a company giving a product or money to support another business or person
Viral marketing
the use of social networks to rapidly raise awareness of a new product/service
Social media
websites and apps that enable users to create and share content to participate in social networking
Emotional branding
seeks to create a bond between the consumer and product by provoking an emotional response to advertisement
Price
the amount of money that is paid for a product/service
Cost plus pricing
Price is calculated by adding a markup percentage to the cost of the product
Price skimming
setting a high initial price for a product when launched to take advantage of those wanting to be the first people to purchase it
Price penetration
setting a low initial price to build market share before switching to a more profitable price
Predatory pricing
deliberately lowering prices to force another business out of the market
Competitive pricing
when a business sets a price similar to competitors selling similar products
Psychological pricing
when a firm sets a price for the product in order to entice the customer
Distribution channels
the stages/methods involved in getting the finished product to customers
Manufacturer
a person/company that produces finished goods and raw materials by using various equipment and resources
then sells them to consumers, wholesalers, distributors and retailers
Wholesaler
a business that buys goods from manufacturers in bulk and sells them in smaller quantities to retailers
Retailer
a business or person that sells goods to the consumers
Intermediaries
individuals or companies that behave as middlemen between parties
(organisations involved in each stage of distribution)
Marketing strategy
the methods chosen to achieve marketing objectives and to compete with rivals
Marketing mix
using the right blend of product, price, place and promotion in order to maximise sales
Product life cycle
it describes the stages a product goes through from introduction to decine
Extension strategy
a method to lengthen the life/sales of a product/service by preventing the entering of the decline stage in the product life cycle
Boston matrix
a method used to analyse the product portfolio of a business based on market share and market growth which categories them as either question marks, stars, cash cows or dogs
Cash cow
a product that has a high market share and a low market growth
Problem child/question mark
a product that has a small market share and a high market growth
Dog
a product that has a low market share and a low market growth
Star
a product that has a high market share and a high market growth
Product portfolio
the collection/range/list of items/products produced/sold/offered by a business
Business 2 business marketing
businesses that promote the sale of products/services to other businesses for use in their operations
Business 2 Consumer marketing
the marketing of a business’ product to a consumer
Where businesses sell directly to consumers.
Customer loyalty
customers will return to the business again and again or favour it over competitors in the same market
Flexible workforce
a workforce that may be multiskilled, part-time, temporary, work flexible hrs, work from home and are outsourced where necessary
Multiskilling
where staff are allowed to carry outa variety of tasks rather than specialise
Part time employees
work for a few hrs or days a week
Temporary employees
workers work for a limited period of time
Flexible hrs
where staff vary the hrs they work to meet both the needs of the business and to some extent their own
Home working
involves employees carrying out all/ part of their job at home without the need to attend the business’ premises
Outsourcing
when a business has one or more of its activities carried out by another business
Dismissal
When an employer ends an employee’s contract of employment due to misconduct or for breaching company rules
Redundancy
When an employee loses their job because their job role is no longer required due to a lack of business/ restructuring
Employer/employee relationships
The working connection between employees and employers in the workplace
Individual bargaining
When a single employee negotiates work-related issues with their employer
Collective bargaining
Negotiation over wages and working conditions between employee representatives/trade unions and the employer
Trade unions
A group that acts on behalf of a group of employees in negotiations with employers
Recruitment process
The process of finding and hiring a person for a specific job role that needs filling within a business
Person specification
Describes the personal attributes desired in a potential employer
(The skills and experience required to succeed in a specified job application.)
Job description
A summary of a job role, including working hrs, salaries, and duties
Selection process
The process of deciding which applicant for a job a business should accept
Internal recruitment
When a business looks to fill a vacancy from within a company
External recruitment
New employees are selected from candidates who have not previously worked in the business
Training
The process of increasing the knowledge and skills of the workforce to enable them to perform their jobs successfully
Induction training
Training provided to new employees to introduce them to the business and their job role
On-the-job training
Learning and developing skills whilst at work doing the job
Off-the-job training
Learning and developing skills away from their normal job environment e.g. in a classroom
Organisational structure
This shows the roles, responsibilities, and hierarchy within a business and shows who is answerable to whom as well as the vertical and horizontal communication links that exist
Hierarchy
The series of levels in a business organised by the amount of authority and responsibility that workers have
Span of control
The number of employees a manager is responsible for
Chain of command
The path of communication and authority up and down the hierarchy of a business
Centralised structure
Where business decisions are made at the top of the hierarchy by senior management or at the headquarters of the business
Decentralised structure
A business allows branches to take more control to make their own decisions
Tall organisational structure
one with many layers and narrow span of control for each manager
Flat organisational structure
one with few layers of hierarchy, short chain of command and wider span of control for each manager
Matrix organisational structure
employees work within teams on projects as well as within their own functional area or department
Motivation
a factor that encourages employees to be more interested and committed to their work
Financial incentives
monetary (money) methods used to motivate workers
Piecework
when workers are paid per unit produced
Commission
an amount of money paid to an employee that is based on a percentage of the sales they have achieved
Commission
an amount of money paid to an employee that is based on a percentage of the sales they have achieved
Bonus
workers are paid extra on top of their salary once an agreed target has been met
Profit share
a scheme that pays employees an additional amount based on the yrs profit
Performance related pay
workers are paid based on their performance or the performance of the business
Non-financial incentives
ways of encouraging/motivating employees without the use of monetary rewards
Delegation
allocating a task to someone who would not normally be responsible for it
Consultation
seeking employees’ opinions/feedback when making business decisions
Empowerment
employees are given more control over their day to day work
Team working
puts workers into small groups and lets them organise their own work
Flexible working
employees have a choice over how and when they work by agreement with the company
Job enrichment
when workers are given more challenging work and training they need to do it
Job rotation
when workers are moved between different tasks
Job enlargement
when workers are given a greater range of work at the same level
Working conditions
the physical surrounding and the atmosphere of the workplace and the way staff are treated by managers
Leadership
the functions of ruling, guiding and inspiring others
a person who has a vision that they share with others, whilst pushing them in the right direction
Management
the planning, organising, directing and controlling all or part of a business
(a person who makes decisions that affect day to day running of a business)
Autocratic leadership
decision making is kept with managers who will direct subordinates with little consultation
Paternalistic leadership
leaders keep control but take the welfare of employees into account when making decisions
Democratic leadership
managers lead a business based on decisions made by the majority- it involves consultation between managers and subordinates
Laissez faire leadership
where the leader may offer coaching and support to employees, but will rarely interfere in the running of the business
Entrepreneur
a person who sets up a business/ takes risks in hope of profit/reward
Intrapreneur
when an employee of a business shows entrepreneurial skills within the business
Profit maximisation
when the difference between sales and revenue and cost is at its greatest
Profit satisficing
when a business is making enough profit so that the owner has a desirable quality of life, or shareholders are paid satisfactory dividends
Entrepreneurial characteristics
qualities/traits demonstrated by an individual starting up in business e.g. resilience, creativity
Business objective
a target/goal set by the business in the short to medium term to achieve its aim/mission
Cost efficiency
minimising the costs of producing goods and services
Social objective
a goal to benefit/improve the community
Limited liability
owners are legally responsible for all business debts
Unlimited liability
owners are only liable for the money they have invested in the business
Sole trader
a business that is owned by one person who has unlimited liability
Partnership
a type of business ownership owned by two or more people
Private limited company (LTD)
a company owned by shareholders who usually also run the business. They cannot sell shares without the agreement of the other shareholders and shares cannot be sold on the stock market
Shareholders
an individual that owns shares in a business
Public limited company (PLC)
they are owned by shareholders that have limited liability and the share are available to the public on the stock market
Stock market flotation
the process of converting a business into a PLC by issuing shares to the public on the stock market
Franchise
a business that is allowed to trade using the brand/logo/business model of an existing business in return for a fee and royalties
Social enterprise
a business that has aims/objectives which benefit society and is not for profit or profits are reinvested into the community
Lifestyle business
a business set up with the aim of making no more than a set level of income from which to enjoy a particular lifestyle
Online business
involves selling products on the internet
Opportunity cost
the next best alternative forgone when making a decision
Trade off
a situation where having more of one thing leads to having less of another
