Business studies - Theme 1 - definitions

  • Created by: s2000
  • Created on: 01-05-18 09:22
Marketing
Describes the range of activities that businesses undertake to try to create demand among consumers for their products or services.
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A market
Where buyers and sellers meet to exchange goods or services.
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Market segment
A subsection of a larger market in which consumers share similar needs and wants.
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Mass market
A market for goods produced on a large scale, for a significant number consumers.
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Niche market
A small segment of a larger market.
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Market size
The number of individuals in a certain market who are potential buyers and/or sellers of a product or service.
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Dynamic markets
Markets that are constantly changing over time.
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PESTLE
Political, Economic, Social, Technological, Legal, Environmental
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Innovation
Developing new products and services that offer features that no rivals offer.
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Risk & Uncertainty
Risk = is quantifiable once identified, and can be put into statistics. Uncertainty = the factors causing the risks.
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Product orientation
An approach to making decisions that considers internal factors before worrying about changes in the market (the business can focus on their own key strengths.)
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Market orientation
Places consumers' views and behaviours at the heart of decision-making within the business.
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Primary research
New research conducted for a particular purpose.
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Secondary research
Uses pre-existing data that has been gathered for another purpose.
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Quantitative research
Research conducted on a large enough scale to provide statistically reliable data, usually aimed at discovering factual information about how customers behave.
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Qualitative research
Unlikely to be carried out on a large enough scale to give statistically valid data, but is instead aimed at providing insights as to why customers behave the way they do.
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Market segmentation
Discovering useful ways to split up a market into different groups of consumers who share similar characteristics and needs.
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Market positioning
Deciding exactly what image you are trying to create for your product relative to its rivals.
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Product differentiation
Attempting to make your product seem different, in the minds of consumers, to any other rival in the market.
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Added value
The difference between the cost of bought-in goods and services and the selling price of a product.
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Demand
Describes the level of interest customers have in a product.
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Effective demand
Interest backed by the ability to pay.
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Substitutes
Similar rival products that consumers may choose instead.
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Complements
Products whose use accompanies another (e.g. petrol is a complementary product to cars.)
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Indirect taxes
Taxes that the government imposes on goods and services (e.g. VAT.)
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Commodity markets
Markets for undifferentiated products, generally raw materials such as gold, crude oil or rice.
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Equilibrium
A situation in a market where supply and demand are balanced, making the price stable.
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Price elasticity of demand (PED)
% change in demand / % change in price
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Income elasticity of demand (YED)
% change in demand / % change in real incomes
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Real income
The amount by which average incomes have adjusted for inflation - the amount by which prices have risen.
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Necesities
Basic items that we would always expect to buy, even when times are tight, and they are not as sensitive to changes in real income.
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Indulgences
Those things we can easily live without, but love to treat ourselves to when we can afford to.
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The design mix
Aesthetics, Function. Economic manufacture
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Environmental concerns
Acceptance of the need to be aware of the environmental impact of business activity.
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Ethical sourcing
Where a business only buys products that are produced with fair working conditions and pay for workers, as well as minimising the impact on the environment.
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Promotion
Methods used by the business to communicate information and persuade consumers to purchase a product.
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Public relations
Describes attempts by a business to create publicity that is reported as news, such as staging a glitzy launch party for a new product.
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A brand
A recognisable name or logo that helps to differentiate a product or business.
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Individual brand
Single product brands.
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Brand family
A brand name that is used across a range of related products (can use the umbrella brand name.)
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Corporate brand
Using the company name as a brand - which can convince consumers that all products across the entire range share similar benefits (or drawbacks.)
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Unique selling point (USP)
A particular feature of a product or service that no rival provides.
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Pricing strategies
When a business makes decisions on how to decide the price for a product.
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Price skimming
Launching a brand new product at a high price while the product is unique.
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Price penetration
Launching a new product at a very low price to entice customers to try it.
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Cost-plus pricing
Deciding price by adding a desired percentage onto total costs per unit.
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Predatory pricing
A strategy that sets price low enough to force a competitor out of business - often only on a local basis where competitors are smaller, local firms.
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Competitive pricing
Charging a price at the market average or at a discount to the average price in the market.
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Psychological pricing
Prices are set just below major psychological levels, such as £9.99 instead of £10.
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Distribution
The process of making a product or service available for the consumer or business user that needs it.
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Distribution channel
The route a product takes from producer to consumer.
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Intermediaries
Businesses between the producer and the consumer in a distribution channel, such as retailers.
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The product life cycle
A pattern of sales over time that most products tend to follow. The life cycle model has four/five phases following the launch of a product: (Development), Introduction, Growth, Maturity, Decline.
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Extension strategy
A medium to long-term plan for extending the life cycle of a product.
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The product portfolio
The range of different products that a business (usually large) sells.
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The Boston Matrix
Assesses each product within a firms product portfolio - usually considering the market share and growth of the market in which the product is being sold.
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Problem child
These products may be successful in the future but currently have low market share. Their potential is based on the fact they are being sold in rapidly growing markets offering the chance of rapid sales growth if supported by the right marketing.
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Rising star
Products in exciting, rapidly growing markets that currently hold high share and are the future money-makers for the firm. These products will currently need lots of funding but if high share can be maintained, future profitability is likely.
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Cash cows
Products in stable markets that hold a high share, and can therefore generate relatively high sales with relatively low marketing expenditure. They can generate significant profits the business can use to help further develop their portfolio.
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Dogs
Products that have a low share of a low growth market and are thus generally unattractive members of the portfolio. They are the most likely candidates to be killed off.
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Marketing strategy
The term used to describe the general approach to marketing used by a business.
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Staff turnover
Is also called labour turnover and is the proportion of staff that leave a business during a year.
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Flexibility
The ability of a business to adapt its operations to changes in patterns of demand.
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Outsourcing
Contracting another business to perform certain business functions, allowing significant increases in capacity when needed.
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Redundancy
When employers need to reduce their workforce. If you're being made redundant, you might be eligible for certain rights, including redundancy pay and a notice period.
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Dismissal
When an employee, having been fairly warned, is deemed 'not up to the job' or they have committed a major breach of their terms of employment. No payments are made.
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Collective bargaining
When an employer deals with one or a few representatives for the whole workforce when discussing problems, or negotiating pay rises or changes to working conditions.
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Individual approach
Allows employees to be treated on an individual basis, with stars singled out for better treatment, but it is more time consuming for the employer.
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Internal recruitment
Filling a job vacancy with somebody who also works for the business.
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External recruitment
Filling a job vacancy with somebody who does not currently work for the business.
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Training
Designed to enhance employees' existing skills or develop new skills.
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Induction training
specifically describes initial training when an employee begins a job that is designed to familiarise them with the workplace and the business.
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Business functions
The main departments working within a business. The traditional business functions are marketing, finance, human resource management and operations management.
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Span of control
Describes the number of subordinates directly answerable to one manager.
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Centralised structure
An organisational structure where most major decisions are taken at the very top of the organisation by the most senior managers.
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Decentralised structure
An organisational structure where decision-making is passed lower down the organisation structure through the process of delegation.
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Delegation
Means passing decision-making down power down the organisational structure to a lower level.
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Tall structure
One with many layers and narrow spans of control.
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Flat structure
One with fewer layers and wider spans of control.
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Matrix structure
Where staff may have more than one line manager, and cross-functional project teams are formed.
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Taylor's motivation theory
Scientific management
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Mayo's motivation theory
Human relations theory
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Maslow's motivation theory
Hierarchy of needs
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Herzberg's motivation theory
Two-factor theory
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Job enrichment
Describes designing jobs that include the motivators. E.g. a complete unit of work, direct feedback on performance and the ability to communicate directly with any other member of staff.
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Piecework
Paying each member of staff a set amount of money each time they repeat a task.
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Commission
Paying staff whose role involves selling a certain percentage of the revenue they generate, usually on top of a low basic salary or hourly rate.
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Bonus
Paying a lump sum as an additional reward to members of staff, typically once a year.
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Profit-sharing
Allocating certain proportion of annual profits to be shared as a bonus among staff.
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Performance-related pay (PRP)
Rewarding staff whose performance exceeds a certain level where work performance is hard to quantify - and the decision whether to award a bonus usually depends on some form of appraisal system.
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Empowerment
A slightly stronger form of delegation in which the subordinate is given some decision-making power over what tasks need to be done, not simply told how to do them.
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Consultation
Asking the views of staff affected as part of a decision-making process, although the manager retains the power to make the decision.
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Job enlargement
The term used to describe any increase in the scope of a job, and this describes both job rotation and job enrichment.
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Job rotation
Moving staff between different tasks on the same level of complexity.
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Manager
A person fulfilling a role whose major job is to oversee putting plans into action, getting the details right and ensuring that the resources allocated are used correctly.
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Leader
Has the role of identifying key issues to be addressed, set objectives and decide what should be done to address those issues and who should do it.
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4 types of leadership style
Autocratic, Paternalistic, Democratic, Laissez-faire
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Intrapreneurship
The encouragement of entrepreneurial behaviour within larger businesses.
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Profit satisficing
Blending a desire for profit with other factors, such as building a good reputation or having a good work-life balance.
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An objective
A specific target set by a business.
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A strategy
The plan devised by the business to achieve its objectives.
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SMART objectives
Specific, Measurable, Achievable, Realistic, Time-bound
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Liability
The extent to which the owner(s) of the business must repay debts incurred in the running of the business.
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Unlimited liability
The owners of the business must take personal responsibility for covering debts run up by their business. If the business goes bust, the owner can be forced to sell their own personal assets to repay lenders, suppliers or employees they owe money to.
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Limited liability
A form of legal protection for business owners which ensures that owners of a limited company can only lose the money they have invested in the business.
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A franchise
A licence to use another business's name and business model in return for payment.
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A franchisor
A business that sells the right to use its name and logo to other businesses or entrepreneurs.
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A franchisee
An entrepreneur or company that buys a licence to use another business's name and business model in return for payment.
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Opportunity cost
The value of the next best option forgone when a business decision is made.
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Other cards in this set

Card 2

Front

Where buyers and sellers meet to exchange goods or services.

Back

A market

Card 3

Front

A subsection of a larger market in which consumers share similar needs and wants.

Back

Preview of the back of card 3

Card 4

Front

A market for goods produced on a large scale, for a significant number consumers.

Back

Preview of the back of card 4

Card 5

Front

A small segment of a larger market.

Back

Preview of the back of card 5
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