Edexcel A Level Business Themes 1-4 Flashcards

Complete vocabulary flashcard set covering Edexcel A Level Business Themes 1-4 definitions.

Mass Market

A market with a large number of potential customers and broadly similar needs.

Niche Market

A smaller, specialised segment of a larger market with specific customer needs.

Market Size

The total value or volume of sales in a market.

Market Share

A firm's sales as a percentage of total market sales.

Market Share Calculation

$$\text{Firm sales} \div \text{total market sales} \times 100$$

Brand

A name, image, symbol or identity that distinguishes a product or business.

Dynamic Market

A market that changes over time because of factors such as technology, consumer tastes, competition and innovation.

Effects of Online Retailing on Markets

It can increase convenience and reach, reduce some distribution costs, increase price transparency and intensify competition.

Market Growth from Innovation

New products, services or processes can create new demand or attract new customers.

Adapting to Changing Markets

Changing customer needs, technology and competition can make existing products or methods less successful.

Effects of Competition on a Market

It can increase customer choice, put pressure on prices and margins, and encourage innovation and better quality.

Risk

A situation where possible outcomes can be identified and probabilities can be estimated.

Uncertainty

A situation where future outcomes or their probabilities cannot be reliably predicted.

Product Orientation

An approach where a business focuses on developing the product and then seeks customers for it.

Market Orientation

An approach where a business researches customer needs and develops products to meet them.

Primary Research

New data collected directly by a business for a specific purpose.

Secondary Research

Existing information collected previously by another organisation or for another purpose.

Quantitative Research

Research producing numerical data.

Qualitative Research

Research producing descriptive information about opinions, motives, attitudes or behaviour.

Purpose of Market Research

To identify and anticipate customer needs and wants, estimate likely demand and understand consumer behaviour.

Sample

A smaller group selected from a population for research.

Sampling Bias

A systematic tendency for a sample to be unrepresentative of the population.

Unreliability of Market Research

It may be biased, outdated, expensive, based on a small/unrepresentative sample or affected by inaccurate responses.

Website Support for Market Research

They can provide data on visits, searches, purchases, customer behaviour and feedback.

Social Networking Support for Market Research

It can provide customer opinions, engagement data, trends and feedback.

Database Support for Market Research

They can store and analyse customer, sales and demographic information.

Market Segmentation

Dividing a market into groups with similar characteristics or needs.

Bases for Market Segmentation

Demographic, geographic, psychographic and behavioural characteristics.

Market Mapping

Positioning products or businesses on a diagram using two chosen characteristics.

Competitive Advantage

A feature or capability that allows a business to perform better than competitors.

Product Differentiation

Making a product or service distinct from competitors' offerings.

Purpose of Product Differentiation

To reduce direct competition, build loyalty, justify prices and gain competitive advantage.

Added Value

The difference between the selling price and the cost of bought-in inputs.

Ways to Add Value

Through branding, quality, design, convenience, service or unique features.

Demand

The quantity consumers are willing and able to buy at a given price.

Effect of Substitute Prices on Demand

A rise in the price of a substitute can increase demand for the firm's product; a fall can reduce it.

Complementary Good

A product used or consumed with another product.

Effect of Complementary-Good Prices on Demand

A rise in the complementary good's price may reduce demand for the related product.

Effect of Consumer Income on Demand

Higher income usually increases demand for normal goods; lower income can reduce it.

Effect of Fashions and Preferences on Demand

Products becoming more desirable can experience increased demand.

Effect of Advertising and Branding on Demand

They can increase awareness, perceived value and loyalty.

Effect of Demographics on Demand

Changes in population size and characteristics alter the size and composition of potential demand.

Seasonality

Regular changes in demand associated with particular times of year.

Supply

The quantity producers are willing and able to sell at a given price.

Effect of Production Costs on Supply

Higher costs can reduce supply; lower costs can increase it.

Effect of New Technology on Supply

It can increase productivity and reduce unit costs, increasing potential supply.

Effect of Indirect Taxes on Supply

They raise business costs and can reduce supply.

Effect of Subsidies on Supply

They lower effective costs and can increase supply.

Equilibrium Price

The price where quantity demanded equals quantity supplied.

Excess Demand

Quantity demanded is greater than quantity supplied.

Excess Supply

Quantity supplied is greater than quantity demanded.

Effect of Increased Demand with Constant Supply

Equilibrium price and quantity generally rise.

Effect of Increased Supply with Constant Demand

Equilibrium price generally falls and equilibrium quantity rises.

PED (Price Elasticity of Demand)

Responsiveness of quantity demanded to a change in price.

PED Formula

$$\text{Percentage change in quantity demanded} \div \text{percentage change in price}$$

PED Greater Than 1

Demand is price elastic.

PED Between 0 and 1

Demand is price inelastic.

PED Equal to 1

Unitary elasticity.

PED Equal to 0

Perfectly inelastic demand.

Factors Influencing PED

Substitutes, necessity/luxury, proportion of income spent, brand loyalty and time.

Impact of Close Substitutes on Elasticity

Customers can switch to alternatives when price changes.

Effect of PED on Pricing

For elastic demand, price cuts can raise revenue; for inelastic demand, price rises can raise revenue, other factors unchanged.

Total Revenue

$$\text{Price} \times \text{quantity sold}$$

Total Revenue Effect of Price Rise on Elastic Demand

Revenue tends to fall.

Total Revenue Effect of Price Rise on Inelastic Demand

Revenue tends to rise.

YED (Income Elasticity of Demand)

Responsiveness of quantity demanded to a change in income.

YED Formula

$$\text{Percentage change in quantity demanded} \div \text{percentage change in income}$$

Positive YED

The product is a normal good.

Negative YED

The product is an inferior good.

YED Greater Than 1

Demand is income elastic and the product is likely to be a luxury.

YED Between 0 and 1

Demand is income inelastic and the product is likely to be a necessity.

Usefulness of YED

It helps forecast demand as incomes change and informs product and market decisions.

Design Mix

The combination of function, aesthetics and cost considered in product design.

Function (Design Mix)

What the product is designed to do and how effectively it does it.

Aesthetics

The visual and sensory appeal of a product.

Cost (Design Mix)

Design choices must be balanced against production costs and customers' willingness to pay.

Impact of Resource Depletion on Product Design

Businesses may design to minimise waste and encourage reuse and recycling.

Ethical Sourcing

Obtaining materials/products while considering ethical standards such as worker welfare and environmental impact.

Promotion

Communication used to inform, persuade or remind customers about a product or brand.

Branding

Creating a distinctive identity for a product or business.

USP (Unique Selling Proposition)

A unique selling proposition that distinguishes a product from competitors.

Value Addition via Strong Branding

It can increase perceived quality, trust and loyalty, making customers willing to pay more.

Viral Marketing

Marketing content that spreads rapidly through consumer sharing.

Cost-Plus Pricing

Adding a mark-up to unit cost to determine price.

Price Skimming

Charging a high initial price and reducing it later.

Penetration Pricing

Setting a low initial price to gain market share quickly.

Competitive Pricing

Setting price with reference to competitors' prices.

Psychological Pricing

Setting prices to influence customer perceptions, such as $\pounds 9.99$.

Predatory Pricing

Setting very low prices with the intention of eliminating or deterring competitors; it may raise competition-law concerns.

Factors Influencing Pricing Decisions

Costs, PED, competition, differentiation, brand strength, product life cycle and objectives.

Distribution Channel

The route through which a product moves from producer to final customer.

Direct Distribution

Selling directly from producer to customer.

Indirect Distribution

Using intermediaries such as wholesalers or retailers.

Product Life Cycle

The pattern of sales over development, introduction, growth, maturity and decline.

Extension Strategy

A strategy designed to extend a product's life and delay decline.

Boston Matrix

A portfolio model classifying products using market growth and relative market share.

Star (Boston Matrix)

High market share in a high-growth market.

Cash Cow (Boston Matrix)

High market share in a low-growth market.

Question Mark (Boston Matrix)

Low market share in a high-growth market.

Dog (Boston Matrix)

Low market share in a low-growth market.