Unit 1 Business and Market Vocabulary

Vocabulary terms and definitions covering Topic 1.1 (What Is a Business?) and Topic 1.2 (Markets and Competitive Advantage).

Business

An organization or entity that produces and distributes products (goods and/or services).

Goods

Tangible products.

Services

Intangible products-work done for the customer.

Customer

The individual or business that PURCHASES a product.

Consumer

The individual who USES a product (may or may not be the buyer).

Problem, need, or want

A specific gap, requirement, or desire a customer has that a business can address. Together, these define a market opportunity.

Market opportunity

An unsolved customer problem, need, or want that a business can serve.

Problem-solution fit

When a business's product successfully addresses a specific customer problem.

Value

The worth or benefit a product gives the customer.

Value creation

When a business provides a product that responds to a customer's problem, need, or want.

Value capture

When a business charges customers a price higher than the cost to produce the product.

Market

Any physical or virtual space where sellers interact with buyers. Markets can be local, regional, or global.

Seller

A business offering a product (good or service) in a market.

Buyer

A customer purchasing a product in a market.

Voluntary exchange

A transaction where both seller and buyer choose to participate- generates revenue for the seller and value for the buyer.

Prevailing market price

The going price for a product, established by the interaction of sellers wanting higher prices and buyers wanting lower prices.

Competitive advantage

The ability to outperform rivals in the same market, leading to increased market share and potentially increased profits.

Market share

The portion of a market a business serves, measured against total market demand.

Rival

A competing business operating in the same market.

Differentiated product

A product with distinguishing features that set it apart from rivals' offerings.

Commodity

A product (often raw or agricultural) where competing offerings are essentially identical; competition is mostly on price.

Barriers to entry

Obstacles that make it difficult for new firms to compete in a market. Includes IP rights, regulations, supplier access, high startup costs, and scale-based pricing.

Intellectual property

Legal protections (patents, trademarks, copyrights) for creations of the mind that can serve as barriers to entry.

Monopoly

A market with no competition - only one business produces a unique good or service.