Edexcel A Level Business - Theme 1: Marketing and People

Marketing

The process through which a product / service moves from being an idea to getting to a consumer

Market

A place where buyers and sellers meet to exchange goods or services

Mass market

Where a business sells to the largest part of the market, where there are many similar products offered by competitors

Niche market

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

Market value

The total value of sales for businesses in a particular market for a product / service

Market share

The percentage of the sales in a particular market that belong to a business. For example; Tesco has 28% share of the UK Supermarket

Market growth

The percentage by which the total value of a market has increased (or decreased if negative growth)

Competition

Other businesses that provide a similar product / service

Market segmentation

The process of dividing a market into parts that reflect different needs and wants

Market segment

One specific group of consumers that have specific needs and wants

Market research

Collection of data to obtain insight into the needs and wants of customers, or the way a market is structured

Primary research / data

Research data collected first hand for a specific purpose

Secondary research / data

Research data that already exists and has been used for a different purpose

Quantitative research / data

Research based on numerical data

Qualitative research / data

Research based on views and opinions (non-numeric)

Market positioning

The place a product occupies in customer minds relative to competing products

Product differentiation

Where a product has something that makes it different from competing products

Adding value

The process of adding value to the cost of inputs through the production process in order to charge a higher price

Demand

The quantity that customers are willing and able to buy at a given price in a given period of time

Demand curve

The quantity demanded of a product at different price points

Supply

The quantity that businesses / producers are willing and able to supply at a given price in a given time period

Supply curve

The quantity willing to be supplied of a product at different price points

Subsidy

Any form of government support - financial or otherwise - offered to producers or consumers to encourage supply or demand

Market equilibrium

When there is a balance between demand and supply in a market

Market demand

The total quantity demanded for a product in a market by all customers

Market supply

The total quantity of a product supplied to a market by suppliers

Price elasticity

The extent to which the quantity of a product demanded is affected by a change in price

Income elasticity

The extent to which the quantity of a product demanded is affected by a change in income

Product

Any good or service that is capable of meeting needs and wants of consumers

Product life cycle

A model predicting the stages a product goes through from development to decline

Product life cycle - Introduction

The stage when a new product is launched onto a market to lower sales and higher advertising

Product life cycle - Growth

The stage when sales rise and a product / service becomes more popular with greater market share

Product life cycle - Maturity

The stage where sales begin to peak and slow down, potentially as competitors enter a market

Product life cycle - Decline

The stage where sales are falling and profits decline until the product is eventually removed from the market

Extension strategy

A strategy put in place to extent the length of a product life cycle

Boston Matrix

A model used to analyse the strategic position of a product and brand portfolio, by looking at market share and market growth

Boston Matrix - Star Product

A product that has high market share and high market growth. They have a large market share over competition in a market that is growing.

Boston Matrix - Cash Cow

A product that has high market share but in a low growth market. They are successful, established products that won't require much investment

Boston Matrix - Problem Child / Question Mark

A product that has low market share but operate in a high growth market. These products have potential but require investment to hopefully gain market share and become Stars

Boston Matrix - Dog Product

A product that has low market share and operate in a low growth market. This means these products might break even but will rarely be worth investing in.

Design Mix

The process of designing a product to meet customer's needs and wants using three main elements: Function, Aesthetics and Economic Cost

Design Mix - Aesthetics

How a product is designed to look in order to appeal to a consumer and offer differentiation

Design Mix - Function

The intended way a product works reliably

Design Mix - Economic Cost

The cost of producing the product, and being able to add value to the product to make a profit when sold

Brand

A product that is easily distinguished from other products (through a logo, style, slogan etc)

Sales promotion

Tactical incentives to encourage people to purchase a product

Advertising

Paid for communication aimed at encouraging people to purchase a product

Direct marketing

Sending promotional materials and messages directly to the target audience

Promotional mix

The mix of activities and approaches taken when promoting a product

Pricing strategy

A plan for the medium to long term where a price is set with the intention of meeting marketing objectives

Pricing strategy - cost plus pricing

A strategy where the prices is set by applying a percentage margin to the unit cost. For example, adding 50% to the cost of producing the product

Pricing strategy - price skimming

A strategy where a business charges a premium price when the product is first launched to maximise revenue per unit

Pricing strategy - penetration pricing

A strategy where a business offers a significantly lower price than normal to maximise volume sold and build a loyal consumer base

Pricing strategy - dynamic pricing

A strategy where a business sets flexible prices for products based on current market demand

Distribution

The way a product or services reaches the end consumer (place)

Distribution channel

The process a product goes through to get from producer to consumer

Multichannel distribution

Where a business uses more than one different channel of distribution

Retailer

The final step in the distribution channel that deals directly with consumers

Wholesaler

A step in the distribution channel where businesses buy in bulk and break into smaller quantities to sell to retailers

Distributor

A step in the distribution channel where a business that usually specialises in a particular industry sells on products and services as a local sales point.

Agents

A specialist type of distributor that doesn't hold stock and usually works in the tertiary sector (travel, insurance, publishing)

Direct distribution

Where a producer and consumer deal directly with each other without third party involvement

Indirect distribution

Involves the use of an intermediary between the producer and consumer

Marketing mix

The four Ps of marketing - Product, Place, Price and Promotion

Marketing mix - Product

The qualities of the product or service being offered by the business

Marketing mix - Price

The price that a business chooses to set for their product or service

Marketing mix - Promotion

The activities a business goes through to make consumers aware of a product and encourages them to buy it

Marketing mix - Place

The way that consumers are able to purchase the product (i.e. in store, online) and the distribution channel the product goes through

Staff

People employed by a business

Labour

The work that a person provides to a business

Workforce

The total number of employees in a business

Multi-skilled workforce

Where a collection of employees have skills that allow them to carry out multiple roles within the business

Part-time

An employee that works less than a full time worker (usually less than 30 hours a week)

Full-time

An employee that works a full time timetable, usually over 30/35 hours a week

Flexible working

An arrangement where employees are given choices in when their working hours are. This has benefits to both employees and the businesses

Outsourcing

When a business doesn't have employees of their own, but contracts employees from an external business/agency to do work for them.

Temporary worker

A worker on a temporary contract of employment

Permanent worker

A worker on a permanent contract of employment

Dismissal

The process of firing an employee due to a breach of contract or another valid reason

Redundancy

The process of sacking an employee as there is no longer a job for them to do, which usually involves a payout

Recruitment

The process of inviting people to apply for a vacancy in a business

Selection

The process of choosing the appropriate new member of staff

Training

The process of developing skills in workers through specifically design training programmes

Internal recruitment

Recruiting for a vacancy from within the business

External recruitment

Recruiting for a vacancy from outside of the business

Induction training

The training programme designed for when an employee is new to a business

On-the-job training

Training that is carried out at the place of work by carrying out the responsibilities of the job

Off-the-job training

Training that is carried out away from the place of work, such as through a lecture or college course

Organisational structure

The system used to define a hierarchy within a business. It would identify the different job roles, their function and who reports to who within a business

Hierarchy

The structure and number of layers of management and supervision in a business

Chain of command

The lines of authority within a business. For example: Boss is responsible for Emp1, Emp2, Emp3. Further down, Emp2 is responsible for Emp4 and Emp5.

Span of control

The number of people a person within a business is responsible for / oversees

Centralisation

An organisational structure where authority rests with senior management at the centre of a business

Decentralisation

An organisational structure where authority is delegated further down the hierarchy, away from the centre.

Delegation

Passing an item of responsibility or task to another member of staff

Empowering

Giving someone responsibility for decision making

Delayering

The process of removing one or more layer from the organisational structure

Motivation

The desire to carry out a task or action

Employee engagement

When employees are happy and motivated, with an intention to work hard for the business

Financial motivator

Something that motivates an employee with a monetary value