Pearson Edexcel AS/A Level Business - Theme 1 Key Terms

Vocabulary flashcards covering the key terms and definitions for Theme 1 of the Pearson Edexcel AS/A Level Business specification.

Brand

A unique design/sign/symbol/words/logo which makes it recognisable/distinguishes/differentiates it from its competitors

Competition

The rivalry among sellers trying to achieve goals such as increasing profits, market share, and sales volume

Competitive market

When there are many rivals selling similar products

Competitor

A rival business operating in the same market offering similar goods or services e.g. KFC and McDonalds

Direct competition

Businesses produce similar products that appeal to the same group of customers

Dynamic market

A market that is subject to rapid/continuous change

Indirect competition

Different businesses make or sell products that are not in direct competition but compete for the same customer experience e.g. Netflix and the local cinema

Innovation

The creation, development and implementation of a new product, process or service

Market

Where buyers and sellers interact

Market growth

An increase in demand/sales for a particular product/service

Market share

The $\%$ of the total market a business has in terms of volume or value

Market size

The total amount of sales/customers in a market measured by value/volume

Mass market

A large unsegmented market where mass appeal products are on sale

Niche market

A specialist area of the market/is a subset of the market on which a specific product focuses. It is a smaller segment of a larger market where consumers have specific needs and wants

Online retailing

Selling goods and services on the internet

Product innovation

The development/creation of products not previously available

Sales volume

The quantity of a good or service sold within a period of time. Calculation: $\frac{\text{Sales revenue}}{\text{selling price}}$

Uncertainty

The inability to predict/a lack of knowledge about future events and outcomes. Is caused by unexpected often external factors outside the business's control

Biased questions

Where the questions do not produce findings that give a true reflection of the views of the target audience on the product or service

Consumer behaviour

How consumers make decisions about how they choose and use products or services

Databases

An organised collection of data stored electronically with instant access, searching and sorting facilities

Face-to-face survey

A research method used where the interviewer communicates directly with the respondent using a questionnaire

Focus group

A group of people who participate in a discussion as part of market research to give feedback about a product or service

Government data

Government publications that a business can use such as the census of the population

Interview bias

Where the opinion of the interviewer interferes with the judgements of the interviewee

Market orientation

When a business's products/services are based around the needs and wants of the customer

Market reports

A document that contains information, stats, research and facts on a chosen field

Market research

Gathering, presenting and analysing information about products/customers

Market segmentation

Dividing a whole market into particular customer groups that have similar characteristics

Market segments

An identifiable group of individuals/a part of the market where consumers share one or more characteristic or need

Observations

Where market researchers watch the behaviour of customers

Primary market research

Obtaining data first hand by the business to match the specific needs of the business. It can also be known as field research

Product orientation

When a business prioritises a product's design quality or performance rather than meeting customer preferences to guide production and marketing decisions

Qualitative research

Market research collected relating to the opinions and beliefs of consumers. Data not presented numerically

Quantitative research data

Numerical information gathered and can be presented and analysed using graphs, charts, table etc

Respondent bias

When respondents respond inaccurately to a question for some reason

Sample

A small group of people who must represent a proportion of a total market when carrying out market research

Secondary market research

Data collected by another business or organisation but used by the business in question. Also known as desk research

Social networking

A platform such as Facebook, X and You Tube, which can be used to market a businesses products/services

Test marketing

Trialling the product in a small area or to a limited number of users to assess the suitability of a product

Trade publications

Specialist magazines that look at current trends in the business world

Added value

The increase in value that a business creates when producing a product/service. It is the difference between the selling price and the cost of inputs

Competitive advantage

A feature of a business and/or its products that enable it to compete effectively with rival producers/products

Differentiation

Making products or services different or distinct from competing products/creating a USP

Market mapping

A form of market positioning that is the use of a 2-dimensional diagram that plots products or services in a market using two key variables to spot a gap

Market positioning

An effort to influence consumer perception of a brand or product, relative to the perception of competing brands or products

Product differentiation

The act of distinguishing a product/service from competitors to make it more attractive to a particular target market

Complementary goods

Products consumed/used together, so they are purchased together e.g. printer and printer ink

Consumer income

The money earned/received from work/investments

Demand

The quantity of goods/services that a consumer is willing to buy at a given price and at a given time

Demographics

The structure of the population such as age, gender and geographical distribution

External shocks

Factors beyond the control of a business

Seasonality

When demand rises or falls at particular times of the year according to seasonal factors

Substitutes

Goods that can be bought as an alternative to others, but perform the same function e.g. petrol car and electric car

Government subsidies

A payment given to producers, usually to encourage production of a certain good

Indirect taxes

Taxes imposed by the government on spending e.g. VAT and Excise duties. Responsibility for payment lies with the business

Supply

The amount that producers are willing/able to produce at a given price/over a given period of time

Equilibrium price

The price where supply and demand are equal. Also known as market clearing price

Non price factors

Factors other than price e.g. Change in consumer incomes, advertising and seasonality

Luxury

Goods that consumers like to buy if they can afford them e.g. air travel and fashion items

Necessity

Basic goods that consumers need to buy e.g. food, electricity and water

Price elastic

Quantity demand is responsive to a change in price

Price elasticity of demand (PED)

Measures the responsiveness of quantity demanded to a change in price. Always negative due to laws of demand

Price Inelastic

Quantity demanded for the product is less responsive proportionately to a change in price

Income elasticity of demand (YED)

Measures the responsiveness of changes in quantity demanded to changes in consumer income

Inferior good

When incomes increase there is a decrease in quantity demanded e.g. budget goods

Marketing mix

A plan for using the right blend of product, price, promotion, and place in order to maximise sales

Social trends

Changing patterns in consumer behaviour reflected in changing demands e.g. increased use of social media/being environmentally friendly

Aesthetics

Relates to the appearance of a product

Design for recycling

Producing products using materials that have been discarded as waste and recycled

Design for reuse

When a product is designed to allow for disassembly at the end of its life and the re-use of the materials

Design for waste minimisation

Reducing the quantity of resources that are discarded in the production process

Design Mix

The combination of factors needed in designing a product including Aesthetics, Function, and Economic Manufacture

Ethical sourcing

When a business buys materials that are produced with fair working conditions/pay and minimum impact on the environment

Function

Relates to the quality and reliability of a product

Re Branding

A marketing strategy in which a new name, terms, symbol, design or combination is created for an established brand to develop a new identity

Resource depletion

The using up of natural resources

Advertising

A paid form of communication used by a business to raise awareness and persuade purchases

Customer loyalty

Customers favouring a business over competitors when making a purchase/favour it over competitors in the same market

Digital communications

The electronic transfer of data

Direct marketing

Where a business mails out leaflets or letters to households

Emotional branding

The creation of brands that may appeal to customers' emotional nature, rather than their logical side

Manufacture/corporate branding

Brands created by the producers of goods and services e.g. Kellogg's cornflakes

Own brand

Products that are manufactured for wholesalers or retailers by other businesses e.g. Tesco Beans

Personal selling

Direct communication between a salesperson and the customer

Premium price

Charging a higher price than competitors because of customer loyalty that has been built up over time or a lack of substitutes

Product branding/Generic branding

Products that only contain the name of the product category rather than the company or product name e.g. Carrots

Promotion

A way of making customers aware of the brand/business and persuading them to buy products e.g. advertising/discounts

Public relations

An organisation's attempt to communicate with interested parties, usually through unpaid media such as press conferences

Sales promotions

Methods of promoting products in the short term to boost sales

Social media

Websites and applications that enable users to participate in social networking

Sponsorship

A form of promotion in which funds are provided for a sporting, cultural, or social event in return for prominent display of the brand name

USP (Unique Selling Point)

A feature that differentiates a product and makes it stand out from the competition

Viral marketing

Encouraging customers to share information/adverts through existing social media platforms e.g. Facebook

Competitive pricing

When a business sets a price similar to competitors selling similar/rival products

Cost plus pricing

A cost-based method for setting prices calculated by adding a mark-up percentage to the cost of the product

Penetration pricing

Setting a low price initially to build market share before switching to a more profitable and higher price

Predatory pricing

Setting a low-price forcing rivals out of the market. This is illegal in the UK but difficult to prove

Price comparison websites

A website that compares the price of a particular product or service in different stores or from different businesses

Price skimming

Setting a high price at the launch of a product to gain money back from R&D and take advantage of early adopters