Edexcel A Level Business - Theme 1: Marketing and People

Brand

A symbol, logo or design that is recognisable and distinguishes a product from competitors

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 interact

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/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

Competitive Market

Where there are many rivals selling similar products

Direct competition

Businesses that produce similar goods or services that appeal to the same group of customers

Indirect competition

Businesses that sell products that aren't in direct competition but compete for the same customer experience (such as Ryanair and Emirates, or Netflix and Cineworld)

Innovation

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

Sales volume

The quantity of sales within a period of time (Sales revenue / Selling price)

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)

Consumer behaviour

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

Database

A collection of data stored electronically

Survey

A research method where an interviewer asks individuals a set of questions using a questionnaire

Focus group

A research method where an interviewer meets a small group of similar people to gain feedback on a product or service

Government data

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

Market reports

A document containing information, stats and research on a chosen market

Bias

Where the opinion of the person interferes with their answers and judgements

Market positioning

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

Market map

A chart showing where products / services appear relative to other businesses in the market using two variables (i.e. high quality/low quality or high price/low price)

Product differentiation

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

Market orientation

When a product or service is based around the needs and wants of the consumer

Product orientation

When a product or service is decided for performance rather than to meet customer needs

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

External shocks

Factors beyond the control of a business

Complementary goods

Products that are consumed or used together, so are purchased together

Demographics

The structure of the population, such as age, gender and geography.

Seasonality

Where demand rises or falls based on the time of year

Substitutes

Goods that can be bought as an alternative to others but serve the same purpose

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

Equilibrium price

The price where supply and demand are equal

Luxury

A good that a consumer wants and can buy if they can afford them

Necessity

A good that is needed by consumers

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

Price elastic

Where demand is responsive to a change in price

Price inelastic

Where demand is less responsive proportionately to a change in price

Income elasticity

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

Inferior good

A good of a lower quality, that will see a demand drop when incomes increase

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

Introduction Stage

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

Growth Stage

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

Maturity Stage

The stage of the product life cycle where sales begin to peak and slow down, potentially as competitors enter a market

Decline Stage

The stage of the product life cycle 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

Aesthetics

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

Function

The intended way a product works reliably

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

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

Price skimming

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

Penetration pricing

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

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

Product

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

Price

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

Promotion

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

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)