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

A comprehensive set of vocabulary flashcards covering key terms from Pearson Edexcel AS/A Level Business Theme 1, including markets, research, marketing mix, and people management.

Brand

A symbol, logo or design that is recognisable and distinguishes a product from 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, such as 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 or continuous change.

Indirect competition

Different businesses make or sell products that are not in direct competition but compete for the same customer experience, such as 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 or sales for a particular product or service.

Market share

The percentage of the total market a business has in terms of volume or value.

Market size

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

Mass market

A large unsegmented market where mass appeal products are on sale.

Niche market

A specialist area or subset of the market on which a specific product focuses, where consumers have specific needs and wants.

Online retailing

Selling goods and services on the internet.

Product innovation

The development or creation of products not previously available.

Sales volume

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

Uncertainty

The inability to predict or a lack of knowledge about future events and outcomes, often caused by unexpected external factors.

Consumer behaviour

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

Market orientation

When a business’s products or 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 or customers.

Market segmentation

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

Primary market research

Also known as field research, it involves obtaining data first hand to match the specific needs of the business.

Product orientation

When a business prioritises a product’s design quality or performance rather than meeting customer preferences.

Qualitative research

Market research relating to the opinions and beliefs of consumers, where data is not presented numerically.

Quantitative research data

Numerical information gathered that can be presented and analysed using graphs, charts, and tables.

Secondary market research

Also known as desk research, it involves data collected by another business or organisation but used by the business in question.

Added value

The increase in value a business creates, defined as the difference between the selling price and the cost of inputs.

Competitive advantage

A feature of a business or its products, such as differentiation or a USP, that enables it to compete effectively with rivals.

Market mapping

A 2-dimensional diagram that plots products or services in a market using two key variables to spot a gap in the market.

Market positioning

An effort to influence consumer perception of a brand or product relative to competing brands.

Complementary goods

Products consumed together, such as a printer and printer ink.

Demand

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

Demographics

The structure of the population, including age, gender, and geographical distribution.

Substitutes

Goods that can be bought as an alternative to others because they perform the same function, such as petrol and electric cars.

Government subsidies

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

Indirect taxes

Taxes imposed by the government on spending, such as VAT and Excise duties.

Supply

The amount that producers are willing and 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 the market clearing price.

Price elasticity of demand (PED)

Measures the responsiveness of quantity demanded to a change in price; it is always negative due to laws of demand.

Income elasticity of demand (YED)

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

Inferior good

A good for which quantity demanded decreases when consumer incomes increase, such as budget goods.

Marketing mix

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

Social trends

Changing patterns in consumer behaviour, such as increased use of social media or being environmentally friendly.

Aesthetics

Relates to the appearance of a product.

Design Mix

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

Ethical sourcing

When a business buys materials produced with fair working conditions, fair pay, and minimum impact on the environment.

Function

Relates to the quality and reliability of a product.

Advertising

A paid form of communication used to raise customer awareness and persuade purchases.

Customer loyalty

When customers favour a business and make repeat purchases, choosing it over competitors in the same market.

Emotional branding

The practice of building brands that appeal directly to a consumer's emotional state, needs, and aspirations.

Sponsorship

A form of promotion where funds are provided for an event in return for prominent display of the brand name.

USP (Unique Selling Point)

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

Viral marketing

Encouraging customers to share information or adverts through existing social media platforms.

Competitive pricing

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

Cost plus pricing

A pricing method 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, higher price.

Predatory pricing

Setting a low price to force rivals out of the market; this is illegal in the UK but difficult to prove.

Price skimming

Setting a high price at the launch of a product to recover R&D costs and target early adopters.

Channels of distribution

Methods used to get products from the manufacturer to the consumer, including intermediaries like wholesalers and retailers.

Boston matrix

A method used to analyse a product portfolio using the categories of stars, cash cows, question marks, and dogs.

Extension strategy

A plan aimed at preventing the decline stage of a product's sales in the medium-to-long term.

Product life cycle

The stages a product goes through from introduction to decline.

Collective bargaining

Negotiation of wages and conditions of employment between employee representatives or trade unions and the employer.

Dismissal

The termination of employment by an employer against the will of the employee, informally known as firing.

Multiskilling

The process of increasing the skills of employees.

Redundancy

When a business needs to reduce the size of its workforce or close, which can be voluntary.

Trade unions

Workforce representatives that act to protect and improve economic and working conditions for members.

Induction training

Introductory training for new employees covering background, policies, and health and safety procedures.

On-the-job training

Learning, gaining, or developing skills while at work doing the job.

Centralised structure

An organisational structure where business decisions are made at the top of the hierarchy or at headquarters.

Span of control

The number of employees or subordinates that a manager is responsible for.

Delegation

The authority to pass tasks down from a superior to a subordinate.

Empowerment

Giving official authority to employees to make decisions and control their own work activities.

Job enlargement

Giving an employee more work of a similar nature, horizontally extending their work role.

Job enrichment

Giving employees greater responsibility and recognition by vertically extending their work role.

Maslow's hierarchy of needs

The order of people’s needs, starting with basic human needs.

Taylor’s scientific management

The theory that jobs should be broken down into efficient parts and that workers are primarily motivated by money.

Autocratic leadership

A style where decision-making is kept with managers who direct subordinates with little consultation.

Democratic leadership

A style where group members take a participative role in decision-making and communication is two-way.

Laissez-faire

A leadership style where employees are encouraged to make their own decisions within certain limits.

Paternalistic leaders

Leaders who are in control but take the welfare of employees into account when making decisions.

Entrepreneur

An individual who sets up and runs a business, taking on financial risks in the hope of profit.

Profit Satisficing

Making enough profit to satisfy the needs of the business owner rather than maximising it.

Survival

A short-term business objective aimed at keeping the business running.

Franchise

A business that buys the right to trade using the brand, logo, and business model of an existing firm in return for a fee or royalty.

Private limited company

A small to medium-sized business with limited liability, where shares are sold privately to friends and family.

Public limited company

A business with limited liability whose shares are publicly traded on the stock market.

Sole trader

A business owned by one person who has unlimited liability.

Opportunity cost

The next best alternative forgone when making a decision.

Trade-off

A situation where having more of one thing leads to having less of something else.