Digital Business Glossary

Asymmetries – In business, asymmetries occur when small inputs—like effort, knowledge, or capital—lead to outsized returns. They stem from imbalances in information, risk, or competition, creating opportunities to gain an advantage.

A/B Testing —   when a company creates two or more variations of a product feature to test out which design is preferred by customers/users.

Business Model — A business model is a strategic plan of how a company will create value. “The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

Complementary resources — Two or more resources that can substitute for one another and, when taken together, augment one another, so that the consumer requires less of them when taken together than when taken separately.

Competitive Advantage —  Competitive advantage refers to unique factors like resources and capabilities (for example, cost, branding, quality, customer service, etc.) that enable a company to outperform its competitors in the marketplace.

Consumer/customer journey —  The customer journey refers to the complete experience a customer has with a brand, encompassing all interactions from initial awareness to post-purchase behavior. It includes every touchpoint across various channels where customers engage with a company's products or services. Understanding the customer journey helps businesses optimize each stage to enhance customer satisfaction and loyalty.

Cost of Goods Sold (COGS) — the direct costs of producing goods that are sold by a company. It is calculated by adding purchases during a production period to beginning inventory, then subtracting ending inventory. There are two methods of calculating COGS: first in, first out (FIFO) – meaning that the least expensive products are sold first – and last in, last out (LIFO) – meaning the last goods added to the inventory are sold first.

Cost per Thousand (CPM) — the average cost a company pays for 1,000 advertisement impressions; it is a metric (and a pricing model) used in digital marketing

Customer Acquisition Cost (CAC) — The cost of acquisition is the total expense incurred by a business in acquiring a new client or purchasing an asset. An accountant will list a company's cost of acquisition as the total after any discounts are added and any closing or transaction costs are deducted.

Cash Flow — Cash flow refers to the net balance of cash moving into and out of a business at a specific point in time. Cash flow can be positive or negative. Positive cash flow means a company has more money moving into it than out of it. Negative cash flow indicates a company has more money moving out of it than into it.

Complementary Resources — Two or more resources that can substitute for one another and, when taken together, augment one another, so that the consumer requires less of them when taken together than when taken separately.

Customer Experience (CX) — CX, or customer experience, encapsulates everything a business or an organization does to put customers first, managing their journeys and serving their needs. The four components of CX are brand, product, price, and service. 

Differentiation — A differentiation strategy is an approach to make your business unique and distinct from the rest. Its main objective is to increase your competitive advantage by standing out from the noise and giving people a reason to choose your brand over others.

Digital Streaming Platform (DSP) — Digital streaming platforms are online services that allow users to access and view multimedia content, such as films, television shows, and music, over the Internet without the need for downloading. 

Earned media — Earned media is public exposure through word of mouth, customer reviews, social media mentions, or media coverage resulting from your content or services’ quality and relevancy.

Economies of Scale — Economies of scale are cost advantages realized by companies when production becomes more efficient. Companies can achieve economies of scale by increasing production while lowering per-unit production costs. Costs can be both fixed and variable.

First-mover advantage — The benefits of being the first business to enter a new market with a new product or service. Potential advantages include the preemption of customer relationships, scarce assets, key patents, and capacity.

Fixed pricing — A fixed cost pricing model sets a fixed price for a product or service, regardless of the production or operational costs associated with it. This means that the price remains the same no matter how many units are produced or sold.

This type of pricing model is often used in industries where there is high competition, and products or services are perceived as commoditized. Examples of such industries include telecommunications, utilities, and transportation. However, the model has cross-pollinated other industries as well since it provides quite a lot of benefits for both sellers and buyers.

Gross margin Sales - The percentage of revenue remaining after a company subtracts its cost of goods sold (COGS) or cost of sales.

Total Revenue - COGS = Gross Margin

Intellectual Property (IP) —  “Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.”

Influencer Marketing — “Influencer marketing is a collaboration between popular social-media users and brands to promote brands’ products or services.” Brands often pay influencers a certain amount of compensation in exchange of being featured on the influencers’ posts or pages. Through effective influencer marketing, brands are able to increase exposure through social media platforms, attracting more customers. 

Key Performance Indicators (KPI) — Key performance indicators (KPIs) are quantifiable measurements used to gauge a company’s overall long-term performance. Organizations use KPIs to track their progress on key business objectives. KPIs can also help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector. They can also be used to judge progress or achievements against a set of benchmarks or past performance.

Last-mover advantage — The last-mover advantage, or late-mover advantage, occurs when a company benefits from entering a market after others have established themselves, learning from their mistakes and improving upon existing products or services.

Leverage — Leverage is the strategy to utilize a firm’s resources (capital, human/network) or advantages to effectively achieve business objectives. “It’s about amplifying output while keeping input at a manageable level.” 

Market — A market is any place where two or more parties can meet to engage in an economic transaction—even those that don't involve legal tender. A market transaction may include goods, services, information, currency, or any combination that passes from one party to another. In short, markets are any setting where buyers and sellers can gather and interact.

Marketspace — The market space is considered a bi-directional unit as both the buyers and sellers can buy and sell through transactions in such portals. It offers an outlet for businesses to exhibit their products while cutting costs on creating physical stores. 

Marketing Funnel —  The visual representation of a customer’s journey from learning about the brand to making the purchase and becoming a loyal customer. It essentially helps businesses understand how to attract, engage, and convert customers. Through the funnel and its various stages, businesses can optimize their campaigns and match their marketing strategy to their customer’s journey, ensuring customer satisfaction and retention. 

Monopoly —  A monopoly is a market structure with a single seller or producer that assumes a dominant position in an industry or a sector. Monopolies are discouraged in free-market economies because they stifle competition, limit consumer substitutes, and thus, limit consumer choice.

Monopsony — A condition where there is only one buyer, therefore the monopsonies dominate a market. Unlike the term monopoly, It is where a single buyer entitles a market, and could reduce the price of consumption. Conditions like geographical constraints, government regulation, or unique consumer demands can cause a rise in monopsony.

MVP (Minimum Viable Product) — A minimum viable product, or MVP, is a product with enough features to attract early adopter customers and validate a product idea early in the
product development cycle. In industries such as software, the MVP can help the product team receive user feedback as quickly as possible to iterate and improve the product.

Network Effects — Network effects refers to any situation in which the value of a product, service, or platform is enhanced by the number of buyers, sellers, or users who leverage it. Typically, the greater the number of buyers, sellers, or users, the greater the network effect—and the greater the value created by the many users. An example of this social media platforms like instagram become more valuable as more users join the platform, increasing engagement and content creation. 

Over the Top (OTT)  — a refined technology service that provides on-demand video, music, or messaging services. Also called “streaming.” Usually compared to televised events/cable TV. OTT Marketing refers to the ad space in (predominantly) streaming markets (Hulu, Netflix, YouTube, etc.). There is a consensus that OTT domains will “register exponential increases in traffic content and volume of subscribers in the coming years” (Agarwal et al.). There are many possible profit formulas for OTT services, including subscription-based models, advertising space, one-time fees, or “freemiums.”

Operations — Operations encompasses all the activities, processes, and workflows executed to deliver value to customers and carry out the organization’s strategy. Operations include contributions from all members of an organization, working to optimize activities from day-to-day tasks to larger essential functions, ensuring efficiency and alignment with the company’s goals. Operation specifics may vary depending on the industry, but they remain central to the overall functioning of the business.

Owned Media — any digital channel that the company fully owns and operates and can control their message conveyed to the consumer. This can be in the form of an email, a website, blog, or app. 

Omnichannel — is an approach to sales, marketing, and customer support that seeks to provide customers with a seamless and unified brand experience, regardless of which channel they use. The organization's distribution, promotion, and communication channels are well-integrated in the back end, so regardless of whether the customer is shopping online from a desktop or mobile device, by telephone or in a brick-and-mortar store, their experience will be seamless and consistent. 

PMN (Platform-Mediated Network) — A Platform-Mediated Network (PMN),  is a platform service that gives users the ability to interact with each other. This type of platform can be two-sided, such as just messaging or email. Even apps like Uber are examples of PMN, as they connect consumers with drivers around them and provide transportation.

Paid media — Paid media is defined as the purchase of ad inventory on a media channel or publisher site to broadcast your brand message and reach your target audiences. It is a form of digital advertising that includes sponsored content to promote a brand’s products or services.

Perfect markets — Perfect markets, also known as perfect competition, refers to a market structure in which there are multiple sellers, no barriers to entry and exit, low production cost, homogeneous goods, and no monopolies. There is also a lack of price influence over commodities. 

Profit — Profit is the benefit realized when the amount of revenue gained from an activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Profit Margin - It is a measure of the company’s earnings (or profit) relative to its revenue. The three main profit margin metrics are gross profit margin (total revenue minus cost of goods sold), operating profit margin (revenue minus cost of goods sold and operating expenses), and net profit margin (revenue minus all expenses, including interest and taxes).

Penetration Pricing – Penetration pricing is a form of marketing strategy that businesses use. In using penetration pricing, when a business introduces a new product into the market, they lower the initial price in order to prompt customers to buy this new product/service. 

Revenue Model — A revenue model outlines how a business generates income by identifying the sources of revenue, pricing strategies, and the value offered to customers. It is part of a company's overall business plan, and provides the framework for how your products or services will be sold.

Search Engine Optimization (SEO) — SEO are Text identifiers, contextual principles, and keywords embedded into a website to increase site visibility and website traffic on Internet search engines. 

Software as a Service (SaaS) — Software as a service (SaaS) allows users to connect to and use cloud-based apps over the Internet… SaaS provides a complete software solution that you purchase on a pay-as-you-go basis from a cloud service provider. You rent the use of an app for your organization, and your users connect to it over the Internet, usually with a web browser. All of the underlying infrastructure, middleware, app software, and app data are located in the service provider’s data center. The service provider manages the hardware and software, and with the appropriate service agreement, will ensure the availability and the security of the app and your data as well. 

Skimming Strategy — Skimming strategy (also known as skim pricing or price skimming) is a pricing strategy where ventures initially set a high price for a new product and lower it over time. This approach maximizes revenue from customers willing to pay the initial cost before adjusting prices to attract more price-sensitive customers as competition increases.

Stakeholder —  A stakeholder is any individual, group, or organization that has an interest in or is affected by a business project or decision. Stakeholders can be internal or external to the business and can influence or be influenced by the outcomes of a project or operation.

Switching Costs — The effort, time, money, or inconvenience a customer faces when changing from one product, service, or platform to another. High switching costs make it harder for users to leave (e.g., losing playlists when switching from Spotify to Apple Music or having to relearn a new software). Companies use switching costs to keep customers loyal.

Total Cost of Ownership —  Total Cost of Ownership is a financial estimate that includes the initial purchase price of an asset along with all costs associated with its operation, maintenance, and eventual disposal throughout its lifecycle. By considering both direct and indirect expenses, Total Cost of Ownership provides a comprehensive view of the asset's long-term value, helping individuals and businesses make more informed purchasing decisions beyond just the upfront cost.

Value Chain — A value chain is a series of consecutive steps that go into the creation of a finished product, from its initial design to its arrival at a customer’s door. The chain identifies each step in the process at which value is added, including the sourcing, manufacturing, and marketing stages of its production. A company conducts a value chain analysis by evaluating the detailed procedures involved in each step of its business.

Variable Pricing  —  Variable Pricing is a business strategy that adjusts a product’s price based on current supply and demand levels. Common in industries like airlines, hotels, and transportation (e.g., Uber, Airbnb), it allows businesses to charge more when demand is high and offer discounts when it's low, helping maximize profits while maintaining value for customers. This model can also vary by location or sales channel, such as online versus physical stores or by region, and is especially prevalent in e-commerce, where prices can be quickly adjusted based on real-time market data, seasonal trends, or consumer behavior shifts. However, while variable pricing can boost revenue, it risks customer dissatisfaction if perceived as unfair, so it must be used carefully to balance profit and maintain trust. 

Virality  — Virality is defined as achieving a large number of views in a short time period due to sharing. Virality is maximized to the extent that content viewed by one consumer is shared with others. The degree of virality is intrinsically dependent on the degree of content sharing

Willingness To Pay (WTP) —  Willingness to Pay is the Maximum price a customer is willing to pay for a product. It can vary from customer to customer and may be affected by Income, Geography, Weather, Age, GenderBrand, loyalty, and Service levels. It may also depend on packaging or the brand name of the company.

Word of Mouth (WOM) — Word of Mouth refers to people spreading the word about a brand or product to their social circles. This form of marketing is shared organically by consumers via different channels such as: online reviews, user-generated content (reviews, unboxing videos, etc.), social listening (sharing thoughts about brands on social media), influencer marketing, and blogging. Integration of this marketing approach may improve the visibility of a brand, as well as bring authenticity that traditional advertising fails to in order to build brand credibility.