Business Year 1 Keywords

• Niche Market


  Small market with specific needs for specialised products or services. E.g. high quality chocolate.
• Mass Market


  Large market where most people tend to buy same or similar products. E.g. laundry detergents.
• Market Size


  Measured by either value or volume.
• Market Share


  Amount sold by a single business as a percentage of total market.
• Dynamic Market


  Constantly changing market. Can be due to rising incomes, fashions or arrival of a superior competing product.
• Innovation


  Bringing a new idea into existence and using it.
• Product Innovation

  New technologies make it possible to create new products or to improve quality of existing ones.
• Process Innovation

  Using new technology to improve production methods, so that costs are reduced. Change is often invisible to consumers, but it may result in price cuts.
• Competition


  Lower prices, better quality, more choice, innovation, greater efficiency.
• Risk


  Situations where the outcomes are known and can be quantified.
• Uncertainty


  Where events are unpredictable. Caused by factors outside the control of the business.
• Product Orientation


  Business will focus its efforts upon creating the product rather than responding to market needs. Make the product first then sell it. E.g. iPhone.
• Market Orientation


  Business will focus on customer preferences and needs, involves expensive market research.
• Primary Research


  Collecting new data directly from original sources. E.g. questionnaires and in-depth interviews.
• Secondary Research


  Gathering data from existing online and paper-based sources. E.g. government statistics.
• Quantitative Research


  Analysis of numerical data.
• Qualitative Research


  Customers' genuine opinions. Aims to understand customer behaviour.
• Bias


  If the sample includes disproportionate number of people from a particular market segment.
• Market Segmentation


  Way markets can be divided up, each with different customer preferences. E.g. income level or gender.
• Product Differentiation


  When each business creates a distinctive product. This could be with unique features. Reduces PED.
• Market Map


  Plots brands in the market according to how they meet customers' needs. It uses two sets of criteria such as quality and prices.
• Competitive Advantage


  Having an edge over rival products. May be based on low costs and keen prices or an innovative design feature.
• Adding Value

  Difference between selling price and costs of its material inputs.
• Unique Selling Point


  Distinctive feature that no competing product can match precisely.
• Supply


  Amount of a good or service that producers are willing to provide at a given cost.
• Equilibrium Point

  The quantity demanded is the same as the quantity supplied. There will be no unsold products.
• Elasticity


  Responsiveness to change.
• Price Elasticity of Demand


  How much a price change leads to a change in demand.
• Price Elastic


  Price Change causes proportionately bigger change in quantity demanded. Beyond -1.
• Unit Price Elasticity

  Price change causes same change in quantity demanded. -1
• Price Inelastic


  Price change causes proportionately smaller change in quantity demanded. -1<x<0
• Income Elasticity of Demand

  How much a change in income leads to a change in demand.
• Income Elastic


  Income change causes proportionately bigger change in quantity demanded. x>1
• Unit Income Elasticity


  Same proportional change in quantity demanded and income. x = 1
• Income Inelastic

  Income change causes proportionately smaller change in quantity demanded. 0 < x < 1
• Luxury Good


  Demand increases as income increases. E.g. Jaguar
• Inferior Good


  Demand decreases as income increases. E.g. Aldi Baked Beans
• Design Mix

  Function, Aesthetics, Cost
• Social Trends


  Way society as a whole behaves.
• Branding


  Creating a positive and recognisable image of the product or service.