Business Studies AS Unit 2 Definitions (Marketing)
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- Created on: 10-04-13 04:50
Cash flow
it is the flow of money into and out of the business in a given time period
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Base case
an optimistic estimate of the best possible outcome, for example if sales prove much higher than expected
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Cash flow forecast
estimating future monthly cash inflow and outflow, to find out the net cash flow
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Factoring
obtaining part-payment of the amount owed from a factoring company. The factoring company will then collect the debt and pass over the balance of the payment
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Negative cash flow
when cash outflows are greater than cash inflows
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Sales and leaseback
a contract that, at the same time, sell the freehold to a piece of property and buys back the leasehold
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Worst case
a pessimistic estimate assuming the worse possible outcome, for example sale are very disappointing
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Budget
It is a target for costs or revenue that firm or department must aim to reach over given period of time
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Advarse variance
a different between budgeted and actual figure that is damaging to the firm´s profit (cost up or revenue dows)
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Criteria
yardsticks against which success (or the lack of it) can be measured)
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Delegated
passing authority down the hierarchy
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Expenditure budget
setting a maximum figure on what a department or manager can spend over a period of time (this is to control costs)
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Favourable variance
a different between budgeted and actual figures that boosts a firm´s profit (revenue up or costs down)
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Income budget
setting a minimum figure for teh revenue to be generated by a product, department or a manager
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Zero budgeting
setting all future budgets at zero $, to force managers to have to justify the spending levels thay say they need in future
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Net profit
profit left after all the operating costs have been deducted from revenue
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Net profit margin
It measure (in %) how much of our revenue is actually profit
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Return in capital
profit as a percentage of the capital a firm invest in a project
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Dividends
annual payments to shareholders from the profits mady by the company. It is te equivalent of the interest paid to those who lend money.
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Insolvency
inability to pay the bills, forcing closure
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Working capital
finance available for the day-to-day running of the business
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Contingency finance
planning how to cope if there are extra, unexpected financial requirements
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Credit period
the length of time allowed for payment
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Working capital cycle
how long ot takes for a complete cycle from cash out to cash back in from customers payment
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Effective marketing
achieves the firm´s sales and profit targets by convincing customers to buy the firm´s products again and again
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Market research
It gathers information about customers, competitors and distributors within firm´s target market.
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Bias
a factor that causes research finding to be unrepresentative of the whole population, for example bubbbly interviews or misleading survey questions
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Primary research
finding out information first-hand, for example questionnaire to obtain information from peope who regularly buy products
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Secondary research
finding out information that already been gathered, for example the government´s estimates of the number of 14 to 16 year olds in Wales
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Sample size
the number of people interviewed. This should be large enough to give confidence that the finding are representative of the whole population
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Sampling method
the approach chosen to select the right people to be part of the research sample (random, quota or stratified)
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Market
A market is where buyers meet sellers
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Niche market
Niche marketing is tailoring a product to a particular type of customer
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Mass market
Mass marketing means devising products with mass appeal and promoting them to all types of customer
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Economies of scale
factors that cause costs per unit to fall when a firm operates at a higher level of production
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Generic brands
brands that are so well know that customers say the brand when they mean the product
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Price elasticity
the responsiveness of demand to change in price
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Product differentation
the extent to whoch customers perceive your brand as being different from others
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Marketing mix
The Marketing mix is the balance between the four main elements of marketing nedeed to carry out the marketing strategy.
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Marketing planning
producing a chedule of marketing activities based on decisions about the marketing mix. This will show the when, what and how much of a product´s advertising, promotions and distribution drives over the coming year.
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Marketing strategy
the medium-term or long-term plan for meeting the firm´s marketing strategy.
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Product
It is a good or service that is bought and sold within a market.
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Brand loyalty
the desire by customers to stick with one brand
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First-mover advantage
the benefits of being the first business into a new market share sector.
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Unique selling point
one feature that makes a product different from all its rivals.
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The product life cycle
Theory that all products follow a similar pattern over a time (development, birth, growth, maturity and decline)
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Cash cow
a product that has a high share of a low-growth market.
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Dog
a product that has a low share of a low-growth market.
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Extension strategy
marketing activities used to prevent sales from declining.
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Portfolio analysis
an analysis of the market position of the firm´s existing products
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Problem child
a product that has a small share of a fast-growing market.
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Rising star
a product that has a high share of fast-growing market.
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Price
amount paid by customer for a good or service.
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Complementary goods
product bought in conjuction with each other (such as shavers and razors from Gillette).
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Early adopters
consumers with the wealth and the personality to want to by the first to get a new gadget or piece of equimpment.
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Monopoly
a market dominated by one supplier.
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Price elasticity
a measurement of the extent to which a product´s domand changes when its price is changed.
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Price sensitive
when customer demand for a product reacts sharply to a price change.
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Price elasticity
It measures the extent to which demand for a product changes when its price is changed.
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Correlation
the relationship between one variable and another.
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External constraint
something outside the firm´s control that can prevent it achieving its objectives.
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Predator pricing
pricing low with the deliberate intention of driving a competitor out of business.
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Price-elastic product
a product that is highly price sensitive, so price elasticity is above 1.
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Price-inelastic product
a product that is not very price sensitive, so price elasticity is below 1.
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Price war
when two or more companies battle for market share by slashing price, perhaps selling at or below cost.
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Promotion
Promotion focuses on persuading people to buy the product or service.
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Impulse purchasing
buying in unplanned way (for example, going to a shop to buy paper, but coming out with paper and Mars bar).
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Food miles
a calculation of how much travelling is involved in making and delivering a product.
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Sustainability
whether the supply spurce can be continued indefinitely into the future.
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Competitiveness
Measures a firm´s ability to compete.
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Non-price competition
rivalry based on factors other than price (advertising, new products...)
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Oligopolistic
a market in which few large companies have dominant share.
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USP
a point of genuine difference that makes one product stand out from the crowd.
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Productivity
Productivity is measure of efficiency. It measures the output of the firm in relation to its inputs.
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Labour productivity
output per worker
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Kaizen
a Japanese term meaning countinuous improvement. Regular, small increases in productivity may achieve more than major changes to working method.
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Rationalise
increase efficiency by cutting out unnecesarry activities or resources.
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Division of labour
subdividing a task into a number of activities, enabling workers to specialise and therefore become very efficient at complenting what may be a small, repetitive task.
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Hygiene factors
everything that surrounds what you do in the job (such as pay, working conditions and social status). All are potential causes of dissatisfaction, according to Herzberg.
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Job satisfaction
the sense of well-being and achievement that stems from a satisfying job.
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Piece rate
paying workers per piece they produce.
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Trades union
an organisation that represents the interests of staff at the work place.
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Dicision of labour
subdividing a job into small, repetitive fragments of work.
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Group norms
the types of behaviour and attitude seen as normal within a group.
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Motivation
to Professor Herzberg, it means doing something because you want to do it. Most business leaders think of it as prompting people to hard work.
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Zero defects
production that is roght first time, therefore requiring no reworking. This saves money and time.
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Autocratic manager
autocratic manager keep most of the authority to themselves. They do not delegate much or share information with employees. Autocratic manager tend to tell employees what to do.
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Democratic manager
democratic managers take the view of their subordinates into account when making decision. Managers discuss what needs to be done and employees are involved in the decision.
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Paternalistic manager
a paternalistic manager believes he knows what is best for employees. Paternalistic manager tend to tell employee what to do, but will often explain his decision. He is also concerned about the social needs of employees.
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Organisational structure
Organisational structure is the formal and systematic way the management of a business os organised.
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Line manager
a manager responsible for meeting specific business tagrets, and responsible for specific staff.
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Matrix management
where staff work in project teams in addition to their responsibilities within their own department. Therefore, staff can be answerable to more than one boss.
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Span of control
the number of staff who are answerable directly to a manager.
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Recruitment
Recruitment is concerned with filling job vacancies that may arise within a business.
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Induction training
familiarises newly appointed workers with key aspects of their jobs and their employer, such as health and safety policies, holiday entitlement and payment arragements.
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Market failure
in the context of training, this refers to the reluctance of employers to invest in training for fear that staff, once trained, will be poached by other firms attempting to avoid training costs.
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On-the-job training
where employees acquire or develop skills without leaving their usual workplace, perhaps by being guided through an activity by a more experienced member of staff
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Off-the-job training
where employees leave their normal place of workin roder to receive instruction such as a collage or university.
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Culture
the accepted attitudes and behaviours of people within a workplace
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Labour productivity
output per person
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Labour turnover
the rate at which people leave their jobs and need to be replaced.
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Operations management
Operations management turns a customer order into a delivery.
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Enterprise resource planning (ERP)
logs all of a firm´s costs, working methods and resources within a piece of software.
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Supply chain
the whole path from supplier of raw materials through production and storage on to customers delivery.
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Innovation
bringing a profitable new product or process to life.
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Invention
drawing up a new way of making a product or process
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Customer service
Customer service describes the range of actions taken by a business when interacting with its customers.
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ISO 9000
the International Standards Organisation (ISO) has a quality assurance certification system called ISO 9000.
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Mystery shoppers
employed to test customers service by visiting a shop or sales outlet unannounced, and therefore have the same experience as customer.
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Zero training
the opposite of customer service, in that it implies that staff need neither skills nor positive attitides to work for the business.
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Quality management
Quality management means providing what the customer wants at the right time, woth the right level of quality and consistency, and therefore yielding high customer satisfaction.
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Benchmarking
comparing a firm´s performance with best practice in the industry.
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Trade-off
accepting less of one thing to achieve more of another (for example lower quality in exchange for cheaper price).
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Zero defects
eliminating quality defects by getting things right first time.
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Supplier
Suppliers are other business that provide products or service to a firm.
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Just-in-time (JIT)
ordering supplier so that they arrive "just in time" (that is, just when they are needed). This means operating without reserves of materials or components.
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Lead time
the time the supplier takes between receiving an order and delivering the goods.
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Stock control
Stock control is the management process that makes sure stock is ordered, delivered and handled in the best possible way.
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Buffer stock
the desired minimum stock level held by a firm just in case something goes wrong.
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Opportunity costs
the cost of missing out on the next best alternative when making a decision.
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Stock holding costs
the overheads resulting from the stock levels held by a firm.
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Stock rotation
the administrative and physical processes to ensure that older stock is used first.
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Lean management
Lean management is a philosophy that aims to produce more using less, by eliminating all forms of waste ("waste" being defined as anything that does not add value to the final product).
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Just-in-case
keeping buffer stocks of materials and components just in case something goes wrong.
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Total quality management
a passion for quality that starts at the top, then spreads throughout the organisation.
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Capacity utilisation
Capacity utilisation is the proportion of maximum possible output that is currently being used.
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Barriers to entery
factors that make it hard for new firms to enter a market.
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Downtime
any period when machinery is not being used in production. Some down-time is necessary for maintance, but too much may suggest incompetence.
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Excess capacity
when whre is more capacity than justified by current demand.
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Flexible specialisation
a production system based upon batches of goods aimed to many market niches, instead of mass production/mass market.
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Rationalisation
reorganising in order ro increase efficiency. This often implies cutting capacity to increase the percentage utilisation.
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Redeploy
find new jobs for staff whose current is no longer needed.
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Highly price elastic
when customers are so focused on price that small change can cause a big switch in customers demand.
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Higher profit margin
a wider gap between price and unit cost. If sales volumes stay the same, this must increase total profit.
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Natural wastage
the "natural" annual fall in staff levels caused by employees retiring, moving away or finding better jobs elsewhere.
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Operational targets
the numercial goals set a management at the start of the year.
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Rationalisation
reorganising on roder to increase efficiency. This usually leads to redundancies.
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Other cards in this set
Card 2
Front
an optimistic estimate of the best possible outcome, for example if sales prove much higher than expected
Back
Base case
Card 3
Front
estimating future monthly cash inflow and outflow, to find out the net cash flow
Back
Card 4
Front
obtaining part-payment of the amount owed from a factoring company. The factoring company will then collect the debt and pass over the balance of the payment
Back
Card 5
Front
when cash outflows are greater than cash inflows
Back
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