Business Midterm Review PDF

MIDTERM REVIEW 3.1 Terms Definitions Capital expenditure: Refers to business spending on fixed assets or capital equipment of a business. Finance: Refers to the various available money that an organization has to fund its business activities. Revenue Expenditure: Refers to business spending on i...

MIDTERM REVIEW 3.1 Terms Definitions Capital expenditure: Refers to business spending on fixed assets or capital equipment of a business. Finance: Refers to the various available money that an organization has to fund its business activities. Revenue Expenditure: Refers to business spending on its everyday and regular operations. 3.2 Terms Definitions Business angels: Wealthy and successful private individuals who risk their own money in a business venture that has high growth potential. Crowdfunding: Rising finance for a business venture or project by getting small amounts of money from a large number of people, usually through online platforms. External sources of finance: Finance that comes from outside the organization, usually with the help of a third-party provider, such as a bank, business angel, venture capitalist or government. Initial public offering(IPO): Finance that come from within the organization, from its own resources and assets without the help of a third-party provider. Leasing:This financial service enables businesses to have access to non- current assets, by hiring these assets, but without the high costs of capital Expenditure. Loan capital: Also known as debt capital , this refers to borrowed funds from financial lenders, such as commercial banks. Long term-finance: Refers to sources of finance of more than five years, for the purchase of long-term fixed assets or to fund the growth of a business in overseas markets. Microfinance: An external source of finance provided by financier who support entrepreneurs of small businesses, especially females and those on low incomes who are ordinarily unable to secure loans from commercial banks. Microfinance providers: Refers to the financiers or organizations that lend small amounts of money to entrepreneurs of small businesses, especially females and business owners on very low incomes. Overdraft: A banking service that enables customers (personal and business customers) to withdraw more money from their account than exists in the account. Personal funds: Internal source of finance, with entrepreneurs using their own savings, usually to finance their start-up business. Retained profit: This is the surplus funds that are reinvested back in the business, rather than being distributed to the owners. Revenue Expenditure: Refers to business spending on its everyday and regular operations, e.g. spending on wages, raw materials and bills. Sales and leaseback: This is a hybrid financial strategy that involves a business divesting its tangible non-current assets and subsequently entering into a lease agreement to regain access to and use of these assets. Sale of assets: An internal source of finance that involves the firm selling existing items of value that it owns. Share capital: Also known as equity capital , this is finance raised through the issuing of shares via a stock exchange (or stock market). Share issue: The process involving a public limited company selling additional shares in order to raise finance. Short term finance: Refers to sources of finance needed for the day-to-day running of the business, i.e., revenue expenditure. Sources of finance: Refers to where a firm obtains its money to fund its business activities and operations, such as from personal savings, loan capital, crowdfunding, and share capital. Stock exchange: A highly regulated marketplace where individuals and businesses can buy and sell shares in public limited companies. Trade credit: Financial service that enables a business customer to purchase and obtain goods and services but to pay for these at a later date. 3.3 Terms Definitions Average costs: This is the cost per unit of output. It is calculated by the formula: AC = TC ÷ Q where: AC = Average cost TC = Total cost, and Q = Quantity of output Average Revenue: This is the amount a business receives from its customers per unit of a good or service sold. Mathematically, AR = TR ÷ Q = P where: AR = Average revenue TR = Total revenue Q = Quantity of output, and P = Price Cost: The charges that an organization incurs from its operations, e.g., rent, wages, salaries, and insurance. Direct cost: Costs that are clearly associated with the output or sale of a certain good, service or business operation, e.g., raw materials. Fixed costs:Costs that do not change with the level of output, e.g., loan repayments and management salaries. Indirect costs: Also known as overhead costs, these costs are not easily identifiable with the sale or output of a specific good, service or business operation. Price:Also known as average revenue , this is the amount of money a product is sold for. Revenue: The money (income) received by a business from the sale of goods and/or services. Revenue stream: The different sources of revenue (or income) for a business, E.g., revenue from sponsorship deals, merchandise sales, membership fees and royalties. Total Cost: This refers to the aggregate amount of money spent on the output of a business. The formula is: TC = TFC + TVC where: TC = Total costs TFC = Total fixed cost, and TVC = Total variable cost. Total Revenue: This is the sum of income received by a business from its trading activities. It is calculated using the formula: TR = P × Q. Variable costs:Costs that change with the level of output - they rise when output or sales increase, e.g., raw materials and packaging costs. 3.4 Terms Assets: The possessions owned by a business, which have a monetary value, e.g., buildings, land, machinery, equipment, inventories, and cash. Balance Sheet: Also known as the statement of financial position, this set of final accounts shows the value of a firm’s assets, liabilities, and the owners’ investment (or equity) in the business, at a particular point in time. Cash: This refers to the money an organization has either “in hand” (at its premises) and/or “at bank” (i.e., in its bank account). It is the most liquid type of current assets. Copyrights: These intangible assets give the registered owner the legal rights to creative pieces of work, such as the works of authors, musicians, conductors, playwrights (scriptwriters) and directors. Cost of Sales (COS): These are the direct costs of production, such as the cost of raw materials, component parts, and direct labour. Creditors: Also known as trade creditors, this refers to the suppliers that allow a business to purchase goods and/or services on trade credit. Current Asset: Short-term assets belonging to an organization which will last in the business for up to 12 months, e.g., cash, debtors, and stock(inventory). Current liabilities: These are the short-term debts of a business, which need to be repaid within twelve months of the balance sheet date. Examples include bank overdrafts, trade creditors, and other short-term loans. Debtors: A type of current asset, referring to individual or business customers that owe money to the organization as they have bought goods or services on trade credit, i.e., they need to pay within 30 and 60 days. Dividends: These are the payments from a company’s profit (after interest and tax) paid to the shareholders (owners) of the company. The amount of dividends paid to an individual shareholder depends on the number of shares held by the individual. Equity: Refers to the value of the owners' stake in the business, i.e., what the business is worth at the time of reporting the balance sheet. Expenses: These are a firm’s indirect costs of production, e.g., rent, management salaries, marketing campaigns, accountancy fees, bank interest charges, travel expenses, utilities, repairs and maintenance, and general insurance. Final accounts: These are the published accounts of an organization, made available to and used by different stakeholders, e.g., managers, employees, shareholders, sponsors, financiers, and investors. Finished Goods: These are the final products of a business, ready to be sold to customers. Fixed assets: The long-term assets (possessions) of an organization that have a monetary value and are used repeatedly but are not intended for resale within the next twelve months, e.g. property and equipment. Goodwill: The reputation and established networks (know-how) of an organization, which adds to a firm’s monetary value. Gross Profit: This refers to the profit from a firm’s everyday trading activities. It is calculated by the formula: Sales revenue – Cost of sales. Illiquid Assets: These items of value, owned by the business, cannot be sold quickly, are difficult to sell, and/or cannot be sold easily without incurring a significant loss in value. Intangible Asset: Non-physical fixed assets that are valuable to a firm’s survival and success, such as brand value, goodwill, copyrights, trademarks, and patents. Intellectual property rights: Abbreviated as IPRs, these are a firm's fixed, intangible assets with a monetary value, comprised of goodwill, patents, copyrights and trademarks. Liabilities: The debts of a business, i.e., the money owed to others, e.g., money owed to financiers, trade creditors, and the government (for tax). Net assets: Refers to the overall value of an organization’s assets after all its liabilities are deducted. It is calculated by the formula: total assets minus current liabilities minus non-current liabilities. Non-current assets: Also known as fixed assets, this refers to the long-term assets or possessions of an organization with a monetary value but are not intended for resale within the next twelve months of the balance sheet date. Non-current liabilities: Also known as long-term liability, this refers to debt owed by a business which will take longer than a year (from the balance sheet date) to repay. Overdrafts: This financial service allows customers to temporarily take out more money than is available in their bank account. Patents: The official rights given to a business to exploit an invention or process for commercial purposes. Profit and loss account: Also known as the income statement, this shows a firm’s profit (or loss) after all production costs have been subtracted from the organization’s revenues, each year. It is also known as the statement of profit or loss or income statement. Profit after interest and taxes: Also referred to as profit for period, this section of the P&L account shows the actual value of profit earned by the business after all costs have been accounted for. Profit before interest and taxes: This section of the P&L account shows the value of a firm’s profit (or loss) before deducting interest payments on loans and taxes on corporate profits. Raw materials: These are the natural resources used in the production process to create goods and provide services to customers. Retained profit: Also referred to as retained earnings, this refers to the value of a firm’s earnings after all costs are paid (including interest and tax) and shareholders have been compensated (dividends). Sales revenue: Shown on the profit and loss account, this refers to the money an organization earns from selling goods and services. Share capital: The value of equity in a business that is funded by its shareholders, either through an initial public offering (IPO) or via a share issue. Short-term loan: These are advances (loans) from a financial lender, such as a commercial bank, that needs to be repaid within 12 months of the balance sheet date. Stocks: Also known as inventories, these are the goods that a business has available for sale, per time period. Tax: Refers to the compulsory deductions paid to the government as a proportion of a firm’s profits. Total assets: The sum of a firm’s non-current assets and its current assets. Total Liabilities: These are simply the sum of current liabilities and non-current liabilities, i.e., the sum of all the monies owed by the business. Trade creditors: Suppliers may give trade credit, which needs to be repaid at a future date (typically 30 to 60 days). Trademark: A form of intellectual property or intangible asset which gives the listed owner the legal and exclusive commercial use of the registered brands, logos, and/or slogans (corporate catchphrases). Window dressing: Also known as creative accounting, this is the legal manipulation of financial statements based on the accounting principles and rules in the country in order to make the figures look more flattering (in the same way that people clean and tidy their homes before guests are due to arrive). Work-in-progress: Also referred to as semi-finished goods, these are parts and components used in the production process. Working capital: The money available for the day-to-day running of a business. It is calculated by subtracting current liabilities from current assets. 3.5 Terms Acid ratio test: Also known as the quick ratio, this short-term liquidity ratio measures an organization’s ability to pay its short-term debts without having to sell any stock (inventories). Capital employed: This is the value of the funds used to operate the business and to generate a financial return for the organization. It is the sum of non-current assets and equity finance. Current ratio: A short-term liquidity ratio used to calculate the ability of an organization to meet its short-term debts (within the next twelve months of the balance sheet date). Gross profit margin(GPM): A profitability ratio that measures an organization’s gross profit expressed as a percentage of its sales revenue. It is also an indicator of how well a business can manage its direct costs of production. Liquidity: Refers to the ease with which a business can convert its assets into cash without affecting its market value, i.e., it measures a firm’s ability to repay short-term liabilities without having to use external sources of finance. Liquidity ratios: These are financial ratios that examine an organization’s ability to pay its short-term liabilities and debts, namely the current and acid test ratios. Profit: The financial surplus after all costs, including expenses, have been paid. Profit Margin Ratio: A profitability ratio that measures a firm’s overall profit (after all costs of production have been deducted) as a percentage of its sales revenue. It is also an indicator of how well a business can manage its indirect costs (overhead expenses). Ratio analysis: A quantitative management planning and decision-making tool, used to analyse and evaluate the financial performance of a business. These can be further categorised as profitability, liquidity, and efficiency ratio analysis. ROCE/Return on capital employed: A profitability ratio that measures a firm’s efficiency and profitability in relation to its size (as measured by the value of the organization’s capital employed). 3.7 Terms Bad debt: This occurs when a debtor is unable to pay outstanding invoices to the business. The result is it reduces the cash inflows for the vendor (seller). Cash: The money a business has, either “in hand” (at its premises) and/or “at bank” (i.e., in its bank account). It is the most liquid of a firm’s current assets and is easily accessible Cash flow: The movement of an organization’s cash inflows (cash received from the sale of goods and services) and cash outflows (used to pay for the costs of running the business). Cash flow forecasting: A quantitative technique used to predict how cash is likely to flow into and out of the business for a particular period of time. Cash flow problems: These are liquidity issues that arise when an organization has insufficient funds to run its business, i.e., when net cash flow is negative. Cash inflow: Refers to the money coming into a business from earnings (sales revenue) and other sources of finance, such as crowdfunding. Cash outflow: Refers to the money going out of a business to pay for its costs, such as the purchase of raw materials or the payment of wages and salaries. Closing balance: Found in a cash flow forecast, this refers to the value of cash held by a business at the end of a trading period (usually on the last trading day of the month). Collateral: Refers to the financial guarantee, using a firm’s fixed assets, for the purpose of securing loan capital. Credit Control: The process of monitoring and management of debtors, such as ensuring only suitable customers are given trade credit and that customers do not exceed the credit period. Current assets: The short-term assets (belongings) of an organization that can be relatively easy to convert into cash, i.e. cash, stocks (inventory), and debtors. Current liabilities: The short-term debts of a business, which need to be repaid within twelve months of the balance sheet date, e.g., overdrafts, trade creditors and short-term loans from banks. Debtors: A category of current assets, these are individuals or businesses that owe money to the organization because they have bought products on trade credit, so typically need to pay within 30 and 60 days. Fixed Assets: Also known as non-current assets, these are items owned by a business that hold a monetary value and are used over and over again for production purposes. Liquidity Crisis: A situation that arises when a business is unable to pay its short- term debts. This can eventually lead to bankruptcy. Liquidity Position: This is a measure of the extent to which a business has sufficient liquidity to continue its operations and activities. Liquidity problem: Also known as a cash flow problem, this issue occurs when there is a lack of cash in the organization because its cash inflows are less than its cash outflows, i.e., it experiences negative net cash flow. Net cash flow: The numerical difference between an organization’s total cash inflows and its total cash outflows, per time period. The formula to calculate this is: Cash inflows – Cash outflows. Net current assets: Also known as working capital, this is shown on a balance sheet to reveal the liquidity position of a business, this is found by using the formula: Current assets – Current liabilities. Opening balance: Found in a cash flow forecast, this refers to the value of cash held by a business at the start of a trading period (usually the beginning of the month). Overdrafts: A financial service from banks that enable customers to temporarily take out more money than is available in their bank account. Profit: The value of sales revenue after all costs have been accounted for, i.e., the positive difference between a firm’s sales revenue and its total costs of production. Sales revenue: The value of goods and/or services sold to customers. It is calculated using the formula: Price × Quantity. Short-term loans: Advances (borrowed funds) from a financial lender, such as a bank, repayable within 12 months. Tax: Payment made to the government if the business earns profit after all costs and expenses have been paid. Working capital: Also known as net current assets, this refers to the cash or other liquid assets available to an organization for its daily operations, such as paying for raw materials, utility bills and staff wages. Working capital cycle: Also referred to as net current assets, this refers to the duration between a business paying for its production costs of a good or service and receiving the cash from customers purchasing the product. 3.8 Terms Account rate of return (ARR): Also referred to as the average rate of return, this method of investment appraisal calculates the average annual profit of an investment project expressed as a percentage of the amount of invested. Capital expenditure: A business organization’s spending on the purchase or acquisition of fixed assets, e.g. spending on buildings (premises),machinery ,equipment and tools. Cumulative net flow: The sum of an investment project’s net cash flows for a particular year plus the net cash flows of all previous years. Investment: Capital expenditure with the intention of a financial return on this spending at some point in the future. Investment appraisal: The formal process of quantifying the financial risks of an investment decision, in order to establish whether the expenditure can be justified from a financial perspective. Payback period (PBP): The investment appraisal method that considers the time it takes for the amount of money invested in a project to be repaid using the proceeds generated from the investment. Principal: The principal refers to the capital outlay or the original amount spent on an investment project. Qualitative investment appraisal: Method of investment appraisal used to determine whether a project is worth investing in by using non-numerical techniques, e.g., whether the project aligns with the organization’s mission. Quantitative investment appraisal: Method of investment appraisal used to determine whether an investment project is worthwhile based on financial analysis, namely, PBP, ARR, and NPV. 4.1 Terms Market Growth: Refers to an increase in the size of a market, usually measured by the rise in total sales revenue of the market or industry. Market leader: Refers to the business with the largest market share in a given industry. Market orientation: This is an approach to marketing that focuses on meeting the specific demands (desires and needs) of customers and potential customers. Market share: Refers to the sales revenue that an organization accounts for within a given market or industry. It is measured by expressing the firm’s sales revenue as a percentage of the whole industry’s sales revenue. Market size: The total number of individual customers or the total value of sales revenue in a certain market. Marketing: The management process of identifying, anticipating, and satisfying customer requirements in a profitable way. It is the art of determining the goods and services required to meet the needs and wants of customers in a sustainable way. Needs:These are the things people need in order to survive, e.g., food, water, and shelter. Product Orientation: This is an approach to marketing that focuses on making products a business knows how to make well, rather than primarily concentrating on the needs and desires of potential customers. Sales revenue: Refers to a firm's income from selling its goods and/or services, i.e., the value of its sales. Sales Volume: Refers to the volume (quantity) of sales of a particular business. Wants: These are human desires, i.e., things that people would like to have, or have more of. 4.2 Terms Bargain products: Goods or services that are those perceived by customers to be of high quality but sold at a low price. Consumer profiles: The demographic and psychographic characteristics of consumers in different market segments. Cowboy products: Goods or services that are perceived by customers to be of low quality but high price. Demographic segmentation: The process of splitting consumers according to statistical characteristics of the population, such as age, gender, family size, religion, and ethnicity. Differentiation: The process of distinguishing an organization’s products from those of other firms in the same industry. Economy brands: Goods or services that are perceived by customers to be of low quality and sold at a low price. Geographic segmentation: The marketing process that involves characterising consumer according to their different geographical locations. Market: A market is the collective term for the buyers and sellers of a particular good or service. Market segment: A distinct group of customers with similar characteristics, tastes, and Preferences. Market segmentation: The process of dividing a market for a product into smaller or distinct groups of customers in an effort to meet their specific desired needs and wants. Marketing mix: The key elements of a marketing strategy to ensure its success in meeting the needs and wants of the organization’s customers and the firm’s marketing objectives. Marketing Objectives: These are the goals or targets that help to give marketing teams (or marketing departments) a sense of purpose and direction.) Marketing plan: A document that shows the marketing objectives and marketing strategy of a particular business. Marketing Planning: The structured process of formulating marketing objectives and appropriate marketing strategies to achieve these goals. Marketing strategies: The different long-term actions used by an organization to achieve its marketing goals. Mass markets: A marketing approach that focuses on supplying to wide-ranging groups of customers in a market, without having split them into separate market segments, such as the markets for bottled water or breakfast cereal. Niche markets: Marketing approach that focuses on supplying highly specialised products to cater for a small and select target market. Objective: An objective is a target or goal a business organization strives to achieve. Premium products: Goods or services that are perceived by customers to be of high quality and high price. Product differentiation: Refers to the process by which firms attempt to make their goods and services different from those provided by other firms in the market in order to increase their own sales revenue. Product position map: Also known as a perception map, this is a graphical illustration of customer perceptions of a business, its products, and/or brands in comparison to other firms in the industry. Psychographic segmentation: Segmentation that involves characterising consumers according to people’s lifestyle choices and personal values. Socioeconomic segmentation: The process of splitting the market according to consumer or household income levels. This is often linked to their type of profession and/or their level of educational attainment. Target market: The group of customers that an organization focuses on selling its products to. Targeting: Targeting is the marketing practice of creating and using an appropriate marketing mix and marketing strategies to cater for different market segments. Unique selling point (USP): An exclusive feature or aspect of a business, its products or brands that make it distinct from others in the same industry. 4.4 Terms Focus groups: involve forming small discussion groups to gain insight into the attitudes and behaviour of respondents. The group is typically made up of participants who share a similar customer profile. Government publications are a type of secondary market research, referring to official documents and publications released by government entities and agencies. Interviews are a type of primary research that involve discussions between an interviewer and interviewees to investigate their personal circumstances, preferences, and opinions. A market analysis is a form of secondary market research that reveals the characteristics, trends, and outlook for a particular product or industry, such as market size, market share, and market growth rate. Market research refers to marketing activities designed to discover the opinions, beliefs, and preferences of potential and existing customers. Media articles are a type of secondary market research referring to the documents (articles) in print or online media. They are written by skilled journalists and authors. Observations are a method of primary research that involves watching how ​ people behave or respond in different situations. Online secondary market research refers to sources available on the Internet for research purposes. These include media articles, government publications, academic journals, and market analyses available on the Internet. The population , in marketing terms, refers to all potential customers of a particular market. Primary market research involves gathering new data for a specific purpose, using methods such as surveys, interviews, focus groups, and observations. The research is obtained first hand to meet the specific needs of the business. Qualitative market research involves getting non-numerical responses from research participants in order to understand their behaviour, attitudes, and opinions. Quantitative market research is about collecting and using factual and measurable information rather than people’s perceptions and opinions. Quota sampling involves using a certain number of people (known as the quota) from different market segments for primary market research purposes. Random sampling gives everyone in the population an equal chance of being selected for the sample. A sample is a selected group or proportion of the population used for primary market research purposes. Sampling is a primary research technique that selects a sample of the population from a particular market for research purposes. Sampling errors are caused by mistakes made in the sample design, such as an unrepresentative sample being used or the sample size being too small. Secondary market research involves the collection of second-hand data and information that already exists, previously gathered by others, such as media articles and government publications. A survey is a document that contains a series of questions used to collect data for a specific purpose. Surveys are the most common method of primary research. 4.5 terms Above the line promotion (ATL): Form of promotion that refers to any form of paid-for promotional technique through independent consumer media. Advertising: A form of visual and/or audio marketing communication used to inform and persuade people to buy a certain good or service. After sales-care: These are value-added services offered to customers subsequent to the sale of a product, e.g., guarantees and warranties, maintenance services, and technical support. Agents: Also known as brokers, these independent intermediaries help to sell a vendor’s products in return for commission, e.g., real estate agents. Below the line promotion: Form of promotion that refers to all forms of advertising or promotion that do not use external media agents. Brand: A brand is the registered name used to identify a product of a particular business organization. Brand awareness: The degree of customer knowledge and recognition of a particular brand in order to gain more customers. Brand development: Part of a firm’s marketing strategy in communicating the value of a brand and what the brand stands for. Brand royalty: The degree of customer devotion to a particular brand. Brand switching: This is the opposite of brand loyalty and occurs when consumers turn to alternative brands, mainly because the original brand has lost some of its former appeal. Brand value: The expected earning potential of a brand, i.e., the likely future earning potential (value) of a particular brand. Branding: This is the practice of using an exclusive name (brand), symbol, or design which identifies a specific product or business. Competitive pricing: This pricing method involves a business setting the price of its products at the same or similar level charged by competitors in the market. Consumer goods: These are products bought for personal consumption, rather than for business use, e.g., home appliances, furniture, food and drink, and house plants. Customer care Refers to the attentiveness and courtesy of employees towards meeting the needs of their customers in the delivery of a good or service. Customer These are marketing strategies used to attract customers to remain loyalty schemes devoted to a brand or business by offering rewards and other incentives for repeat purchases. Customer Reward systems used to encourage customers to make repurchases, loyalty schemes such as price discounts or free gifts for members. Direct mail The use of postal correspondence for promotional purposes. Direct Refers to a business communicating information about its products marketing straight to customers. Distribution The marketing process of getting the right products to the right (place) customers in the right place and at the right time, e.g., wholesalers, retailers, agents, e-commerce, and vending machines. Distribution Also known as a channel of distribution, this refers to the path taken for channel a product to get from the producer to the consumer. Extension Marketing approaches used to prolong or lengthen a product’s life cycle, strategies e.g., price reductions or new promotional strategies. Genericized These are brand names that become synonymous with the name of the brands product itself due to their popularity, e.g., AstroTurf, Band-Aid, Frisbee, Sellotape, and Yo-Yo.  These are highly recognized brands in overseas markets. Firms use a Global brands unified approach to their global brand strategy to increase its brand recognition as well as to support its brand awareness and brand development in new markets. Impulse buying Refers to the unplanned or unintentional purchases of customers due to them being attractive by promotional campaigns (sales promotions). Informative Describes one of the purposes of promotion in the marketing mix, which promotion is used to notify or tell customers about a firm’s products. The name given to the group of consumers who are the first to own a Innovators certain product, usually due to the prestige associated with being first and/or customer loyalty to a particular brand or product. Intermediary A third-party person or business that offers distribution services as part of a channel of distribution, such as agents, wholesalers, and retailers. Intermediation The marketing process of using a middle person or distributor as channels of distribution between the producer and consumers. Logo A form of branding that uses a visual symbol to represent a business, brand, or product. Loss leader Pricing a product below its cost of production so as to attract customers pricing to also buy other items (with a higher profit margin). Mail order A form of distribution channel that enables customers to receive their goods via postal services. Marketing This exists when a business becomes complacent about its product myopia strategy, thereby failing to keep up with market changes. Mark-up (or the profit margin) The difference between the price and the cost per unit. Refers to a retailer’s range of goods that are available for sale, often Merchandise used for promotional purposes, e.g., Disney toys sold at their theme parks. Multi-brand This marketing strategy involves a business developing more than one strategy brand as part of its overall product strategy. Multi-channel distribution This refers to a firm’s use of a different distribution channels to get its strategy products to customers. One-channel distribution This method of distribution involves the use of a single intermediary, network such as an agent or retailers. Payment As part of “process” in the marketing mix, this refers to the different methods methods that customer can pay for the purchase of goods and services, e.g., cashless payment options. Penetration A pricing method that involves a firm setting low prices so as to gain pricing entry in a new market. The firm will then raise the price once the product or brand has established itself in the industry. Personal selling The use of sales personnel to sell goods and services with customers on a face-to-face basis. Persuasive Describes one of the purposes of promotion in the marketing mix, which promotion is used to encourage or convince customers to make a purchase and to improve customer loyalty. Point of sale The promotion of products in retail outlets where customers can buy the (POS) goods. Predatory A strategy that involves charging a low price, sometimes even below pricing the cost, so as to damage the sales of rivals. Premium A pricing method that involves a firm charging significantly higher prices pricing than similar or competing products in the market. This is usually due to the prestige or quality associated with the product or brand. Price The value of a good or service that is paid by the customer. Price leadership A strategy of following the price set by the dominant firm in the industry (the firm with the largest market share). Price wars The process of rival businesses competing by continually reducing prices so as to threaten the competitiveness of rivals in the market. Pricing This refers to the various ways a business can set a price for its goods methods and services. The price of a good or service is paid by customers. This refers to the ways in which a service is provided or delivered, such Process as various payment systems, queuing systems, after-sales care, and delivery service options. These are products purchased by a business for its commercial use, Producer goods rather than for private consumption, e.g., machinery, equipment, tools, fixtures and fittings, and office stationery. Product This refers to both physical (goods) and non-physical (services) items sold by a business or purchased by a customer. Product This refers to marketing strategies used to make a product distinct from differentiation its rivals, e.g., branding, product features, and packaging. Product life Marketing theory showing the different stages that most products go cycle (PLC) through from their research and development (R&D) stage to their final removal from the market. Product The range and mix of products sold by a business, including the various portfolio brands of all the products it owns. Promotion The various marketing processes used to inform customers about a product and persuading them to purchase the product. Promotional The range of above and below the line methods used to promote a mix product as part of a larger marketing mix. Prototype This is a trial product, used during the pre-launch stage of the product life cycle, to evaluate the potential commercial success of the product. Public relations The management function overseeing public attitudes and opinions of an organization to gain public understanding and support. Retailers These are commercial businesses that sell a manufacturer’s products directly to consumers. Sales A short-term promotional tactic used to entice customers to buy a promotion certain product.  Services Intangible products or non-physical products offered by a business, e.g., education, entertainment, healthcare, as well as travel and tourism. These are corporate catchphrases used as a marketing strategy to Slogans signify the or represent a brand, product, or business in a favourable and memorable way. Social media The use of online content that users can upload and share to a website marketing using a suitable medium platform, e.g., Facebook, Google. Instagram, (SMM) Twitter, and YouTube. Social This refers to the use of Internet-based websites, platforms and apps to networking share online content by building online communities. A promotional strategy that involves a business providing financial Sponsorship support to another organization or event in return for marketing exposure. Misc: Profit and loss account structure Revenue Cost of Goods Sold (COGS) Gross Profit Expenses Net Profit Before Interest and Tax Net Profit After Tax Retained Profit Cash flow forecast Cash inflows (e.g., sales revenue) Cash outflows (e.g., rent, wages) Net cash flow Opening and closing balances Break-even analysis Break-even quantity = fixed costs/selling price per unit - variable cost per unit