LC Business key terms

Dividing a broad market into smaller groups of buyers who share similar needs, traits, or behaviors, so that products and messages can be tailored to each group more effectively.

The specific group of customers a business chooses to serve with its product or service, selected because the group is reachable, large enough, and well matched to the firm's strengths.

A short, clear statement of the concrete benefit a product delivers and why that benefit is better or different from alternatives, used to persuade customers to choose the offer.

The place a brand or product occupies in customers' minds relative to competitors, shaped deliberately through messaging, pricing, design, and channel choices.

The four controllable levers a firm combines to reach its chosen market: product, price, place (distribution), and promotion. Decisions in one area usually constrain the others.

The extra value a product gains from carrying a recognized brand name, reflected in customers' willingness to pay more, stay loyal, or recommend it to others.

The total profit a business expects to earn from a customer over the whole relationship, often used to judge how much spending on acquisition and retention is justified.

The average amount spent on sales and marketing to win one new customer, calculated by dividing total acquisition spending over a period by the number of customers gained.

The share of customers or subscribers who stop buying or cancel during a given period. High churn erodes revenue and raises the cost of maintaining growth.

A firm's ability to keep existing customers buying over time through service quality, loyalty programs, product improvement, and ongoing relationship management.

The sales volume or revenue level at which total revenue equals total costs, so the business makes neither profit nor loss. It is found by dividing fixed costs by contribution per unit.

Expenses that stay roughly the same regardless of how much the business produces or sells in the short run, such as rent, insurance, and salaried staff.

Expenses that rise or fall directly with the level of output or sales, such as raw materials, packaging, and sales commissions.

The money left from each sale after variable costs are subtracted, which goes toward covering fixed costs and then generating profit. Often expressed per unit or as a percentage of price.

Revenue minus cost of goods sold, divided by revenue. It shows how much of each sales dollar remains to cover operating expenses and profit before overheads are counted.

Profit earned from core business operations after deducting cost of goods sold and operating expenses such as marketing and administration, but before interest and taxes.

The bottom-line profit remaining after all costs, including interest and taxes, have been subtracted from revenue. It is the figure reported as the firm's final earnings.

The actual movement of money into and out of a business over a period. A profitable firm can still fail if the timing of cash outflows outpaces inflows.

Current assets minus current liabilities, representing the short-term funds available to run day-to-day operations such as paying suppliers and covering payroll.

A financial statement listing what a business owns (assets), what it owes (liabilities), and the owners' residual interest (equity) at a single point in time.

A financial statement showing revenue, costs, and profit over a period, revealing whether the business earned a profit and which expenses consumed the most money.

A performance measure calculated as the gain from an investment divided by its cost, usually expressed as a percentage, used to compare the efficiency of different spending choices.

The length of time needed for an investment's cumulative cash inflows to equal its initial cost. Shorter periods mean faster recovery of money but ignore returns after payback.

The value today of an investment's expected future cash flows minus its initial cost, after discounting those flows at a required rate of return. Positive NPV suggests the investment adds value.

A structured review of a firm's internal strengths and weaknesses alongside external opportunities and threats, used to inform strategy and prioritize where to act.

A scan of the external environment covering political, economic, social, technological, legal, and environmental forces that may affect a business or market.

A lasting edge that lets a firm win customers or earn higher margins than rivals, typically built on lower costs, differentiation, or a hard-to-copy resource.

A framework for judging how attractive an industry is by examining rivalry among existing firms, threat of new entrants, threat of substitutes, and the bargaining power of buyers and suppliers.

The chosen method for starting operations in a new market or country, such as exporting, licensing, a joint venture, or a wholly owned subsidiary, each trading control against risk and cost.

A business arrangement in which two or more parties create and share ownership of a new entity, pooling resources and risk while splitting control and returns.

Any person or group affected by or interested in a business's decisions, including owners, employees, customers, suppliers, lenders, regulators, and local communities.

The systems, rules, and practices by which a company is directed and controlled, defining who holds authority, how decisions are made, and how managers are held accountable.

A firm's voluntary commitment to act in ways that benefit society and reduce harm, beyond what the law requires, often covering environment, labor, and community issues.

Coordinating the flow of materials, information, and money from suppliers through production to customers, aiming to cut waste while meeting service and quality expectations.

An operating approach in which materials and goods arrive only as needed for production or sale, reducing inventory holding costs but leaving little buffer against supply disruption.

Cost savings that arise as output grows, because fixed costs are spread over more units and purchasing or production becomes more efficient per unit.

The approach a business takes to set prices, such as cost-plus, value-based, or penetration pricing, balancing profit goals against what customers will pay and what rivals charge.

A specific measure chosen to track progress toward an important business goal, such as conversion rate, margin, or on-time delivery, used to guide decisions and accountability.

Objectives written to be specific, measurable, achievable, relevant, and time-bound, which makes progress easier to track and results easier to evaluate.