Mind map

A mind map is a creativity technique that places the main or central idea at the centre and develops related ideas around it. It provides a visual picture of groups of connected ideas while keeping the central idea as the focus.

Break-even

The break-even point is the point at which total expenditure, or total costs, is equal to total income or revenue. At this point the business makes neither a profit nor a loss.

Fixed cost

A fixed cost is an expense that remains the same, or relatively constant, from month to month regardless of the level of business activity. Examples include certain rent and insurance expenses.

Income statement

An income statement is a financial statement that summarises the revenue earned and expenses incurred by a business over a period. It shows whether the business made a profit or a loss.

Shopping products

Shopping products are products that consumers normally compare with similar or competing products before making a purchase. The comparison may involve factors such as price, quality, features and suitability.

Kaleidoscope packaging

Kaleidoscope packaging uses attractive and attention-grabbing visual elements on packaging, including pictures of famous personalities, to make the product more appealing and noticeable to consumers.

Survey

A survey is a method used to collect primary data directly from respondents. It commonly uses questionnaires or structured questions to obtain information about consumers, markets, opinions or behaviour.

TRUE

Economic factors can influence consumers' purchasing power and business conditions. Changes in factors such as income, inflation, interest rates and economic growth can therefore affect sales.

FALSE

A private company is a separate legal entity and generally provides its owners or shareholders with limited liability. Their personal liability is therefore not unlimited merely because they own shares in the company.

TRUE

A slogan is a short, memorable phrase or sentence used in marketing to communicate a positive message about a product, service or business and help consumers remember the brand.

TRUE

Under a lease arrangement, the leasing company remains the owner of the equipment. At the end of the agreed lease period, the equipment is returned to the leasing company unless the agreement provides another arrangement.

FALSE

Odd pricing is a psychological pricing technique in which prices are set just below a round amount, for example R99.99 rather than R100.00. Its purpose is to create the perception that the product is cheaper, rather than specifically to gain quick market acceptance.

FALSE

Remuneration policy deals with how employees are compensated and rewarded. It is associated with human-resource management rather than being a component of the marketing function.

TRUE

Attribute analysis is a creativity technique in which the characteristics or attributes of a product, service or idea are examined so that improvements, alternatives or new ideas can be generated.

FALSE

Price skimming involves setting a relatively high initial price for a new product and then lowering the price over time. A strategy aimed at gaining quick market acceptance is associated with penetration pricing, where a relatively low initial price is used to attract customers and build market share.

TRUE

The Department of Trade and Industry can provide business-related information and support that entrepreneurs can use when researching and preparing a business plan.

FALSE

A bank overdraft is generally a short-term financing facility used to meet temporary cash-flow needs. It is therefore not a type of long-term financing.

Entrepreneurs are important to the economy for several reasons:

• They develop natural resources. Entrepreneurs identify opportunities to use and develop available natural resources in productive economic activities. This contributes to economic development and the creation of goods and services.
• They create job opportunities. When entrepreneurs start and expand businesses, they employ people. SMMEs can therefore contribute significantly to employment and reduce unemployment.
• They pay tax. Businesses and entrepreneurs contribute to government revenue by paying taxes. Government can use this revenue to provide public services and support economic and social development.
• The free-market system depends on entrepreneurs. Entrepreneurs identify opportunities, establish businesses, compete in markets and take risks. Their activities help the free-market system to function by providing goods and services and responding to consumer demand.

An entrepreneur is someone who creates a new business in the face of risk with the aim of making a profit. He or she identifies business opportunities and assembles the necessary resources to capitalise on those opportunities.

• Equity

  Equity financing provides capital to a business in exchange for an ownership interest. The finance becomes part of the business's capital and does not operate in the same way as a conventional loan that must be repaid with interest.

• Debt

  Debt financing involves obtaining funds that the business is required to repay according to agreed terms, normally with interest. It creates a financial obligation for the business.