In today’s era, we all are connected to the business world in some way or the other. Whether we are shopping in a mall, ordering food from an app or buying our favorite cold drink, there is a big game of business going on behind the scenes everywhere. Often in the news or on social media, we hear some words which sound very high-profile but in reality their meaning is related to our everyday life.
It is important to understand these words because by knowing the hidden trick or strategy behind them, you can become a smart customer and wise investor. When you understand the real meaning of these words, you will be able to decode the market language that big companies use to their advantage. This information will not only keep you ahead of the discussions, but will also completely change the way you look at market fluctuations.
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1. Upselling
This is a sales technique in which the shopkeeper motivates you to buy goods that are slightly more expensive or premium than your budget. For example, when you ask for a small burger and the person at the counter tells you to ‘get it bigger for just Rs 20’, he is ‘upselling’.
2. Exit Strategy
It means a way out of a business. When a person invests money in a company, he thinks in advance how and when he will withdraw his profits by selling his stake in the future. Like selling the company to a big company or listing it in the stock market so that investors can get their money back with profits. In simple language, ‘Exit plan after earning money from the business.’
3. Cannibalization
When a company brings a new product of its own in the market and that new product starts reducing the sales of the old and good running product of the same company, then it is called ‘cannibalization’. This means that the new goods of the company attract the customers of its old goods.
4. Network Effect
This means that the more people use something, the more its value will increase. As the number of users on an app increases, that app becomes more powerful and then it becomes almost impossible for new competitors to defeat that company.
5. Zero-Sum Game
In business, this is a situation where one party’s gain completely depends on the other’s loss, that is, if one party has won something, the other must have definitely lost something. In this, the sum of total profit and loss always remains ‘zero’.
6. First-Mover Advantage
The company which brings a new idea to the world first, the initial lead and name it gets is called ‘first-mover advantage’. This gives the company the first and golden opportunity to establish its hold in the market.
7. Economies of Scale
It is a simple calculation that the larger the quantity of goods you make, the less will be the cost of making them. For this reason, big companies produce very cheap goods, which small companies are unable to compete with.
8. Moat
In business, ‘mort’ means the biggest strength of the company which protects it from its competitors. It could also be a brand name or some special technology that no one else has. It is like a security blanket for the company.
9. Customer Lifetime Value- CLV (Customer Lifetime Value)
Companies no longer just look at what you buy from them today, but rather calculate how much total profit you will give them by joining them in the coming years. On this basis, they give special discounts to their special customers.
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10. Friction
Friction in business means all those obstacles that prevent a customer from purchasing a product. Like payment failure, app running slow or asking for too much information. Companies always try to make their service so easy that customers can shop without any hassle.
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