Cambridge IGCSE and O Level Business Studies

Section 3 – Mind maps

10  Marketing, competition and the customer
Why consumer spending patterns change

Changes in the product’s

price

Changes in the price of

competitors’ products

Changes in consumer
income
Why consumer spending
patterns may change
Changes in tastes and
fashion

Changes in population size

and structure

Changes in advertising and

promotional spending

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Cambridge IGCSE and O Level Business Studies

How markets are segmented

Methods of
market
segementation

Geographic Demographic Psychographic

Different regions
within the same Age Lifestyles
country

Different regions
Gender Personalities
of the world

Different
Values and
countries of the Income
attitudes
world

Social class

Family size

Ethnic background

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Cambridge IGCSE and O Level Business Studies

11  Market research

Sources of market research data

Sources of market
research data

Primary (field) Secondary (desk)

research research

Consumer
Focus groups Test market Observation Internet
surveys

Government
Interviews
publications

Postal surveys Business records

Newspapers and
Online surveys
magazines

Library resources

Market research
agencies

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Cambridge IGCSE and O Level Business Studies

Benefits and limitations of market research

Up to date

Collected for the specific

Benefits
needs of the business

Not available to
competitors

Primary
Time-consuming
to collect

Limitations Expensive to collect

Risk of inaccurate
Market research data or bias

Cheap to collect

Benefits

Easier and quicker to

obtain than primary data

Secondary
May be out of date

Not collected for the

Limitations specific needs of the
business

Available to other
businesses

Methods of sampling

Every member of the population has an

Simple random
equal chance of being selected

Every nth member of the population is

Systematic random
selected

Methods of sampling

Population is divided into groups with

Stratified specific characteristics and then a
sample is randomly selected

The population is divided into groups and a

specific number is selected at random from
Quota
each group in the same proportion as they
appear in the whole population

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Cambridge IGCSE and O Level Business Studies

12  Marketing mix: product and price

The marketing mix

Marketing mix

Marketing decisions
for the effective
marketing of a
product

Product Price Promotion Place

Develop a new Channels of

Skimming pricing Advertising
product distribution
Change an existing
product for a new
market
‘Direct sales’
Penetration pricing Sales promotion Producer to
consumer

Producer to retailer
Competitive pricing Personal selling
to consumer

Producer to
Promotional pricing Direct mail wholesaler to retailer
to consumer

Producer to agent to
Cost-plus pricing Sponsorship wholesaler to retailer
to consumer

The product life cycle

Introduction

Find new markets for the

product

Growth

Stages of the product life Find new uses for the

cycle product

Maturity Extension strategies

Change the product or its
packaging to improve its
appeal
Decline

Increase advertising or
other promotional activities

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Cambridge IGCSE and O Level Business Studies

Pricing methods

Used for new/unique products which are very

Skimming
different from anything else on the market

Used for new products which are to

Penetration compete with similar products already
established in the market

Used for new products launched by a

business with an already strong brand image,
Methods of pricing Competitive
or for existing products which were launched
using skimming or penetration pricing

Used to create brand awareness or attract

Promotional
customers

Often used by retailers to set the final price

Cost-plus
of the product to consumers

Price elasticity of demand

Price elasticity of demand

Measures the effect on

the demand for a product
of a change in its price

Elastic Inelastic

The percentage change in The percentage change in

demand is greater than demand is less than the
the percentage change in percentage change in
price price

Reduce price to increase Increase price to increase

sales revenue sales revenue

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Cambridge IGCSE and O Level Business Studies

13  Marketing mix: place and promotion

Channels of distribution

Producer

Direct sales Retailer Wholesaler Agent

Final Final
Retailer Wholesaler
consumer consumer

Final
Retailer
consumer

Final
consumer

Methods of promotion

Newspapers/magazines

Advertising
Radio/television
(paid-for communication)

Personal selling
(use of trained sales staff to Internet/social media
communicate directly with customers)

Money-off vouchers

Methods of promotion
Competitions

Sales promotion
(incentives to encourage short-term
increase in sales or repeat purchases)

Loyalty reward schemes

Direct mail
(posting leaflets and other printed
material to customers)

Point of sale displays

Sponsorship
(company pays to have its name
directly linked to an event)

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Cambridge IGCSE and O Level Business Studies

Opportunities and threats of e-commerce for business

Increased market

Reduced staffing and

Opportunities for businesses
Use of the internet and premises costs
other technologies by
business to market and sell
goods and services Can provide more
to consumers information to customers
E-commerce through a website

Increased competition

Threats for businesses

Consumers are less likely to
buy products from
businesses they don’t know

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Cambridge IGCSE and O Level Business Studies

14  Marketing strategy

Protect consumers from
dangerous or faulty goods

Prevent businesses from using

Legal controls on marketing
misleading advertisements

Protect consumers from being

exploited in industries where
there is little or no competition

Problems of entering foreign markets

Problems faced
when entering new
markets

Differences in legal Differences in

Lack of knowledge
controls to language Economic differences Social differences
about the market
protect consumers or culture

Some words do not The age structure of

Countries have their translate into other Consumers’ average the population
The business does not languages differs between
own laws to protect income differs
know the market and countries, as does
consumers Colours, numbers and between
consumers often do the role of women
and control business symbols mean different countries
not know the business and the importance
activities things in different
cultures of family

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