Paper 1

• Businesses make money by selling their goods and services.
• Consumer goods markets


  Where products such as food, cosmetics and magazines are sold.
• Markets for services


  This can include services for individuals.
• The housing market

  Where people buy, sell and let property.
• Commodity markets


  Where raw materials are traded.
• Financial markets

  Where currencies and financial products are traded.
• Marketing involves...

  • identifying the needs and wants of customers
  • designing products that meet these needs
  • understanding the threats from competitors
  • telling customers about the product
  • charging the right price
  • persuading customers to buy the product
  • making products available in convenient locations
• Mass markets


  A business sells the same product to all consumers and markets them in the same way.
• In Mass markets...

  • businesses can produce large quantities at a lower unit cost by exploiting economies of scale which would result in higher sales and profits
  • there is a lot of competition so businesses may have to spend more money on marketing
• Niche markets


  Smaller market segment.
• Niche marketing...

  • involves selling to a small customer group sometimes with specific needs
  • means a business might avoid competition to charge premium prices
• Market size...

  • can be estimated or calculated by the total sales of all businesses in the market
  • is usually estimated using value and volume
• Market share


  The proportion of a particular market that is held by a business.
• Market share equation

  Sales of a business / total sales in the market x 100%
• Market share might...

  • indicate whether if a business is a market leader
  • influence the strategy or objectives of a business
  • indicate business success or failure
• Brand names

  Distinguishes a product from other products in the market.
• Branding might be used to...

  • differentiate the product
  • create customer loyalty
  • help product recognition
  • develop an image
  • charge a premium price
• A failure to adapt to a market can lead to the collapse of a business.
• Growth in online retailing is rapid and expected to continue into the future.
• Benefits of online retail services:

  • retailers can market their goods to people who prefer to shop from home
  • it is easier to gather personal information from customers who can be targeted in the future
  • selling costs such a staff and rent can be avoided
  • marketing costs will be lower
  • online retailers can reach more customers
  • affords greater flexibility
• How markets change:

  • the size of markets
  • the nature of the markets
  • new markets
• Innovation

  Can create new wants and needs and meet them with new products.
• Adapting to change:

  • develop a culture of flexibility within an organisation
  • use market research to keep up to date with developments in the market
  • investing in new product development
  • develop a niche strategy for customer loyalty
• Gaining a competitive advantage:

  • lowering prices
  • making their products appear different to those of rivals
  • offering better quality
  • advertising and promotion
  • quality of customer service
• Uncertainty

  Events which are completely beyond the control of a business which can have an impact on the market and have financial consequences.

  • a new competitor might enter the market
  • consumer tastes might change as a result of social trends
  • government might introduce new policies or legislation
  • new developments in technology
  • economy might go into recession
• Product Orientation


  Business focuses on the production process and the product itself
• Market orientation


  A business continually identifies, reviews and analyses consumer needs and is led by the market.
• Advantages to being market-orientated

  • can respond more quickly to changes because of the use of market information
  • stronger position when new competition enters the market
  • more able to anticipate market changes
• Market research


  Gathering, presenting and analysing information about the market and consumption of goods which is used to help prevent business failure.
• Primary research


  Information that did not exist before the research began and it is collected by the researcher.
• Methods of primary research

  • Questionnaires
  • Telephone interviews
  • Personal interviews
  • Focus groups
  • Observation
  • Test marketing
• Secondary research


  information which already exists and be internal or external data.
• Qualitative research


  Involves the collection of data about attitudes, beliefs and intentions.
• Quantitative research

  Involves the collection of data that can be measured.
• Limitations of market research

  • lack of research can cause business failure
  • human behaviour is unpredictable
  • sampling and bias
• Advantages of using social media as market research

  • it can reach millions of people around the world
  • allows specific groups of people to be targeted
  • free or low cost
  • allows communication on a personal basis with customers
  • information can be collected quickly
  • high skills and complex equipment are not needed
• Database

  Electronic filling system for holding data.
• Market segment

  Part of a whole market where a particular customer group has similar characteristics.
• Marketing positioning

  Looks at the perceptions consumers have about the product.
• Approaches a business might use to position its products

  • benefits offered by the product
  • the USP
  • the attributes of the product
  • the origin of the product
  • the classification of the product