Revision Notes: Marketing | Business Studies for GCSE/IGCSE - Year 11 PDF Download

 Page 1


 
  
  
3.1 – Marketing, Competition and the Customer 
What is a market? 
A market consists of all buyers and sellers of a good. 
What is Marketing? 
Marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements 
profitably. 
The role of marketing in a business is as follows: 
• Identifying customer needs: through market research 
• Satisfying customer needs: by producing and selling goods and services 
• Maintaining customer loyalty: building customer relationships – by a variety of methods that encourage 
customers to keep buying one firm’s products instead of their rivals’. For eg: loyalty card schemes, discounts for 
continuous purchases, after-sales services, message system that informs past customers of new offers. 
Page 2


 
  
  
3.1 – Marketing, Competition and the Customer 
What is a market? 
A market consists of all buyers and sellers of a good. 
What is Marketing? 
Marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements 
profitably. 
The role of marketing in a business is as follows: 
• Identifying customer needs: through market research 
• Satisfying customer needs: by producing and selling goods and services 
• Maintaining customer loyalty: building customer relationships – by a variety of methods that encourage 
customers to keep buying one firm’s products instead of their rivals’. For eg: loyalty card schemes, discounts for 
continuous purchases, after-sales services, message system that informs past customers of new offers. 
• Gain information about customers: by understanding why customers buy their products, they can develop and 
sell better products in the future. 
• Anticipate changes in customer needs: the business will need to keep looking for any changes in customer 
spending patterns and see if they can produce goods that customers want that are not currently available in the 
market. 
Some objectives the marketing department in a firm may have: 
• Raise awareness of their product 
• Increase sales revenue and profits 
• Increase or maintain market share (this is the proportion of sales a company has in the overall market sales. For 
example, if in a market $1 million worth of toys were sold in a year and company A’s total sales was $30,000 in 
that year, company A’s market share for the year is ($30,000/ $1000000) *100 = 30%) 
• Enter new markets at home or abroad 
• Develop new products or improve existing products. 
  
 Marketing Changes 
Why customer spending patterns may change: 
• change in their tastes and fashions 
• change in technology: as new technology becomes available, the old versions of products become outdated and 
people want more sophisticated features on products. 
• change in income: the higher the income, the more expensive goods consumers will buy; and vice versa. 
• ageing population: in many countries, the proportion of older people is increasing and products that are 
required by them are increasing- such as anti-ageing creams, medical assistance etc. 
The power and importance of changing customer needs: 
Firms need to always know what their consumers want (and they will need to undertake lots of research and 
development to do so) in order to stay ahead of competitors ans stay profitable. If they don’t produce and sell what 
customers want, they will buy competitors’ products and the firm will fail to survive. 
Why some markets have become more competitive: 
• Globalization: products are being sold in markets all over the world, so there are more competitors in the 
market. 
• Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to 
distribute and sell products everywhere. 
• Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making 
the market more competitive. 
How business can respond to changing spending patterns and increased competition: 
A business has to ensure that it is keeping up its market share and remain competitive in the market. It can ensure this 
by: 
Page 3


 
  
  
3.1 – Marketing, Competition and the Customer 
What is a market? 
A market consists of all buyers and sellers of a good. 
What is Marketing? 
Marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements 
profitably. 
The role of marketing in a business is as follows: 
• Identifying customer needs: through market research 
• Satisfying customer needs: by producing and selling goods and services 
• Maintaining customer loyalty: building customer relationships – by a variety of methods that encourage 
customers to keep buying one firm’s products instead of their rivals’. For eg: loyalty card schemes, discounts for 
continuous purchases, after-sales services, message system that informs past customers of new offers. 
• Gain information about customers: by understanding why customers buy their products, they can develop and 
sell better products in the future. 
• Anticipate changes in customer needs: the business will need to keep looking for any changes in customer 
spending patterns and see if they can produce goods that customers want that are not currently available in the 
market. 
Some objectives the marketing department in a firm may have: 
• Raise awareness of their product 
• Increase sales revenue and profits 
• Increase or maintain market share (this is the proportion of sales a company has in the overall market sales. For 
example, if in a market $1 million worth of toys were sold in a year and company A’s total sales was $30,000 in 
that year, company A’s market share for the year is ($30,000/ $1000000) *100 = 30%) 
• Enter new markets at home or abroad 
• Develop new products or improve existing products. 
  
 Marketing Changes 
Why customer spending patterns may change: 
• change in their tastes and fashions 
• change in technology: as new technology becomes available, the old versions of products become outdated and 
people want more sophisticated features on products. 
• change in income: the higher the income, the more expensive goods consumers will buy; and vice versa. 
• ageing population: in many countries, the proportion of older people is increasing and products that are 
required by them are increasing- such as anti-ageing creams, medical assistance etc. 
The power and importance of changing customer needs: 
Firms need to always know what their consumers want (and they will need to undertake lots of research and 
development to do so) in order to stay ahead of competitors ans stay profitable. If they don’t produce and sell what 
customers want, they will buy competitors’ products and the firm will fail to survive. 
Why some markets have become more competitive: 
• Globalization: products are being sold in markets all over the world, so there are more competitors in the 
market. 
• Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to 
distribute and sell products everywhere. 
• Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making 
the market more competitive. 
How business can respond to changing spending patterns and increased competition: 
A business has to ensure that it is keeping up its market share and remain competitive in the market. It can ensure this 
by: 
• maintaining good customer relationships: by ensuring that customers keep buying from their business only, 
they can increase market share. By doing so, they can also get information about their spending patterns and 
respond to their wants and needs to increase market share. 
• keep improving its existing products, so that sales are maintained. 
• introduce new products to keep customer’s interest, so that they don’t buy competitors’ products. 
• keep costs low to maintain profitability: low costs mean the firms can afford to charge low prices. And low 
prices generally mean more demand and sales, and thus market share. 
 
Niche & Mass Marketing 
Niche Marketing: identifying and exploiting a small segment of a larger market by developing products to suit it. For 
example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group. 
Advantages: 
• Small firms can thrive in niche markets where large forms have not yet established. 
• If there are no or very few competitors, firms can sell products at a high price and gain high profit margins 
because customers will be willing be willing to pay more for exclusive products. 
• Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms 
who only sell to the mass market and gain more sales. 
Mass Marketing: selling the same product to the whole market with no attempt to target groups with in it. For example, 
the iPhone sold is the same everywhere, there are no variations in design over location or income. 
Advantages: 
• Larger amount of sales, as compared to niche market. 
• Can benefit from economies of scale: a large volume of products is produced and so the average costs will be 
low, as compared to niche market. 
• Risks are spread, unlike in niche market. If the product isn’t successful in one market, it’s fine as there are 
several other markets. 
• More chances for the business to grow since there is a large market. In niche markets, this is difficult as the 
product is only targeted towards a particular group. 
 
Market Segmentation 
A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and 
preferences 
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on 
different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed 
the Diet Coke towards them. 
Markets can be segmented based on socio-economic groups (income), age, location, gender, lifestyle, use of the 
product (home/work, leisure/business.) etc. 
Each segment will require different methods of promotion and distribution. For example, products aimed towards kids 
would be distributed through popular retail stores and products for businessmen would be advertised in exclusive 
business magazines. 
Page 4


 
  
  
3.1 – Marketing, Competition and the Customer 
What is a market? 
A market consists of all buyers and sellers of a good. 
What is Marketing? 
Marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements 
profitably. 
The role of marketing in a business is as follows: 
• Identifying customer needs: through market research 
• Satisfying customer needs: by producing and selling goods and services 
• Maintaining customer loyalty: building customer relationships – by a variety of methods that encourage 
customers to keep buying one firm’s products instead of their rivals’. For eg: loyalty card schemes, discounts for 
continuous purchases, after-sales services, message system that informs past customers of new offers. 
• Gain information about customers: by understanding why customers buy their products, they can develop and 
sell better products in the future. 
• Anticipate changes in customer needs: the business will need to keep looking for any changes in customer 
spending patterns and see if they can produce goods that customers want that are not currently available in the 
market. 
Some objectives the marketing department in a firm may have: 
• Raise awareness of their product 
• Increase sales revenue and profits 
• Increase or maintain market share (this is the proportion of sales a company has in the overall market sales. For 
example, if in a market $1 million worth of toys were sold in a year and company A’s total sales was $30,000 in 
that year, company A’s market share for the year is ($30,000/ $1000000) *100 = 30%) 
• Enter new markets at home or abroad 
• Develop new products or improve existing products. 
  
 Marketing Changes 
Why customer spending patterns may change: 
• change in their tastes and fashions 
• change in technology: as new technology becomes available, the old versions of products become outdated and 
people want more sophisticated features on products. 
• change in income: the higher the income, the more expensive goods consumers will buy; and vice versa. 
• ageing population: in many countries, the proportion of older people is increasing and products that are 
required by them are increasing- such as anti-ageing creams, medical assistance etc. 
The power and importance of changing customer needs: 
Firms need to always know what their consumers want (and they will need to undertake lots of research and 
development to do so) in order to stay ahead of competitors ans stay profitable. If they don’t produce and sell what 
customers want, they will buy competitors’ products and the firm will fail to survive. 
Why some markets have become more competitive: 
• Globalization: products are being sold in markets all over the world, so there are more competitors in the 
market. 
• Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to 
distribute and sell products everywhere. 
• Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making 
the market more competitive. 
How business can respond to changing spending patterns and increased competition: 
A business has to ensure that it is keeping up its market share and remain competitive in the market. It can ensure this 
by: 
• maintaining good customer relationships: by ensuring that customers keep buying from their business only, 
they can increase market share. By doing so, they can also get information about their spending patterns and 
respond to their wants and needs to increase market share. 
• keep improving its existing products, so that sales are maintained. 
• introduce new products to keep customer’s interest, so that they don’t buy competitors’ products. 
• keep costs low to maintain profitability: low costs mean the firms can afford to charge low prices. And low 
prices generally mean more demand and sales, and thus market share. 
 
Niche & Mass Marketing 
Niche Marketing: identifying and exploiting a small segment of a larger market by developing products to suit it. For 
example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group. 
Advantages: 
• Small firms can thrive in niche markets where large forms have not yet established. 
• If there are no or very few competitors, firms can sell products at a high price and gain high profit margins 
because customers will be willing be willing to pay more for exclusive products. 
• Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms 
who only sell to the mass market and gain more sales. 
Mass Marketing: selling the same product to the whole market with no attempt to target groups with in it. For example, 
the iPhone sold is the same everywhere, there are no variations in design over location or income. 
Advantages: 
• Larger amount of sales, as compared to niche market. 
• Can benefit from economies of scale: a large volume of products is produced and so the average costs will be 
low, as compared to niche market. 
• Risks are spread, unlike in niche market. If the product isn’t successful in one market, it’s fine as there are 
several other markets. 
• More chances for the business to grow since there is a large market. In niche markets, this is difficult as the 
product is only targeted towards a particular group. 
 
Market Segmentation 
A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and 
preferences 
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on 
different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed 
the Diet Coke towards them. 
Markets can be segmented based on socio-economic groups (income), age, location, gender, lifestyle, use of the 
product (home/work, leisure/business.) etc. 
Each segment will require different methods of promotion and distribution. For example, products aimed towards kids 
would be distributed through popular retail stores and products for businessmen would be advertised in exclusive 
business magazines. 
Advantages: 
• Makes marketing cost-effective, as it only targets a specific segment and meets their needs. 
• The above leads to higher sales and profitability 
• Increasing opportunities to increase sales 
3.2 – Market Research 
Product-oriented business: such firms produce the product first and then tries to find a market for it. Their 
concentration is on the product – it’s quality and price. The most common example are all basic necessities for living- 
foods and agricultural tools. 
Market-oriented businesses: such firms will conduct market research to see what consumers want and then produce 
goods and services to satisfy them. They will set a marketing budget and undertake the different methods of researching 
consumer tastes and spending patterns, as well as market conditions. Example, mobile phone markets. 
Market Research 
Market research is the process of collecting, analyzing and interpreting information about a date. 
Why is market research important/needed? 
Firms need to conduct market research in order to ensure that they are producing goods and services that will sell 
successfully in the market and generate profits. If they don’t, they could lose a lot of money and fail to survive. Market 
research will answer a lot of the business’ questions prior to product development such as ‘will customers be willing to 
buy this product?’, ‘what is the biggest factor that influences customers’ buying preferences-price or quality?’, ‘what is 
the competition in the market like?’ and so on. 
Market research data can be quantitative (numerical-what percentage of teenagers in the city have internet access) or 
qualitative (opinion/judgement- why do more women buy the company’s product than men?) 
Market research methods can be categorized into two: primary and secondary market research. 
  
Primary Market Research (Field Research) 
The collection of original data. It involves directly collecting information from existing or potential customers. First-hand 
data is collected by people who want to use the data (i.e. the firm). Examples include questionnaires, focus groups, 
interviews, observation, online surveys and so on. 
Page 5


 
  
  
3.1 – Marketing, Competition and the Customer 
What is a market? 
A market consists of all buyers and sellers of a good. 
What is Marketing? 
Marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements 
profitably. 
The role of marketing in a business is as follows: 
• Identifying customer needs: through market research 
• Satisfying customer needs: by producing and selling goods and services 
• Maintaining customer loyalty: building customer relationships – by a variety of methods that encourage 
customers to keep buying one firm’s products instead of their rivals’. For eg: loyalty card schemes, discounts for 
continuous purchases, after-sales services, message system that informs past customers of new offers. 
• Gain information about customers: by understanding why customers buy their products, they can develop and 
sell better products in the future. 
• Anticipate changes in customer needs: the business will need to keep looking for any changes in customer 
spending patterns and see if they can produce goods that customers want that are not currently available in the 
market. 
Some objectives the marketing department in a firm may have: 
• Raise awareness of their product 
• Increase sales revenue and profits 
• Increase or maintain market share (this is the proportion of sales a company has in the overall market sales. For 
example, if in a market $1 million worth of toys were sold in a year and company A’s total sales was $30,000 in 
that year, company A’s market share for the year is ($30,000/ $1000000) *100 = 30%) 
• Enter new markets at home or abroad 
• Develop new products or improve existing products. 
  
 Marketing Changes 
Why customer spending patterns may change: 
• change in their tastes and fashions 
• change in technology: as new technology becomes available, the old versions of products become outdated and 
people want more sophisticated features on products. 
• change in income: the higher the income, the more expensive goods consumers will buy; and vice versa. 
• ageing population: in many countries, the proportion of older people is increasing and products that are 
required by them are increasing- such as anti-ageing creams, medical assistance etc. 
The power and importance of changing customer needs: 
Firms need to always know what their consumers want (and they will need to undertake lots of research and 
development to do so) in order to stay ahead of competitors ans stay profitable. If they don’t produce and sell what 
customers want, they will buy competitors’ products and the firm will fail to survive. 
Why some markets have become more competitive: 
• Globalization: products are being sold in markets all over the world, so there are more competitors in the 
market. 
• Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to 
distribute and sell products everywhere. 
• Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making 
the market more competitive. 
How business can respond to changing spending patterns and increased competition: 
A business has to ensure that it is keeping up its market share and remain competitive in the market. It can ensure this 
by: 
• maintaining good customer relationships: by ensuring that customers keep buying from their business only, 
they can increase market share. By doing so, they can also get information about their spending patterns and 
respond to their wants and needs to increase market share. 
• keep improving its existing products, so that sales are maintained. 
• introduce new products to keep customer’s interest, so that they don’t buy competitors’ products. 
• keep costs low to maintain profitability: low costs mean the firms can afford to charge low prices. And low 
prices generally mean more demand and sales, and thus market share. 
 
Niche & Mass Marketing 
Niche Marketing: identifying and exploiting a small segment of a larger market by developing products to suit it. For 
example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group. 
Advantages: 
• Small firms can thrive in niche markets where large forms have not yet established. 
• If there are no or very few competitors, firms can sell products at a high price and gain high profit margins 
because customers will be willing be willing to pay more for exclusive products. 
• Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms 
who only sell to the mass market and gain more sales. 
Mass Marketing: selling the same product to the whole market with no attempt to target groups with in it. For example, 
the iPhone sold is the same everywhere, there are no variations in design over location or income. 
Advantages: 
• Larger amount of sales, as compared to niche market. 
• Can benefit from economies of scale: a large volume of products is produced and so the average costs will be 
low, as compared to niche market. 
• Risks are spread, unlike in niche market. If the product isn’t successful in one market, it’s fine as there are 
several other markets. 
• More chances for the business to grow since there is a large market. In niche markets, this is difficult as the 
product is only targeted towards a particular group. 
 
Market Segmentation 
A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and 
preferences 
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on 
different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed 
the Diet Coke towards them. 
Markets can be segmented based on socio-economic groups (income), age, location, gender, lifestyle, use of the 
product (home/work, leisure/business.) etc. 
Each segment will require different methods of promotion and distribution. For example, products aimed towards kids 
would be distributed through popular retail stores and products for businessmen would be advertised in exclusive 
business magazines. 
Advantages: 
• Makes marketing cost-effective, as it only targets a specific segment and meets their needs. 
• The above leads to higher sales and profitability 
• Increasing opportunities to increase sales 
3.2 – Market Research 
Product-oriented business: such firms produce the product first and then tries to find a market for it. Their 
concentration is on the product – it’s quality and price. The most common example are all basic necessities for living- 
foods and agricultural tools. 
Market-oriented businesses: such firms will conduct market research to see what consumers want and then produce 
goods and services to satisfy them. They will set a marketing budget and undertake the different methods of researching 
consumer tastes and spending patterns, as well as market conditions. Example, mobile phone markets. 
Market Research 
Market research is the process of collecting, analyzing and interpreting information about a date. 
Why is market research important/needed? 
Firms need to conduct market research in order to ensure that they are producing goods and services that will sell 
successfully in the market and generate profits. If they don’t, they could lose a lot of money and fail to survive. Market 
research will answer a lot of the business’ questions prior to product development such as ‘will customers be willing to 
buy this product?’, ‘what is the biggest factor that influences customers’ buying preferences-price or quality?’, ‘what is 
the competition in the market like?’ and so on. 
Market research data can be quantitative (numerical-what percentage of teenagers in the city have internet access) or 
qualitative (opinion/judgement- why do more women buy the company’s product than men?) 
Market research methods can be categorized into two: primary and secondary market research. 
  
Primary Market Research (Field Research) 
The collection of original data. It involves directly collecting information from existing or potential customers. First-hand 
data is collected by people who want to use the data (i.e. the firm). Examples include questionnaires, focus groups, 
interviews, observation, online surveys and so on. 
The process of primary research: 
 
(Sample is a subset of a population that is used to represent the entire group as a whole. When doing research, it is 
often impractical to survey every member of a particular population because the number of people is simply too large). 
Selecting a sample is called sampling. A random sampling occurs when people are selected at random for research, 
while quota sampling is when people are selected on the basis of certain characteristics (age, gender, location etc.) for 
research. 
  
Methods of primary research 
• Questionnaires: Can be done face-to-face, through telephone, post or the internet. Online surveys can also be 
conducted whereby researchers will email the sample members to go onto a particular website and fill out a 
questionnaire posted there. These questions need to be unbiased, clear and easy to answer to ensure that 
reliable and accurate answers are logged in.   
Advantages: 
1. Detailed information can be collected 
2. Customer’s opinions about the product can be obtained 
3. Online surveys will be cheaper and easier to collate and analyze 
4. Can be linked to prize draws and prize draw websites to encourage customers to fill out surveys. 
Disadvantages: 
1. If questions are not clear or is misleading, then unreliable answers will be given. 
2. Time-consuming and expensive to carry out research, collate and analyze them. 
  
• Interviews: interviewer will have ready-made questions for the interviewee. 
Advantages: 
1. Interviewer is able to explain questions that the interviewee doesn’t understand and can also ask follow-up 
questions 
2. Can gather detailed responses, body-language also allowing interviewer to come to accurate conclusions 
about the customer’s opinions. 
Disadvantages: 
1. The interviewer could lead and influence the interviewee to answer a certain way. For example, by phrasing a 
question such as ‘Would you buy this product’ to ‘But, you would definitely buy this product, right?’ to which the