AQA GCSE Business (8132) · Paper 2

📣 Marketing

Revision notes written to the specification, with examiner tips and the required practicals. Every point here has flashcards in the Stickwise app.

Identifying & understanding customers

The purpose of marketing is to identify and understand what customers need, so that a business can develop products people actually want to buy. Marketing that does its job well lets a business increase its sales, avoid the cost of failed launches, and stay ahead of its competitors.

A business that fails to understand its customers risks developing products that nobody wants. It can lose sales to competitors who have researched the market more carefully, and it can waste money on products that flop after launch.

Market-oriented businessThis kind of business bases its decisions on customer research and on what customers actually want, then designs products around the needs it discovers.

Product-oriented businessThis kind of business instead focuses on its own expertise and on what it is already good at making, without first researching what customers want.

Market research

Businesses carry out market research to collect information about customer needs, the size of the market, and their competitors. This information reduces the risk of a new product failing once it is launched.

Research is either primary or secondary. Primary research collects brand new data first-hand, for example through questionnaires or focus groups. Secondary research uses data that already exists, for example government reports or a competitor's website.

Primary research methodsThese include questionnaires, focus groups, and observing or interviewing customers directly.

Secondary research sourcesThese include government publications, such as ONS statistics, the internet, and competitors' annual reports or websites.

Qualitative dataThis covers opinions and feelings, gathered by asking open questions that let a customer answer in their own words.

Quantitative dataThis is numerical data that can be measured and compared, for example how many customers chose each answer on a survey.

🎯 Examiner tip: When a question asks which research method a business should use, name a specific method, link it to the type of information the business needs, and explain why that method suits this particular business, rather than describing methods in general terms.

Market segmentation

Market segmentation means dividing a market into groups of customers who share similar characteristics or needs, so that a business can target its marketing at each group more effectively. Rather than marketing a single product to everyone in the same way, a business can adapt its marketing mix to suit each segment.

A market can be segmented in several ways. Common approaches include segmenting by demographics, such as age, gender, income, family size or ethnicity; by geography, meaning where customers live; or by lifestyle, meaning customers' interests and hobbies.

Segmentation is useful because it lets a business target its marketing at the customers most likely to buy, develop products that suit each group, and use its marketing budget more efficiently. Marketing aimed at a well-defined segment tends to waste less money than marketing aimed at everyone at once.

The marketing mix

The marketing mix is the four elements a business blends together to market a product effectively: Product, Price, Promotion and Place, often called the four Ps. Together these elements shape how a customer experiences a product, from what it is to how much it costs and where they can buy it.

The product life cycle

The AQA product life cycle includes five stages: research and development, introduction, growth, maturity and decline. Development happens before launch and brings costs before sales. Sales usually rise after introduction, grow, level off at maturity and then fall; a product need not follow an identical path or timescale.

An extension strategy is an action taken to prolong the maturity stage and delay decline, such as rebranding the product, adding new features, or finding new markets for it to sell into. A successful extension strategy can keep a mature product profitable for longer, rather than letting it slide straight into decline.

Pricing strategies

Penetration pricingThis sets a low price to enter a market and build up sales quickly.

Price skimmingThis sets a high price at launch, to make the most of customers who are willing to pay it, before the price is lowered later.

Competitive pricingThis sets a price based on what rival businesses are charging.

Cost-plus pricingThis adds a fixed mark-up for profit onto the cost of making the product.

Promotion and place

A business can promote its products through advertising on television, in print or online, through sales promotions such as discounts or buy-one-get-one-free offers, or through sponsorship and social media. The best choice usually depends on the target audience and on how much the business can afford to spend.

Place is how and where a product reaches the customer, for example by selling directly online or through retailers such as shops. The right choice of place depends on the product itself and on where its target customers prefer to shop.

The four elements of the marketing mix must suit each other and the target market. A premium price, for example, needs quality promotion and the right retail outlets to match it, or the mix sends customers a mixed message.

🎯 Examiner tip: Questions that ask which pricing strategy, or which part of the marketing mix, a business should use want a judgement, not just a description of the options. Give a clear recommendation and justify it using details from the business in the question, such as its type of product or its target market.

The Boston Matrix

The Boston Matrix is used to analyse a business's portfolio of products by market share and market growth, classifying each product as a star, a cash cow, a problem child (also called a question mark), or a dog. The matrix helps a business decide where to invest its resources across its range of products.

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