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NEW FOR
2015
Edexcel AS/A
Edexcel AS/Alevel
level
BUSINESS
ECONOMICS
Dave Hall
Rob Jones
Carlo Raffo
Alain Anderton
Alain Anderton Jennifer Lee
Edited by Dave Gray Keith Hirst
Andrew Redfern
6th
5thEDITION
EDITION Edited by Dave Gray
About this book
‘Preparing for your exams’ At the end of Themes 1 and 4 you’ll find detailed exam
preparation sections to help consolidate your learning. Exam-style questions, mark
schemes and answers, together with useful tips for how to approach the exams, will
give you extra confidence in your performance.
*for new purchases only. If this access code has already been revealed, it may
no longer be valid. If you have bought this textbook secondhand, the code may
already have been used by the first owner of the book.
vii
Introduction
The 5th edition of Edexcel AS/A level Business is designed Comprehensive course coverage
to develop the skills and approaches you may need, in a variety
of contexts, when making business decisions. It develops an This book covers the material found in all four themes of the
analytical, rigorous and critical approach to the decision-making Edexcel A level Business specification:
process and to your studies of business. It does not provide a ●● Theme 1 Marketing and people
step-by-step guide to how to be ‘good at business’ as there is ●● Theme 2 Managing business activities
no simple set of rules that can be applied in all contexts that
will always be successful. It is possible that different approaches
●● Theme 3 Business decisions and strategy
may be used by different people in business and there may be ●● Theme 4 Global business
disagreement about which approach to take. By covering all four themes of the specification in detail, this
book takes you through the course, ensuring your skills and
Business is integrated and different areas of business are
understanding are developed, so that you can have confidence
interdependent. There are links, for example, between:
when approaching your exams. Units in Theme 1 and Theme 2
●● what is being produced and the funds available to pay for it allow you to gain an in-depth understanding of core business
(production and finance) concepts, with the content in Theme 3 and Theme 4 building
●● the selling of the product and ethical considerations on these topics. Theme 3 and Theme 4 extend breadth and
(marketing and ethics) depth of knowledge through focusing on business strategy and
●● the type of business and many aspects of its operation. decisions, and exploring the global context in which modern
Being aware of these aspects of business will help you to businesses operate. This focus on developing a breadth
understand how and why business decisions are made, and and depth of knowledge across the course will allow you to
how they affect a variety of people, both within and outside the develop the synopticity needed for your final paper.
business. The aim of the 5th edition of Business is to help you
as you study Edexcel AS level and A level Business to understand
business decisions and to be analytical, rigorous and critical in
your business thinking. A number of features are included in the
book to develop and extend your skills and approaches – see
About this book, page iv.
viii
1 The market 1.1.1
Theme 1
Key points
1. Mass markets and niche markets: 3. How competition affects the market.
●● characteristics 4. The difference between risk and uncertainty.
●● market size and market share
●● brands.
2. Dynamic markets:
●● online retailing
●● how markets change
●● innovation and market growth
●● adapting to change.
Getting started
Marketing involves a range of activities that help a business sell its
The market for holidays has changed dramatically over time. products. However, marketing is not just about selling, it involves:
In the 1960s a typical holiday for a UK person might have been ●● identifying the needs and wants of consumers
an annual two-week family trip to the seaside at Blackpool, ●● designing products that meet these needs
Scarborough or Brighton, staying in a caravan, a holiday camp or ●● understanding the threats from competitors
small hotel. Today people might take several holidays a year and ●● telling customers about products
However, if a business successfully exploits a niche market Volume: This is the physical quantity of products which are
it still may attract competition. Niche markets, by their nature, produced and sold. For example, the global crude steel production
are very small and unable to support many competing firms. As in 2014 was 1,661 million tonnes (worldsteel.org). Some
a result, if a large business decides to enter a niche market they estimates of volume are based on the number or percentage of
may find it easy to overrun a smaller rival. Also, businesses that users, subscribers or viewers. This is often the case in markets
rely on a single niche market may be vulnerable because they for services, such as the number of mobile phone users, the
are not spreading their risk. If they lose a grip in their chosen number of television viewers or the percentage of households
market, they may collapse because they do not have other with digital television.
products or markets as a back-up. Different markets are likely to differ in size. For example, the
sale of savory snacks in one year is likely to be much smaller than
the sales of footwear in the same year in the UK.
Exam tip
In examinations it is helpful to give examples when explaining the
meaning of business terms and concepts. Relevant examples Market share
support your answer and show that you understand the meaning of Market share or market penetration is the term used to describe
the term or concept. It is also important to use information in the the proportion of a particular market that is held by a business, a
case material in the question to support your answer. This product, a brand or a number of businesses or products. Market
approach will show your skills in ‘application’ in your answer. share is shown as a percentage. The market share of a business
can be calculated as:
Question 1 Sales of a business × 100%
Total sales in the market
Why might the measurement of market share be important?
It might indicate a business that is a market leader. This could
influence other companies to follow the leader or influence the
leader to maintain its position. It might influence the strategy
or objectives of a business. A business that has a small market
share may set a target of increasing its share by 5 per cent over
a period of time. It may also be an indication of the success or
failure of a business or its strategy.
Figure 1 shows the market shares of supermarkets in the UK
David Algunik, a Canadian Emergency Room doctor, designed
in 2013. It shows, for example, that Tesco was the market leader
Banana Guards. He wanted to prevent bananas from being with nearly one-third of the total market. It also shows that the top
bruised and squashed during his journey from home to work, four supermarkets share 75.3 per cent of the total market, i.e. the
so designed Banana Guards from lightweight plastic. Once shut market is dominated by just four firms.
inside a Banana Guard, a banana of almost any shape or size
can be transported completely undamaged inside a lunchbox, Figure 1
bag or backpack – even when travelling on a packed tube. The UK market shares of supermarkets in 2013
contents are kept fresh by ventilation holes in the side of the Market share (percentage)
bright yellow Banana Guard, which also prevent the banana
Key
from ripening prematurely until ready for consumption. The
Tesco Morrisons
Banana Guard is also safe for the dishwasher.
Asda Co-op
Sources: adapted from www.bananaguard.com and
www.johnlewis.com Sainsbury's Lidl
Waitrose Iceland
(a) Explain what type of market the Banana Guard is aimed at.
Aldi Others
(b) Explain one possible disadvantage of targeting a niche market
for a business selling a product like Banana Guard.
Source: www.kantarworldpanel.com
(data for 12 weeks ending 10.11.2013 and from data source
Market size comparing 12 weeks ending 25.11.2012)
Apple. Branding might be used to: ●● Online retailing affords greater flexibility. An online store can be
●● differentiate the product from those of rivals updated instantly and as frequently as is necessary. For example,
●● create customer loyalty it is possible to promote a ‘deal of the day’ on the home page,
●● help product recognition without the need for expensive printed display material.
●● develop an image ●● Distance is no object with online retailing. Customers can buy
●● charge a premium price when the brand becomes strong. products from anywhere in the world.
Branding is discussed in more detail in Unit 10.
Online retailing
One of the biggest changes to occur in the marketing of products
has been the development of online retailing or e-tailing. This
is a popular branch of e-commerce that has emerged along with
the development of the internet. It involves shoppers ordering
goods online and taking delivery at home. There are specialist Online grocery retailing has not quite taken off in the same way
e-tailers such as Amazon and Alibaba – retail ‘giants’ that sell a that other forms of online retailing have.
huge range of goods online. However, many retailers, both large
However, reports estimate that online grocery sales may rise
and small, now have online services. Growth in online retailing is
from 4.4 per cent to 8.3 per cent in the period 2014–2019. This
rapid and expected to continue into the future.
may be due to busier lifestyles and the further integration of
Businesses may enjoy a number of benefits from offering
mobile technology into daily life as people increasingly become
online retail services.
on-the-go consumers. Online shopping is convenient and saves
●● Retailers can market their goods to people who prefer to
time and fuel. Research shows that 27 per cent of people
shop from home or who find it difficult to get to traditional
shopped online for groceries in 2014, with 10 per cent buying
shops. For example, people who do not enjoy the physical
the majority of their groceries via the internet.
shopping experience, people too busy to go shopping and
people with conditions or disabilities that make physical It was reported in 2014 that click & collect was also being used
shopping difficult. by around a quarter of online shoppers and this figure was
●● It is easier to gather personal information from customers so
growing as more services were made available.
that they can be targeted with other products and offers in Click & collect is a good example of a trend that took off. Major
the future. retailers, including Tesco and ASDA, invested heavily to roll out
●● Selling costs such as sales staff, rent and other store the service to the majority of their stores, as well as convenient
overheads can be avoided. The savings might be enormous locations such as London travel hubs. Click & collect became
and allow online retailers to charge lower prices. available at some London tube stations, with plans to include
●● Marketing costs will also be lower. It is much cheaper, for travel hubs and workplaces as future locations, as retailers
example, to send a marketing message by e-mail to 1,000 continue to experiment and innovate.
customers than it is to send 1,000 newsletters by post.
Source: adapted from www.essentialretail.com
●● Online retailers can reach more customers. A single store in
a high street can only attract a limited number of customers. (a) Explain one reason why online grocery retailing is likely to grow
However, a website advertising a 15,000-item product range in the future.
can have a global reach. (b) Assess the benefits and drawbacks to supermarkets of
●● An online retailer is open 24/7. There are not many stores online retailing.
that can match this level of service.
3
The market Unit 1
quite stable over a period of time. For example, the size of the over time. This means that the world’s population has more
milk market in the UK probably hasn’t changed much for many money to spend. As a result businesses can supply more of
years. This is because consumption of milk is fairly constant. their output to growing global markets. Also, as people get
However, the majority of markets are likely to grow. For wealthier they are likely to demand different types of goods.
example, The Future of Global Packaging to 2018 reports that For example, the markets for holidays, electronic goods, cars,
the global packaging market stood at $799 billion in 2012, air travel, cosmetics, furniture and luxury goods will grow.
increasing by 1 per cent over 2011 with sales projected to ●● Innovation. Businesses can grow their markets through the
increase by 3 per cent. Some forecasters reckoned growth to process of innovation. They can create new wants and needs
2018 would reach 4 per cent per year, with sales reaching over and meet them with new products. A lot of innovation emerges
1 trillion US dollars. Factors for growth in packaging include through technological research and development. The arrival
increasing urbanisation, investment in construction and housing, of smartphones, tablets, the internet, 3D printing, driverless
development of retail chains, and the expanding cosmetics and cars, wearable technology and space travel have all created
healthcare sectors in the emerging economies. brand-new markets that did not exist before the technological
Some markets are in decline. For example, the market for breakthroughs. However, innovation can take other forms.
coal in the UK has fallen sharply since 1970. Markets often Businesses can use clever marketing techniques to develop
decline because the need for a product ceases to exist. In the new wants. They can supply their products in new locations
case of coal, other fuels, such as oil, gas, nuclear and renewable – for instance supermarkets offering a click & collect service
sources are now preferred by households and industry. at London tube stations. New businesses can cash in on the
inadequacies of others. For example, since the ‘credit crunch’
The nature of markets: Many markets are in a state of flux. in 2008, new businesses have been set up to compete with
This means that the structure and nature of the market is subject banks. Crowd funding and peer-to-peer websites have started
to constant change. For example, in many markets products to provide unsecured loans. At the moment their market shares
are constantly updated, modified and re-launched – the choice are relatively small. But if they prove successful the established
available increasing enormously over time. This is the result of banks will have to match these new innovations.
new entrants into the market and existing firms widening their ●● Social changes. Changes in society can have a big impact
ranges and extending their lines. For example, the restaurant on markets. For example, the decline in the number of
market in the UK, worth around £40 billion in 2014, has seen marriages, an increase in the proportion of working women
many changes. In the 1960s, the industry was dominated and the growth in the number of one-parent families have
by fish and chip shops, the occasional Chinese restaurant, increased the market size for childcare and housing.
cafés, independents and hotel restaurants. Today the sector is ●● Changes in legislation. New laws can affect markets.
large and diverse. Restaurants range from top-end fine-dining For example, environmental legislation has helped to foster
establishments to quick service takeaway outlets. UK high growth in renewable energies and ‘green goods’. Tighter laws
streets tend to be dominated by chains, such as Nando’s, Prezzo relating to payday lending has resulted in many firms leaving
and Domino’s Pizza, and café chains, such as Costa Coffee the market. A ban on tobacco advertising in the UK might
and Caffè Nero. There has been a significant development of have reduced the market size for cigarettes.
4
Marketing and people
●● Demographic changes. Changes in the structure of the Develop a niche: If a market is in decline and a business is
population can affect the size of markets. In most countries unable to diversify, it may survive by serving a niche. A niche
the population is aging. This will help a lot of markets to grow strategy is appropriate if groups of loyal customers can be
because populations get bigger. But there will also be an served profitably. For example, Harley-Davidson survived by
increase in the markets for specialist holidays for the elderly, leaving most of the motorcycle market to the Japanese. They
healthcare, care homes and mobility aids. sold high-horsepower ‘hogs’ to a small segment of motorcycle
enthusiasts. As a result they became quite profitable and
Adapting to change survived. Generally, if firms cannot adapt quickly to the changing
If businesses do not adapt to market changes, they are likely needs of customers, they will lose out to rivals that do adapt.
to lose market share. At worst they could collapse. In 2014,
it was reported that Tesco was losing market share to other How competition affects the market
supermarkets. There were a number of reasons for this, but Competition is the rivalry that exists between businesses in a
several reports suggested that they were failing to meet market. It would be rare for a business to operate in a market
customer needs. They were losing market share to the big where there was absolutely no competition. The existence
discounters such as Aldi and Lidl. There was a need for Tesco of competition will have an impact on both businesses and
to adapt quickly, or risk losing more of their market share. What consumers in the market.
might help businesses adapt to market changes?
Businesses: Competition puts businesses under some
Flexibility: Businesses need to be prepared for change. One pressure. It means that they have to encourage customers to
way is to develop a culture of flexibility within an organisation. buy their products in preference to those of rivals. They will
A business might need flexible working practices, machinery use a range of methods to attract customers. These methods
and equipment, pricing and staff. This could mean that staff have include:
to be trained in a variety of skills and be prepared to change ●● lowering prices
the tasks they undertake in the workplace. This might help ●● making their products appear different to those of rivals
businesses to serve customers more effectively when changes ●● offering better quality products
occur. For example, if customers want access to the business ●● using more powerful or attractive advertising or promotions
during the evening, then staff might have to work shifts. If ●● offering ‘extras’ such as high-quality customer service.
businesses have flexible operations it will be a lot easier for All of these methods cost money and generally reduce the
them to adapt to market changes. amount of profit a business can make. However, businesses
have to use such methods in order to survive in the market.
Market research: Businesses must keep in touch with Because competition makes running a business more
developments in the market. One way to do this is to undertake challenging and reduces the profit potential, owners and
regular market research. This might be aimed at current customers managers might try to reduce competition in the market. One
or potential customers. Firms need to be aware of any changes way of doing this is to take over their rivals. This might be
in customer needs or tastes. Communication with customers and achieved by purchasing a rival in the market. Alternatively, they
potential customers should be an ongoing process if firms want to might try to create obstacles that make it difficult for others to
keep completely up to date. Market research is discussed in Unit 2. enter the market. For example, they may spend huge amounts
of money on advertising, which potential entrants might struggle
Investment: Those businesses that invest in new product to match. It is generally the larger businesses in the market
development are likely to survive for longer in the market. which are able to reduce competition in this way. However, there
Although expenditure on research and development is is a range of legislation which prevents businesses restricting
expensive, a failure to innovate could be costly. A unique new competition using practices that are considered unfair.
version of a product or a brand-new model could rejuvenate
sales and help win a larger share of the market. In the car Consumers: Consumers will generally benefit from competition
industry, firms spend very large sums of money in product in markets. In markets where there are lots of businesses
development. BMW has enjoyed a larger slice of the small car competing with each other, there will be more choice. Most
market by extending the range of its Minis. Investment might people enjoy having lots of choice because it makes their life
also be needed in training and use of flexible machinery. more interesting. For example, when people buy a car they can
choose from a huge range of different models, styles, colours
Continuous improvement in the increasingly and endless variations in specifications. Consumers may also
competitive environment: Businesses need to make continual enjoy better quality products and lower prices.
improvements in all aspects of their operations. For example, if In the absence of competition consumers might be exploited.
they can improve efficiency, costs will be lower and prices can be A business with little or no competition might raise prices and
held or reduced. If customer service is flawless, customers are restrict choice. They will lack the incentive to innovate. For
more likely to return. If new product ideas are encouraged, they example, they are unlikely to invest money to develop new
may gain a competitive edge. A culture of continuous improvement products. Consequently, one of the roles of a government is to
can help businesses be more adaptable in the market. ensure that competition exists in markets.
5
The market Unit 1
The difference between risk and ●● consumer tastes might change as a result of a new social trend
the government might introduce a new policy or piece
uncertainty ●●
of legislation
One of the challenges when running a business is dealing with
●● some new technology might be invented
risk and uncertainty. Although both risk and uncertainty are likely
●● there may be a natural disaster such as a flood
to pose threats to a business, they are not the same.
●● the economy might go into recession.
Even when businesses are established, they may continue to Knowledge check
take risks. This is because they often spend money on ventures
that may not yield positive results. For example, they may invest 1. What is the difference between a mass market and a
in a new product which subsequently fails in the market. If the niche market?
product is withdrawn, most of the money spent on development 2. What is a key advantage of selling in a mass market?
and launch will be lost.
In 2014, Amazon, the online retailer, launched a mobile 3. State two disadvantages of selling in a niche market.
phone called the Amazon Fire Phone. It failed in the market and 4. How is market share calculated?
the price was reduced very quickly from $199 to just 99 cents.
5. State three advantages of giving products brand names.
It was reported that Amazon lost $170 million as a result.
6. State two advantages to customers of online retailing.
Uncertainty: The markets in which businesses operate are 7. What is meant by a dynamic market?
often subject to external influences. This means that events
which are completely beyond the control of businesses can have 8. How might the nature of a market change over time?
an impact in the market, which can have financial consequences. 9. State three reasons why a market might grow.
For example:
10. Describe two ways a business might adapt to changes
●● a new competitor might enter the market with a
in markets.
superior product
6
Marketing and people
Case study
Figure 2
HYBRID AND
UK sales of electric vehicles between 2010 and 2014
Sales
55,000
Figure 3
Crude oil price
Oil prices from 2000 to 2014 69.31 USD/bbl
4 December 2014
180
160
140
Crude oil price (USD/bbl)
120
100
80
60
40
20
0
May 22 Dec 24 Jul 31 Mar 7
2000 2004 2009 2014
Source: www.infomine.com
7
2 Market research 1.1.2
Theme 1
Key points
1. Product and market orientation.
2. Primary and secondary market research data (qualitative and quantitative) used to identify and
anticipate customer needs and wants, quantify likely demand and gain insight into consumer behaviour.
3. Limitations of market research, sample size and bias.
4. Use of ICT to support market research: websites, social networking and databases.
5. Market segmentation.
prepared to pay.
The business must produce the right product at the right
Examples Examples
price and in the right place, and it must let the consumer know Coal mining business Clothing retailer
that it is available. This is known as the marketing mix. Wheat farmer Soap powder manufacturer
The adoption of a market orientated approach will not Water supply business Supermarket chain
always guarantee success. Many well-researched products
have been failures. Coloroll was a business which started in
the wallpaper market and expanded into home textiles and soft
furnishings. Its attempt to enter the DIY burglar alarm market, Question 1
however, was a failure. The company’s reputation and design
skills had little value in that section of the DIY market compared AstraZeneca is a large British-Swedish pharmaceuticals company,
with other companies, whose reputations were based on home which serves the global market. It focuses on particular areas of
security or electronics. Whether a business places a greater healthcare, including treatments for cancer and heart diseases.
emphasis on the product or on the market will depend on a The company has around 57,500 employees globally and has
number of factors. manufacturing sites in 16 different countries. In 2014, its total sales
revenue was just over $26 billion.
The nature of the product: Where a firm operates in an The UK is the major location for AstraZeneca’s research and
industry at the edge of new innovation, such as bio-technology,
development of new medicines. One research and development
pharmaceuticals or electronics, it must innovate to survive.
(R&D) centre in Alderley Park plays a vital role in their strategy
Although a firm may try to anticipate consumer demand,
as the lead centre for cancer research. The site houses the
research is often ‘pure’ research, i.e. the researcher does not
Advanced Lead Discovery Centre, which has innovative
have a specific end product in mind.
compound management and high throughput screening facilities
Policy decisions: A business will have certain objectives. to assist with the drug discovery process. AstraZeneca is one of
Where these are set in terms of technical quality or safety, the the world’s largest spenders in R&D. Figure 2 shows the amount
emphasis is likely to be on production. Where objectives are in spent on R&D between 2006 and 2013.
terms of market share or turnover, the emphasis is likely to be
on marketing. Figure 2
AstraZeneca R&D expenditure 2006–2013
The views of those in control: An accountant or a
($ million)
managing director may place emphasis on factors such as
cash flow and profit forecasts, a production engineer may give 6,000
5,523
5,162 5,179 5,138 5,243
technical quality control and research a high priority and a 5,000
4,821
marketing person may be particularly concerned with market 4,409
3,902
research and consumer relations. 4,000
3,000
The nature and size of the market: If production costs
are very high, then a company is likely to be market orientated. 2,000
Only by being so can a company ensure it meets consumers’
needs and avoid unsold goods and possible losses. 1,000
0
The degree of competition: A company faced with a 2006 2007 2008 2009 2010 2011 2012 2013
lack of competition may devote resources to research with Year
little concern about a loss of market share. Businesses in Source: www.statista.com
competitive markets are likely to spend more on marketing for
fear of losing their share of the market. (a) Comment on the pattern of R&D expenditure shown in Figure 2.
The distinction between product and market orientation
(b) Explain one benefit to AstraZeneca of being product orientated.
can be seen as a spectrum, as in Figure 1. Most business are
(c) Assess to what extent AstraZeneca is product orientated.
somewhere along the spectrum. For example, supermarkets
may be more market orientated and a copper mining company
more product orientated.
9
Market research Unit 2
10
Marketing and people
●● Telephone interviews. The main advantage of interviewing External data: Secondary data will also be available from
people over the telephone is that it is cheaper. People from sources outside the business. Individuals or other organisations
a wide geographical area can be covered. However, some will have collected data for their own reasons. A business might
people do not like being telephoned by businesses. be able to use this for its own market research. Examples are
●● Personal interviews. These are often carried out in given below.
the street and the interviewer fills in the answers. The ●● Information from competitors. This may be, for example, in
advantage is that questions can be explained if a respondent the form of promotional materials, product specifications or
is confused. It may be possible to collect more detailed price lists.
information. However, many people do not like being ●● Government publications. There are many government
approached in the street. publications that businesses can use. These include general
●● Focus groups or consumer panels. If a business wants statistical publications such as Social Trends, the Census of
very detailed information from customers it might use focus Population and the Annual Abstract of Statistics. Many are
groups or consumer panels. A focus group is where a now online.
number of customers are invited to attend a discussion led ●● Data from customer services on complaints which have been
questions. This is a relatively cost-effective method of secondary data which can be highly valuable to businesses
collecting information but the group may be a little small. operating within EU countries. Such publications include
Consumer panels are similar to focus groups except that Eurostatistics, which is published by Eurostat (the Statistical
groups of customers are asked for feedback over a period of Office of the European Union).
time. This approach allows businesses to see how consumers ●● International publications. There is a huge amount of
react to changes in their products. information about overseas marketing published each year by
●● Observation. This is where market researchers ‘watch’ the organisations such as the World Bank and the International
behaviour of customers. This approach might be used in Monetary Fund.
retail outlets. Observers might record the amount of time ●● Commercial publications. A number of organisations exist to
customers spend looking at particular products and displays gather data about particular markets. This information is often
in the store. However, because there is no feedback when highly detailed and specialised. Mintel, Dun & Bradstreet and
using this method a lot of questions go unanswered. Verdict are examples of such organisations.
●● Test marketing. This involves selling a new product in a ●● Retail audits. The widespread use of EPoS (electronic
restricted geographical area to test it before a national launch. point of sale) has meant that it is now much easier to
After a period of time feedback is gathered from customers. collect detailed and up-to-the-minute data on sales in
The feedback is used to make modifications to the product retail outlets such as supermarkets and other retail chains.
before the final launch. This reduces the risk of failure. Retail audits provide manageable data by monitoring and
recording sales in a sample of retail outlets. Businesses
Secondary research find these audits especially helpful because of the way
Secondary research or desk research involves the collection of in which they provide a continuous monitoring of their
secondary data. This is information which already exists in some performance in the market. A well-known example is data
form. It can be internal data, from records within the business, or on the best-selling CDs which make up weekly music
external data, from sources outside the business. charts. The data to compile the official charts is drawn
from a highly complex tracking service representing
Internal data: This may be collected from existing business one of the most sophisticated ongoing market research
documents or other publications, including the following. programmes anywhere in the world. Traditionally, this data
●● Existing market research reports.
has been limited to sales of vinyl and CDs – but this has
●● Sales figures. The more sophisticated these are the better.
been enhanced with the addition of digital download sales
For example, sales figures which have been broken down (of singles and albums) and also streaming information –
according to market segments can be particularly useful. which was added to the singles chart in July 2014 and the
●● Reports from members of the sales force resulting from
official albums chart in February 2015.
●● General publications. A business may use a range of
direct contact with customers.
●● Annual report and accounts published by businesses.
publications widely available to members of the public for
●● Businesses increasingly make use of company intranets
its market research. These include newspaper and
to provide up-to-date information. These are restricted to magazine articles.
●● Internet website pages. Increasingly businesses make use of
company employees. But some information may be available
on the internet on company websites. the internet to search for secondary data outside of their own
●● Stock movements. These can often provide the most up-to-
organisations. Many of the sources of secondary information
date information on patterns of demand in the market. This above (including, for example, government publications) can
is because they are often recorded instantly, as opposed to now be found on the internet.
sales figures, which tend to be collected at a later date.
11
Market research Unit 2
Quantitative and qualitative research ●● Human behaviour. Much marketing research depends upon
Data collected through desk and field research can be either the responses of consumers who participate in the collection
quantitative or qualitative in nature. Qualitative research involves of primary data. While the responses of consumers may be
the collection of data about attitudes, beliefs and intentions. Focus honest and truthful at the time, it does not mean that they
groups and interviews are common methods used to collect will necessarily respond in the same manner in future. This is
qualitative data. An example of qualitative research could be because all human behaviour, including the act of consuming
face-to-face interviews with 100 purchasers of new Land Rover and purchasing goods, is to some extent unpredictable.
●● Sampling and bias. When carrying out market research,
Discoveries to find out why they prefer this product to similar
four-wheel drives sold by other car manufacturers. The information it is usual to base the research upon a sample of the total
collected through qualitative research is usually regarded as being population. This is because it would be impossible and costly
open to a high degree of interpretation. This means that there are to include every person when dealing with a large population.
often disagreements within businesses about the significance and It is possible, however, that results from the sample may be
importance of qualitative research data. different from those that would have been obtained if the
Quantitative research involves the collection of data that whole population had been questioned. This is known as a
can be measured. In practice this usually means the collection of sampling discrepancy. The greater the sampling discrepancy,
statistical data such as sales figures and market share. Surveys the less reliable the data obtained.
●● As mentioned earlier, questionnaires need to be carefully
and the use of government publications are common methods of
collecting quantitative research data. An example of quantitative constructed to avoid the problem of encouraging particular
research would be a survey of four-wheel drive owners in responses from consumers through the use of leading
West Derbyshire to establish their places of residence, ages, questions. Similarly, the behaviour of interviewers can affect
occupations, incomes and gender. The information collected the outcome of interviews.
through quantitative research is usually regarded as being open to Businesses must also be careful when using secondary data.
less interpretation than that collected through qualitative research. For example, businesses may use a government publication to
estimate the size of markets in which they might wish to operate.
Limitations of market research However, these market sizes may not always accurately match
If market research was totally dependable, businesses could use the product market being researched.
it when introducing or changing products and be completely
confident about how consumers would respond to them. This Use of ICT to support market research
would mean that all new products launched onto the market, Developments in information and communications technology
which had been researched in advance, would be a success. (ICT) have had an impact on the way businesses carry out
Similarly, no products would flop because businesses would market research. ICT can provide support in a number of ways.
receive advance warning from their research and take any
necessary measures. Company websites: These can be used to provide access
In reality, things can be different. It has been estimated that 90 to online surveys. These are similar to postal surveys except
per cent of all products fail after they have been initially launched. respondents may be directed to a questionnaire after receiving
Some of this may be put down to a lack of, or inadequate, market an email confirming an online transaction, for example. Online
research. However, a number of businesses that have conducted surveys may be more sophisticated because they are flexible
extensive research among consumers before committing a and can be tailored to the responses of individuals – for instance
product to the market place have launched products which have if someone responds ‘yes’ to a particular question the survey
failed. Given estimates which suggest that the minimum cost of can then take them to a further set of questions, and if ‘no’ it
launching a new product nationally is £1 million, this is a risky takes them to a different set of questions. They are cheap to
business. Famous examples of thoroughly researched products administer and can be made available to respondents 24/7.
which have turned out to be flops include the Sinclair C5, a cheap However, many people still ignore them.
vehicle with more stability than a moped and lower costs than a Some businesses have review systems on their websites.
car. In research, consumers enthused over this vehicle. In reality, These allow customers to write accounts of their experiences
it was almost impossible to sell. Similarly, when the Coca-Cola after buying or consuming a product or service. TripAdvisor, the
Company launched ‘New Coke’ with a new formula flavour onto online hotel booking site, offers such a facility. Not only can a
the market, research suggested it would be a huge success. In business collect information from their own customers, but they
practice, ‘New Coke’ was quickly withdrawn from the shops. can also look at the reviews of rivals’ customers.
Businesses want to be sure that the data they collect is A business can also carry out secondary research by
reliable. One way of checking the reliability of data is to pose gathering data from the websites of rivals. By analysing the
the question, ‘If this information was collected again would the websites of competitors a wide range of information can be
same or broadly similar results be obtained?’ Businesses acting gathered very easily and cheaply. For example, information
upon research data need to be sure that they can depend upon about prices charged, product ranges, delivery terms, payment
it. There is a great deal of debate among researchers about the terms, store locations, details of special offers and useful links
reliability of different research methods. There are a number of that might provide even more information. A business might also
reasons why primary research does not always provide reliable use comparison websites to identify the cheapest suppliers in
information for businesses. the market.
12
Marketing and people
High level IT skills and complex equipment are not Biddle Ron 34 Bedford Rd Bath 58 Civil servant £35,000
Easy needed.
Brown Jane 111 Bold St Newport 25 Solicitor £41,000
13
Market research Unit 2
Question 2
Some businesses use online surveys to gather data. This involves The sample of respondents may not be representative. This is
providing a link to a questionnaire on a company website and because online surveys are only presented to internet users. The
inviting people to complete it. An online questionnaire can views of others may not be taken into account even though they
be completed quickly and responses can often be analysed may be potential customers.
immediately. Survey costs are low because there are no printing Some businesses are keen to find out what customers think of
and postage charges. Online surveys can be interactive and may their websites. They might use an online survey similar to the one
be fun to complete. They can also be accessed 24/7 and be shown in Figure 3.
completed when it is convenient. However, there are problems.
Figure 3
An example of a website survey
Website survey How did you find our site? Please select all that apply.
❏ Recommended by others
Thank you for using our website. We'd like to ask you some questions about
your experience so that we can improve. ❏ Link from email our site sent you
❏ Link from another website
We would like your feeedback about the content on our site. How satisfied are
you with the content? ❏ Link from marketing leaflet
❍ Very dissatisfied ❍ Dissatisfied ❍ Neutral ❍ Satisfied ❏ Search engine results
❍ Very satisfied ❏ Other, please specify
Please tell us how our site compares with similar sites for each of the items How frequently do you visit our site?
below If you did not experience an item, please select “N/A”.
❍ First choice ❍ Daily ❍ A few times per week
Much Worse About Better Much N/A
worse the better
❍ A few times per month ❍ Once per month ❍ Less frequently than
once per month
same
Overall organisation/ ❍ ❍ ❍ ❍ ❍ ❍ The next questions will only be used to group your answers with others
navigation 1 2 3 4 5 – like yourself.
Please tell us how you access the internet. Check all that apply.
Home page content ❍ ❍ ❍ ❍ ❍ ❍
1 2 3 4 5 – ❏ Home ❏ Cafe
Product information ❍ ❍ ❍ ❍ ❍ ❍ ❏ Work ❏ Mobile phone
1 2 3 4 5 –
❏ College ❏ Computer tablet (eg iPad)
Ease of finding how to ❍ ❍ ❍ ❍ ❍ ❍ ❏ LIbrary ❏ Other, please specify
contact us 1 2 3 4 5 –
Downloading information ❍ ❍ ❍ ❍ ❍ ❍ How long do you spend on the internet each day? Select a choice.
1 2 3 4 5 –
❍ 1–2 hours ❍ 3–4 hours ❍ More than 8 hours
How likely are you to recommend our site to others?
Please indicate your gender
❍ Definitely not ❍ Unlikely ❍ Neutral ❍ May be likely
❍ Very likely ❍ Male ❍ Female
What prompted you to visit our site today? Please select all that apply. Please select the category that includes your age.
(a) Give one reason why it might be important to find out what people (c) Discuss the advantages and disadvantages of online surveys.
think of a business website.
(b) Explain whether an online survey would benefit a company selling
to: (i) customers in isolated areas (ii) less developed countries,
such as Ethiopia, Bhutan and Haiti.
14
Marketing and people
Market segmentation more than other ethnic groups on leather goods, furniture,
Markets can be divided into different sections or market appliances and electronic equipment.
segments. Each segment is made up of consumers that have ●● Religion. Different religious groups can display different
similar needs. Businesses recognise this and target particular tastes. For example, Muslims do not eat pork or drink alcohol.
market segments with their products. In the US the market for kosher (Jewish) food is thought to be
●● Some businesses concentrate on producing one product for
worth $100 billion.
one particular segment, for example luxury cars targeted at a
very wealthy market segment in the car market. Table 3 Socio-economic groups
●● Some businesses produce a range of different products and % of UK
Social Social Head of household
target them at several different segments. population
grade status occupation
●● Some businesses aim their products at nearly all consumers.
(approx)
For example, large food manufacturers are likely to target Higher managerial, administrative
A Upper middle or professional – doctors, lawyers 4%
their brands at everyone. and company directors
However, by dividing markets into segments businesses can
Intermediate managerial,
more easily supply products that meet customers’ needs. B Middle class administrative or professional – 12%
teachers, nurses and managers
Geographic and demographic Supervisory or clerical and junior
segmentation C1 Lower middle managerial, administrative or 22%
class professional – shop assistants,
Geographic segmentation: Different customer groups are clerks and police constables
likely to have different needs depending on where they live. For Skilled manual workers –
example, groups living in hot climates, such as Australia or South Skilled
C2 working class carpenters, plumbers, cooks and 33%
Africa, will have different needs to groups living in temperate train drivers
climates such as the UK. There might also be differences between Semi-skilled and unskilled manual
groups living in different parts of the same country. For example, D Working class workers – fitters, window cleaners 19%
in India different regions have slightly different tastes in cuisine. and storekeepers
State pensioners or widows,
Demographic segmentation: It is common for businesses to E The poor casual or lower grade workers, or 10%
divide markets according to age, gender, income, social class, long-term unemployed
ethnicity or religion of the population.
●● Age. Infants, teenagers, young adults and the over 65s are all Psychographic segmentation
likely to have different needs because of their different ages. Geographic and demographic segmentation have limitations. For
Many products are targeted to different consumer groups on example, there is a wide variety of spending patterns among
the grounds of age. For example, clothes are produced in females aged 16–18 living in Manchester. Yet people in this
different styles for people in different age groups. consumer group share the same gender, age and location. An
●● Gender. Men and women are likely to be targeted by alternative way of grouping customers is through psychographic
businesses with different products. For example, producers segmentation. This groups customers according to their
of clothes, cars, magazines, toiletries and drinks target attitudes, opinions and lifestyles.
different products to different genders. ●● Sports products may be aimed at those who are interested in
●● Income. Incomes in most countries vary considerably. As a ‘extreme’ sports such as skiboarding.
result businesses target products at certain income groups. ●● Chocolate manufacturers have identified two categories of
For example, luxury watchmakers target products at very chocolate eaters. ‘Depressive’ chocolate lovers eat chocolate
high-income groups. In contrast, low-cost supermarket chains to unwind, predominantly during the evening. ‘Energetic’
target lower income groups. chocolate eaters eat chocolate as a fast food and live life at a
●● Social class. Businesses pay a lot of attention to different fast pace.
socio-economic groups. Such groups are usually based on ●● People’s attitudes to life may also be used to segment the
occupations. An example of a commonly used measure of market. Some pension funds are geared towards those who
social class is shown in Table 3. It is compiled by the Institute of only want investments in ‘ethical’ businesses.
Practitioners in Advertising (IPA) and divides social class into six ●● Clothes may be geared at those who are interested in ‘retro’
categories. These can be used by businesses to target products. fashions from earlier decades.
●● Ethnicity. Many countries in the world are becoming more ●● Travel companies target holidays at families with younger children.
cosmopolitan. This means that people from different ethnic ●● Certain newspapers are geared towards Labour voters, while
groups are likely to live in the same country. This is important others are geared towards Conservative voters.
for businesses because different ethnic groups are likely to One of the drawbacks of psychographic segmentation is that it
have different needs and tastes due to their different cultures. can be difficult for businesses to collect data about the beliefs,
For example, in Canada, where there are over 200 different attitudes and lifestyles of consumers. In order to do this they
ethnic groups, Chinese consumers are likely to spend may require the help of specialist businesses.
15
Market research Unit 2
16
Another random document with
no related content on Scribd:
The Project Gutenberg eBook of Birds and their
nests
This ebook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this ebook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.
Language: English
NEW YORK:
GEORGE ROUTLEDGE AND SONS, 416, BROOME STREET.
London: S. W. Partridge & Co., 9, Paternoster Row.
All rights reserved.
WATSON AND HAZELL,
Printers,
London and Aylesbury.
CONTENTS.
PAGE
Introductory
Chapter 1
chapter I. —the wren 8
” II. —the goldfinch 15
” III. —the song thrush 20
” IV. —the blackbird 26
” V. —the dipper, or water-ousel 33
” VI. —the nightingale 37
” VII. —the skylark 42
” VIII. —the linnet 47
” IX. —the peewit 51
” X. —house-martins, or window-
swallows, and nests 56
” XI. —chiff-chaffs, or oven-builders,
and nest 66
” XII. —golden-crested wrens and
nest 70
” XIII. —wagtail and nest 76
” XIV. —jackdaw and nestlings 82
” XV. —spotted fly-catchers and nest 86
” XVI. —wood-pigeons and nest 92
” XVII. —white-throat and nest 98
” XVIII. —bull-finch and nestlings 102
” XIX. —missel-thrushes and nest 106
” XX. —yellow-hammer, or yellow-
head, and nest 112
” XXI. —magpie and nest 116
” XXII. —nuthatch and nest 120
Birds and their Nests.
INTRODUCTORY CHAPTER.
The birds in these pictures of ours have all nests, which is as it
should be; for how could the bird rear its young without its little home
and soft little bed, any more than children could be comfortably
brought up without either a bed to lie upon, or a home in which to be
happy.
Birds-nests, though you may find them in every bush, are wonderful
things. Let us talk about them. They are all alike in the purpose for
which they are intended, but no two families of birds build exactly
alike; all the wrens, for instance, have their kind of nest; the thrushes
have theirs; so has the swallow tribe; so has the sparrow, or the
rook. They do not imitate one another, but each adheres to its own
plan, as God, the great builder and artist, as well as Creator, taught
them from the very beginning. The first nightingale, that sang its
hymn of joyful thanksgiving in the Garden of Paradise, built its nest
just the same as the bird you listened to last year in the coppice. The
materials were there, and the bird knew how to make use of them;
and that is perhaps the most wonderful part of it, for she has no
implements to work with: no needle and thread, no scissors, no
hammer and nails; nothing but her own little feet and bill, and her
round little breast, upon which to mould it; for it is generally the
mother-bird which is the chief builder.
No sooner is the nest wanted for the eggs which she is about to lay,
than the hitherto slumbering faculty of constructiveness is awakened,
and she selects the angle of the branch, or the hollow in the bank or
in the wall, or the tangle of reeds, or the platform of twigs on the tree-
top, exactly the right place for her, the selection being always the
same according to her tribe, and true to the instinct which was
implanted in her at the first.
So the building begins: dry grass or leaves, little twigs and root-
fibres, hair or down, whether of feather or winged seed, spangled
outside with silvery lichen, or embroidered with green mosses, less
for beauty, perhaps—though it is so beautiful—than for the birds’
safety, because it so exactly imitates the bank or the tree-trunk in
which it is built. Or it may be that her tenement is clay-built, like that
of the swallow; or lath and plaster, so to speak, like an old country
house, as is the fashion of the magpie; or a platform of rude sticks,
like the first rudiment of a basket up in the tree-branches, as that of
the wood-pigeon: she may be a carpenter like the woodpecker, a
tunneller like the sand-martin; or she may knead and glue together
the materials of her nest, till they resemble thick felt; but in all this
she is exactly what the great Creator made her at first, equally
perfect in skill, and equally undeviating year after year. This is very
wonderful, so that we may be quite sure that the sparrow’s nest,
which David remarked in the house of God, was exactly the same as
the sparrow built in the days of the blessed Saviour, when He,
pointing to that bird, made it a proof to man that God’s Providence
ever watches over him.
Nevertheless, with this unaltered and unalterable
working after one pattern, in every species of bird, Jules Michelet on
there is a choice or an adaptation of material Birds.
allowed: thus the bird will, within certain limits, select that which is
fittest for its purpose, producing, however, in the end, precisely the
same effect. I will tell you what Jules Michelet, a French writer, who
loves birds as we do, writes on this subject:—“The bird in building its
nest,” he says, “makes it of that beautiful cup-like or cradle form by
pressing it down, kneading it and shaping it upon her own breast.”
He says, as I have just told you, that the mother-bird builds, and that
the he-bird is her purveyor. He fetches in the materials: grasses,
mosses, roots, or twigs, singing many a song between whiles; and
she arranges all with loving reference; first, to the delicate egg which
must be bedded in soft material; then to the little one which, coming
from the egg naked, must not only be cradled in soft comfort, but
kept alive by her warmth. So the he-bird, supposing it to be a linnet,
brings her some horse-hair: it is stiff and hard; nevertheless, it is
proper for the purpose, and serves as a lower stratum of the nest—a
sort of elastic mattress: he brings her hemp; it is cold, but it serves
for the same purpose. Then comes the covering and the lining; and
for this nothing but the soft silky fibre of certain plants, wool or
cotton, or, better still, the down from her own breast, will satisfy her.
It is interesting, he says, to watch the he-bird’s skilful and furtive
search for materials; he is afraid if he see you watching, that you
may discover the track to his nest; and, in order to mislead you, he
takes a different road back to it. You may see him following the
sheep to get a little lock of wool, or alighting in the poultry yard on
the search for dropped feathers. If the farmer’s wife chance to leave
her wheel, whilst spinning in the porch, he steals in for a morsel of
flax from the distaff. He knows what is the right kind of thing; and let
him be in whatever country he may, he selects that which answers
the purpose; and the nest which is built is that of the linnet all the
world over.
Again he tells us, that there are other birds which, instead of
building, bring up their young underground, in little earth cradles
which they have prepared for them. Of building-birds, he thinks the
queerest must be the flamingo, which lays her eggs on a pile of mud
which she has raised above the flooded earth, and, standing erect all
the time, hatches them under her long legs. It does seem a queer,
uncomfortable way; but if it answer its end, we need not object to it.
Of carpenter-birds, he thinks the thrush is the most remarkable;
other writers say the woodpecker. The shore-birds plait their nests,
not very skilfully it is true, but sufficiently well for their purpose. They
are clothed by nature with such an oily, impermeable coat of
plumage, that they have little need to care about climate; they have
enough to do to look after their fishing, and to feed themselves and
their young; for all these sea-side families have immense appetites.
Herons and storks build in a sort of basket-making
fashion; so do the jays and the mocking birds, only How various Birds
in a much better way; but as they have all large Build.
families they are obliged to do so. They lay down, in the first place, a
sort of rude platform, upon which they erect a basket-like nest of
more or less elegant design, a web of roots and dry twigs strongly
woven together. The little golden-crested wren hangs her purse-like
nest to a bough, and, as in the nursery song, “When the wind blows
the cradle rocks.” An Australian bird, a kind of fly-catcher, called
there the razor-grinder, from its note resembling the sound of a
razor-grinder at work, builds her nest on the slightest twig hanging
over the water, in order to protect it from snakes which climb after
them. She chooses for her purpose a twig so slender that it would
not bear the weight of the snake, and thus she is perfectly safe from
her enemy. The same, probably, is the cause why in tropical
countries, where snakes and monkeys, and such bird-enemies
abound, nests are so frequently suspended by threads or little cords
from slender boughs.
The canary, the goldfinch, and chaffinch, are skilful cloth-weavers or
felt makers; the latter, restless and suspicious, speckles the outside
of her nest with a quantity of white lichen, so that it exactly imitates
the tree branch on which it is placed, and can hardly be detected by
the most accustomed eye. Glueing and felting play an important part
in the work of the bird-weavers. The humming-bird, for instance,
consolidates her little house with the gum of trees. The American
starling sews the leaves together with her bill; other birds use not
only their bills, but their feet. Having woven a cord, they fix it as a
web with their feet, and insert the weft, as the weaver would throw
his shuttle, with their bill. These are genuine weavers. In fine, their
skill never fails them. The truth is, that the great Creator never gives
any creature work to do without giving him at the same time an
inclination to do it—which, in the animal, is instinct—and tools
sufficient for the work, though they may be only the delicate feet and
bill of the bird.
And now, in conclusion, let me describe to you the nest of the little
English long-tailed titmouse as I saw it many years ago, and which I
give from “Sketches of Natural History”:—
There, where those boughs of blackthorn
cross, The Titmouse’s
Behold that oval ball of moss; Nest.
Observe it near, all knit together,
Moss, willow-down, and many a feather,
And filled within, as you may see,
As full of feathers as can be;
Whence it is called by country folk,
A fitting name, the feather-poke;
But learned people, I have heard,
Parus caudatus call the bird.
Yes, here’s a nest! a nest indeed,
That doth all other nests exceed,
Propped with the blackthorn twigs beneath,
And festooned with a woodbine wreath!
Look at it close, all knit together,
Moss, willow-down, and many a feather;
So soft, so light, so wrought with grace,
So suited to this green-wood place,
And spangled o’er, as with the intent
Of giving fitting ornament,
With silvery flakes of lichen bright,
That shine like opals, dazzling white.
Think only of the creature small,
That wrought this soft and silvery ball,
Without a tool to aid her skill,
Nought but her little feet and bill—
Without a pattern whence to trace
This little roofed-in dwelling place—
And does not in your bosom spring
Love for this skilful little thing?
See, there’s a window in the wall;
Peep in, the house is not so small,
But snug and cosy you shall see
A very numerous family!
Now count them: one, two, three, four, five—
Nay, sixteen merry things alive—
Sixteen young, chirping things all sit,
Where you, your wee hand, could not get!
I’m glad you’ve seen it, for you never
Saw ought before so soft and clever.
CHAPTER I.
THE WREN.
Truly the little Wren, so beautifully depicted by Mr. Harrison Weir,
with her tiny body, her pretty, lively, and conceited ways, her short,
little turned-up tail, and delicate plumage, is worthy of our tender
regard and love.
The colouring of the wren is soft and subdued—a reddish-brown
colour; the breast of a light greyish-brown; and all the hinder parts,
both above and below, marked with wavy lines of dusky-brown, with
two bands of white dots across the wings.
Its habits are remarkably lively and attractive. “I know no pleasanter
object,” says the agreeable author of “British Birds,” “than the wren; it
is always so smart and cheerful. In gloomy weather other birds often
seem melancholy, and in rain the sparrows and finches stand silent
on the twigs, with drooping wings and disarranged plumage; but to
the merry little wren all weathers are alike. The big drops of the
thunder-shower no more wet it than the drizzle of a Scotch mist; and
as it peeps from beneath the bramble, or glances from a hole in the
wall, it seems as snug as a kitten frisking on the parlour rug.”