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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
Advantages Disadvantages Detailed analysis of the market and the ‘size’ of each
Can benefit from economies High costs of advertisement potential segment in terms of consumers and likely
sales.
of scale and promotion
Company image and brand image - ‘high-tech '
Standardised products or
businesses may not want to produce innovative, high-
Opportunities for growth services, so it may not meet
quality products for low-income consumers.
(large sales) the specific needs of all
For example, the cost of entering each segment is a
customers
specially designed product and advertising campaign.
There are many variations of
products, so the risk is
spread.
1.5. Market Research
Market Research: Gathering information about
Niche Market: a SMALL (usually specialised) segment
consumers' needs or preferences in a market
(part) of a mass market. Specialised and sold by small
The roles of market research:
businesses that would find it difficult to compete in a mass
Identify demand for the product and how much they
market (ex, a business specialised in scuba diving gear)
are willing to pay.
Identifying the target audience is the most effective
Advantages Disadvantages
way to promote to these customers.
Avoid competition with big To measure the competitiveness of the market and
Small – limited sale potential
businesses the best way to compete with it.
Usually, they specialise in just There are two types of businesses:
Customers' specific needs are one product; if the product Product-Oriented Business: a business that focuses
focused, leading to high levels has low demand, it will fail. It mainly on the product, disregarding market needs and
of customer loyalty and good would require businesses to wants. Often, it produces necessities for living, such as
customer relations. have multiple products to agricultural tools or fresh food.
spread risks. It may not have a brand name.
Producers’ main concern is price and quality.
Risky due to the large market and many
1.4. Market Segmentation
competitors.
Market Segmentation: an identifiable subgroup of a whole
A market-oriented business is a business that focuses
market where consumers have similar characteristics or
on market research and finding out what the customer
preferences. wants BEFORE a product, such as clothing or
A market can be segmented by:
electronic devices, is developed.
Demographic segmentation - age, gender, and Better able to survive because of more
income. adaptability to changes in customer taste and
Geographic segmentation - region/location, where trends.
people live (ex, people who live in wet areas will buy Takes advantage of new market opportunities.
more waterproof clothing than those who live in dry Market Research Methods:
areas) Quantitive information (quantity related)
Psychographic segmentation - beliefs, values, lifestyle, Qualitative information (where opinion or judgement
social status, activities, interests and opinions and is necessary).
other psychological criteria. Can be gathered through:
Benefits of Market Segmentation: Primary Research: Gathering ORIGINAL data by directly
You can use it to sell more products, creating different contacting existing customers/potential customers.
variations for different groups.
Advantages Disadvantages
A more effective marketing strategy can be placed (as
the characteristics of consumers are known), resulting Expensive in both time and
Up-to-date and relevant
in an increase in sales. money
Identifying a market segment that is not having its Usually planned and carried
needs fully met increases the opportunity for out by people who want to use Not available immediately
increased sales. the data first-hand.
Making marketing expenditure cost-effective by It is most effective when used
producing a product that can closely meet the needs for a specific problem.
of those customers and targeting its marketing efforts Not available to business
to that group only.
Which method of segmentation should be used depends Process:
on factors such as: Purpose of market research
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CAIE IGCSE BUSINESS STUDIES
Decide on the most suitable method of market questionnaire). 2 standard methods of sampling:
research A Random Sample is when people are selected
Decide the size of the survey and who is going to be randomly as a source of information for market
asked. research.
Carry out the research Advantage: Everyone has an equal chance to be
Analyse the data and results picked, but not everyone in the population may be
Produce a report of the findings a product consumer.
Methods of Primary Research: A Quota Sample: People are selected based on
Questionnaires specific characteristics. They can find out the views of
They may be conducted face-to-face, by telephone, a specific group.
or online. Advantage: can find out the views of these specific
groups.
Advantages Disadvantages Secondary Research:
If questions are not well- Information that has already been collected and is
thought-out, answers may available to others
Detailed qualitative
mislead the business, as
information can be gathered. Benefits Limitations
there may not be accurate
answers. It is cheaper than primary as You do not get specific results
The customer’s opinion can Lots of time and money are research has already been for a particular product or
be obtained. needed. done by others service; you get broad results
Online surveys may be There is some information
Collating and analysing data (i.e. economic forecasts or Data may be outdated or
cheaper and make it easier to
also takes a long time. population size) that can’t be incorrect as others collected it
collate the results.
obtained by primary research
They can be linked to prize
draws and encourage people It might not have the specific
to fill them. information
Interviews: A person will interview another person and ask Internal Sources of secondary data – within the firm’s own
questions. records:
Advantages: Sales department records, price data, customer
The interviewer will be able to explain the records, sales reports, etc.
questions and clear confusion. Opinions of distribution and public relations personnel
Detailed information about the interviewee can be Finance department.
gathered. Customer service department
Disadvantages: External Sources of Secondary Data:
The interviewer may lead the interviewee to Government Statistics: a detailed source of general
answer in a certain way. information (ex: population and its age structure)
It is time-consuming and Expensive. Newspapers: useful articles about the general
Focus Groups: collect opinions and feedback from a group economy state
of people about a specific product, concept, or service. Trade Association: information about business in the
industry
Advantages Disadvantages Market Research Agencies: specialist agencies
It is time-consuming and researching on the company’s behalf; the commission
expensive if done by a is paid.
Provide detailed information Internet: easily accessible source. Paper-based
specialist market research
agency. sources can also be found.
Regardless of which type of research a business chooses
Interacting between members The discussion could be
to use, the accuracy of the research data depends on the
can help businesses based on some people being
following:
understand the reason for influenced by the opinions of
How carefully the sample was drawn up
peoples’ opinions. others.
How the questions in questionnaires/interviews were
A few people can dominate it, phrased to ensure honest answers were given.
Quicker and cheaper than
so researchers must have The sample itself and its size. By using quota
individual interviews.
experience dealing with this. sampling, you might get more reliable results.
The bias – some secondary research will be biased
Sampling: A group of people who are selected (randomly) (i.e. articles in newspapers), which means the
to respond to a market research exercise (i.e. information might be unreliable
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CAIE IGCSE BUSINESS STUDIES
Age of the information: older data might be 6. Go to a full launch of the product to the whole market.
inaccurate.
Presentation of data from market research: Benefits Drawbacks
Tables or tally chart USP – a unique selling point: a
Costs of carrying out market
Pie Chart special feature about a
research and analysing the
Diagram product that differentiates it
findings
Bar chart from its competitors’ product.
Line graph Cost of producing trial
Diversification products, including waste
1.6. Marketing Mix materials
Brand image is damaged if
Marketing Mix: a term used to describe all the activities Allows businesses to expand
the product fails to meet
that go into marketing a product or service. into new and existing markets
consumer demand
The marketing mix can be summed up as the 4 Ps:
The lack of sales if the target
Product - applies to the product or service. Design,
market is wrong
features and quality.
Price - the price at which the product is sold,
comparisons between prices of competitors. Importance of Brand Image
Place - channel of distribution that is selected.
Brand name: the unique name of a product that
Promotion - how the productivity is advertised and
distinguishes it from other brands.
promoted.
Brand loyalty: when consumers keep buying the same
You should always mention the 4 Ps when answering
brand again instead of choosing a competitor’s brand.
questions about Marketing Mix!
Brand image: an image or identity given to a product
which gives it a personality of its own and distinguishes it
1.7. Product from its competitors.
Good branding includes:
Some products are sold to consumers, and some to other Brand name
businesses. Higher quality than unbranded products.
They are usually grouped: Unique packaging
Consumer goods: bought by consumers for their own Brand loyalty
use. Can be perishable goods such as food or long- Assured quality
lasting such as furniture. Creates a brand image associated with consuming the
Consumer services: services bought by consumers for product.
their own use. Ex. Cleaners
Producer goods: there are goods that are produced Role of Packaging
for other businesses’ use to help with the production
process. Ex. Trucks Packaging: the physical container or wrapping for a
Producer services: services that are produced to help product. 2 functions - protect and promote product
other business. Ex. Accountants. Protects the product and makes it easier to transport
Identifying the type of product is important as it Eye catching
decides how the product would be Carries information about the product
advertised/marketed and developed. Promotes brand image
Points to consider about choosing product:
Satisfying existing needs and wants of consumers Product Life Cycle (PLC)
Not be expensive to produce.
New and original idea Product life cycle: describes the stages a product will pass
Unique selling point through from its introduction, though its growth until it is
Capable of stimulating new wants from their mature, and then finally its decline.
consumers.
1. Development: First, the product is developed. The
Development of New Products: prototype will be tested in the market before its
launch. There are no sales during this time.
1. Generate ideas 2. Introduction: Then it is introduced or launched in the
2. Select the best idea for further development market. Sales are often slow. No profit made as
3. Decide if the company will be able to sell enough for development costs are not yet covered.
the product to be a success. 3. Growth: The product gains more sales. Advertising is
4. Develop a prototype changed to persuade and encourage customer loyalty.
5. Launch the product in one area to test the market
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
Benefits Limitations
Gives the manufacturer some
control over the way product
Benefits Limitations
is sold.
There is no direct contact with
Manufacturer sells lots of customers, which makes It
Methods of Distribution
stock to retailer hard to create customer
loyalty. E-Commerce
Price is often higher than Selling of goods and services through the internet
Cheaper transportation costs
‘direct selling‘ as the retailer
because all products go to
has to cover its costs and Benefits to the business Problems to business
one place
make a profit Cheaper Website must be maintained
Lower storage costs for the Customers are encouraged to
manufacturer High distribution costs
buy in bulk
Business-2-Business e-
Producers sell to wholesalers, who buy in bulk, divide their No direct contact
commerce is cheaper
stock into smaller quantities, and sell them to retailers.
Wider options for customers,
Returns – higher costs
brand image and loyalty
A stock system will be
Benefits Limitations needed.
Reduces storage costs for More expensive to buy from a
small retailers because small wholesaler than from a Benefits to consumers Problems for consumers
quantities are sold manufacturer No need to go out Internet needed
A wholesaler might not have High chances of fraud and
Small quantities, so transport Wide options
all the products a retailer theft
costs are low
wants
Products can’t be physically
Wholesalers can give Easy Comparison
It takes longer to get to the examined
feedback on what sells well to
consumer Payment through net banking No direct contact
producer
Easy access to imported
Huge gap between the
goods
manufacturer and the
Low prices
customer
Consumer prices may be
Other methods include:
higher than direct selling, as
Department stores
retailers and wholesalers
Discount stores
need profit.
Chain stores
Superstores
A manufacturer hires an agent (person or business) that Independent retailers
will sell products on behalf of the manufacturer. Direct sales
Agent: an independent person or business appointed Supermarkets
to deal with sales and distribution of a product or Mail order
range of products.
Selecting Which Distribution Channel to Use
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
Encourages new customers to try an existing product. Benefits to consumers Problems for consumers
Encourages customers to try a new product. No need to go out Internet needed
Increase customer loyalty by encouraging existing
High chances of fraud and
customers to buy in greater quantities. Wide options
theft
Encourages customers to buy their product instead of
competitors. Products can’t be physically
Easy Comparison
examined
Marketing Budget Payment through net banking No direct contact
Easy access to imported
The marketing budget is the financial plan for marketing a goods
product/brand for a period of time.
Low prices
When deciding which type of promotion to use, marketing
budget is an essential factor
How technology influences the marketing mix:
Businesses will need to compare the cost of advertising
and the increase in expected sales. Cost-effectiveness if Social Media Marketing: a form of internet marketing that
important. involves creating and sharing content on social media
This is where small businesses struggle compared to big networks to achieve marketing goals.
businesses because their budget is much smaller. Viral Marketing: when consumers are encouraged to
share information online about a business's product.
Factors Influencing Type of Promotion Product: may change to respond to new technology.
Promotion: social media marketing and viral marketing
Stage of PLC
can be used to promote.
Nature of product
Price: the internet allows businesses to gather
Cultural issues involved in international marketing
information about customer purchasing habits, which
The media used must depend on the following:
means dynamic pricing can be used to increase revenue.
Literacy rate Place: The widespread spread of online purchasing and e-
Poverty rate
commerce. Can create new opportunities.
Availability of radio and cinema
Nature of target market Use of the Internet and Social Media Network for
Public Relations and Sponsorship Promotion
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE
Business Studies
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