Edexcel A Level Business: Marketing and People (WBS11)

This guide covers Unit 1 Marketing and people, the compulsory International AS unit for Pearson Edexcel International Advanced Subsidiary/Advanced Level Business (YBS11/XBS11), Issue 1. It is assessed by a single 2-hour paper worth 80 marks, built from short-open response and extended-writing questions based on sources, some of which require quantitative skills.

Where this fits in Unit 1 (WBS11)

Unit 1 introduces students to how businesses identify market opportunities and build competitive advantage, then turns to how they recruit, train, organise and motivate the people who deliver on that strategy. Alongside Unit 2 (Managing business activities), it forms the International AS half of the qualification; Units 3 and 4 (Business decisions and strategy; Global business) complete the full International A Level.

Specification coverage

PEARSON EDEXCEL INTERNATIONAL A LEVEL BUSINESS — UNIT 1 MARKETING AND PEOPLE (WBS11)

• 1.3.1 Meeting customer needs — mass and niche markets, dynamic markets, the effect of competition, and the difference between risk and uncertainty; primary and secondary market research methods and sampling; market positioning, segmentation and product differentiation
• 1.3.2 The market — factors changing demand and supply, the interaction of demand and supply, and the calculation and business significance of price elasticity of demand (PED) and income elasticity of demand (YED)
• 1.3.3 Marketing mix and strategy — marketing objectives and the elements of the marketing mix
• 1.3.4 Managing people — approaches to staffing (staff as an asset or a cost, the flexible workforce, dismissal and redundancy, employer/employee relationships); recruitment, selection and training; organisational design (hierarchy, chain of command, span of control, centralised and decentralised decision making; tall, flat and matrix structures); motivation in theory and practice; leadership
• 1.3.5 Entrepreneurs and leaders — the role of enterprising individuals and leadership in business start-up and growth

How to approach it

Meeting customer needs (1.3.1) and the market (1.3.2) are the most quantitative parts of this unit — practise calculating and interpreting PED and YED until the arithmetic is automatic, since the paper explicitly tests quantitative skills alongside written analysis. Because every question is source-based, get comfortable applying concepts like market segmentation or motivation theory to an unfamiliar business scenario rather than just defining them in the abstract. The people-focused content in 1.3.4 and 1.3.5 pairs naturally with Unit 2’s management topics, so building a clear picture of how marketing decisions and people decisions interact within one business will help across both units.

Official specification

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Business specification, Issue 1, September 2017 — qualifications.pearson.com.

Meeting customer needs

Markets are classified as mass (large, standardised, low unit cost) or niche (small, specialised, higher margins but greater risk from a narrow customer base).

Market size, share and growth are the standard calculations:

market share = firm's sales / total market sales x 100

Segmentation divides customers demographically, geographically, psychographically or behaviourally, so the offer can be targeted. Positioning places the brand relative to competitors on a market map — commonly price against quality — and gaps on that map suggest opportunities, though a gap may exist simply because no demand is there.

Dynamic markets change through online retailing, changing consumer tastes and technology, so competitive advantage erodes and must be renewed.

Risk and uncertainty are not the same. A risk can be estimated: the business can put a probability or likely range on the outcome, for example from past sales data or market research. Uncertainty cannot be estimated, because there is no reliable basis for predicting the outcome, as with a sudden change in tastes or an unexpected new competitor.

Market research is used to identify and anticipate customer needs and wants, quantify likely demand and gain insight into consumer behaviour. Primary research collects new data first-hand: surveys and questionnaires, focus groups and consumer panels, face-to-face or telephone interviews, and product trials or test marketing. Secondary research uses data that already exists: websites and social media, newspapers, magazines, TV and radio, reports and databases. Either kind can be quantitative (numerical, such as the percentage of customers who would buy) or qualitative (opinions and reasons, such as why they would buy). Primary data is specific to the business’s question but slower and costlier to collect; secondary data is quicker and cheaper but may be out of date or not fit the question exactly.

Sampling means researching part of the market rather than all of it. In a random sample every member of the population has an equal chance of selection; a quota sample fills set numbers from chosen groups (for example 50 men and 50 women) without random selection; a stratified sample divides the population into groups and selects randomly from each in proportion to its size. A larger, more representative sample gives more reliable results but costs more.

Demand, supply and elasticity

Demand shifts with income, competitor prices and actions, demographics, fashion and seasonality. Supply shifts with costs, technology, government intervention and external shocks.

PED = % change in quantity demanded / % change in price
YED = % change in quantity demanded / % change in income

The business application matters more than the formula. Where demand is price inelastic, a firm can raise price and increase total revenue — which is why differentiation and brand loyalty are pursued. Where demand is elastic, competing on price destroys revenue. YED guides product portfolio decisions: luxury goods suffer disproportionately in a recession.

The marketing mix and strategy

Marketing objectives give the marketing function its targets, for example to increase market share, increase revenue or build a brand, and the marketing strategy and mix are chosen to meet them.

The four Ps extend to seven for services with people, process and physical environment. The elements must be internally consistent — premium price requires premium product, place and promotion.

Design mix balances function, aesthetics and cost of economic manufacture, and shifts to reflect social trends such as designing for waste minimisation, re-use and recycling, and ethical sourcing.

Pricing strategies include cost-plus, price skimming, penetration, predatory (deliberately pricing below cost to force a rival out of the market), competitive and psychological pricing, chosen according to the degree of differentiation, price elasticity of demand, the level of competition, brand strength, and the product’s stage in its life cycle.

Distribution channels range from two-stage (producer to consumer) to three-stage (producer to retailer to consumer) to four-stage (producer to wholesaler to retailer to consumer), and are changing with the growth of online sales and price comparison sites.

Product life cycle — development, introduction, growth, maturity, decline — with extension strategies at maturity. The Boston Matrix classifies a portfolio into stars, cash cows, question marks and dogs, and the insight is that cash cows fund the stars and question marks.

Branding builds loyalty, allows premium pricing and eases new product launches.

Managing people

Approaches to staffing range from treating staff as an asset (investment, training, low turnover) to a cost (flexibility, minimum commitment). A flexible workforce uses multi-skilling, part-time and temporary staff, zero-hour contracts, flexible hours and home working, and outsourcing. Dismissal ends an employee’s contract for a reason connected with that employee, such as misconduct; redundancy happens when the job itself is no longer needed. Employer/employee relationships can be managed through an individual approach (terms agreed with each employee) or collective bargaining (terms negotiated with a group, usually a trade union, on behalf of the employees it represents).

Recruitment, selection and training — induction, on-the-job and off-the-job — carry costs justified by productivity and retention.

Organisational design describes how authority and communication are arranged. The hierarchy is the levels of authority from the top of the business to the bottom; the chain of command is the line through which instructions pass down and information passes up; the span of control is the number of subordinates who report directly to one manager. Decision making is centralised when it is kept at the top and decentralised when it is delegated to lower levels or local managers. A tall structure has many levels and narrow spans of control: supervision is close and there are clear promotion routes, but communication is slower and management costs are higher. A flat structure has few levels and wide spans of control: communication is quicker and staff have more autonomy, but managers can become overstretched. A matrix structure brings staff from different functional departments together in project teams, so an employee reports to a functional manager and to a project manager: it combines expertise for project work, but two lines of authority can cause conflict and confusion. The specification asks for the impact of these structures on business efficiency and employee motivation: for example, removing a management level to make a structure flatter can cut costs and give staff more responsibility, but it widens spans of control and removes a step on the promotion ladder.

Motivation theory: Taylor (pay and control), Mayo (social needs and group belonging), Maslow (hierarchy of needs), Herzberg (hygiene factors prevent dissatisfaction, motivators create satisfaction). Financial methods to improve performance are piecework, commission, bonus, profit share and performance-related pay; non-financial methods are delegation, consultation, empowerment, team working, flexible working, job enrichment, job rotation and job enlargement.

Leadership styles — autocratic, paternalistic, democratic, laissez-faire — suit different situations, and the examinable point is that no style is universally best. The specification also names the distinction between management and leadership and the difficulty of moving from entrepreneur to leader as a business grows and its founder has to delegate.

Entrepreneurs and leaders

The role of an entrepreneur covers creating and setting up a business, running and expanding it, innovation within an existing business (intrapreneurship), the barriers to entrepreneurship (such as access to finance, red tape and lack of experience), and anticipating risk and uncertainty in the business environment.

Entrepreneurial motives split into financial motives (profit maximisation and profit satisficing – accepting a satisfactory rather than the maximum possible profit) and non-financial motives (an ethical stance, social entrepreneurship, independence, and the wish to work from home).

Business objectives include survival, profit maximisation, and a range of others – sales maximisation, market share, cost efficiency, employee welfare, customer satisfaction and social objectives – and which a business prioritises depends on its size, its stage of development and its ownership.

Every business choice involves an opportunity cost – the next best alternative given up – and a trade-off between competing objectives, for example between growth and short-term profit, or between paying higher wages and keeping prices competitive.

Worked example

A firm sells 40,000 units at $25. It cuts price to $22 and sales rise to 50,000. Calculate PED and advise.

% change in Qd = (50 000 - 40 000) / 40 000 x 100 = +25%
% change in P  = (22 - 25) / 25 x 100            = -12%

PED = 25 / -12 = -2.08  (elastic)

Revenue before = 40 000 x 25 = $1 000 000
Revenue after  = 50 000 x 22 = $1 100 000

Demand is elastic, so the price cut raised revenue by $100,000. Whether it raised profit depends on unit costs — a distinction worth making.

Common mistakes

Confusing market size with market share. Ignoring the minus sign on PED and misclassifying elasticity. Assuming a gap on a market map is always an opportunity. Concluding on revenue when the question asks about profit. Listing motivation theories without applying them to the case.

Quick revision checklist

• Distinguish mass from niche markets and calculate market share and growth.
• Explain segmentation, targeting and positioning using a market map.
• Distinguish risk from uncertainty; compare primary and secondary research and random, quota and stratified sampling.
• State marketing objectives (market share, revenue, brand building) and link the mix to them.
• Calculate PED and YED and link them to pricing and portfolio decisions.
• Apply the marketing mix, product life cycle and Boston Matrix.
• Compare staffing approaches, training methods and leadership styles.
• Explain hierarchy, chain of command, span of control and centralisation, and judge how a tall, flat or matrix structure affects efficiency and motivation.
• Apply Taylor, Mayo, Maslow and Herzberg to a given workforce problem.
• Explain the design mix and identify a predatory pricing strategy and a distribution channel structure.
• Name the financial and non-financial motives for setting up a business, and identify an opportunity cost or trade-off in a given scenario.