AQA A-Level Business: Marketing management (7132) – Revision Notes

These notes condense the marketing section (3.3.1 to 3.3.4 in the specification text) of the AQA AS and A-level Business specification (7131/7132) for A-level Business (7132). For full explanations and worked examples read the study guide, then test yourself with the practice questions. Other links: the AQA A-Level Business hub, the checklist and free diagnostics.

Section map

Section	One-line summary
3.3.1	Marketing objectives: volume, value, market size, growth, share, brand loyalty; external and internal influences
3.3.2	Research, sampling, data interpretation, technology, elasticity, using data
3.3.3	Segment, target, position; four segmentation methods; niche and mass
3.3.4	7Ps, Boston Matrix, product life cycle, new products, pricing, promotion, place, integration, digital

Five themes run through every section: technology, ethical and environmental influences, market conditions and competition, competitiveness, and links with other functions.

3.3.1 Objectives

• Value: gives direction, a target to measure against and a link between marketing and the other functions.
• Listed objectives: sales volume, sales value, market size, market growth, sales growth, market share, brand loyalty.
• External influences: competitors, the economy, technology, social attitudes, ethical and environmental pressure, legislation.
• Internal influences: corporate objectives, finance, capacity, staff skills, brand and product range.

3.3.2 Markets and customers

Definitions

Term	Meaning
Primary research	New data gathered first-hand: tailored, slower, dearer
Secondary research	Existing data: cheaper, quicker, may be dated or off target
Quantitative	Numerical (counts, prices, percentages)
Qualitative	Opinions, attitudes, motives
Market mapping	Plotting brands on two axes to show competition and gaps
Sampling	Asking a part of the population to estimate the whole
Confidence interval	Range likely to contain the true population value
Extrapolation	Extending a trend beyond the data range

Formulas

Measure	Calculation
Market growth (%)	change in market size ÷ original market size × 100
Sales growth (%)	change in sales ÷ original sales × 100
Market share (%)	firm’s sales ÷ market sales × 100
Market size	firm’s sales ÷ market share
PED (standard form)	% change in quantity ÷ % change in price
YED (standard form)	% change in quantity ÷ % change in income

The specification says you must calculate market and sales growth, share and size, and that you need to interpret, not calculate, elasticity.

Method in steps for share and growth questions

1. Write each formula with the figures in.
2. Keep the same units (£m with £m).
3. Compare firm growth with market growth: faster means share rises, slower means share falls, equal means share is unchanged.
4. State the meaning for the business.

Reminder. Pennivale Cycles sold £28.8m in a £360m market. A year later the market was £414m and Pennivale sold £33.12m. Market growth is 54 ÷ 360 = 15%. Sales growth is 4.32 ÷ 28.8 = 15%. Share is 28.8 ÷ 360 = 8% before and 33.12 ÷ 414 = 8% after, so no share was gained.

Interpreting data

• Positive correlation: both variables rise together. Negative: one rises as the other falls. Strength: the nearer the points to a line, the stronger.
• Correlation is not causation. A third factor may explain both.
• Confidence intervals: a narrower range means more reliable data; a larger, representative sample narrows it. You need the concept only.
• Extrapolation: reliable only close to the existing data; trends bend, saturate or break.
• Technology: loyalty cards, website analytics, social media listening and large data sets give speed and detail; risks are cost, poor data quality and privacy concerns.
• Data in decisions: check age, sample size, bias, cost and relevance.

Elasticity interpretation

Value	Meaning	Best price move for revenue
PED above 1 (ignoring sign)	Elastic	Cut price
PED below 1	Inelastic	Raise price
YED above 0	Normal good	Demand rises with income
YED above 1	Luxury-type good	Demand rises faster than income
YED below 0	Inferior good	Demand falls as income rises

Elasticity helps pricing, forecasting and choosing which market to serve in a boom or a recession.

Reminder. A loaf of bread: PED −0.6 and a 5% price cut. Quantity rises 0.6 × 5 = 3%. Revenue is 0.95 × 1.03 = 0.9785 of the old figure, a fall of about 2.2%. With inelastic demand a cut loses revenue.

3.3.3 Segmentation, targeting, positioning

1. Segment: split the market (demographic, geographic, income, behavioural).
2. Target: choose segments; mass marketing (broad, one mix) or niche (small, specialised).
3. Position: decide how buyers should see the product against rivals.

Influences on target and position: segment size, growth, profit potential, competitors, resources, brand image, objectives.

3.3.4 The marketing mix

P	Key decisions and models
Product	Portfolio analysis and Boston Matrix; product life cycle and extension strategies; new product development
Price	Penetration, price skimming, cost-plus, competitor-based, dynamic pricing
Promotion	Promotional mix; value of branding
Place	Channels; multi-channel distribution
People	Staff skills and attitude
Process	How the service or order is delivered
Physical environment	Setting, layout, website, packaging

Product types. Convenience: frequent, low-effort. Shopping: compared before buying. Specialty: loyal buyers search for the brand. Also consider goods and services, consumer and industrial.

Boston Matrix (axes: market growth and relative market share). Relative share (standard form) = own share ÷ largest rival’s share.

	High relative share	Low relative share
High growth	Star: invest	Question mark: build or drop
Low growth	Cash cow: harvest cash	Dog: consider withdrawal

Reminder. Own share 18%, largest rival 12%: relative share 1.5. Own share 10%, rival 25%: relative share 0.4.

Product life cycle. Introduction, growth, maturity, decline. Extension strategies: new packaging, markets, uses, promotion, price or modifications.

Integration. The mix should fit the product life cycle position, Boston Matrix position, type of product, objectives, target market, competition and positioning.

Digital marketing and e-commerce. Value: reach, targeting, measurability, lower costs. Drawbacks: competition, delivery and returns, security, skills needed. Relationship marketing builds long-term loyalty.

Evaluation prompts

Use these to turn description into judgement in longer answers.

• Is the objective realistic given capacity, cash and competitors?
• How reliable is the data: sample size, age, bias, cost?
• Does the Boston Matrix result depend on how the market is defined?
• Will extension strategies cost more than the extra sales are worth?
• Does the price fit the positioning and the target market?
• Does the digital channel suit the age and habits of the customers?
• Which stakeholders gain or lose, and how might they respond?
• What are the effects on operations, finance and human resources?

Must-know distinctions

• Penetration vs skimming: low entry price for share against high entry price for margin from early adopters.
• Volume vs value: units against revenue.
• Market share vs relative market share: share of the whole market against share compared with the largest rival.
• Niche vs mass: small specialised segment against broad market.
• Primary vs secondary: new data against existing data.
• Qualitative vs quantitative: why against how many.

Quick self-test

1. Define market share.
2. Sales rose from £16m to £18.4m. Calculate sales growth.
3. A firm has sales of £21m and a 7.5% share. Calculate the market size.
4. Sales of £9.9m in a £165m market. Calculate market share.
5. Name the four segmentation methods in the specification.
6. PED is −1.5. Price rises 6%. Give the change in quantity and in revenue.
7. YED is +2.2 and incomes rise 2.5%. Give the change in demand.
8. Own share is 18%, the largest rival has 12% and market growth is 2%. Give the relative share and the Boston Matrix category.
9. Give one reason a firm might choose price skimming.
10. Why should you be cautious about extrapolation?
11. Name the three Ps added to the traditional four.
12. What does a wide confidence interval suggest?

Answers

1. A firm’s sales as a percentage of total market sales.
2. 2.4 ÷ 16 × 100 = 15%.
3. £21m ÷ 0.075 = £280m.
4. 9.9 ÷ 165 × 100 = 6%.
5. Demographic, geographic, income, behavioural.
6. Quantity falls 9%; revenue is 1.06 × 0.91 = 0.9646 of the old figure, a fall of about 3.5%.
7. Demand rises 5.5%.
8. Relative share is 1.5; high share, low growth, so a cash cow.
9. A novel product with few rivals and buyers willing to pay a premium, or a need to recover high development costs quickly.
10. The trend may not continue outside the range of data observed.
11. People, process, physical environment.
12. The sample result is imprecise (often a small sample), so decisions based on it carry more risk.

Where marks are usually lost

• Using the formula without units or without stating what the result means for the business.
• Treating market share and sales growth as the same thing.
• Dividing by the new figure rather than the original when calculating growth.
• Claiming correlation proves cause.
• Using absolute share instead of relative share on the Boston Matrix.
• Describing the 7Ps as a list with no link to the target market or the case.
• Giving the same recommendation for any elasticity value.
• Writing a one-sided evaluation of digital marketing with no judgement about the firm’s circumstances.

Frequently asked questions

What marketing objectives are listed in the AQA specification? Sales volume, sales value, market size, market growth, sales growth, market share and brand loyalty.

What are the four segmentation methods in AQA 7132? Demographic, geographic, income and behavioural segmentation.

Why should you be cautious about extrapolation? Extrapolation is reliable only close to the existing data, because trends can bend, saturate or break outside the range observed.

What does a wide confidence interval suggest? A wide confidence interval means the sample result is imprecise, often because the sample is small, so decisions based on it carry more risk. A larger, representative sample narrows the interval.

Official syllabus

AQA AS and A-level Business specification (7131 and 7132), section 3.3 Decision making to improve marketing performance, published by AQA.