AQA GCSE Business: Marketing (8132) – Revision Notes

Condensed notes on 3.5 Marketing (3.5.1 to 3.5.4) from the 8132 AQA GCSE Business specification, first teaching September 2017. Fuller explanations and examples are in the study guide. Test yourself with the practice questions. Course hub: AQA GCSE Business. Checklist: AQA GCSE Business checklist. Not sure where to start? Use the free diagnostics. Marketing is examined in Paper 2. All examples are invented.

Customers (3.5.1)

The section opens by stating that operations, human resources, marketing and finance depend on one another, and that business objectives are split into functional plans with clear links between them. Marketing plans therefore follow from the objectives.

Identify and satisfy customer needs to:

• provide a product that customers will buy
• increase sales
• select the correct marketing mix
• avoid costly mistakes
• be competitive.

Segmentation (3.5.2)

Splitting a market into groups so each can be targeted.

Type	Quick example
Gender	Different ranges for men and women
Age	Toys for under-fives versus teenagers
Location	Raincoats stocked in wet regions
Income	Budget and premium versions

Why: the mix fits the group, money is not wasted. Risk: too narrow a target limits sales.

Market research (3.5.3)

Purpose: spot opportunities, understand customers and competitors. Collect information on demand, competition and target market.

Method	Primary or secondary	One benefit	One drawback
Questionnaire	Primary	Cheap, many people	Few replies
Survey	Primary	Large sample	Time and cost
Interview	Primary	Detailed answers	Slow, costly
Focus group	Primary	Reasons and opinions	Small, unrepresentative group
Internet research	Secondary	Fast, often free	Out of date or unreliable
Printed press	Secondary	Cheap, shows trends	May not fit the business’s need

Must-know distinctions

• Primary = collected first-hand. Secondary = already exists.
• Quantitative = numbers (60% like the flavour). Qualitative = opinions and reasons (they find it too sweet).
• Market size = total sales of everyone. Market share = one firm’s slice.

Formulas (standard forms)

Measure	Formula
Share (%)	one firm’s sales ÷ everyone’s sales in the market × 100
Growth (%)	change in market size ÷ starting size × 100

Worked reminder. Pinchbeck Pet Treats sells 9,000 units in a market of 150,000 units. Share = 9,000 ÷ 150,000 × 100 = 6%. The market grows 10% to 165,000. If Pinchbeck still sells 9,000 its share is 9,000 ÷ 165,000 × 100 = 5.5% (1 d.p.). Same sales, smaller share.

Method in steps for a data question

1. Read the title, units and time period.
2. Pick out the highest, lowest and any change.
3. Calculate a percentage or share if asked.
4. Say what it means for a decision, such as which group to target.
5. Mention a limit, for example the sample is small or the data is old.

Price (3.5.4)

Method	Key point
Price skimming	High at first, then lowered
Price penetration	Low at first to gain share
Competitive pricing	Close to rivals
Loss leader	Below cost to bring in customers
Cost-plus	Unit cost plus mark-up

Cost-plus reminder. A unit costs £12 and the mark-up is 25%. Price = 12 × 1.25 = £15. Profit per unit £3. Check the other way: a mark-up is profit as a percentage of cost, so selling at £18 on a £12 cost gives (18 − 12) ÷ 12 × 100 = 50%.

Factors: costs, nature of the market, degree of competition, product life cycle. Basic relationship: higher price, lower demand (likely).

Product (3.5.4)

• New products: benefits are sales and image; risks are cost and failure. Design, image and target market needs matter.
• USP: the feature that makes the product different. Brand image: how customers see it. Both help in a competitive market.

Product life cycle

Stage	Sales	Typical action
Research and development	None	Spending, testing
Introduction	Low	Heavy promotion
Growth	Rising fast	Build share, widen distribution
Maturity	Peak, flat	Defend share
Decline	Falling	Extension strategy or withdraw

Extension strategies: update packaging; add more or different features; change target market; advertising; price reduction. Evaluate by cost, speed, and whether rivals can copy.

Boston Matrix (Boston Box)

Category	Share	Growth
Star	High	High
Cash cow	High	Low
Question mark	Low	High
Dog	Low	Low

Why use it: to broaden and balance the portfolio so that cash cows fund stars and question marks.

Promotion (3.5.4)

Reasons: inform or remind; create or increase sales; create or change image; persuade.

Method	Benefit	Drawback
Newspapers, magazines	Targeted readership	Short life, cost
Television	Wide reach	Very costly
Internet	Targeted, measurable	Easily ignored
Billboards	Seen by passers-by	Little detail
PR	Cheap, credible	No control over coverage
Sales promotion (point of sale displays, 2 for 1, free gifts, samples, coupons, competitions)	Quick sales boost	Cuts profit; may not build loyalty
Sponsorship	Builds image	Cost; link to the event’s fortunes
Social media	Low cost, interactive	Negative comments spread

Factors choosing the mix: finance available, competitor actions, nature of the product, nature of the market, target market.

Place (3.5.4)

Channel	Point to remember
Retailers	Reach the public; take a margin
Wholesalers	Bulk buyers; reach many shops
Telesales	Phone selling; personal, but can annoy

For a scenario, ask: how many customers, how big is each order, does the customer need to see it?

E-commerce and m-commerce

• Internet selling and mobile-device selling.
• Benefits: reach (including international markets), always open, lower premises costs.
• Drawbacks: security, delivery, cannot try the product, competition.

The mix together

• The 4Ps must fit each other and the target market.
• The mix changes over time (life cycle, rivals, technology). Recommend, justify with case facts, and judge.

Applying the 4Ps to a business

Worked reminder. Ottoway Kites is a small firm selling hand-made kites to families through its own website. Its target market is parents with children aged 5 to 12, on mid-range incomes.

• Product: a bright design, a USP of a repair guarantee, a strong brand image of quality.
• Price: competitive pricing near similar kites, since many rivals sell online; skimming would fail with so many close substitutes.
• Promotion: social media and photos from customers, because the budget is small and parents use these sites. Television would take most of the finance available.
• Place: its own website (e-commerce) plus a few toy retailers at holiday times.

Each choice links to a fact about the business. That link is what turns a description into analysis.

Command words in this topic

Command word	What to do
State, identify, define	Give a short fact; no explanation needed
Calculate	Write the formula and working, then give the result with its unit or %
Explain	Give a point and a reason, with a link to the case
Analyse	Break a point into cause and effect, step by step
Evaluate, justify	Weigh both sides, then reach a judgement and give the reason for it
Recommend	Choose an option and support it using the case facts

Linking the topic together

• Segmentation decides who the target market is, and research confirms what that group wants.
• The target market shapes all four Ps. Youth buyers may suggest low prices, social media and online sales.
• The life cycle stage affects price (skimming at introduction, cuts in decline), promotion (heavy at introduction) and place (more outlets in growth).
• The Boston Matrix looks at the whole portfolio, not one product, so a decline in one product may be fine if a star is rising.
• Market share is a measure of success for the marketing mix as a whole.

Quick self-test

1. Give two reasons it is important to identify customer needs.
2. Name the four types of segmentation in the specification.
3. State one benefit and one drawback of a focus group.
4. Is a newspaper article a primary or secondary source?
5. A firm sells £45,000 in a market of £600,000. Calculate its market share.
6. A unit costs £8. Find the price with a 50% mark-up.
7. Which pricing method starts high and falls?
8. Which Boston Matrix category has high share in a slow-growing market?
9. Name two extension strategies.
10. State two benefits of e-commerce.

Answers

1. Provide a product customers will buy; avoid costly mistakes (also: increase sales, choose the mix, be competitive).
2. Gender, age, location, income.
3. Benefit: gives reasons and opinions. Drawback: small group may not represent the market.
4. Secondary.
5. 45,000 ÷ 600,000 × 100 = 7.5%.
6. 8 × 1.5 = £12.
7. Price skimming.
8. Cash cow.
9. For example updating packaging and price reduction.
10. Wider reach, including international customers; open at all hours.

Where marks are usually lost

• Writing “market share” when the question asks for market size, or giving the share without a percentage sign.
• Listing benefits of a method with no application to the case business.
• Saying a method is “cheap” with no comparison.
• Forgetting that primary research is first-hand and secondary already exists.
• Describing the product life cycle but not saying what the business should do.
• Putting a cash cow in a fast-growing market.
• Recommending a mix with no link to the target market.
• Evaluation answers that stop at a list instead of reaching a justified judgement.

Frequently asked questions

What are the four types of segmentation in AQA GCSE Business (8132)? Gender, age, location and income. Segmentation lets a business fit its marketing mix to each group so money is not wasted.

What is the difference between primary and secondary market research? Primary research is collected first-hand, for example by questionnaires, interviews or focus groups. Secondary research already exists, for example on the internet or in the printed press.

What is the difference between price skimming and price penetration? Price skimming sets a high price at first and lowers it later. Price penetration sets a low price at first to gain market share.

What are extension strategies in the product life cycle? Actions to extend a product’s sales, such as updating packaging, adding more or different features, changing the target market, advertising or reducing the price.

How do you calculate market share? Divide one firm’s sales by total sales in the market and multiply by 100. Give the answer as a percentage, not a decimal.

Official syllabus

Source: AQA 8132 GCSE Business specification (first teaching September 2017), section 3.5 Marketing.