Edexcel GCSE Business: Promotion, place and combining the marketing mix (1BS0) – Revision Notes

These notes condense Pearson Edexcel Level 1/Level 2 GCSE (9-1) Business (1BS0), Issue 2, July 2022, Theme 2 topic 2.2 Making marketing decisions, content items 2.2.3 Promotion, 2.2.4 Place and 2.2.5 Using the marketing mix to make business decisions. For full explanations and worked examples, read the study guide. When you are ready to test yourself, use the practice questions.

Course links: the Edexcel GCSE Business hub, the printable checklist and the free diagnostics. For the Theme 1 introduction to the four elements, see the marketing mix and the business plan. Items 2.2.1 and 2.2.2 are covered in product and price decisions.

The specification sets two written papers, Theme 1 (1BS0/01) and Theme 2 (1BS0/02), each 1 hour 45 minutes, 90 marks and 50% of the qualification. Calculators may be used. Formulae are listed in the specification (Appendix 3) and are not provided in the examinations.

1. Promotion strategies by market segment (2.2.3)

A market segment is a group of customers with shared characteristics, such as age, income or lifestyle (the standard meaning). Promotion is appropriate when it reaches the chosen segment, at an affordable cost, with a message the segment responds to.

Strategy	Remember it as	Best for	Main weakness
Advertising	Paid message in a medium	Telling many people, or a chosen group, about the product	Paid for whether or not people buy
Sponsorship	Name linked to a team, event or person	Segments that follow that team or event	Hard to measure the effect
Product trials	Try before you buy	New or unfamiliar products	Free samples cost money
Special offers	Temporary price incentive	Price-sensitive customers; first purchases	Lower profit per sale; customers may wait for the next offer
Branding	Name, logo, image and reputation	Any segment, long term	Slow to build; one scandal can harm it

Method in steps: answering “which promotion strategy suits this segment?”

1. Pick out the segment from the stem: who they are, what they care about and how they spend time.
2. Choose one strategy and say what the business would actually do.
3. Link the strategy to the segment’s needs, such as price, trust or interests.
4. Add a limit or cost, and end with a judgement if the command word needs one.

Small worked reminder

Trial: 500 samples are given out, 12% buy a pack at £4.50.

• Buyers: 12% × 500 = 60.
• Revenue: 60 × £4.50 = £270.
• Compare it with the cost of the samples and stand. If those cost £200, revenue is £70 above the cost, before the cost of making the packs.

2. Technology in promotion (2.2.3)

Method	What it is	Advantage	Disadvantage
Targeted advertising online	Adverts shown to selected groups of internet users, chosen by details such as age, location or interests	Reaches the right segment; results can be counted	Rivals can target the same people; adverts can be ignored or blocked
Viral advertising via social media	Content that customers pass on to their own contacts by choice	Low cost for the number reached	Cannot be controlled; may not spread, or may spread badly
E-newsletters	Regular emails to people who signed up	Low cost; direct; good for existing customers	Only reaches subscribers; many go unopened

Must-know distinctions

• Viral advertising spreads through customers sharing it. Targeted advertising is paid for and aimed at chosen groups. Posting on social media is not automatically viral.
• An e-newsletter goes to people who have chosen to receive it, so it mainly helps keep existing customers, not win new ones.
• Technology makes results easier to count, but it does not guarantee sales.

Small worked reminder

An online advert costs £360 and produces 30 sales.

• Cost per sale: £360 ÷ 30 = £12.
• If each sale earns £9 of revenue, the advert did not pay for itself on first sales. If customers come back, the answer may change.

3. Place: retailers and e-tailers (2.2.4)

	Retailer	E-tailer (e-commerce)
What it is	Sells to the public from a shop or physical outlet	Sells to the public online
Strengths	Customers see, try and collect at once	Wide reach; open at any hour; business controls its website
Weaknesses	Retailer takes a share of the selling price; limited to the shop’s customers	Delivery, packaging and returns; customers cannot handle the product

A producer may sell through retailers, through its own e-tailer site, or both. The choice depends on the product, the target market and the money available.

Small worked reminder

A retailer buys a jacket for £18 and sells it for £30.

• Amount kept by the retailer: £30 − £18 = £12.
• As a share of the selling price: 12 ÷ 30 × 100 = 40%.

A producer that sells directly online keeps more per item but pays for delivery and has fewer customers unless it promotes the site.

4. How the elements influence each other (2.2.5)

Change	Likely knock-on
Product made higher quality	Higher costs, so a higher price; promotion must show the quality
Price cut	Promotion may stress low prices; margins fall; place may shift to outlets for value buyers
Move to selling in specialist shops	Price must allow for the retailer’s share; promotion should fit the shop’s customers
New online store	Promotion must send people to the site; delivery becomes part of the offer
Heavy promotion creating high demand	Product supply and place must be able to cope

Method: name the change, name the element it affects, say what the business should do, then give the reason.

5. Competitive advantage and the integrated mix (2.2.5)

Term	Meaning
Competitive advantage	Something a business does better or differently from rivals that makes customers prefer it
Integrated marketing mix	A mix where product, price, promotion and place support each other and give the customer one clear offer
Source of advantage	A distinctive product, a lower price, a strong brand, easier access, or a combination

• An advantage must matter to the target market.
• An integrated mix is hard for a rival to copy, because it relies on four connected decisions.
• A mix that sends mixed messages, such as a premium product sold in a discount outlet with a low-price advert, weakens the advantage.

Quick self-test

1. Name the five promotion strategies the specification lists.
2. State what is meant by a market segment.
3. A business’s sales rise from 800 to 1,000 units after a campaign. Calculate the percentage increase.
4. A coat costing £45 is offered at 20% off. Calculate the offer price.
5. At the offer price in question 4, 300 coats are sold. Calculate the revenue, and compare it with selling 220 coats at the full price.
6. Explain one reason a product trial might suit a brand-new snack.
7. Give one disadvantage of viral advertising via social media.
8. State the difference between a retailer and an e-tailer.
9. A retailer buys an item for £18 and sells it for £30. Calculate the retailer’s share of the selling price as a percentage.
10. Explain one way a decision to raise the price of a product could influence promotion.

Answers

1. Advertising, sponsorship, product trials, special offers and branding.
2. A group of customers who share characteristics such as age, income or lifestyle (standard meaning).
3. (1,000 − 800) ÷ 800 × 100 = 25% (the standard percentage change calculation).
4. 20% of £45 = £9, so offer price = £36.
5. 300 × £36 = £10,800. At the full price: 220 × £45 = £9,900. Revenue is £900 higher, but profit also depends on the extra cost of the additional units.
6. For example: a new snack is unknown, so customers are unsure whether they will like it. Tasting free removes that risk, and happy customers may then buy a full pack.
7. For example: the business cannot control whether it spreads or how people react to it.
8. A retailer sells to the public from a shop or similar outlet. An e-tailer sells to the public online.
9. 12 ÷ 30 × 100 = 40%.
10. For example: a higher price signals quality, so promotion should stress quality and good service, aimed at customers who will pay more, instead of low-price offers.

Where marks are usually lost

• Listing a promotion strategy with no link to the market segment in the stem.
• Describing a method but not saying why it is appropriate for these customers.
• Using “social media” as an answer for viral advertising, with no mention of sharing.
• Mixing up the retailer, who sells on, with the producer who made the goods.
• Showing that e-commerce helps place, but forgetting that delivery and returns are costs.
• Describing the four elements one by one when the question asks how one influences another.
• Calling something a competitive advantage with no reference to what rivals do or what customers prefer.
• Showing only a final figure in a calculation, which leaves nothing to reward if the figure is wrong.
• Finishing an evaluate or justify answer without a supported judgement.

Frequently asked questions

What promotion strategies are in the Edexcel GCSE Business specification? The 1BS0 specification lists advertising, sponsorship, product trials, special offers and branding. The right strategy depends on the market segment being targeted.

What is the difference between a retailer and an e-tailer? A retailer sells to the public from a shop or other physical outlet, so customers can see and try the product. An e-tailer sells online through a website or app, reaching customers anywhere the business can deliver to.

What is competitive advantage? Competitive advantage is something a business does better, or differently, than its rivals, so customers prefer it. It may come from a distinctive product, a lower price, a stronger brand, easier access or a combination.

What is viral advertising? Viral advertising spreads because people choose to share it on social media, such as a funny video or a challenge. The spend can be small for the reach, but the business cannot control whether it spreads.

Official syllabus

Pearson Edexcel Level 1/Level 2 GCSE (9-1) in Business (1BS0), Specification, Issue 2, July 2022, published by Pearson Education Limited. Theme 2: Building a business, topic 2.2 Making marketing decisions, content items 2.2.3 Promotion, 2.2.4 Place and 2.2.5 Using the marketing mix to make business decisions.