Edexcel IGCSE Business: Market research and the market (4BS1)

This guide follows the Pearson Edexcel International GCSE in Business (4BS1) specification, Issue 2, February 2026. It covers Topic 4, Marketing: section 4.1 Market research (4.1.1 to 4.1.3) and section 4.2 The market (4.2.1 to 4.2.3). The marketing mix is section 4.3 and is not covered here. Paper 1 uses a small business (up to 49 employees) and Paper 2 a large business (more than 250 employees). Both papers can draw on the whole content.

Course links: the Edexcel IGCSE Business hub, the printable checklist and the free diagnostics. Companion pages: the revision notes and the practice questions.

What the specification asks for

Point	You must be able to	Where in this guide
4.1.1	Explain the purpose of market research	Section 1
4.1.2	Describe primary methods (survey, questionnaire, focus group, observation, test marketing) and secondary methods (internet, market reports, government reports)	Section 2
4.1.3	Use qualitative and quantitative data; explain the role of social media; judge the reliability of data	Section 3
4.2.1	Explain why marketing matters: customer needs, relationships, loyalty, market and product orientation, market share and analysis, niche and mass marketing	Sections 4 and 5
4.2.2	Explain how a business responds to changing customer needs, changing spending patterns and increased competition	Section 6
4.2.3	Explain how businesses use market segmentation (location, demographics, lifestyle, income, age)	Section 7

The strengths and weaknesses of each method, the orientation comparison and the definitions below are standard teaching, not specification text. All businesses named below are invented, and amounts are in dollars.

1. The purpose of market research (4.1.1)

Market research is the collection and analysis of information about customers, competitors and the market. The specification lists four purposes.

• To identify and understand customer needs. What do people want, how much will they pay, where and how do they like to buy?
• To identify gaps in the market. A gap is a want that no existing product meets well. A bakery that finds nobody nearby sells gluten-free bread has found one.
• To reduce risk. Launching a product is expensive. Research does not remove the risk, but it replaces guesses with evidence.
• To inform business decisions. Price, product design, where to open and how much stock to order are all easier to justify with evidence.

In an answer, link the purpose to the scenario: “Harlow Bakes would buy a second oven before knowing whether customers want sourdough, so research lowers the chance of a costly mistake.”

2. Methods of market research (4.1.2)

Primary research is collected first-hand for the business’s own purpose. Secondary research uses information that already exists, collected by someone else.

Primary methods

Method	What it is	Strength	Weakness
Survey	Questions put to a sample of people, in person, by phone or online	Reaches many people; results can be counted	Takes time and money; some people give careless answers
Questionnaire	A written set of questions that respondents complete themselves	Cheap; the same questions go to everyone	Low response rate; cannot ask follow-up questions
Focus group	A small group discussing a product with a leader	Explains why people think as they do	Small sample; strong voices can dominate
Observation	Watching what customers actually do, such as which shelf they walk to	Shows real behaviour, not claimed behaviour	Cannot show why they acted that way
Test marketing	Selling the product in a limited area or period before a full launch	Tests real buying with real money	Slow, and competitors can see the product early

In standard usage, a survey is the whole exercise of asking a sample and a questionnaire is the written list of questions used in it. The specification lists both without defining them.

Secondary methods

• Internet: competitor websites, review sites, news and search trends. Quick and often free, but quality varies.
• Market reports: published analyses of an industry, usually produced by research firms. Detailed, but may be expensive and not about your exact customers.
• Government reports: official statistics, for example on population, incomes or spending. Usually trustworthy and wide in scope, but may be out of date or too general.

Primary or secondary? Primary data fits the exact question and is not shared with rivals, but costs more and takes longer. Secondary data is cheaper and faster, but was collected for another purpose.

Worked example 1: choosing a method

Harlow Bakes, a small business with 12 employees, is thinking of selling fresh sourdough. The owner has little money and wants an answer in a fortnight. Recommend a method.

1. Identify what must be found out: will local people buy sourdough, and at what price?
2. Weigh the options. Test marketing costs ingredients and time. A focus group gives opinions from perhaps eight people. A short questionnaire left on the counter is cheap and reaches regular customers.
3. Judgement: use a short questionnaire first, because the budget is small and the deadline is short. Try a limited test sale only if replies show enough interest.

3. Using data (4.1.3)

Qualitative and quantitative data

Quantitative data is numerical and can be counted or measured: how many people would buy, average spend, a percentage. Qualitative data is descriptive and records opinions, feelings and reasons, such as “the packaging looks cheap”.

Quantitative data shows how many and how much. Qualitative data shows why. A focus group usually produces qualitative data. A questionnaire with tick-box answers produces quantitative data, and one with open boxes also produces qualitative data.

Worked example 2. Harlow Bakes asks 240 customers whether they would buy sourdough weekly. 84 say yes.

Percentage yes = 84 / 240 x 100 = 35%

35% is quantitative. A customer comment, “I would buy it if it were sliced”, is qualitative. The two together suggest a market that exists and a feature that might widen it.

The role of social media

Social media can provide market research data cheaply and quickly. A business can run a poll, read comments and reviews, see which posts get most reactions, and see what customers say about competitors. Strengths: low cost, fast results and direct contact with customers. Weaknesses: respondents may not represent all customers, and some accounts may not be real customers.

Reliability of data

Data is reliable when it can be trusted to give a true picture, so that repeating the research would give much the same result. Questions to ask about any data:

• Sample size: are enough people included? Ten people tell you little about a city.
• Representative sample: do the people questioned match the target market in age, income and location?
• Bias: were the questions leading, such as “Don’t you agree our bread is excellent?” Were respondents only the business’s friends?
• Age of data: is it recent? Spending patterns change.
• Source: who collected it, and do they gain from a particular result?

Unreliable data can lead to a wrong decision, such as stocking an unwanted product, which defeats the purpose of reducing risk.

4. Why marketing matters (4.2.1, part 1)

In standard teaching, marketing is how a business identifies, anticipates and satisfies customer needs profitably. The specification names these three reasons it matters.

• Satisfying customer needs: a business that provides what customers want sells more and receives fewer returns.
• Building customer relationships: friendly service, replies to complaints and personal offers make customers feel valued.
• Keeping customer loyalty: repeat customers cost less to serve than winning new ones, and they recommend the business to others.

Market orientation and product orientation

	Market orientation	Product orientation
Starting point	What customers want, found through research	What the business can make or already makes
Role of research	Central	Limited
Risk	Research costs money and customer wants change	Product may not match demand
Fits	Competitive markets with changing tastes	A genuinely new product, or one where the maker’s skill is the selling point

The table is standard teaching. A market-oriented business designs its offer around research results; a product-oriented business makes the product first and then looks for buyers.

5. Market share, analysis, niche and mass marketing (4.2.1, part 2)

Market share and market analysis

Market share is the proportion of total market sales that one business makes. The specification names market share but gives no formula, so this is the standard form:

Market share (%) = (business sales / total market sales) x 100

Worked example 3. Total sales of bread in a town last year were 360,000. Harlow Bakes sold 45,000 of it.

Market share = 45,000 / 360,000 x 100 = 12.5%

This year the town market grows 10% to 396,000, and Harlow Bakes grows its sales 10% to 49,500.

New market share = 49,500 / 396,000 x 100 = 12.5%

Sales rose, yet share is unchanged: the business only kept pace with the market. A fair judgement is that the business has not gained ground on competitors.

Market analysis means studying the market’s size, growth, the share of each competitor and customer trends. A business uses it to decide whether to enter, expand or leave a market, and to set targets such as raising share by two percentage points.

Niche and mass marketing

	Niche marketing	Mass marketing
Target	A small, specialised part of the market	The whole market, or most of it
Typical product	Specialist, often higher price	Standard, often lower price
Advantages	Less competition; loyal customers; premium prices possible	Large sales volume; economies of scale
Disadvantages	Limited customer base; harmed if the niche shrinks	Strong competition; lower margins

A shop selling handmade vegan cakes is niche. A supermarket chain selling bread to all shoppers is mass.

6. Responding to changes in the market (4.2.2)

Markets change. The specification names three causes.

• Changing customer needs. Tastes, technology and attitudes move. A business should keep researching, adapt products and drop what no longer sells. Response: add healthier recipes after research shows demand.
• Changing customer or consumer spending patterns. If incomes fall, people buy cheaper items or fewer of them. If they shift to online shopping, shops lose footfall. Response: introduce value ranges, change prices, add a delivery service.
• Increased competition. A new rival can take customers and share. Response: improve quality or service, change prices, promote more strongly or find a niche.

Worked example 4. Weekly spending on bakery products by a typical household in Harlow falls from 38 to 34. Percentage change:

(34 - 38) / 38 x 100 = -10.5% (to 1 d.p.)

A drop of about 10.5% would worry Harlow Bakes. A response is a small, lower-priced range. A drawback is lower profit on each sale, so the owner must check costs first.

7. Market segmentation (4.2.3)

A market segment is a group of customers who share characteristics. Market segmentation is dividing a market into such groups so that a business can target the product, price and promotion at the groups most likely to buy. The specification lists five ways to identify segments.

Basis	Meaning	Example
Location	Where people live or work	A city-centre cafe targets office workers
Demographics	Features of the population such as gender, family size or occupation	A toy maker targets parents of young children
Lifestyle	How people live and what they value	A sports brand targets people who exercise regularly
Income	How much customers earn	A luxury chocolate maker targets high earners
Age	The age group of customers	A phone with large buttons targets older adults

Segmentation helps a business aim its marketing money well. Disadvantages: research costs, and ignoring other segments may lose sales.

Common errors

• Describing a focus group as quantitative. It mostly gives qualitative views.
• Calling data from a government report primary. The business did not collect it.
• Treating higher sales as a higher market share. Check the total market.
• Writing that segmentation “makes more profit” without explaining how targeting reduces wasted spending.

Next steps

Try the practice questions, use the revision notes to recall the lists, and find your gaps with the diagnostics.

Frequently asked questions

What is the difference between market orientation and product orientation? A market-oriented business starts from what customers want, found through research, and designs its offer around the results. A product-oriented business starts from what it can make and then looks for buyers.

What is test marketing? Test marketing means selling a product in a limited area or for a limited period before a full launch. It tests real buying with real money, but it is slow and competitors can see the product early.

What is market segmentation? Market segmentation is dividing a market into groups of customers who share characteristics so a business can target its product, price and promotion. The 4BS1 specification lists location, demographics, lifestyle, income and age.

How can a business respond to increased competition? It can improve quality or service, change prices, promote more strongly or find a niche. Each response has a drawback, such as lower profit per sale after a price cut.

Official syllabus

Pearson Edexcel International GCSE in Business (4BS1), Specification, Issue 2, February 2026, published by Pearson Education Limited. Topic 4: Marketing, sections 4.1 Market research and 4.2 The market, points 4.1.1 to 4.2.3.