IGCSE Business: Marketing mix (Cambridge 0264) – Revision Notes

These notes condense section 3.3 Marketing mix of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. For full explanations and worked examples, read the study guide first, then test yourself with the practice questions. Course links: IGCSE Business hub, the checklist and the free diagnostics.

Key definitions

Term	Meaning
Marketing mix	The combination of product, price, place and promotion used to sell to a target market
Brand image	The picture customers hold of a brand: quality, values, status
Packaging	Protects, informs, attracts and expresses the brand
Product life cycle	The stages a product passes through: introduction, growth, maturity, decline
Extension strategy	An action to keep a product’s sales from falling
Distribution channel	The route goods take from producer to customer
Sales promotion	Short-term offers to boost sales
Ecommerce	Buying and selling over the internet

3.3.1 Product in a page

• Brand image supports higher prices, loyalty and easier launches. Poor image does the reverse.
• Packaging roles: protect, preserve, inform, attract, reflect the brand. Better packaging costs more.
• New products: advantages are fresh sales and a lead on rivals; disadvantages are development cost, risk of failure and sales taken from existing products.

Life cycle at a glance

Stage	Sales shape	Profit	Promotion
Introduction	Low, slow rise	Little or none	Heavy, to build awareness
Growth	Steep rise	Rising	Persuasive, as rivals arrive
Maturity	Flat top	Highest	Defend share
Decline	Falling	Falling	Often cut back

Reading a diagram in steps

1. Label the axes: sales up, time across.
2. Find the peak. Steep climb before it is growth; flat area at it is maturity.
3. Mark where the line falls: decline.
4. Quote figures from the diagram to support each label.

Extension strategies and the one-line test

Strategy	Choose it when	Watch out for
New markets	The product still sells well somewhere else	Research and distribution cost
New uses	The product has features that suit another need	Customers may not accept the new use
Adapt product or packaging	The product looks dated	Redesign cost
More advertising or sales promotion	Customers know the product but are drifting	Effect fades when spending stops

3.3.2 Price in a page

Method	Memory hook	Best when
Cost-plus	Cost then add a percentage	A business needs a quick, safe price
Competitive	Follow the rivals	Products are similar and prices are visible
Penetration	Low to get in	The business wants market share fast
Skimming	High to start	The product is new or unique
Dynamic	Moves with demand	Demand changes by time or customer

Standard form for cost-plus: price = unit cost × (1 + mark-up percentage as a decimal). The syllabus does not print it, so quote it as the standard form.

Worked reminder. Unit cost 14, mark-up 50%: price = 14 × 1.5 = 21. Profit per unit 7. Selling 300 gives 2,100 profit (amounts in dollars).

Judging a pricing method. Ask three things. What does the business want (profit now or share)? Who are the customers (price-sensitive or not)? How many rivals are there? Then pick a method, give the reason from the case, and state one drawback.

3.3.3 Place in a page

Channel	Remember
Direct	Whole margin; you do the storage, delivery and selling
Retailer	Reach and display; retailer takes a margin
Wholesaler	Bulk breaking; one more margin
Agent	Local knowledge; commission

Method for a channel recommendation

1. Name the product type: perishable, bulky, custom, mass market.
2. Name the customer: where they are and how they like to buy.
3. Choose the channel that fits both.
4. Justify against one alternative, then give one drawback.

Margins reminder. Retailer buys at 150 and adds 40%: shop price 150 × 1.4 = 210, retailer keeps 60.

3.3.4 Promotion in a page

• Reasons: inform, persuade, increase sales, build or keep brand image, respond to rivals.
• Sales promotion methods: vouchers, reward schemes, competitions, special offers or discounts.
• Advertising methods: social media, direct or targeted emails, leaflets, billboards.
• Sales promotion is a short-term offer. Advertising is a message in a medium.

Method	Fits best	Main weakness
Social media	Young, online target group	Needs steady effort
Targeted emails	Existing customers	May be treated as junk
Leaflets	Local customers	Hard to target
Billboards	Mass awareness in busy places	Costly; short message only
Vouchers	Winning new buyers	Cost of discount
Reward schemes	Repeat purchase	Admin and reward cost
Competitions	Building interest	Few winners
Discounts	Clearing stock fast	Cuts profit per unit

Discount reminder. 10% off 120: 120 × 0.9 = 108.

3.3.5 Ecommerce in a page

Examples: mobile or internet banking, online shopping, online ticketing.

For	Advantages	Disadvantages
Business	Wider market; lower premises cost; always open	Website and security cost; delivery issues; fraud; rivals one click away
Customer	Convenient; compare prices; wider choice	Cannot inspect goods; wait for delivery; security worries; needs internet

3.3.6 Marketing strategy

• The elements must fit each other and the target market.
• Importance varies: price for basic goods, product and brand for differentiated goods, place for convenience purchases, promotion for new or unknown products.

Method for a marketing mix recommendation

1. State the target market from the case.
2. Give one decision for each of product, price, place and promotion.
3. Link each decision to evidence.
4. Show the four fit together.
5. Say which element matters most here, with a reason.

3.3.7 Entering new markets in other countries

Advantages	Disadvantages
Increase sales	Cultural differences
Spread risk	Lack of knowledge
Longer product life	Legal requirements
Possible lower unit costs	Transport and exchange costs

Percentage change. (new - old) / old × 100. Sales from 8,000 to 10,000 is a 25% rise.

Must-know distinctions

• Penetration: low price to gain share. Skimming: high price to gain profit from early buyers.
• Maturity: sales high and flat. Decline: sales falling.
• Sales promotion: short-term offer. Advertising: message to inform or persuade.
• Wholesaler: sells to retailers. Retailer: sells to the public. Agent: arranges sales for commission.
• Extension strategy: acts on an existing product. New product: a different product.

Command words for this topic

Command word	What to do	Marketing mix example
State, identify	Give the answer briefly	State one extension strategy
Define	Give the meaning in one sentence	Define dynamic pricing
Calculate	Show the working and the unit	Calculate a cost-plus price
Explain	Give a point and a reason	Explain why packaging matters for a food product
Analyse	Develop a chain: point, cause, effect	Analyse how a falling price could change sales and profit
Recommend, justify	Choose one option, give reasons from the case, say why others are weaker	Justify a distribution channel for a small producer
Evaluate	Weigh both sides and reach a judgement	Evaluate whether skimming suits a new product

For recommendation questions, one clear choice with two reasons from the case is stronger than a list of every option. Finish with a judgement sentence that begins with “Overall” or “Therefore” and names the deciding factor, for instance the size of the target market or the budget available.

Quick self-test

1. State the four stages of the product life cycle.
2. Define brand image.
3. State two roles of packaging.
4. Name two extension strategies.
5. A unit costs 25. Use a 30% mark-up to find the cost-plus price.
6. Which pricing method sets a high price at launch?
7. A producer sells to a retailer at 150 and the retailer adds 40%. What is the shop price?
8. A coat priced at 120 is offered with 10% off. What is the new price?
9. Give two disadvantages of ecommerce for customers.
10. Give two advantages of entering a new country.
11. Sales rise from 8,000 to 10,000 units. Calculate the percentage change.
12. State the difference between sales promotion and advertising.

Answers

1. Introduction, growth, maturity, decline.
2. The image customers have of a brand, such as its quality and values.
3. Any two of: protect goods, keep them fresh, give information, attract attention, show the brand image.
4. Any two of: new markets, new uses, adapting the product or packaging, increased advertising or sales promotion.
5. 25 × 1.3 = 32.50.
6. Skimming.
7. 150 × 1.4 = 210.
8. 120 × 0.9 = 108.
9. Any two of: cannot see or try goods, delivery delay, worry about security of payment, privacy worries, no internet means no access.
10. Any two of: increase sales, spread risk, longer product life, possible lower costs per unit.
11. (10,000 - 8,000) / 8,000 × 100 = 25% rise.
12. Sales promotion is a short-term offer to boost sales, for example a voucher. Advertising is a message in a medium, for example social media, to inform or persuade.

Where marks are usually lost

• Naming a pricing method or channel without a reason tied to the business in the question.
• Giving only advantages when the command word asks for a recommendation and justification.
• Mixing up penetration and skimming.
• Calling a flat peak “decline” on a life cycle diagram.
• Writing “advertise more” as the only extension strategy and ignoring a better fit such as new markets.
• Leaving out units or currency in a calculation.
• Describing ecommerce for the business when the question asks about customers, or the other way round.
• Writing a list of four Ps with no judgement about which matters most.
• Giving a general description of a method with no link to the target customers or the product.

Frequently asked questions

What is the difference between penetration and skimming pricing? Penetration pricing sets a low price to gain market share. Skimming sets a high price to gain profit from early buyers.

What is the difference between sales promotion and advertising? Sales promotion is a short-term offer, such as vouchers, reward schemes, competitions or discounts. Advertising is a message in a medium, such as social media, targeted emails, leaflets or billboards, used to inform or persuade.

What is the difference between maturity and decline in the product life cycle? In maturity, sales are high and flat at their peak. In decline, sales are falling.

What does packaging do for a product? Packaging protects and preserves the product, informs customers, attracts attention and reflects the brand.

Official syllabus

Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge University Press & Assessment, section 3.3 Marketing mix.