O Level Business: Marketing strategy (Cambridge 7115) – Revision Notes

These notes condense section 3.4 (Marketing strategy) of the Cambridge O Level Business Studies 7115 syllabus for examination in 2026: 3.4.1 justifying marketing strategies, 3.4.2 legal controls related to marketing, and 3.4.3 entering new foreign markets. For full explanations and worked examples, read the study guide. Then test yourself with the practice questions and the topic-level Marketing practice set. Track progress on the printable checklist, see the course hub, or start with the free 10-minute diagnostics.

Key definitions

Term	Meaning
Marketing strategy	The plan for how a business uses the marketing mix to reach its marketing objectives with its target customers.
Marketing mix	The combination of product, price, place and promotion.
Misleading promotion	Promotion that gives customers a false or unclear impression of a product or its price.
Faulty goods	Goods that do not work as they should or as described.
Dangerous goods	Goods that could harm the user or others.
Recall	Asking customers to return a product because of a fault, usually with a refund or replacement.
Joint venture	Two or more businesses set up a shared project and share costs, risks and profit.
Licensing	The owner of a brand or product lets another business make or sell it for a fee or royalty.
Royalty	A payment, often a percentage of the licensee’s sales, paid to the licensor.
Cultural differences	Differences in language, tastes, religion, customs and symbols between countries or groups.

3.4.1 Marketing strategy: summary

• Strategy means choosing and combining the four parts of the mix for a target market, within a budget.
• The parts must be consistent. A premium product needs a quality image, a matching price, suitable outlets and the right promotion.
• Importance varies with the circumstances. Always ask what the customer cares about.

If the case says…	Think about…
Customers see little difference between brands	Price, sales promotion
New or unfamiliar product	Promotion (to create awareness)
Impulse purchase	Place (availability)
High-quality, high-cost or status item	Product, brand image, packaging
Online shopping with easy comparison	Price, delivery, website
Product in decline	Price cuts, sales promotion, possibly an extension strategy
Small budget	The most cost-effective promotion, such as social media
Strong rivals	A competitive price or a difference in product

Method: recommend and justify a strategy

1. State the objective and the target customers from the case.
2. Pick the element of the mix that matters most to them.
3. Fit the others around it and keep within the budget.
4. Support every choice with evidence from the case: a figure, a customer detail, a rival’s action.
5. Weigh one risk or alternative.
6. Finish with a clear judgement and the reason for it.

“Justify” means support a case with evidence or argument, so a recommendation with no reason does not do the job.

3.4.2 Legal controls: summary

Area	What it means	Impact on strategy
Misleading promotion	Claims, prices or images that give a false impression	Claims must be provable; adverts and packaging checked; more factual promotion; risk of penalties and loss of trust
Faulty goods	Products that do not work as described	More testing and quality control; slower launch; refunds or replacements; damage to brand image
Dangerous goods	Products that could cause harm	Safety testing; warnings and instructions on packaging; recalls; bad publicity

Points to remember:

• Keep to general descriptions of the law; laws differ between countries.
• Costs rise (testing, checking, recalls), but customers trust the business more.
• Honest businesses are protected from rivals who exaggerate.
• A recall costs more than prevention. Refunds plus collection costs plus lost sales add up.

Small worked reminder: Larch Hollow Candles recalls 1 500 faulty candles. It refunds 18 dollars and pays 2 dollars to collect each one. Cost = 1 500 × (18 + 2) = 30 000 dollars, before any lost future sales.

3.4.3 Foreign markets: summary

Growth potential

• Bigger population or more customers.
• Rising incomes, so more people can afford the product.
• Less competition or a new market.
• Spreads risk across several countries.
• Extends the life of a product that is mature at home.
• Possible economies of scale.

Problems

• Cultural differences (language, tastes, religion, customs, colours, names and symbols).
• Lack of knowledge of customers, competitors, rules and distribution.
• Cost and time of distance.
• Established local brands.

Methods to overcome them

Method	Benefits	Limitations
Joint venture	Local knowledge; shared cost and risk; faster entry	Shared profit; disagreements; possible leak of ideas to a future rival
Licensing	Low cost and risk; local knowledge; quick	Lower income per unit; weaker control of quality and image; licensee may become a rival

Small worked reminder: a licensee sells 800 000 dollars of goods and pays a 5% royalty. Royalty = 0.05 × 800 000 = 40 000 dollars. A joint venture with profit of 150 000 dollars and a 40% share gives 0.40 × 150 000 = 60 000 dollars, but the owner must also invest.

Answering strategy questions in Paper 1 and Paper 2

Both papers assess the whole syllabus and use stimulus material, so numbers, quotations and descriptions in the stem are evidence you should use.

• Read the marks. The syllabus tells you the marks printed on the paper are a guide to the amount of detail expected, so a 2-mark “identify” needs two short points, while a “justify” needs a developed argument.
• Quote the case. Name the product, customer, price or country in the stem.
• Use the command word. State and identify need a short answer. Define needs a precise meaning. Explain needs a reason or a link between things. Justify needs evidence or argument. Calculate needs working from the figures given.
• For a foreign-market question, name the opportunity or problem first, then say what it means for the business, then name the method that helps.

Must-know distinctions

• Joint venture: shared ownership, shared profit. Licensing: permission to use a brand for a fee.
• Misleading promotion (what is said or shown) versus faulty goods (what the product does).
• Faulty goods (do not work properly) versus dangerous goods (could cause harm).
• A growth opportunity (why enter) versus a problem (what makes entry hard) versus a method (how to deal with the problem).
• Recommend (say what to do) versus justify (give the reasons, with evidence).

Quick self-test

1. State the four elements of the marketing mix.
2. Which element is likely to matter most to customers buying a basic item with little brand difference?
3. Give one reason why a new product often needs heavy promotion.
4. Define misleading promotion.
5. State one way legal controls on faulty goods can change a business’s marketing strategy.
6. Larch Hollow Candles recalls 1 500 candles. Refund is 18 dollars and collection is 2 dollars each. Calculate the cost.
7. Give two reasons a business might want to enter a foreign market.
8. Identify one cultural difference that could cause a problem for an advert abroad.
9. Define licensing and state one limitation for the licensor.
10. A licensee sells 800 000 dollars of goods and pays a 5% royalty. Calculate the licensor’s income.
11. Give one benefit of a joint venture compared with entering alone.
12. A business has a budget of 60 000 dollars and puts 35% into social media. Calculate the amount.

Answers

1. Product, price, place and promotion.
2. Price (and sales promotion).
3. Customers must first know it exists, understand what it does and be persuaded to try it.
4. Promotion that gives customers a false or unclear impression of the product or its price.
5. More testing and quality control before launch, or clearer packaging and instructions, or willingness to recall and refund faulty goods.
6. 1 500 × (18 + 2) = 30 000 dollars.
7. Any two: a larger market, rising incomes abroad, less competition, spreading risk, extending the product life.
8. Any one: language or translation of a slogan, a colour or symbol with a different meaning, different religious customs or tastes.
9. The licensor lets another firm make or sell its product or brand for a fee. A limitation: it earns less than selling itself, or it has less control over quality.
10. 0.05 × 800 000 = 40 000 dollars.
11. Any one: local partner’s knowledge, shared costs and risks, quicker entry.
12. 0.35 × 60 000 = 21 000 dollars.

Where marks are usually lost

• Writing a list of the four Ps with no link to the business in the case.
• Giving a recommendation with no reason, or reasons that are not tied to a figure or fact in the stem.
• Failing to weigh the other side when asked to justify a choice, and ending with no judgement.
• Describing legal controls in detail instead of explaining their impact on marketing decisions.
• Saying legal controls only damage a business and ignoring the trust they build.
• Writing that “culture is different” with no example of what differs and how it affects marketing.
• Mixing up joint ventures and licensing.
• Quoting amounts without units or showing no working in a calculation.
• Repeating the same point in different words in a two-reason question.

Frequently asked questions

What is the difference between a joint venture and licensing? A joint venture involves shared ownership and shared profit with a local firm. Licensing gives another firm permission to use the brand or make the product in return for a fee or royalty.

Which element of the marketing mix is most important? No element is always most important. It depends on the circumstances, such as what the target customers care about most, competitors’ actions, the budget and the product’s stage in its life cycle.

Do legal controls on marketing only harm businesses? No. They add cost and checks, but they also build customer trust, and honest businesses gain because competitors cannot win sales with false claims.

What are the problems of entering a foreign market? Cultural differences in language, tastes, customs and symbols, lack of knowledge about customers and local rules, distance and delivery costs, and competition from established local brands.

Official syllabus

Cambridge International, Cambridge O Level Business Studies 7115 syllabus for 2026, section 3.4 Marketing strategy (3.4.1 to 3.4.3).