OxfordAQA IGCSE Business: Marketing (9225) – Revision Notes

These notes condense section 3.5 Marketing of the OxfordAQA International GCSE Business (9225) specification, version 3.1, for exams from May/June 2022 onwards. For full explanations read the study guide, then test yourself with the practice questions. The course hub, the printable checklist and the free diagnostics show what else to revise. All businesses and figures are invented.

Topic map

Ref	Topic
3.5.1	Identifying and satisfying customer needs (local, national, international)
3.5.2	Market segmentation: gender, age, location, income
3.5.3	Market research: purpose, methods, using results, inaccuracy
3.5.4	Price, product, promotion, place, e-commerce, the integrated mix

3.5.1 Customers

• Identify who customers are and what they need, then supply what they will buy.
• Local, national and international markets differ in tastes, income and culture, so the offer may need adapting.
• Why it matters: unsold stock and wasted spending follow from guessing wrong.

3.5.2 Segmentation

• A segment is a group of customers with shared characteristics.
• Types: gender, age, location, income.
• Benefit: product, price and message fit the group; money goes where buyers are. Cost: more products and campaigns.
• Method to recommend: young segment, social media; older segment, print or radio; high income, exclusive retail and quality magazines; low income, discounts.

3.5.3 Market research

Purpose

• Identify market opportunities.
• Gain insight into customers and competitors.
• Reduce the risk of launching the wrong thing.

Must-know distinctions

Pair	Difference
Primary vs secondary	First-hand and new, versus existing information collected by others
Quantitative vs qualitative	Numbers and counts, versus opinions and reasons
Survey vs focus group	Many answers, easy to total, versus deeper views from few people
Sales data vs interview	What customers did, versus why

Techniques

Technique	Benefit	Drawback
Questionnaire	Many replies	Low response, untruthful answers
Interview	Detail	Slow, costly
Focus group	Attitudes	Group influence, small sample
Online survey	Cheap, wide reach	Self-selected respondents
Website data	Real behaviour	No reasons
Secondary sources	Cheap, quick	Dated, not specific

Method in steps: using a table or chart

1. Read the title, units and totals.
2. Convert counts to percentages: part ÷ total × 100.
3. Name the largest and smallest groups.
4. Link the finding to a decision for this business.
5. State a limit, such as sample size or age of the data.

Reminder example. Peltry Leather asks 400 customers whether they would buy a card holder. 60 say yes, 120 maybe, 220 no. Yes = 60 ÷ 400 = 15%; maybe = 30%; no = 55%. A majority say no, so launching widely is risky. A small trial, or follow-up qualitative research on the “maybe” group, is more sensible.

Why research can mislead

• Sample too small or unrepresentative.
• Leading or unclear questions.
• Dishonest or biased answers.
• Out-of-date data.
• Misreading the results.

3.5.4 Price

Methods

Method	Key idea	Suits
Cost-plus	Unit cost plus a mark-up	Firms that need a safe margin
Skimming	Start high, cut later	New, unique products
Penetration	Start low to gain share	Crowded or price-sensitive markets
Competitive	Price near rivals	Similar products
Loss-leader	Below cost to bring in shoppers	Retailers with many lines

Reminder example. Peltry’s wallet costs 22 to make. A 25% mark-up adds 22 × 0.25 = 5.50, so the price is 27.50. Mark-up and margin differ: cost 30 and price 39 gives a mark-up of 9 ÷ 30 = 30% but a margin of 9 ÷ 39 = about 23.1% of selling price.

Factors influencing price

• Production costs (the floor).
• Degree of competition.
• Product life cycle stage.
• Growth of the business: lower unit costs, new rivals, new markets.
• To assess suitability: match each factor to the case, then judge which method fits best.

3.5.4 Product

New and adapted products

• Benefits: new sales, spread of risk, stronger image.
• Risks: cost, possible failure.
• Adapting is usually cheaper than a brand-new product.
• Fit design, brand image and target market needs.

Differentiation

• USP: a feature or benefit rivals lack, giving a reason to choose and sometimes a higher price.
• Brand image: recognition and loyalty; damage loses sales.

Product life cycle

Stage	Sales	Typical action
Introduction	Low	Build awareness; price by skimming or penetration
Growth	Rising quickly	Widen distribution; defend share
Maturity	Peak, flat	Extension strategies
Decline	Falling	Discount, redesign or withdraw

• Extension strategies: new packaging, uses, markets, price, design, promotion.
• Judge by cost against extra sales; suitable at maturity or early decline.

Product portfolio

• Broaden: more products, segments and spread of risk.
• Balance: mature products fund new ones.
• Reminder example. Peltry sells 400 items: wallets 120 (30%), bags 180 (45%), belts 100 (25%). Bags carry the business, so a new line would reduce reliance on one product.

3.5.4 Promotion

• Purpose: inform, persuade, remind.
• Methods: advertising, sales promotions, public relations, sponsorship, personal selling, social media.
• Selection factors: target market, marketing budget, competitors’ activities, product type.
• Judge each method by reach, cost, and fit to the target market.

3.5.4 Place

Channel	Route
Direct	Producer to customer
Retailer	Producer, retailer, customer
Wholesaler	Producer, wholesaler, retailer, customer

• Intermediaries: retailers (convenience), wholesalers (bulk), vending machines (no staff), telesales, direct selling, e-commerce.
• Choose by product, customer location, cost and control.

e-Commerce

• Benefits: 24-hour access, international reach, low premises cost, customer data.
• Drawbacks: delivery, security worries, rivals, no touching the product, IT costs.
• Computer commerce suits detailed browsing. Mobile (cell-phone) commerce reaches customers anywhere but has small screens.

Integrated mix

1. Choose the target segment.
2. Set a product, price, promotion and place that fit each other.
3. Review as the life cycle, rivals and customers change.

• Mismatched elements, such as a luxury image with a bargain price, confuse buyers.
• Recommend activities for the case and evaluate the business’s reaction to change.

Applying the 4Ps to a case study

Case-study questions give you a business, a market and some data. Follow this routine.

1. Underline the target market, the budget, the stage of the product and any rival.
2. Decide which of the 4Ps the question is really about.
3. Make a point, link it to a fact from the stem, then say what it means for the business.
4. For evaluate and justify questions, weigh at least one point on each side and end with a reasoned judgement.

Worked reminder. Peltry plans to sell a premium wallet to professionals aged 30 to 50 with high incomes. Skimming fits because the product is new and the buyers can pay. Promotion in business magazines and online suits the segment, while a cut-price discount would damage the image. A sensible channel is its own website plus a few upmarket retailers. The weakness is a high price that rivals could undercut, so the business should watch competitors and cut the price at maturity.

Distribution reminder

A producer sells at 16 to a wholesaler, who sells at 20 to a retailer, who sells at 30. The wholesaler’s mark-up is 4 ÷ 16 = 25%. The retailer’s is 10 ÷ 20 = 50%. The customer pays 30, which is 87.5% more than the producer received. Selling direct removes the intermediaries’ mark-ups but the producer takes on storage, delivery and selling costs.

Command words

• State, identify: give the answer with no explanation.
• Define: give an exact meaning.
• Calculate: show the working and the units.
• Explain: give a reason and develop it.
• Analyse: break the issue into parts and link cause to effect in the case.
• Evaluate, justify, recommend: weigh the options for this business and reach a reasoned conclusion.

Quick self-test

1. State two reasons why a business carries out market research.
2. Peltry surveys 500 people and 125 prefer leather. What percentage is this?
3. Define primary research.
4. Is a count of website visits quantitative or qualitative?
5. A product costs 40 to make. What is the price with a 35% mark-up?
6. Name the pricing strategy that starts high and falls later.
7. In which life cycle stage are sales highest and flat?
8. Give two extension strategies.
9. Name the intermediary that buys in bulk and sells to retailers.
10. Give one benefit and one drawback of selling online.

Answers

1. To identify market opportunities; to understand customers and competitors better.
2. 125 ÷ 500 × 100 = 25%.
3. New information collected first-hand for a specific purpose.
4. Quantitative.
5. 40 × 1.35 = 54.
6. Skimming.
7. Maturity.
8. Any two: new packaging, new uses, new markets, price change, redesign, extra promotion.
9. Wholesaler.
10. Benefit: reaches international customers. Drawback: delivery costs, security worries or competition.

Where marks are usually lost

• Giving a definition of a pricing method but not applying it to the business named.
• Writing “cheap” or “quick” as the only point for secondary research.
• Mixing up mark-up and margin.
• Naming promotion methods without linking them to budget or target market.
• Calling a product a loss-maker because sales fell, without checking the life cycle stage.
• Saying e-commerce is good with no drawback, or the reverse.
• Recommending a channel without analysing the product and customer.
• Giving a list in evaluation questions with no judgement.

Frequently asked questions

What types of market segmentation are in OxfordAQA IGCSE Business? The types listed include gender, age, location and income. A segment is a group of customers with shared characteristics, so the business can fit its product and message to that group.

How do you calculate a cost-plus price? Multiply the unit cost by the mark-up percentage and add the result to the unit cost. For example, a 25% mark-up on a cost of 22 adds 5.50, giving a price of 27.50.

What are extension strategies? Extension strategies delay the decline of a product, for example new packaging, new uses, new markets, a price change, a new design or more promotion. Judge them by their cost against the likely extra sales.

What is the purpose of promotion? Promotion aims to inform, persuade and remind customers. Methods include advertising, sales promotions, public relations, sponsorship and personal selling.

Official syllabus

OxfordAQA International GCSE Business (9225) specification, version 3.1, OxfordAQA, for International GCSE exams May/June 2022 onwards. Section 3.5 Marketing (3.5.1 to 3.5.4).