ZNOTES.

ORG

UPDATED TO 2023-2025 SYLLABUS

CAIE IGCSE
BUSINESS
STUDIES
SUMMARIZED NOTES ON THE THEORY SYLLABUS
Prepared for Abdul Basit Saeed for personal use only.
CAIE IGCSE BUSINESS STUDIES

the business to:

Raise customer awareness of a product or service of
1. Marketing the business
Increase in revenue and profitability
Increase or maintain market share
1.1. The Role of Marketing
Maintain or improve the image of the product or
Marketing Department: business
Target a new market or market segment
Marketing: Identifying and satisfying customer needs and Enter a new market at home or abroad.
satisfying them profitably. Develop new products or improve existing products.
Customer: a person, business or other organisation which
buys goods or services from a business. 1.2. Market Changes
The different marketing department sections:
Sales Team: responsible for the sales of products. If a Markets change because consumer spending patterns
product is exported, it may be called the export team. change; this might be due to the following:
Market Research: responsible for discovering Trends and Fashions Change: for some time, it might
customers’ needs, market changes and the impact of be fashionable to have a specific product (i.e., Fidget
competitors’ actions. This report will be used in Spinner), but a month later, no one bought them
decision-making, research, developing new products, Advancement in Technology: new products provide
price levels, etc. the latest technology so older versions (i.e., iPads or
Promotion Section: deals with organising the computers) don’t have high sales
advertising for products. Arrange for advertisements Unemployment/Wages: Economies with high
and have a market budget. unemployment rates/low wages will not have
Distribution: transports the products to the market. increased sales of expensive products
The Role of Marketing: Ageing Population: different ages are interested in
Identify customer needs: this will be done via ‘Market other products (i.e. anti-ageing creams)
Research’. It will influence the development of a Businesses have to keep up with customers' changing
product, its price, and the sales technique. needs to stay relevant and maintain their customer
A good marketing department should also be able base/loyalty. The competitiveness of a business is majorly
to anticipate changes in customer needs (i.e. due affected by its ability to respond to any changes in the
to advancements in technology) market.
Find new trends or gaps in the market with
potential. Some markets have become more competitive because:
Satisfy Customer Needs: selling the exact product
customers want for a price they are willing to pay. Globalisation: products are sold all over the world
Maintaining customer loyalty: maintaining close Transportation: it is cheaper, quicker, and easier to send
customer relationships to discover the product's products around the world now
expectations and changes needed to be made. It’s Internet/e-commerce: customers can now search for
cheaper for businesses to keep existing customers products or services and buy from somewhere else
than to attract new ones. around the world
Customer Loyalty: existing customers continually The ways businesses respond to changing spending
buy products from the same business. It is patterns and increased competition:
achieved by always satisfying customer needs. Keep improving its existing products
Bring out new products to keep customer’s interest
Building customer relationships to gain information
about customers Keep costs low
Customer Relationships: communicating with maintain good customer relationships
customers to encourage them to become loyal to
the business and its products. 1.3. Market Types
Through customer relationships, changing needs
can be understood. Research information can be Market: the total number of customers, potential
applied to make effective marketing through these customers and other sellers of a product/service.
relationships. There are two types of markets:
Anticipate changes in customer needs – Mass Market: where there is a vast number of sales of
Identify new trends in customer demands or gaps a product type.
in the market.
When the marketing department succeeds in identifying Advantages Disadvantages
customer requirements and future needs, it will enable Total sales are very high Abundant competition

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Advantages Disadvantages Detailed analysis of the market and the ‘size’ of each
Can benefit from economies High costs of advertisement potential segment in terms of consumers and likely
sales.
of scale and promotion
Company image and brand image - ‘high-tech '
Standardised products or
businesses may not want to produce innovative, high-
Opportunities for growth services, so it may not meet
quality products for low-income consumers.
(large sales) the specific needs of all
For example, the cost of entering each segment is a
customers
specially designed product and advertising campaign.
There are many variations of
products, so the risk is
spread.
1.5. Market Research
Market Research: Gathering information about
Niche Market: a SMALL (usually specialised) segment
consumers' needs or preferences in a market
(part) of a mass market. Specialised and sold by small
The roles of market research:
businesses that would find it difficult to compete in a mass
Identify demand for the product and how much they
market (ex, a business specialised in scuba diving gear)
are willing to pay.
Identifying the target audience is the most effective
Advantages Disadvantages
way to promote to these customers.
Avoid competition with big To measure the competitiveness of the market and
Small – limited sale potential
businesses the best way to compete with it.
Usually, they specialise in just There are two types of businesses:
Customers' specific needs are one product; if the product Product-Oriented Business: a business that focuses
focused, leading to high levels has low demand, it will fail. It mainly on the product, disregarding market needs and
of customer loyalty and good would require businesses to wants. Often, it produces necessities for living, such as
customer relations. have multiple products to agricultural tools or fresh food.
spread risks. It may not have a brand name.
Producers’ main concern is price and quality.
Risky due to the large market and many
1.4. Market Segmentation
competitors.
Market Segmentation: an identifiable subgroup of a whole
A market-oriented business is a business that focuses
market where consumers have similar characteristics or
on market research and finding out what the customer
preferences. wants BEFORE a product, such as clothing or
A market can be segmented by:
electronic devices, is developed.
Demographic segmentation - age, gender, and Better able to survive because of more
income. adaptability to changes in customer taste and
Geographic segmentation - region/location, where trends.
people live (ex, people who live in wet areas will buy Takes advantage of new market opportunities.
more waterproof clothing than those who live in dry Market Research Methods:
areas) Quantitive information (quantity related)
Psychographic segmentation - beliefs, values, lifestyle, Qualitative information (where opinion or judgement
social status, activities, interests and opinions and is necessary).
other psychological criteria. Can be gathered through:
Benefits of Market Segmentation: Primary Research: Gathering ORIGINAL data by directly
You can use it to sell more products, creating different contacting existing customers/potential customers.
variations for different groups.
Advantages Disadvantages
A more effective marketing strategy can be placed (as
the characteristics of consumers are known), resulting Expensive in both time and
Up-to-date and relevant
in an increase in sales. money
Identifying a market segment that is not having its Usually planned and carried
needs fully met increases the opportunity for out by people who want to use Not available immediately
increased sales. the data first-hand.
Making marketing expenditure cost-effective by It is most effective when used
producing a product that can closely meet the needs for a specific problem.
of those customers and targeting its marketing efforts Not available to business
to that group only.
Which method of segmentation should be used depends Process:
on factors such as: Purpose of market research

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CAIE IGCSE BUSINESS STUDIES

Decide on the most suitable method of market questionnaire). 2 standard methods of sampling:
research A Random Sample is when people are selected
Decide the size of the survey and who is going to be randomly as a source of information for market
asked. research.
Carry out the research Advantage: Everyone has an equal chance to be
Analyse the data and results picked, but not everyone in the population may be
Produce a report of the findings a product consumer.
Methods of Primary Research: A Quota Sample: People are selected based on
Questionnaires specific characteristics. They can find out the views of
They may be conducted face-to-face, by telephone, a specific group.
or online. Advantage: can find out the views of these specific
groups.
Advantages Disadvantages Secondary Research:
If questions are not well- Information that has already been collected and is
thought-out, answers may available to others
Detailed qualitative
mislead the business, as
information can be gathered. Benefits Limitations
there may not be accurate
answers. It is cheaper than primary as You do not get specific results
The customer’s opinion can Lots of time and money are research has already been for a particular product or
be obtained. needed. done by others service; you get broad results
Online surveys may be There is some information
Collating and analysing data (i.e. economic forecasts or Data may be outdated or
cheaper and make it easier to
also takes a long time. population size) that can’t be incorrect as others collected it
collate the results.
obtained by primary research
They can be linked to prize
draws and encourage people It might not have the specific
to fill them. information

Interviews: A person will interview another person and ask Internal Sources of secondary data – within the firm’s own
questions. records:
Advantages: Sales department records, price data, customer
The interviewer will be able to explain the records, sales reports, etc.
questions and clear confusion. Opinions of distribution and public relations personnel
Detailed information about the interviewee can be Finance department.
gathered. Customer service department
Disadvantages: External Sources of Secondary Data:
The interviewer may lead the interviewee to Government Statistics: a detailed source of general
answer in a certain way. information (ex: population and its age structure)
It is time-consuming and Expensive. Newspapers: useful articles about the general
Focus Groups: collect opinions and feedback from a group economy state
of people about a specific product, concept, or service. Trade Association: information about business in the
industry
Advantages Disadvantages Market Research Agencies: specialist agencies
It is time-consuming and researching on the company’s behalf; the commission
expensive if done by a is paid.
Provide detailed information Internet: easily accessible source. Paper-based
specialist market research
agency. sources can also be found.
Regardless of which type of research a business chooses
Interacting between members The discussion could be
to use, the accuracy of the research data depends on the
can help businesses based on some people being
following:
understand the reason for influenced by the opinions of
How carefully the sample was drawn up
peoples’ opinions. others.
How the questions in questionnaires/interviews were
A few people can dominate it, phrased to ensure honest answers were given.
Quicker and cheaper than
so researchers must have The sample itself and its size. By using quota
individual interviews.
experience dealing with this. sampling, you might get more reliable results.
The bias – some secondary research will be biased
Sampling: A group of people who are selected (randomly) (i.e. articles in newspapers), which means the
to respond to a market research exercise (i.e. information might be unreliable

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CAIE IGCSE BUSINESS STUDIES

Age of the information: older data might be 6. Go to a full launch of the product to the whole market.
inaccurate.
Presentation of data from market research: Benefits Drawbacks
Tables or tally chart USP – a unique selling point: a
Costs of carrying out market
Pie Chart special feature about a
research and analysing the
Diagram product that differentiates it
findings
Bar chart from its competitors’ product.
Line graph Cost of producing trial
Diversification products, including waste
1.6. Marketing Mix materials
Brand image is damaged if
Marketing Mix: a term used to describe all the activities Allows businesses to expand
the product fails to meet
that go into marketing a product or service. into new and existing markets
consumer demand
The marketing mix can be summed up as the 4 Ps:
The lack of sales if the target
Product - applies to the product or service. Design,
market is wrong
features and quality.
Price - the price at which the product is sold,
comparisons between prices of competitors. Importance of Brand Image
Place - channel of distribution that is selected.
Brand name: the unique name of a product that
Promotion - how the productivity is advertised and
distinguishes it from other brands.
promoted.
Brand loyalty: when consumers keep buying the same
You should always mention the 4 Ps when answering
brand again instead of choosing a competitor’s brand.
questions about Marketing Mix!
Brand image: an image or identity given to a product
which gives it a personality of its own and distinguishes it
1.7. Product from its competitors.
Good branding includes:
Some products are sold to consumers, and some to other Brand name
businesses. Higher quality than unbranded products.
They are usually grouped: Unique packaging
Consumer goods: bought by consumers for their own Brand loyalty
use. Can be perishable goods such as food or long- Assured quality
lasting such as furniture. Creates a brand image associated with consuming the
Consumer services: services bought by consumers for product.
their own use. Ex. Cleaners
Producer goods: there are goods that are produced Role of Packaging
for other businesses’ use to help with the production
process. Ex. Trucks Packaging: the physical container or wrapping for a
Producer services: services that are produced to help product. 2 functions - protect and promote product
other business. Ex. Accountants. Protects the product and makes it easier to transport
Identifying the type of product is important as it Eye catching
decides how the product would be Carries information about the product
advertised/marketed and developed. Promotes brand image
Points to consider about choosing product:
Satisfying existing needs and wants of consumers Product Life Cycle (PLC)
Not be expensive to produce.
New and original idea Product life cycle: describes the stages a product will pass
Unique selling point through from its introduction, though its growth until it is
Capable of stimulating new wants from their mature, and then finally its decline.
consumers.
1. Development: First, the product is developed. The
Development of New Products: prototype will be tested in the market before its
launch. There are no sales during this time.
1. Generate ideas 2. Introduction: Then it is introduced or launched in the
2. Select the best idea for further development market. Sales are often slow. No profit made as
3. Decide if the company will be able to sell enough for development costs are not yet covered.
the product to be a success. 3. Growth: The product gains more sales. Advertising is
4. Develop a prototype changed to persuade and encourage customer loyalty.
5. Launch the product in one area to test the market

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CAIE IGCSE BUSINESS STUDIES

Prices reduced due to competitors and profit starts to

1.8. Pricing
be made.
4. Maturity: sales increase slowly. Competition intense The price chosen may not be related to the cost of
and advertising is used to maintain sales growth and
manufacturing but rather to what consumers are willing
profit is at its highest.
to pay, the product's value, and the brand image.
5. Saturation: sales have stabilised at their highest point.
The business must constantly monitor what its
Competition and advertising is high and stable, but competitors charge for their products to ensure its prices
profit starts to fall as sales static and prices are remain constant.
reduced to be competitive.
A business can adopt new pricing strategies for:
6. Decline: sale of product starts to decline as new
To break into a new market
products enter, or it has lost its appeal. Product is
To increase market share
withdrawn from market and sales, prices and To increase profits
advertising low until it stopped. To make sure all costs are covered and a particular
profit is earned

The Main Methods of Pricing

There are five main types of pricing methods:

Cost-plus Pricing: the cost of manufacturing the product

plus a profit mark-up. It involves:
How Stages of PLC Influence Marketing Decisions Estimating how many of the products will be produced.
Calculating the total cost of producing this output.
Introduction – Adding a percentage markup for profit.
Product – newly launched product Total cost /output + % markup.
Price – price skimming or penetration pricing
Place – limited range of exclusive shops (if price Benefits Limitations
skimming is used) Businesses could lose sales if
Promotion – informative advertising The method is easy to apply. the selling price is higher than
Growth competitors.
Product – remains the same
A total profit will only be made
Price – raise prices if penetration pricing was used Different profit markups could
if sufficient product units are
Place – increase the number of outlets, e-commerce be used in different markets.
sold.
Promotion – establish a strong brand identity through
promotional activities. Each product earns a profit There is no incentive to
Maturity/Saturation for the business. reduce costs.
Product – plans for product changes begin
Price – lower prices to competitive Competitive Pricing: When the product is priced in line
Place – full range of distribution channels used with or just below competitors’ prices to try to capture
Promotion – sales promotion techniques to encourage more of the market.
repeat purchases
Benefits Limitations
Decline
Product – changes made to extend the life cycle High-quality products must be
Sales are likely to be high due
Price – lower prices sold at higher prices to give
to realistic level prices.
Place – sell through low-cost outlets them a high-quality image.
Promotion – re-launch the product as an extension If cost is high and sales are
strategy Avoids price competition low, competitive prices can
lead to loss.
Extending Product Life Cycle: Often used when it is difficult
Detailed research will be
for consumers to tell the
Extension strategy: a way of keeping a product at the needed to determine these
difference between the
maturity stage of the life cycle and extending the cycle. prices, which costs time and
products of different
Introduce new variations into the original product money.
businesses.
Sell into new markets
Make small changes to the product’s design, cover, colour
Price Skimming: setting a high price for a new product on
Sell through additional retail outlets
the market. A product is usually a new invention or a new
Introduce a new, improved version of the old product
product development.
Use a new advertising campaign

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CAIE IGCSE BUSINESS STUDIES

Benefits Limitations Price Elasticity of Demand: How responsive is a demand

High prices may discourage for a product to a change in price?
It can help establish the PEDs are affected by the no of substitutes available
some customers from buying
product as good quality. Price-Elastic Demand is when a product is very responsive
it.
to a change in demand. The % change in demand is
If production is unique, a high High prices and profitability
GREATER than the % change in price, i.e., prices increase
price may lead to profit, and may encourage competitors
by 5%, but sales decrease by 10%.
the price may be reduced. to enter.
Therefore, the business's revenue would be falling
High research and with a price increase. Businesses must find another
development costs can be way to increase demand without using the product's
rapidly recovered from profit price.
made. Price-Inelastic Demand is when the product is not very
responsive to changes in demand. The % change in
Penetration Pricing: when the price is lower than the demand is LESS than the % change in price.
competitors’ to enter a new market. This means you can increase the price of the product
a lot without the demand changing (i.e., oil & petrol
Benefits Limitations because people have to buy it)
Often used for newly
Sold at a low price; therefore,
launched products to create 1.9. Place (Distribution Channels)
profit per unit may be low.
an impact on customers.
Ensure sales are made, and Customers may ‘get used‘ to Products should be available when and where customers
the new product enters the low prices and reject the need them
market. product if the price is raised. Wrong place, low sales and profits
It might not be appropriate for The place must be convenient for consumers
Market share should build up
products that have a Distribution Channel: is how a product is passed from the
quickly.
reputation for quality. place of production to the customer.

There are four main distribution channels:

Promotional Pricing: when a product is sold at a low price
for a short period of time. To increase short-term sales. Manufacturer sells products directly to consumers (i.e.
car components to car factories).
Benefits Limitations
This channel is most common with business-to-
Useful for getting rid of Revenue will be lowered business transactions.
unwanted inventory that will because the price of each
not sell. item is reduced.
Help renew interest in a This might lead to price
Benefits Limitations
product if sales are falling. competition with competitors.
It is impractical because
The impact of psychology on price decisions Very simple consumers don’t usually live
High prices for high-quality products can be near factories
purchased for status symbols. Not suitable for products that
When a price is lower than a whole number, it creates Suitable for products that are can’t be sent quickly by post,
the illusion of being cheaper. sold straight out of factories especially if they’re perishable
Supermarkets may choose low prices for products or easily breakable goods.
purchased regularly. It is not cost-effective, as
There is a lower price for
Repeat sales are often made to reinforce consumers’ sending products by post is
consumers (cuts retailer)
perceptions of the product. expensive
Using different pricing methods for the same product- Products can be sold by mail
Dynamic pricing: When businesses change product order catalogue or via the
prices, usually when selling online, depending on the internet.
level of demand, for example, Aeroplane tickets.
There are ethical issues with some dynamic pricing;
Producers sell to retailers, who sell to consumers (i.e.,
using technology, businesses can track customers'
farms selling food to big supermarkets).
buying history and charge accordingly.
This channel is most common where retailers and
large such as supermarkets or the product is
Price Elasticity of Demand expensive, Ex. furniture or jewellery.

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CAIE IGCSE BUSINESS STUDIES

Benefits Limitations
Gives the manufacturer some
control over the way product
Benefits Limitations
is sold.
There is no direct contact with
Manufacturer sells lots of customers, which makes It
Methods of Distribution
stock to retailer hard to create customer
loyalty. E-Commerce
Price is often higher than Selling of goods and services through the internet
Cheaper transportation costs
‘direct selling‘ as the retailer
because all products go to
has to cover its costs and Benefits to the business Problems to business
one place
make a profit Cheaper Website must be maintained
Lower storage costs for the Customers are encouraged to
manufacturer High distribution costs
buy in bulk
Business-2-Business e-
Producers sell to wholesalers, who buy in bulk, divide their No direct contact
commerce is cheaper
stock into smaller quantities, and sell them to retailers.
Wider options for customers,
Returns – higher costs
brand image and loyalty
A stock system will be
Benefits Limitations needed.
Reduces storage costs for More expensive to buy from a
small retailers because small wholesaler than from a Benefits to consumers Problems for consumers
quantities are sold manufacturer No need to go out Internet needed
A wholesaler might not have High chances of fraud and
Small quantities, so transport Wide options
all the products a retailer theft
costs are low
wants
Products can’t be physically
Wholesalers can give Easy Comparison
It takes longer to get to the examined
feedback on what sells well to
consumer Payment through net banking No direct contact
producer
Easy access to imported
Huge gap between the
goods
manufacturer and the
Low prices
customer
Consumer prices may be
Other methods include:
higher than direct selling, as
Department stores
retailers and wholesalers
Discount stores
need profit.
Chain stores
Superstores
A manufacturer hires an agent (person or business) that Independent retailers
will sell products on behalf of the manufacturer. Direct sales
Agent: an independent person or business appointed Supermarkets
to deal with sales and distribution of a product or Mail order
range of products.
Selecting Which Distribution Channel to Use

Benefits Limitations Type of product

Is it technical?
Agents know the most
Manufacturers lose much How often is it purchased?
profitable places & prices to
control over how the product How expensive is it?
sell in other markets that
is sold to customers. How perishable is it?
manufacturers may not know.
Where are customers located?
Agents will provide advice on Higher costs for consumers, Where do competitors sell?
the best ways to survive new as agents will need
markets. compensation for expenses.
1.10. Promotion

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CAIE IGCSE BUSINESS STUDIES

Promotion: where marketing activities aim to raise AD appears, and should be cost-effective.
awareness of a product or brand by generating sales and 5. Evaluate the effectiveness of the campaign-
helping create brand loyalty. Includes the following: if sales or brand image improved.
Advertisement: Involves ‘above-the-line‘ promotions.
Ex. TV, Social media. Newspapers, etc. Types of Advertising Media
Sales Promotion: Involves ‘below-the-line‘ promotions.
Used for short periods of time to reinforce the above- Television
the-line promotions. Ex. Money-off coupons, gifts, Examples of suitable products/services are food
protect placements in programmes or newly released products/drinks, cars, and household products.
films.
Advantages Disadvantages
Aims of Promotion It will go out to millions of
Very expensive
people.
To raise awareness about a firm’s products Young consumers often
Encourage customers to make a purchase It can be shown in a download films/movies and
Increase sales favourable way (Attractive). don’t watch many television
Introduce new products in the market programmes.
Create brand image
Reaches the most significant
Improve the company’s image
number of consumers and
Compete with competitors
reaches the target audience
by showing AD after specific
Above and Below-the-line Promotion
programmes.
Above-the-line promotion: involves marketing
communication using mass advertising media, such as Radio
television, radio, newspapers and mobile phones, to Examples of suitable products or services: Local
increase sales services or events, e.g., local shops or car showrooms.
Below-the-line promotion: all other forms, including
Advantages Disadvantages
product placement and endorsements by famous
celebrities, public relations (PR), direct mail, personal It cannot be put across as a
It's cheaper than TV.
selling and sales incentives such as free gifts and visual message.
competitions. It is pretty expensive
Reaches a large audience.
compared to other methods.
Advertising Often, it uses memorable The advert needs to be
songs or tunes so that the AD remembered because there
Advertising: paid-for communication with potential can be remembered. is no hard copy.
customers about a product to encourage them to buy it.
It's not as broad an audience
There are two types of advertisements:
as television.
Informative Advertisement: where advertising or sales
promotion emphasises giving complete information
about the product. (i.e. the benefits of the product) Newspaper
Examples of suitable products or services: Local
Persuasive Advertisement: advertising or promotion
trying to persuade consumers that they need the products and events in the local newspaper.
product and should buy it.
Advantages Disadvantages
The advertising process:
1. Set objectives of advertising to capture new Often, it is black and white;
Can be selected to target a
market and increase market share therefore, it is not attractive
particular group
2. Decide the advertising budget-predict how to the eye.
much sales will be in the future, and spread A large number of people Many young People do not
a certain percentage (between 2% to 10%), buy/read national read/purchase traditional
or set by how competitors are spending, or newspapers. newspapers.
simply what the business can afford to Local newspapers are cheap
spend. and, therefore, cost-effective.
3. Create an advertising campaign- the target Adverts are permanent and
audience and objective must be can be cut and kept.
considered.
A lot of information can be put
4. Selecting the media to use the target
in the advert.
audience will decide the media, how often

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CAIE IGCSE BUSINESS STUDIES

Magazines Advantages Disadvantages

Ex of suitable products/services: Feature in specialist Internet searches may not
magazines, gold equipment, medical equipment. A large amount of information
highlight the website, and it
can be placed.
could be missed.
Advantages Disadvantages
A vast number of people can Some countries have limited
An effective way to reach the
Published once a month or see it access to the internet.
target population is if there
week. Orders can be made instantly
are specialist magazines. A lot of competition.
via the website.
Magazine adverts are in They are more expensive
colour, thus attractive. than newspapers. Security issues can
Direct mail via email is cheap.
discourage customers.
Posters
Ex of suitable products/services: Local events, Other forms of publicity:
products purchased by a large population. Ex of suitable products/services: shops can use bags
as a form of advertising, such as billboards on the
Advantages Disadvantages street.
Permanent It can be easily missed.
Advantages Disadvantages
No detailed information can
Relatively cheap Very cheap methods of
be included
advertising, e.g. T. Shirt
Potentially seen by everyone delivery vehicles and bags Customers may not see it in
passing can be worn, and by walking the target market.
around, it can be an
Cinemas, DVDs, Blu-ray discs:- advertisement itself.
Examples of suitable products/services: Coca-Cola
(make sure to boycott ;) ).
Sales Promotion
Advantages Disadvantages
Sales Promotions: when incentives (i.e. special
Shows visual image of Scene by only a limited offers/sales) are aimed at consumers to achieve a short-
product positively. number of people. term increase in sales.
Relatively low cost.
It can be effective if the target Types of Sales Promotion
audience goes to see a
particular film. Price Reductions
Includes coupons
Leaflets Linked to loyalty cards
Examples of suitable products/services: local events Reduced prices of products at certain times of the
and retail outlets (can contain vouchers). year.
Gifts
Advantages Disadvantages Small gifts to encourage purchases
Cheap It may not be read The main aim is to get customers to buy at regular
intervals
Direct mail, also called ‘junk
BOGOF (Buy One, Give One Free)
Give out on the street to a mail,’ can be annoying and
Multiple purchases are encouraged
wide range of people. prevent customers from
Competitions
buying.
Packaging can allow customers to enter competitions
Direct mail (delivered door to Encourages sales
door) High prices
Sometimes contains money- Point of sale display and demonstrations
off-vouchers. Place where the product is sold
Special display
Internet After-sales services
For example, suitable products/services are familiar, For expensive products, good after services
e.g., books, clothes, electronics—services such as encourage consumers to buy their products.
train information, ticketing, insurance, etc. Free samples
Can be handed out to shops to encourage sales
Advantages Disadvantages Maybe delivered at home
Product placement

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CAIE IGCSE BUSINESS STUDIES

Featured in television programmes, movies or music Benefits to the business Problems to business
videos. Customers are encouraged to
It is expensive to pay for placement and can have a High distribution costs
buy in bulk
negative effect if the image is unattractive to
Business-2-Business e-
customers. No direct contact
commerce is cheaper
Advantages of Sales Promotion Wider options for customers,
Returns – higher costs
brand image and loyalty
It can be used at the times of year when sales are low. A stock system will be
Encourages new customers to try an existing product. needed.
Encourages customers to try a new product.
Increase customer loyalty by encouraging existing Benefits to consumers Problems for consumers
customers to buy in greater quantities.
No need to go out Internet needed
Encourages customers to buy their product instead of
competitors. High chances of fraud and
Wide options
theft
Marketing Budget Products can’t be physically
Easy Comparison
examined
The marketing budget is the financial plan for marketing a Payment through net banking No direct contact
product/brand for a period of time.
Easy access to imported
When deciding which type of promotion to use, marketing
goods
budget is an essential factor
Businesses will need to compare the cost of advertising Low prices
and the increase in expected sales. Cost-effectiveness is
important. How technology influences the marketing mix:
This is where small businesses struggle compared to big
Social Media Marketing: a form of internet marketing that
businesses because their budget is much smaller.
involves creating and sharing content on social media
networks to achieve marketing goals.
Factors Influencing Type of Promotion
Viral Marketing: when consumers are encouraged to
Stage of PLC share information online about a business's product.
Product: may change to respond to new technology.
Nature of product
Cultural issues involved in international marketing Promotion: social media marketing and viral marketing
The media used must depend on the following: can be used to promote.
Literacy rate Price: the internet allows businesses to gather
Poverty rate information about customer purchasing habits, which
means dynamic pricing can be used to increase revenue.
Availability of radio and cinema
Nature of target market Place: The widespread spread of online purchasing and e-
commerce. Can create new opportunities.
Public Relations and Sponsorship
Use of the Internet and Social Media Network for
It is concerned with promoting a good image of the brand Promotion
Ways to increase public awareness:
Sponsor events linked with good causes Social media for promotion:
Donate to charities.
All these activities are used to raise the public’s Opportunities for Advertising on Threats of advertising on
awareness of the company and its product and increase Social Media social media
their chance of choosing their product over competitors. It can alienate customers if
Target specific demographic
they find the adverts
group
annoying.
1.11. Technology and Marketing Mix
Businesses have to pay for
E-Commerce Guarantee it reaches customers advertising if using pop-
ups.
It is the ‘online’ buying and selling of goods and services Speed in response to market Lack of control of
using computer systems linked to the internet and apps. changes: Information can be advertising if used by
uploaded regularly. others.
Benefits to the business Problems to business
Cheaper Website must be maintained

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CAIE IGCSE BUSINESS STUDIES

Opportunities for Advertising on Threats of advertising on Increase market share/retain market share
Social Media social media For example, A product is made, priced reasonably, and
Messages may be altered meets the consumer's needs, but no promotional element
exists. No one will buy it because people don’t know about
Cheap to use-low cost if placing or used badly and
its existence.
advertisements. forwarded to another user,
Or if a product is made that doesn’t meet consumer
giving bad publicity.
needs, it won’t sell regardless of the price set.
It reaches groups that are
It is crucial to have all elements working together to
difficult to reach any other way. influence consumer decisions (buying the product)

Create your own website for promotion: Recommending and justifying a marketing strategy
Opportunities of advertising on Threats of advertising on
in a given circumstance:-
the business’s own website the business’s own website
Important points to include in your answer:
Potential customers may not
No extra cost after setting up a see the website, as the page Marketing objective
website. may appear in a long results Marketing budget
list. Target market
Control of advertising as the Relies on customers finding Balanced marketing mix
website is owned. the website.
Can change adverts quickly and 1.13. Legal Controls in Marketing
The website's design costs
update pictures, prices, and so
can be high.
on. There are many laws in different countries to protect
consumers from businesses taking advantage of their
It would need to be
lack of knowledge or lack of product information
Interactive adverts can be more constantly updated, and a
attractive than magazines or team would need to be These legal controls include (in the U.K.):
posters. nearby for any bugs or Weights and Measures
issues. Which is costly. Selling underweight items or using inaccurate
equipment to weigh goods is illegal.
Can provide more information Sale of Goods
in adverts and link to other
Supplying flawed goods (not up to quality
pages with further information
standard).
and pictures.
Product not fit for its intended purpose.
Attracts funds and payment Products which do not perform as described in
from companies who want to label or by retailer.
advertise their product on the Supply of Goods and Services Act
business’s site Service must be provided with skill and care.
Consumer contracts Regulations
1.12. Marketing Strategy A consumer should have a minimum of 7 days
cooling period (a consumer should have seven
Marketing Strategy: a plan to combine the right days to change their mind about the purchase they
combination of the four elements of the marketing mix for made)
a product or service to achieve a particular marketing Trade Descriptions
objective Supplying a good/ service which is unsafe/ not fit
The Marketing Strategy developed depends on the for the purpose is illegal.
following: Giving false info or misleading claims is illegal
Size of market Misleading consumers about the actual price is illegal
Number and size of competitors Making false claims about special deals and offers is
Marketing objectives illegal
Target market Offensive or indecent ads are illegal
Finance available Complying with all legal controls can raise the total costs
Marketing objectives may include: of a business by:
Increasing sales Goods/ services may have to be redesigned to ensure
Improve the existing product quality and safety
Increasing sales of a new product Ads may have to be altered
Maintaining/ increasing market share Some promotion techniques may have to be changed
Increasing sales in a niche market May have to change the packaging
Prices may have to be controlled and altered

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CAIE IGCSE BUSINESS STUDIES

Increase employment Problem Method to Overcome

Licensing: the business
1.14. Entering New Markets Abroad Transport costs are
permits a local business to
sell goods under its name, so
expensive.
The globalisation of businesses has been increasing over they do not have to import all
the years; there are opportunities & problems with this: the products physically
Localising Existing Brands:
Opportunities Problems
where a business still has the
Growth potential in other same brand image but adapts
Lack of knowledge of Cultural Differences
countries: countries are it to the market it is in (i.e.
competitors or consumer
developing, and population McDonald’s cooking
habits
incomes are increasing vegetarian meals in India)
Markets in the original region Cultural differences: for
might be saturated (sales are example, alcohol won’t sell Limitations to the methods listed above:
low) well in the Middle East
Exchange rates: in some Method Limitation
Can produce products abroad
countries, their currency isn’t Management conflict between
and learn about its market to
stable, so the price of Joint venture the two businesses. Profit
increase sales
imported goods increase shared.
Trade barriers are lowered in Quality problems caused by an
Transport costs are more
most countries, so it is inexperienced licensee could
expensive
cheaper to enter markets damage brand reputation.
Import restrictions - causes Licensee now had access to
Licensing
price of goods to increase and information about how the
sales decrease. product is made - could develop
Increased risk of non- a better version and become a
payment competitor.
Quality problems or poor service
However, there are many methods to reduce and offered by franchisees could
overcome the problems of entering a new market: International franchising damage brand image. Training
and support will need to be
Problem Method to Overcome provided by the franchisor.
Joint-Ventures: by working May be less successful than a
together/merging with local new product made to meet local
businesses in the same cultures and market conditions.
Localising existing brands
market, a business will gain a Expensive to change packaging,
lot of necessary knowledge promotion, and so on for each
Lack of knowledge (and
about the culture & market \n market the product is sold.
cultural Differences)
Franchising: letting people
from the market abroad who
have local knowledge to
choose the location of the
shop

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CAIE IGCSE
Business Studies

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