4.1.

1
The purpose of market research

Market Research

Market research is the process of collecting and analysing data about customers,
competitors, and the market to support business decision-making. It can be divided into two
main types:
Primary Research( field research )
Secondary Research ( desk research)

. To Identify and Understand Customer Needs

A business should use market research to help them identify what a customer needs and how
to meet and exceed that need.The market research should help to understand the potential
customers and the needs of the existing customers. Understanding the needs and wants of
customers is essential to future-proof business
2
Meaning: Find out what customers really want, how they want it, and why
Example: A sports shoe brand discovers customers prefer lightweight shoes with breathable
fabric for summer training.
Why it matters: Meeting customer preferences increases satisfaction and boosts sales.
Fun analogy: It's like choosing a birthday gift- you ask what they want first so you don't
waste money on socks.

. To Identify Gaps in the Market (First Mover Advantage)

A business will carry out market research to spot a gap in the market or a potential business
opportunity. Markets are dynamic and trends change all the time so the more up-to-date the
research means the business can remain competitive by selling the latest trend product
1
Meaning: Spot opportunities where demand exists but nobody's offering the product/service
yet.

Example: Netflix identified the gap for on-demand streaming before competitors, shifting
from DVD rentals.
Why it matters: Being first means you can secure loyal customers before rivals arrive and
have market dominance .
 . To Reduce Risk
3
Market research data helps a business to make the right choices such as:
● When to start an advertising campaign
● Which products to promote
● When a new product or service should be launched

Meaning: Use data to avoid costly mistakes.

Example: A new restaurant tests its menu with a small group before launching, saving money
if dishes aren't popular.
Why it matters: Helps avoid launching products nobody wants or marketing in ineffective
ways.

. To Inform Business Decisions (The 4Ps)

Market research gives the business owner solid information on which to base a decision.
Businesses cannot predict the future or see the outcomes of their decisions but they can use
good market research data to help make the decisions more certain e.g. how many
customers will buy the new product if given the opportunity

Meaning: Guide decisions on Product, Price, Promotion, and Place using actual market data.
Example:
Product: Update recipe based on taste tests.
Price: Set a price customers are willing to pay.
Promotion: Advertise on platforms your target market uses most.
Place: Sell online if customers prefer home delivery.
4.1.2 & 4.1.3
Methods of market research

1. Primary Research (Field Research)

Primary research is the gathering of new information that is specific

to the business. This is an expensive method of research but will
produce good quality information that the business can use for
decision-making. It is not always suitable
Definition: The collection of first-hand data directly from the market, often from customers
or potential customers.

Advantages:
● Data is specific to the business’s needs.
● Usually current and relevant.
● Allows the business to control the method of data collection.

Disadvantages:
● Often costly to conduct.
● Can be time-consuming.
● Risk of small sample sizes, which may reduce reliability.

Surveys
Explanation: A set of structured questions designed to collect quantitative data.
Example: A café asking customers whether they prefer plant-based milk options.

Advantages:
● Large amounts of data can be gathered quickly.
● Results are straightforward to analyse.
● Suitable for collecting statistical information.
● include a survey of customer who use the business
● A business can gather quantitative (numbers) and qualitative data (opinions) in this
method
● Can be used to measure customer satisfaction , giving the business a clear idea of
where to improve
Disadvantages:
● Responses may not always be truthful.
● Poorly designed surveys may produce unreliable results.
● Limited detail if using only closed questions.
● Can include data from unhappy customers (surveys on hotel rooms or restaurants are
usually only filled out by those who want to complain)
● Can include poor data (e.g. if customers in the shop keep pressing the unhappy
button)

Questionnaires
Explanation: A research tool consisting of both open and closed questions to gather the
purpose is to gather data from target audience
qualitative and quantitative data.
Example: A smartphone company asking consumers which features they would prioritise in
the next model.

Advantages:
● Flexible — can collect both numerical and descriptive data.
● Low cost if conducted online.
● Easy to distribute to a wide audience.

Disadvantages:
● Low response rates may occur.
● Risk of misunderstanding questions.
● Responses may be incomplete.

Focus Groups
A group of individuals selected and assembled by researchers to discuss and comment on,
from personal experience, the product or service
Customers may reveal more about their experiences with the product in a social setting like
the focus group than with an interview

Explanation: A small, selected group discussing a product or concept, led by a moderator.

Example: A game developer discussing a new app design with teenagers.

Advantages:
● Provides detailed insights and opinions.
● Allows observation of body language and reactions.
● Can stimulate creative ideas.
● Gathers lots of data about how customers feel about a product, their opinions
(qualitative data)
● A focus group brings a group of potential customers together to talk about the
proposed new product or service idea
Disadvantages:
● Time-consuming and potentially costly.
● Dominant personalities may influence results.
● Small group size may not be representative of everyones point of view
● It may be hard to persuade people to take part
● Complex to set up and manage

Observation
Explanation: Watching customers’ behaviour in real-life settings without direct questioning.
Example: A supermarket tracking which aisles receive the most customer traffic.

Advantages:
● Shows actual customer behaviour rather than stated preferences.
● No survey bias.
● Can identify unexpected trends.
● Greater accuracy than direct questioning, no recall error
● Gives researchers an inside perspective into buying behaviour

Disadvantages:
● Does not explain reasons for behaviour.
● Potential ethical/privacy issues.
● May require long periods to collect useful data.

Test Marketing
Test marketing means that the business wants to find out what customers think of a product
by making it available to a limited audience first
This allows the business to find out if customer’s needs are met before making significant
investments in mass producing the product

Explanation: Launching a new product in a limited geographical area before a full release.
Example: A bakery selling a new pastry in one branch for a month.

Advantages:
● Measures real customer reactions.
● An opportunity to make sure the marketing mix is correct before full launch
● Can stop from huge investment that wont sell
● Reduces risk before nationwide launch.
● Risk of failure reduced
● Allows adjustments before full rollout.
Disadvantages:
● Competitors may imitate the product.
● Local results may not reflect national demand
● Delay in full launch will reduce revenues
● Still involves costs.

2. Secondary Research (Desk Research)

In secondary research the information already exists in some format,
someone has already collected the data.
Definition: The use of existing data collected by others, often for purposes other than the
current research project.

Advantages:
● Quicker to access than primary research.
● Generally cheaper.
● Can provide a broad market overview.

Disadvantages:
● May be outdated.
● May not be directly relevant to the business’s needs.
● Reliability can vary depending on the source.

Internet
There are billions of websites on the Internet
It’s a great place for market research to find information about the competition. The
researchers may get ideas for new ways to market the products by looking at competitors’
website

Explanation: Using online resources such as company websites, industry blogs, social media,
and statistical databases.
Example: A travel agency using Google Trends to identify popular holiday destinations.

Advantages:
● Wide range of sources available instantly.
● Many resources are free.
● Look at influencers to spot trends
● Can provide up-to-date information.
Disadvantages:
● Information quality varies; some may be inaccurate.
● Difficult to filter large volumes of data.
● Some sources are outdated or biased.
● Information needed may not be on the company website

Market Reports
Mintel trends and reports – Mintel has a global team of trend analysts constantly assessing
changes in culture, economy and society and writing industry reports about it. Mintel
collects all the data and does all the research so the business does not have to, they can just
buy the completed report
Reports cost between £1,000 - £4,000

Explanation: Specialist reports produced by research organisations providing analysis of an

industry.
Example: A clothing retailer purchasing a market report on upcoming fashion trends.

Advantages:
● Professionally compiled, often reliable.
● data is already collected, analysed and submitted in a report, which can then quickly
be used for decision making. Important in dynamic or competitive markets
● Can give insights into a market and all the actions of competitors
● Can give insight into key industry trends
● Contains in-depth analysis and forecasts.
● Saves time for the business.

Disadvantages:
● Can be expensive.
● May not focus on the specific target market of the business.
● Data may still be out of date.
Government Reports
Office of national statistics (ONS)contains very useful demographic information and data on
a range of markets and industries e.g. construction, manufacturing, production and tourism
For example: A business can use the government report information to make decisions about
expanding overseas

Explanation: Official statistics and publications from government bodies.

Example: A construction company using census data to identify regions with high
population growth.

Advantages:
● Often free and highly reliable.
● Covers large-scale trends and demographics.
● Useful for long-term planning.

Disadvantages:
● Information collected is not for a specific company so the data may not be useful
● Competitors have access too
● Can be complex and require interpretation.
● May not address specific business questions.
● Can be out of date if published infrequently.

3. The Use of Data in Market Research

Quantitative Data
Definition: Data that can be measured and expressed in numerical form. Data displayed in
charts and graphs, such as statistics and percentages
Questionnaires are written to gather numerical data e.g. the number of respondents who
used the Nike website last month but did not like the checkout system Quantitative research
is statistical in nature so it is important to use a large enough sample size so the results are
meaningful
This type of research is useful for discovering trends relating to
consumer preferences, feelings of importance and satisfaction, and
patterns in behaviour
Example: A survey shows that 65% of customers prefer delivery within 24 hours.

Advantages:
1. Easy to analyse and compare.
2. Useful for spotting patterns.
3. Objective and less open to interpretation.
Disadvantages:
1. Lacks depth and detail.
2. May not explain reasons behind customer behaviour.
3. Can be misleading if sample size is too small.

Qualitative Data
Seeks to gather and explore feelings and thoughts about a product from consumers
Information gathered by :
A. Focus group discussions
B. Interview consumers on what they ‘think’ about the product or service
C. Observations of buyer behaviour (e.g. only family groups bought
the squash)
Qualitative research can be used to discover consumers’ motivations, needs, reactions to an
advert, reactions to new products or to come up with new ideas. Qualitative data consists of
the feelings, opinions and complaints of customers

Definition: Non-numerical data describing opinions, attitudes, and motivations.

Example: A focus group reveals that customers feel a brand’s packaging is ‘too plain’ and
‘uninspiring.’

Advantages:
1. Provides rich, detailed insights.
2. Helps explain why customers behave in certain ways.
3. Can inspire product improvements and innovation.

Disadvantages:
1. Time-consuming to collect and analyse.
2. Subjective — may be open to interpretation.
3. Small sample sizes may not be representative.
The Role of Social Media in Collecting Market Research Data
Definition of social media- Websites and applications that enable users to create and share
content or to participate in social networking
Social media has become a powerful, low-cost tool for gathering market research data,
offering both qualitative and quantitative insights.
Uses:
1. Monitoring trends via hashtags and keywords.
2. Analysing customer feedback from comments and reviews.
3. Measuring engagement such as likes, shares, and click-through rates.

Example: A clothing retailer uses Instagram polls to find out whether customers prefer
‘summer pastel’ or ‘neon’ colours for the next clothing line.

Advantages:
1. Fast, real-time feedback.
2. Can reach a global audience instantly.
3. Allows interaction and deeper engagement with customers.
4 cheaper than organising focus groups

Disadvantages:
1. Opinions may not represent the whole market.
2. Can be influenced by trends or emotions.
3. Not all customers use social media.

The Importance of the Reliability of Market Research Data

Reliable data is accurate, consistent, and trustworthy, and is essential for effective business
decision-making.

Factors affecting reliability:

1. Adequate and representative sample sizes.
2. Unbiased, clear questions.
3. Up-to-date data.
4. Credible sources.

Why it matters:
- Poor decisions can result from inaccurate data.
- Resources may be wasted on ineffective strategies.
- Competitors with better data gain an advantage
4.2.1
Importance of marketing

Market
Market is a place or medium through which buyers and sellers agree to trade at a price.
Market can be both physical and virtual. Eg- eBay, Amazon,

Marketing
It involves a range of activities that help a business to sell its product.
It is a management process which involves identifying, anticipating, and satisfying consumer
requirements profitably.

How to do Marketing
1. Reward Schemes and Free Gifts
2. Charitable Donation
3. Partnership Deals
4. Personal Communication ( eg- thank you )
5. Know Your Customer
6. Connect Regularly
7. Build Trust
8. Take Complaints Seriously

Importance of Marketing

● Satisfying Customer Needs

Marketing is about understanding what customer needs are and satisfying them, with a
range of goods and services.This will build customer relationships leading to brand loyalty

● Building Customer Relationships Effective Communication

Building a brand includes using innovative marketing techniques to get customers talking
about the goods or service Companies like Netflix and Amazon focus on building customer
relationships through positive experiences because they need customers to return and keep
purchasing each month

● Keeping Customer Loyalty

Loyal customers are likely to make repeat purchases. Products and services with high brand
loyalty will bring in a steady stream of revenue and will also have a longer lifecycle. It is five
times more expensive to acquire a new customer than to keep an existing one
 ● Market Orientation
Market orientation is when a business identifies the needs and wants of consumers and then
creates products and services to satisfy these needs The customer is at the heart of the
product or service

Advantages
. Since consumer needs/ preferences are closely made, customer loyalty increases.
. Customer loyalty = to repeat purchases.
. Positive word of mouth promotion , Sales revenue increases.
. Less expenditure behind R&D.
. Demand could become less price elastic, Allows the business to charge slightly higher
price.
. A source of competitive advantage as lower risk of failed launch

Disadvantages
1. Detailed market research, time-consuming and expensive.
2. Limited scope for innovation, lesser ability to take patents.
3. Limited scope to charge higher prices( limited profit margin) especially if market is
competitive.
4. Consumer taste and preferences might change too frequently. If business adapts so much,
so often the brand image could be at risk.

● Product Orientation
Product orientation is the opposite of market orientation A business will focus on the
products or services that they can sell rather than customer preferences The business will
put a particular focus on t

he quality of the products and pricing them, so customer will want to buy them

Advantages
. Fewer resources, the focus is on R&D rather than market research.
. cheaper cost= money shared carrying out market research.
. unique product
● creates a USP,
● can charge higher prices( R&D can be covered quickly, profit margin increases)
● Can take patents to stop limitations.
. less budget needed for promotion, the product could sell itself.
. limited direct competition.
Disadvantages
1. Risk (high)
● Consumers may not accept the product
● Consumers may shift to rival brands which are market-oriented.
2. Few ideas
● The company only relies on internal research
● over dependency on its own human resources.
3. Wastage of resources (if the product fails)
● Wise idea was to know the needs and preferences of customers.

● Market Share
It is the proportion of sales generated by a firm compared to the whole industry
This is a key piece of marketing data as it helps a business to understand how well they are
doing in comparison to the competition

Market share- sales of firm / total sales in industry x 100

● Market Analysis
Market analysis is a detailed quantitive and qualitative assessment of the target market and
competitive background of the industry. it gives a business important information on which
to base marketing decisions
It measures :
. Size of the market
. Current growth rate/ future growth rate
. Number of competitors
. Changes in external environment ( PESTLE , interest rates , echange rates , economic
growth , recession . Unemployment rate )
. The way consumers behave in a market
. Market segmentation
 ● Mass market
A mass market is a large scale market and mass marketing means an approach that seeks to
advertise to the widest possible customer base
This strategy means the business will sell products at low prices to generate high sales
volume. Examples include fast food, bottled water etc

Advantages
. Involves a large proportion of the population,
. is the largest group of consumer for a product or service within the market. Consumer
preferences tend to be similar for large group of people.
. The product or service is usually standardized or heavily promoted.
. The product will be widely available and well known.
. Large customer base with standardized products.
. High sales revenue due to large-scale demand.
. Profits can be reinvested to expand further and increase market share.
. Mass production reduces unit cost (economies of scale), allowing lower prices.

Disadvantages
1. Competition is often intense.
2. Price competition reduces profit margins.
3. High advertising and promotional costs may cut into profitability.

● Niche market

A niche market develops where a business identifies a small market with specific needs for
specialised products or services
Companies are able to charge higher prices for these niche products
Many small businesses serve small market niches

Advantages
. Less competition in some markets.
. Easier to meet specific customer needs — customers get exactly what they want
. Strong customer loyalty, leading to repeated purchases.
. Ability to charge premium prices.
. Greater flexibility — can respond quickly to market changes.
. Has a specialized or specific type of product or service
. is identified with a particular market segment,
. prices tend to be higher, and there is often a close link between buyer and seller.
. Promotion is likely to be specifically targeted at niche customers.
. Compared to mass market products, sales will be relatively low,
. is much smaller than mass market.
Disadvantages
. Limited room for expansion. ( less chances of exploiting Eos )
. Lesser chances of exploiting economies of scale.
. Vulnerable to economic downturns and shifts in consumer taste.
. Successful niche products may be taken over or copied by larger competitors.

Responding to changes in market :

Why needs of consumers change over time?

● Changes in consumer income
● Consumer over time Because better education and sophisticated
● Changes in social habits
● Change in taste, fashion Preferences, new technology
● Consumer spending patterns
● Increased competition
● Competition puts business under pressure

How to respond?
● Lower prices,
● USP, unique selling point
● Offer better quality products and services
● Advertise campaign :
. Sponsorship
. celebrity endorsement
4.2.2
Responding to Changes in the Market

. Changing Customer Needs

If the market is dynamic and fast moving the needs of customers are
constantly changing. To be market orientated a business will need to
respond to these changes. Businesses must adapt as customers’ preferences, lifestyles, and
expectations evolve.

Examples of changing needs:

● Health-conscious choices → More demand for low-sugar or organic foods (e.g., Coca-
Cola Zero Sugar, McDonald’s offering salads).

● Environmental concerns → Customers want eco-friendly packaging (e.g., LEGO

investing in plant-based plastics).

● Convenience → Growth of online shopping and home delivery services (e.g., Amazon
Prime, food delivery apps).

● Demographic changes → Ageing population may demand healthcare services, while

younger consumers may seek tech products.

Business responses:
• Product innovation (new product features, healthier options, eco-friendly
packaging)
• Improved customer service (apps, chatbots, 24/7 service).
• Adopting new technology (e-commerce, mobile payments, AI
personalization)
 . Changing Consumer Spending Patterns
A consumer spending pattern is a change in time in the money that
customers spend on particular goods and services.Customer spending habits shift due to
income levels, economic conditions, and cultural trends.
Identifying consumer needs is the key to business success.These needs are not static and
change over time. Businesses need to respond to
these changes. This may be due to changing consumer incomes or tastes

Examples:
• During a recession, consumers cut back on luxury spending and buy
cheaper alternatives (e.g., Aldi and Lidl gaining market share in Europe).
• Higher disposable income → Growth in demand for luxury brands, travel,
and experiences (e.g., Apple iPhone, designer clothes).
• Subscription services replacing one-time purchases (e.g., Netflix vs DVD
purchase).

Business responses:
• Offering a range of products at different price levels to suit varied
income groups.
• Introducing value-for-money options (budget airlines like Ryanair,
economy ranges in supermarkets).
• Promotions and discounts to attract cost-conscious buyers.
• Shifting to subscription or digital models to match spending patterns

3. Increased Competition
More competition in a market means that the companies that operate in that market will need
to:
A. Create new and innovative products and services for the customers
B. Create better quality products
C. Respond quickly to changing customer tastes
Consumers get more choice and better quality products and services

Globalisation and technology make it easier for new firms to enter markets.

• Example: Local taxis face competition from Uber.

• Example: Streaming services competing with traditional TV and cinemas.
Effects on businesses:
• Lower prices due to competitive pressure.
• More innovation to stand out.
• Increased marketing costs.
• Risk of losing market share.

Business responses:
• Differentiation: Strong branding, unique selling points (e.g., Dyson
vacuum cleaners with innovative design).
• Improving efficiency to reduce costs (automation, lean production).
• Customer loyalty schemes (e.g., Tesco Clubcard, airline frequent flyer
programmes).
• Expanding to new markets (e.g., Starbucks opening in emerging
economies)

Exam-Style Chains of Reasoning

Changing Customer Needs

If a business introduces healthier product options → it meets consumer demand for well-
being → this increases customer satisfaction and sales → leading to higher revenue and
stronger brand loyalty.

Changing Spending Patterns

If customers spend less during a recession → businesses offering only luxury goods may
struggle → they may lose revenue unless they introduce cheaper alternatives → adapting
helps maintain sales and survive downturns.

Increased Competition
If a business faces new rivals → customers may switch due to lower prices or better service
→ unless the business innovates or improves quality → it risks losing market share and
profitability

Exam Tip (Edexcel Style):

Always link the change in the market to business response, outcome, and
stakeholder impact (customers, employees, shareholders). Use real business examples to
strengthen your answers
4.2.3
How businesses use market segmentation to target customers

Segmentation
Market research will show that a particular product appeals to a specific group of people.
Businesses need this information to identify groups with similar wants and needs. Breaking
down a market into sub-groups is called market segmentation. Knowledge of different
groups within a potential customer base can help the business target those customers
through a variety of methods

● Location
A business may decide to sell its product in just one country, one region, or in an even
smaller area. A business may target its product in rural rather than urban areas. A business
may target its products depending if the market area is hot (Spain) or cold (Norway)

● Demographics
Demographics means ‘statistical data relating to the population and particular groups within
it’
For example market segmentation helps book publishers target customers as we wont all
read the same book eg- harry potter

●
Lifestyle
– Customers can be grouped according to the way they lead their lives and the attitudes
they share( eg- young professionals may drive a sports car because of the image they
want to project)
– Parents might want the same things, but have to provide for their children, which is a
large extra cost. They will need a family car to suit their lifestyle
A business may decide to segment the market according to lifestyle
• This may be a combination of; values, attitudes, perceptions, beliefs
• This may also include hobbies and interests
• This may also include the family situation (living on own or living with five kids)

● Income
Establishing a group's disposable income is important so that products can be targeted to
the relevant income group

● Age
Each age group will have different needs and wants in terms of products and services and
the business can develop a targeted marketing strategy to appeal to that age group
Market segmentation
A market segment is an identifiable group of individuals or part of a
market where consumers share one or more characteristics or need

Advantages :
1. Better Customer Targeting

• Explanation: Segmentation allows businesses to design products and

marketing messages that appeal directly to specific customer needs.

• Example: Nike uses segmentation based on sport type (e.g., running,

basketball, football). Their “Nike Air Zoom Pegasus” is promoted specifically to long-
distance runners with ads focusing on comfort and endurance.

• Benefit: Higher sales conversion rates because the message fits the
audience.

2. Increased Customer Loyalty

• Explanation: By meeting the specific needs of a segment, businesses can build stronger
brand loyalty.

• Example: Apple targets creative professionals (designers, video editors)

with its MacBook Pro line, offering high-end specifications and creative software integration.

• Benefit: Loyal customers are less likely to switch to competitors.

3. Efficient Use of Marketing Resources

• Explanation: Marketing budgets are used more effectively because

campaigns target a specific, well-defined audience rather than the general population.

• Example: Spotify offers student discount plans, promoting them mainly

through Instagram and university events, instead of expensive mass media ads.

• Benefit: Lower wastage in marketing spend.

4. Opportunity for Higher Pricing

• Explanation: Certain segments are willing to pay premium prices for

products that meet their exact needs.

• Example: Rolex targets the luxury consumer segment, emphasising

exclusivity and craftsmanship to justify high prices.

• Benefit: Higher profit margins per unit sold.

Disadvantages :
1. Higher Marketing and Production Costs

• Explanation: Different segments may require separate product designs,

packaging, and promotions.

• Example: Coca-Cola offers multiple variations (Diet Coke, Coke Zero,

Cherry Coke) with different ad campaigns, increasing production and marketing expenses.

• Drawback: Increased operational complexity and costs

2. Risk of Market Over-Segmentation

• Explanation: Targeting too many small segments can dilute focus and
reduce economies of scale.

• Example: Sony once had too many overlapping MP3 player models before
the iPod dominated, confusing customers and reducing brand impact.

• Drawback: Lower profitability if segments are too small.

3. Difficulty in Correctly Identifying Segments

• Explanation: Misjudging a segment’s preferences can lead to poor sales.

• Example: Colgate launched frozen ready meals in the 1980s, assuming

brand loyalty in toothpaste would transfer to food – it didn’t.

• Drawback: Wasted resources and possible brand damage.

4. Potential to Alienate Other Segments

• Explanation: Focusing too heavily on one segment can make other groups feel excluded.

• Example: Abercrombie & Fitch faced backlash for openly targeting only
“cool and attractive” teens, which hurt its broader brand image.

• Drawback: Loss of potential customers and negative publicity

4.3.1
Product
A product is the item offered for sale, in physical or virtual or digital
format

R&D - stands for research and development. It includes all activities

that a business will undertake to innovate and introduce new
products and services

Goods- products that are tangible ( can be touched )

Gives us direct satisfaction eg- clothes , healthcare

Services - actions that is performed by someone and received by the consumer Gives us
indirect satisfaction eg- machines , tools , accounting , advertising , printing , business
insurance

Developing new products :

By developing new products the business can:
A. sell more to existing customers (making the most of existing relationships is cheaper than
finding new customers)
B. spread fixed costs like premises or machinery across a range of products
C. diversify the products on offer so the business is less reliant on certain customers or
market

Advantages
A. Gives the customers something fresh and new which stimulates demand
B. Competitive advantage
C. fills a gap in the market
D. gains new customers
E. develops the reputation of the business as an innovator and an industry leader

Disadvantages
1. Very expensive to develop completely new products, which is why so many are adapted
from old ideas like the football shirts
2. It may take a long time for the business to recoup the investment in the new product
3. Very risky customers may not like the product
Product development
. generating ideas- ideas could come from owners, customers , staffs, competitors( who
might try to copy or adapt or improve)

. analysis
● each idea must be analysed
● product needs to be marketable, technically possible, suitable fit , legal
● cost and benefit analysis

. development
Lengthy stage as it carries out experiments builds model , use stimulations, create
prototypes(modify and change if necessary) test market

. Test marketing/ product trailing

● To small section of the population gathering
● gathering information regarding what customers think of the product.

. Commercialisation and launch

● Business can use high profile press conference
● Final touches made

Packaging
its important bcuz :
A.It makes storage easier (think about cornflakes without boxes)
B. It impacts buying decisions
C. Helps promote brand recognition
D. Helps the product to stand out on the shelves
E. Gives information to the customers (on the box)
F. Consumers link the quality of product with packaging eg- cosmetics , perfumes , watch
G. Packaging also helps to the product to be recognised

Factors affecting choice of packaging

. Protection-
Eg- fragile and perishable good needs strong packaging

. Convenience
Eg- easy to handle , open and use

. Design
Eg- able to identify the brand
Must be appealing
Must reflect the nature and quality of product

. Environment.
Eg- minimise use of materials
Should be recyclable

. Cost effective
Eg- must not be too bulky
Need to keep distribution costs down

. Information
Eg- labels should comply with the law. Usage direction , ingredients

Marketing mix
Elements of a firm’s marketing that are designed to meet the needs of customers

Marketing strategy
A plan which helps business to achieve its marketing objectives

4 P’s :
● Product ( design and produce high quality products )
● Price ( acceptable to customers )
● Promotion ( lets customer know about the product )
● Place ( distribution , makes product visible at the right place at the right time
Product life cycle
Product life cycle analysis helps business understand the stages of a product and makes
better strategic decisions about marketing , investment and resource allocation

Stages of PLC :

. Research and development

This is the first stage of the product lifecycle where a product is designed and market
research is analysed to produce a product which will satisfy customer needs. This is a very
expensive phase and at this point the product is not making any revenue and therefore no
profit. All capital at this point will just be an investment, there is always a risk of the product
not being a success

. Introduction
The introduction phase will involve high costs in research and development and the product
may have been test marketed before launching, so profits may be negative. Sales will be low
as customers may not yet be aware of the products. Advertising will be informative to let
customers know that the product has been launched

. Growth
Growth phase products are enjoying rapid growth in sales and profits. At this stage the
customers are aware of the product and demand is high. A business may advertise the
product to take advantage of the high demand
 . Maturity phase
Maturity phase products face intense competition now all the suppliers have joined the
market. Market is starting to be saturated – everyone has bought the product who is likely to
buy. Sales are high but profits are starting to fall Products have to be discounted to keep
sales high – so prices may be lowered or the product may be put on sale

. Decline
Decline phase products may be limited in production. At this stage profits and sales have
fallen and the product may be withdrawn from sale. The business may decide to heavily
discount to get any last sales before the product becomes obsolete. There is a trend towards
more disposable items rather than products that can be fixed or repair – they are simply
replaced with new ones, therefore repairable goods are in decline phase

Usage of plc :
1. Strategic Marketing Decisions
By Identifying the stage (e.g., introduction, growth, maturity, decline), businesses can adjust
the marketing mix appropriately.

Chain of Reasoning:
At the growth stage, a firm may increase advertising and expand distribution this builds
brand loyalty and market share ensuring long-term profitability.

Example: Apple increasing promotional spending during the launch of a new iPhone to push
rapid adoption.

2. Forecasting Sales and Profits

PLC analysis provides insight into expected sales trends and cash flow patterns.

Chain of Reasoning:
businesses can predict In the maturity stage, sales are high but growth slows stable
revenues making it easier to plan budgets and capacity.

Example: Coca-Cola uses PLC analysis to forecast demand and maintain consistent
production levels.

3. Planning Extension Strategies.

When a product nears maturity or decline, firms can plan extension. strategies (e.g.,
rebranding, product improvements).

Chain of Reasoning:
This prolongs the profitable stage of the life cycle. delays decline maximises return on
investment.

Example: LEGO constantly reinvents product themes (Star Wars, Harry Potter sets) to extend
the maturity of its brand.

4. Resource Allocation & Investment Decisions

PLC helps businesses decide where to invest more and where to cut back

Chain of Reasoning:
A declining product may not justify heavy marketing resources can be diverted to new
product development ensuring long-term competitiveness.

Example: Netflix reduced investment in DVD rentals and channelled Funds into streaming
services.

The purpose of PLC analysis is to:

● Guide marketing mix strategies at each stage.
● Forecast sales, profits, and cash flow.
● Plan extension strategies to sustain demand.
● Support resource allocation and investment decisions.

In short: PLC analysis helps businesses maximise the profitability of products while
managing their portfolio for long-term growth.

Advantages

1. It tells device promoted strategies the model will help make decisions on established
products. For example, new products intro growth stage- so more promotion.

2. Identify products in maturity stage- Use extension strategies

3. Identify products in decline stage- decide whether to withdraw

4.identify products in growth stage- Spend more in advertising, promotion, increase

capacity to reduce more.
5. It has predictive value. ( The ability to forecast future outcomes or trends based on current
or past information.)

Overall helps in marketing strategies for different products in terms of pricing, promotion,
distribution.

Disadvantages
1. simplistic model, many products whose sales follow the classical shape, but for many
other products, the trajectory is different. It is difficult to predict, especially when taste
fashion in the market changes quickly.

2. Take no account of competitor's actions. Some products may reach decline quicker than
anticipated if competitor launches superior product.

3. Better to use Boston Metrics if the business has a wide range of products.

4. Often, a time lag between data collection and product lifecycle analysis.

In conclusion, to finalize decision on a product range, other factors should also be

important, such as finding on competitors, the economy, changing trends.
Product life cycle- extension

Extension strategies- are designed to extend the life of the product before it goes into
decline
Refers to Prolonging the maturing stage

ways that a business can extend the lifecycle of a product rather than withdrawing it from
sale :

1. updating packaging
It is very expensive to design and develop new products.So those products that have
reached maturity or are starting in the decline phase will get a
fresh new image and be relaunched. This encourages existing customers to continue to buy
and also new customers may now be attracted to the product

2. adding more or different features

One of the methods of extending the lifecycle is through product modification and a good
example of this is cars, which retain the same engine but change the styling. This strategy
will either sell to a new market or remind the old market that its time to change the products
to the new version

3. changing target market

Once the business decides to extend the lifecycle of the products that they make, they may
conclude that they need to sell the same products but to a different segment or target
market.This can be done by the way the goods are marketed and the platforms they use to
communicate promotions and advertising to customer

4. advertising
When the product has reached the maturity and saturation point (it has been sold to
everyone). There are lots of brands that have been around for generations and have never
reached the decline stage. A new creative advertising campaign can make a real impact on
product sales

External strategies might make it difficult for rivals to enter the market

Boston matrix
Product portfolio- is the collection of all the products and services offered by a company. A
detailed analysis of this portfolio can provide insights
into the sources of company sales and profits, and growth prospects

Boston matrix- the Boston consulting group( BCG) matrix , commonly called Boston matrix,
is a strategic planning tool used in portfolio analysis . Its main purpose is to help a business
access its range of products ( or strategic business units SUBS ) by comparing
● Market growth rate ( high or low )- shows how attractive the market is
● Market share ( high or low )- shows how competitiveness the product is in the market

Products are placed in 4 categories :

. Stars
● Have high market share
● Are in a high growth market
Star products need to maintain their current marketing spend to keep
sales high Stars should become cash cows in time, if the marketing is managed correctly
Example- Stars: iPhone (dominant market share in a growing smartphone market)

. Question mark
● Have low market share
● Are in a high growth market
Question mark products have lots of potential to become stars if they
are managed correctly Question marks will need lots of investment in marketing and
promotion – if they are to succeed

Eg- Question Marks: Apple Vision Pro (new product, high growth industry,
but uncertain share)

. Cash cow
● Have high market share
● Are in a low growth market
Cash cow products are good sellers and need little or no new investment
The product just need to be ‘milked’ for cash (hence the term) Cash cows need monitoring in
case they become dogs
Eg- Cash Cows: MacBook (high share but in a slower growth PC market)

. Dog
● Have a low market share
● Are in a low growth market
Dog products require no investment as they are in the decline phase of their lifecycle. The
product may have become obsolete or replaced
The business may consider discontinuing or withdrawing the product
Eg- Dogs: iPod (low growth, obsolete market – discontinued).

How it is useful in portfolio analysis

1. Resource allocation
• Businesses can decide where to invest resources.
• For example, cash cows generate high profits and can fund investment
into stars or question marks.

2. Strategic decision-making
• Helps managers identify which products to grow, maintain, harvest, or
divest.
• Example: Dogs may be phased out to avoid wasting resources.
3. Balance of portfolio
• Ensures the business isn’t too reliant on one type of product.
• A balanced portfolio would have some stars (future leaders), cash cows
(stable profit generators), and limited dogs.

4. Long-term planning
• Encourages forward-looking decisions.
• Stars may turn into cash cows as the market matures, ensuring
sustainability of revenue.

In summary:
The Boston Matrix is a portfolio management tool that helps businesses analyse their
products based on growth and market share, guiding them in resource allocation, strategic
choices, and long-term planning
4.3.2
Price

Pricing- refers to deciding the amount that is required as payment for a product or service

Cost pricing :
Penetration pricing :
Competition pricing
Skimming price
Promotional pricing
Predatory pricing ( illegal )
A pricing strategy where a business sets prices very low, often below cost, to drive
competitors out of the market and later raise prices once competition is reduced
4.3.3
Place- distribution channels
Distribution retailers
A retailer is a business that sells goods direct to a
consumer through a ‘bricks and mortar’ shop

● Direct to customers
A retailer sells goods directly to a consumer.The owner of the retail shop may have bought
the goods from a wholesaler or manufacturer to sell to the consumer. The retailer will mark
up the price of the goods, so they will be more than they paid for them This is how a retailer
makes a profit

● customer service
Retailers or shops are useful when a customer needs some help with their purchase or needs
to see the products up close For example the material of a dress or jumper may be hard to
see online, whereas in a shop the customer can feel the material Some customers may wish
to try on clothes or shoes to make sure they fit before making a purchase

● Independent retailers
Independent means these retailers are NOT part of a chain like Tesco.These are smaller
retailers usually started by the business owner.They may sell niche market products which
are more unique and so a higher price can be charged. They may have to compete on non-
price factors such as customer service
Distribution e-tailers / e-commerce
An e-tailer is a business which sells goods direct
to a consumer via the Internet

4.3.4
Promotion
is the process in marketing of : reminding, informing or
persuading customers to buy a product or service
a business uses advertising to :
A. To give customers information about a new product
B. To raise awareness of a product or a brand
C. To remind customers how great an existing product is
D. To persuade customers to switch or to try a new brand
Promotional strategies :
● Advertising
● Sponsorship
● Product trails
● Special offers
● Branding

1.advertising :
• Mass market, broad age range: Television
• Style/interest-based niches (e.g., fashion, cars, gaming): Magazines
• Local, price-sensitive adults, older readers: Newspapers
• Local commuters, drive-time audiences, budget-conscious SMEs: Radio

. Newspaper

What/when: Printed daily/weekly. Best for local/regional reach and older or

price-conscious segments.

Example: A Dhaka-based grocery chain advertises weekend discounts in The Daily Star to
reach local households.
Pros (with 3-stage chains of reasoning)
1. Local targeting → papers have city/region editions → the message
reaches nearby households → higher relevance and footfall.

2. Trust & detail → print format allows longer copy + price lists →
shoppers can compare offers → supports immediate purchase decisions.

3. Short lead time → quick booking/production → ads can match fast

price changes → useful for time-limited promos.

Cons (with 3-stage chains of reasoning)

1. Declining readership → many people get news on phones → fewer
eyeballs per ad → lower reach per taka.

2. Short life → papers are discarded daily → exposure window is brief

→ frequency spend may rise.

3. Weaker visuals → newsprint limits colour quality → less stopping

power vs glossy/TV → brand image impact reduced.

2.Magazines

What/when: Periodical, glossy. Best for interest-defined niches (fashion, tech,

cars) and premium/lifestyle positioning.

Example: A luxury watch brand buys a full-page spread in a men’s style

magazine to reach affluent, style-conscious readers.

Pros
1. Precise niche targeting → readership self-selects by interest →
wastage falls → higher relevance per impression.

2. High production quality → glossy visuals + colour accuracy → product

looks aspirational → stronger brand image.

3. Long shelf life → magazines stay on coffee tables → repeated re-

reads → extended exposure without extra cost.

Cons
1. Long lead times → monthly cycles require early booking → slow to
tweak offers → poor for fast-moving promos.

2. Higher cost per thousand (CPM) → quality print is expensive → fewer

total impressions for budget → limits frequency.

3. Narrower reach → tight niche equals smaller audience → scale-up

needs multiple titles → planning becomes complex/costly.

3. Television

What/when: Audio-visual, broadcast. Best for mass-market awareness,

demonstrations, and brand building across wide demographics.

Example: A national beverage brand runs a prime-time 30-second spot during a popular
drama to reach families.

Pros
1. Huge reach + impact → sight, sound, motion → emotional storytelling
→ rapid brand awareness at scale.
2. Great for demos → show product in use → reduces uncertainty →
boosts trial intentions.
3. Signal of credibility → being on TV implies scale/professionalism →
reassures buyers → supports premium pricing.

Cons
1. Very expensive → production + prime-time media costs → strains SME
budgets → high break-even sales needed.
2. Wastage risk → broad audiences include non-targets → pay for
impressions that don’t convert → lower ROI for niche offers.
3. Ad avoidance → zapping/second-screening → fewer ads fully watched
→ effective exposure may be below paid reach

4. Radio

What/when: Audio only. Best for local reach, commuters, and frequency on a budget.

Example: A neighborhood tutoring center runs 15-second spots on popular

morning commute shows to reach parents.

Pros
1. Cost-effective frequency → low spot prices → repeat messages
across dayparts → memory reinforcement at low cost.
2. Drive-time capture → listeners in cars/rideshare → fewer visual
distractions → higher attention to short messages.
3. Local station targeting → choose stations by city/language/music
genre → message fits audience → relevance improves response.

Cons
1. No visuals → can’t show product or design → weaker demonstration
→ harder for new/complex products.
2. Fleeting exposure → 10–30s spots vanish quickly → single hearing
may not stick → needs high frequency to work.
3. Audience fragmentation → streaming/podcasts split listening →
smaller station audiences → reach may require many buys.

Quick “which medium when?” (exam hack)

• Local weekend price promo (supermarket): Newspapers or Radio (local
targeting, quick activation).
• Luxury/aspirational product (watches, skincare): Magazines (visual
quality, niche fit).
• New mass-market FMCG launch: Television (scale + demo power).
• Small service business near schools (tuition): Radio (local + frequency)
and/or local Newspapers

2.Sponsorship

When a business pays to support an event, team, or activity in

return for exposure.
Example: Coca-Cola sponsoring the FIFA World Cup → logo exposure to a
global audience.

Pros
1. Brand visibility → logo/name shown to event audiences → reinforces
recognition → supports long-term loyalty.
2. Positive association → link with popular event/team (e.g., sports) →
audience goodwill rubs off on brand → enhanced brand image.
3. Targeted reach → sponsor niche events (e.g., a coding competition by
Dell) → product fits audience interests → higher relevance per spend.
4. Builds awareness of the brand

Cons
1. High cost → big events demand millions → small firms cannot afford
→ risk of low ROI if sales don’t rise.
2. Risk of controversy → if sponsored team/event gets negative
publicity → brand image damaged → backlash possible.
3. Indirect effect → sponsorship does not show product benefits directly→ awareness may
not turn into sales → impact is hard to measure.
4. Difficult to tell what impact this has on brand loyalty and sales
5. Controversies with brand ambassadors saying the wrong thing against the brand
6. No guaranteed returns on the investment
7. More expensive than other methods of promotion
3.Product trails

Giving consumers a chance to use the product for free or at very low cost.

Example: A new yogurt brand handing out free samples in supermarkets.

Pros
1. Reduces uncertainty → customers taste/experience before buying →
boosts confidence → higher chance of adoption.
2. Quick feedback → trial reactions give insights → firm adapts product
if needed → improves long-term success.
3. Word-of-mouth effect → satisfied samplers tell friends → free
advertising → spreads awareness cheaply.

Cons
1. Expensive in short term → free distribution costs money → revenue
delayed → financial strain for new firms.2. Limited scale → trials usually reach small areas →
national
awareness not immediate → slow expansion.
3. Risk of wastage → people may take samples without intent to buy →
high cost with little sales → inefficient use of resources.
4.Special offers

Short-term incentives like discounts, “buy one get one free,” or coupons.

Example: Domino’s Pizza offering “50% off all orders over Tk1000 for a week.”

Pros
1. Boosts short-term sales → lower prices attract new buyers → volume
rises → helps clear stock or increase cash flow.
2. Encourages trial → first-time customers test product at low risk → if
satisfied → repeat purchases may follow.
3. Competitive advantage → price cut undercuts rivals → captures
market share → strengthens position temporarily.

Cons
1. Reduced profit margin → discounts cut revenue per unit → firm earns
less per sale → unsustainable long-term.
2. Short-lived effect → customers stop buying once offer ends →
demand falls back → not a lasting solution.
3. Risk of brand devaluation → frequent discounts signal “cheap” →
brand image weakens → harder to charge premium later.
5.Branding

Branding is the process of creating a unique identity and image for a product, service, or
company in the minds of customers. It involves developing a distinctive name, logo, design,
and message that sets the product or service apart from its competitors and creates a
positive perception among customers. It is the first impression of a business is likely to be
the logo, which is important when the customer if forming early opinions The best designs
are simple, attractive and memorable

Value :
● A strong brand is one that is recognisable, memorable and has a positive reputation
● It helps customers to identify and differentiate the product or service from others in
the market, and can also influence their purchasing decisions
● Branding involves communicating the brand values , personality and unique selling
point (USP) to customers through the promotional mix

Example: Apple’s logo and “Think Different” identity → strong brand loyalty worldwide.

Pros
1. Customer loyalty → strong brand = repeat purchases → customers
trust quality and reduces the need of constant promotions → boost profit margins

2. Price premium → consumers pay more for branded goods (Nike, Rolex) charge more than
generic → higher margins → increased profitability.

3. Differentiation → branding separates products in crowded markets →

reduces price competition → market share protected.

4. Competitive advantage → branding differentiates in crowded markets

→ reduces price competition → protects market share.

5. Trust & credibility → customers view branded firms as more reliable

→ reduces perceived risk of purchase.

Cons
1. High investment cost( building and maintaining brand requires heavy advertising ) →
advertising + design + promotion needed →
expensive for SMEs → financial risk if it fails.

2. Takes time → building recognition is slow → sales may not rise

immediately → long payback period.

3. Brand damage risk → one faulty product (e.g., Samsung Galaxy Note
7 batteries exploding) → global trust loss → revenue hit across range.

1) Above the Line (ATL) Promotion

Mass-media advertising that reaches a wide audience through

traditional paid channels (TV, radio, newspapers, magazines, billboards).

Purpose: Build brand awareness and shape long-term image.

Example: Samsung advertising its Galaxy smartphone on national television.

Pros
1. Wide reach → adverts broadcast nationally → brand seen by millions
→ rapid awareness building.
2. Professional image → TV/radio ads show a firm is large/trusted →
improves credibility → helps premium positioning.
3. Standardized message → one ad reaches all → consistent
communication → clearer brand identity.

Cons
1. Very expensive → airtime + production costs high → SMEs struggle →
poor ROI if sales don’t rise.
2. Hard to target → many viewers/listeners are outside target group →
wastage → lower efficiency.3. Limited feedback → no direct interaction with customers →
effectiveness is hard to measure → difficult to adjust quickly.

2) Below the Line (BTL) Promotion

Direct, more targeted methods that are not mass media. Includes
sales promotions (discounts, coupons, loyalty cards), direct mail, sponsorship, in-store displays,
personal selling.

Purpose: Drive short-term sales or specific customer responses.

Example: A supermarket offering “Buy One Get One Free” on detergent.

Pros
1. Highly targeted → loyalty cards or coupons reach specific customers
→ less wastage → better conversion rates.
2. Direct feedback → customers redeem vouchers or respond to emails
→ firms measure impact → data improves planning.
3. Cost-effective for SMEs → cheaper than TV/radio → flexible budget
use → accessible to smaller firms.

Cons
1. Short-term effect → boosts sales during offer only → demand may
fall after → not sustainable long-term.
2. Lower prestige → discounts/promos may cheapen image → reduces
perceived quality → damages brand positioning.
3. Clutter risk → customers bombarded with emails/offers → reduced
attention → promotion fatigue.

3) Public Relations (PR) – Improving Company Image/Brand

Activities designed to build and maintain a positive image of the

business in the public eye. Includes press releases, charity involvement,
community projects, media coverage.

Purpose: Strengthen goodwill, trust, and reputation rather than direct sales.

Example: Unilever running sustainability campaigns and publishing CSR reports.

Pros
1. Improves brand trust → good press/community involvement →
customers see firm as ethical → stronger long-term loyalty.2. Cost-effective exposure → positive
media coverage often free →
higher credibility than paid ads → efficient image building.
3. Crisis management → PR teams handle scandals (e.g., recalls) →
mitigates damage → protects brand reputation.

Cons
1. Uncertain control → media may spin stories negatively → outcomes
unpredictable → risk of backfiring.
2. Slow impact → takes years to build trust → not effective for
immediate sales → weak in short-term promotion.
3. Resource intensive → needs PR specialists and planning → costly for
small firms → time and money pressure.

Targeted Advertising Online

Paid adverts placed on websites or search engines, shown to

specific audiences using data such as browsing history, age, location.

Example: A Dhaka clothing store running Facebook ads targeted at 18–25-

year-olds interested in fashion.

Pros
1. Precise targeting → ads only shown to selected demographics →
reduces wastage → higher return on investment (ROI).
2. Measurable results → click-through rates and conversions tracked →
businesses adjust campaigns quickly → improves effectiveness.
3. Cost flexibility → firms can set daily budgets (e.g., Google Ads) →
affordable even for SMEs → accessible to small firms.

Cons
1. Ad avoidance → many users skip or block ads → exposure falls →
limits impact.
2. Privacy concerns → tracking customer data may feel intrusive →
negative brand perception → trust issues arise.
3. High competition → bidding for keywords is costly → SMEs outbid bylarge rivals → reduces
visibility.

Viral Advertising via Social Media

Content (videos, memes, challenges) that spreads rapidly when users share it.

Example: Nike’s inspirational campaign shared millions of times on Instagram

and TikTok.

Pros
1. Low cost, high reach → user sharing drives exposure → millions
reached without extra spend → efficient awareness building.
2. Engages youth → social media aligns with Gen Z/Millennials →
interactive sharing → strong brand engagement.
3. Builds emotional connection → creative/relatable content triggers
shares → customers feel involved → boosts loyalty.
Cons
1. Unpredictable → firms cannot guarantee virality → campaign mayflop → wasted effort.
2. Negative spread risk → if content is mocked or misinterpreted → bad
publicity spreads fast → damages reputation.
3. Short-lived impact → viral trends fade quickly → awareness may not
lead to sales → limited long-term effect.

E-Newsletters

Regular promotional emails sent to customers who subscribe.

Example: Amazon sending weekly newsletters about discounts based on past

purchases.

Pros
1. Direct communication → reaches customers personally via inbox →
strengthens relationship → encourages repeat purchases.
2. Low cost → once mailing list built → sending emails is cheap → cost-
effective for SMEs.
3. Customisation → content tailored to customer interests (e.g., travel
deals) → more relevance → higher conversion rates.

Cons
1. Spam risk → many emails deleted unopened → engagement low →
message ignored.
2. List maintenance needed → addresses change or unsubscribe →
constant updates required → resource intensive.
3. Annoyance factor → too many emails frustrate customers → brand
seen as intrusive → trust declines.