Cambridge IGCSE Business PDF Past Paper

Head to www.savemyexams.com for more awesome resources Cambridge (CIE) IGCSE Your notes Business 3.1 Customers, Marketing & Competition Contents The Role of Marketing The Dynamic Nature of Markets Niche & Mass Ma...

Head to www.savemyexams.com for more awesome resources Cambridge (CIE) IGCSE Your notes Business 3.1 Customers, Marketing & Competition Contents The Role of Marketing The Dynamic Nature of Markets Niche & Mass Marketing The Process of Market Segmentation Page 1 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources The Role of Marketing Your notes Identifying & Satisfying Customer Needs Marketing helps a business identify and satisfy the needs and wants of its customers Identifying customer needs involves finding out about the Variety and quality of goods and services that customers want Prices they are willing to pay Promotional techniques that may persuade them to make repeated purchases Convenience factors, including where and how they want to purchase products After-sales services they anticipate Satisfying these customer needs involves ensuring products are available when and where customers want to buy them, at a suitable price, at the quality expected and with effective customer service Diagram: benefits of identifying customer needs Page 2 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Your notes The ultimate aim of identifying and meeting customer needs is to ensure business survival and success Businesses that successfully identify and satisfy customer needs Will compete more effectively than rival businesses Will keep up to date with changing tastes and preferences Will attract positive word-of-mouth recommendations and build the brand The Benefits of Meeting Customers Needs Page 3 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Need Explanation Benefits to the Business Your notes Price This is the amount of money a Understanding this helps the business set customer is willing to pay for a competitive prices and offer appealing product or service promotions to their target market Customers often have a budget in mind and want to find the best value for their money Quality Quality refers to the standard of Understanding this helps businesses excellence that a customer create products that meet the desired expects from a product or standards, which can lead to customer service loyalty and positive word-of-mouth advertising Customers want products that are reliable, durable, and meet their expectations They also want good quality after-sales service Choice Customers often have a wide Understanding this helps businesses offer range of preferences and want to a range of product options that cater to be able to choose from a variety different customer preferences of products or services This can increase customer satisfaction Varied features, such as sizes, and loyalty, as customers are more likely to colours and styles, are required purchase a product that meets their by different customers specific needs Convenience Customers value convenience Understanding this helps businesses to because they want products that create a customer experience that is both are easy to access and use efficient and enjoyable This includes factors such as By providing a convenient shopping location, online ordering, and fast experience, businesses can build delivery customer loyalty and increase repeat sales Customers may also want a variety of ways to pay for the products Page 4 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Customer Loyalty & Relationships Customer loyalty is when existing customers buy products from the same business over and over Your notes again Customer loyalty leads to repeat purchases and a rise in market share. It is much cheaper for a business to try to keep existing customers (for example, with loyalty cards) than trying to gain new customers, as this can involve expensive advertising campaigns Building customer relationships involves communicating with customers to encourage them to become loyal to the business and its products Good relationships are maintained by Developing close ties with customers and finding out if products/services are continuing to meet their needs E.g. Using surveys to discover if preferences are changing Using technology to gather important information about customers By having strong relationships with the customer, the business can respond appropriately when customers change their expectations of what they want from a good or service Page 5 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources The Dynamic Nature of Markets Your notes Changing Customer Needs & Spending Patterns Markets and marketing strategies are constantly changing as a direct result of the changing wants/needs of customers, which affect their spending patterns There are many different reasons for changes in customer spending habits and patterns Businesses that conduct ongoing market research are able to identify and interpret the changes that are happening in markets Diagram: reasons for changes in spending patterns If businesses fail to respond to changing customer needs, then they are likely to fail Changes in tastes and fashions Trends in some markets can change very quickly E.g. Wide-leg jeans are now more fashionable with Gen-Z customers than 'skinny' jeans worn by Millennials Change in disposable incomes High unemployment or inflation may lead to customers to buy cheaper products, e.g own brand breakfast cereal Demographic changes Page 6 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Populations in most developed countries are becoming older Demand for products that meet their needs has driven many market changes Your notes E.g. Sales of specialist travel insurance for mature holidaymakers has increased Global influences The arrival of well-known international brands can change demand and purchasing patterns in a market Increased travel, support from celebrities and extensive promotional activity drive demand E.g. American fast food chains now dominate the market for fast food across Europe Changes in technology New technology makes old technology less desirable or obsolete E.g. Products such as smart speakers are replacing sales of radios Increasing Competition in Markets Competition occurs when at least two businesses are providing goods/services to the same target market The more businesses in the market, the more intense the competition Competition results in many benefits for the customer, such as Lower prices Better-quality products Better customer service However, the absence of competition reduces incentives for businesses to innovate, be efficient or offer consumers lower prices Some markets have become more competitive in recent years as a result of Globalisation of markets has meant that products are increasingly sold all over the world Transportation improvements have meant that it is easier and cheaper to transport products from one part of the world to another Internet and e-commerce have meant that consumers can search for products and buy from overseas markets Increased consumer information about products and the different international businesses that produce them makes the market much more competitive Page 7 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Responding to Changing Spending Patterns and Increased Competition Your notes Whenever there are changes to spending patterns or competition a business will need to take action to maintain its market position Steps a Business can take to Remain Competitive Step Explanation New product The development of new and innovative products encourages customer development loyalty and also attracts new customers E.g. Apple identified changing trends in the way people consumed music and switched their focus from iPods to digital downloads via the Apple Music App Customer focus Provide outstanding customer service ensures customer loyalty for longer periods of time Improve products Customers will compare products and services to competitors so improving the product allows the firm to maintain market share and stay competitive E.g. Google software developments (e.g. Google Meet) differentiate Google from other search engine software Minimise costs Lower costs can sometimes be passed onto the consumer in the form of lower prices Increased retained profit can be used to fund promotion to raise awareness of a brand/its products or expansion which allows a business to operate on a larger scale Examiner Tips and Tricks It's important to recognise that the competitive environment is changing all the time but the change is unpredictable in many cases. Competitive businesses can never stand still. They need to be constantly investigating and responding to changes in the market or risk losing their competitive advantage. When you're weighing up choices for a business, try to include the idea that further Page 8 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources change are likely to happen, or that current changes could be short-lived. This demonstrates deeper understanding of how the competitive environment works. Your notes Page 9 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Niche & Mass Marketing Your notes Niche & Mass Marketing In mass markets, products are aimed at broad market segments Mass marketing occurs when businesses sell their products to most of the available market Production usually happens on a large scale Products are generally standardised with little differentiation Kellogg's Corn Flakes is an example of a breakfast cereal brand aimed at the mass market In niche markets, products are aimed at a small subset of the larger market, e.g. gluten-free products Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market Production usually happens on a small scale Products may be made to order or produced with very specific customer needs in mind Bob’s Red Mill is well known for producing a variety of high quality gluten-free foods, including a range of breakfast cereals Some niche markets become mass markets as large businesses start to realise the potential for growth E.g. Energy drinks started out as ‘niche products’ aimed at those engaging in fitness classes but as prices have fallen and more choice is available they have now become mass market products Evaluating Mass Markets & Niche Markets Market Benefits Drawbacks Type Mass Low average costs due large scale Products are less unique as they market production economies of scale are aimed at broad market segments Low prices lead to greater affordability and higher sales volumes Highly competitive markets that generally push down selling prices The potential customer base is large Low prices lead to lower profit Save money on marketing by using mass margins marketing channels to appeal to large volumes of customers E.g. TV Page 10 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Primark is an example of a clothing company that focuses its product on the mass market Your notes Niche Products are specialised and unique as they High average costs due to small market are aimed at narrow market segments scale production Builds up specialist skill and knowledge, They do not benefit from leading to a business having valuable market economies of scale expertise High prices make products less High prices can allow businesses to earn a affordable and lead to low sales higher profit margin volumes Louis Vuitton is an example of a fashion Risk of over-dependence on a company that aims its products at a niche single product or market market Likely to attract competition if successful Page 11 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources The Process of Market Segmentation Your notes An Introduction to Market Segmentation Market segmentation is the process in which a single market is divided into sub markets or 'segments' Each segment represents a slightly different set of consumer characteristics Firms often segment their markets according to factors such as geographical location, demographics, behavior and lifestyle, age or gender Businesses can choose to segment markets in a variety of ways A market for a product such as crisps is not simply seen as one market e.g. the crisp market is divided up into many market segments such as Dinner party snacks (Walkers Sensations, Pringles, Burts) are targeted at middle to upper earners/professionals with a premium price Health conscious crisps (Walkers lite, Walkers baked, Revita lite) are targeted at the health conscious market Lunch box value snacks (multipacks, hoola hoops etc) are targeted at families and the mass market The Advantages & Disadvantages of Market Segmentation Advantages Disadvantages Recognises that consumers are not all Not everyone within a segment will identical; consumer groups do not all share the behave in the same way same tastes and preferences Page 12 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources Products and marketing activities can be altered It may be difficult to identify a to meet different needs of different groups of segment and consumers can belong Your notes consumers and targeted more precisely to multiple segments at the same time Less expensive and wasteful than marketing Segmentation requires more detailed products at wide market segments market research, which can prove costly but beneficial to the business It may increase loyalty if the consumer feels that A segment may be identified but it their needs are being met, which can lead to may be too small and unprofitable to repeat purchases cater for Recommending an Appropriate Method of Segmentation The type of market segmentation used will depend upon the nature of the business itself Examples of industry specific segmentation include The cosmetic industry often aim their products at a specific gender. In recent years, there has been a growth in specific make-up products aimed entirely at men, such as 'Guyliner'- eye liner for men A bespoke watchmaker may base their segmentation on income levels, aiming at high income customers who can afford their handmade, niche market pieces A business that runs boot camp style exercise classes may base their segmentation on lifestyle choices E.g. those people who want to improve their fitness levels Before recommending an appropriate method of market segmentation the business must also consider a number of factors Factors Affecting Choice of Market Segmentation Factor Explanation Brand image The business must consider whether appealing to the chosen segment aligns with the existing brand image of the product/company E.g. A luxury fashion retailer may harm their image if they try to appeal to a budget market Cost of entry into How much advertising will be needed to attract the attention of the segment? the market Page 13 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  Head to www.savemyexams.com for more awesome resources segment E.g. The fitness fashion industry is very competitive with brands such as Gymshark and Puregym and a new entrant may therefore require a large promotional campaign budget to catch the attention of potential Your notes customers Market analysis The business will need to examine market research data to find out how big the data potential market segment is in terms of number of customers and potential future sales Page 14 of 14 © 2015-2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers