Edexcel GCSE Business Studies Revision Cards for Section 1

Building a business requires marketing. The business must provide the right balance between product, price, place and promotion. Some businesses find that each P is equally important. Others learn that one P is more important than any other.

Market research - the process of gathering, analysing and interpreting information about a market, about a product or service to be offered in that market, and about past, present and potential customers

Primary research - when a firm carries out first-hand research by field work, e.g. a questionnaire. Usually more useful than secondary research because it is specific to the firm's requirements.

Secondary research - information from second-hand sources, e.g. government statistics, books or websites. Cheaper than primary research but can be less useful

Qualitative research - in depth research using focus groups or depth interviews. It is used to find out consumers' behaviour and attitudes

Quantitative research - deals with large quantities of data, e.g. a sample size of 500 for a survey. This allows statistical analysis of the results

Socio-economic group - the customer's social class. For example, people in the AB group are professionals and managers.

It can be difficult to get people to buy a product for the first time, because:

• buyers are locked into existing brand loyalties
• buyers' earlier decisions make it difficult (e.g. someone who is halfway through a mobile phone contract)
• the new business may not have established a reputation/brand image yet

To achieve brand loyalty, some factors are crucial:

• the product/service must not be a disappointment for the customer
• the brand image must match the customer's image of themself
• the product must seem value for money

Product trial - when a consumer samples a product for the first time

Brand loyalty - a strongly motivated and long-standing decision to purchase a particular product or service

There are 4 stages in a product life cycle:

1. Introduction - after research and development, the product is launched and placed on the market. There will be low sales and small-scale distribution, Any advertising will be informative, to make people aware that the product exists.

2. Growth - at this stage the product becomes known in the market and there will be a wider distribution network. Advertising will be less frequent than at the product's launch. Profits begin to rise.

3. Maturity - the market may become saturated as copycat products are launched. Sales growth flattens out and cash flow improves. Weak brands often disappear at this stage, as they cannot compete.

4. Decline - sales and profits start to fall. The product is no longer offering what customers want or new technology used by other products has made it out of date. The last products are often sold at a reduced price, before the product is withdrawn from the market.

Firms may use extension strategies to prevent sales going into decline. Some of the techniques they can use are:

• to find new uses for the product
• to develop a wider product range
• to change the appearance, format or packaging
• to encourage the use of the product on more occasions
• to adapt the product ('new and improved')
• to reduce the price

At the start of the product life cycle there is no cash inflow because money is paid out to design, develop and launch the product.

Most products have a portfolio of products that they sell. Some products are more popular than others. The Boston Matrix is a tool that managers can use to compare products and decide which to concentrate their efforts on.

Problem children - low market share, high-growth market. Require lots of money to be succesful.

Rising stars - high market share, high-growth market. Generate lots of sales but often need lots of money to be spent on them, because the market is growing. Stars are destined to become cash cows, so should be kept and built up by businesses.

Cash cows - high market share, low-growth market. Generate lots of sales and huge profits. Profits from these products often help fund problem children or rising stars. Cash cpows generate more than is invested in them

Dog - low market share, low-growth market. May have once been cash cows or problem children. Businesses want as few dogs as possible, as they have no real future.

Problems with the matrix

• Business often assume that high market share = more profit. This is not always the case. High costs mean that even products with a high market share can make small profits
• Sometimes the matrix over-simplifies things. A product may be a dog, but sales could pick up

Branding gives a product an identity. Building and managing a brand plays a big part in whether customers become loyal.

The advantages of having a strong brand are:

• it encourages customer loyalty, leading to repeat purchases and word-of-mouth
• companies are able to charge higher prices
• retailers want to stock top-selling brands

However, there are also disadvantages to branding:

• it causes high costs
• constant promotion is necessary to maintain the brand
• a single bad event may affect all of the brand's products
• brand names have to be protected by being registered worldwide

Differentiation - the process of making a product seem distinct from its competitors

There are many ways in which a business can differentiate its products or services:

• logo
• name
• quality
• content
• packaging
• design

A product gains a USP (a key feature of a product that is not shared by any of its rivals) when it has an important feature that other products do not have.

The marketing mix is made up of four elements: product, price, place and promotion. In order to be successful a firm must make sure it has:

• the right product/service (that customers like and and want to buy)
• the right price
• promotion via the right medium (TV, radio, magazines, newspapers)
• availability at the right place (a Chanel perfume is better suited to Selfridges than to Savers)

Why do some products fail?

Launching products is difficult because customers get used to their everyday products. Furthermore, markets are often crowded.

Public image - how a business is perceived by the general public