Revision Notes for Edexcel A Level Business Theme 1 - Marketing & People

1. Edexcel Business A Level
Theme 1- Marketing & People

2. Introduction to marketing
• Marketing objectives: Aims and objectives
• Raise brand loyalty
• Brand awareness
• Marketing strategies: Plan to achieve objectives
• Profits (desire for)
• Offensive (stay) instead of defense
• Integrate (with other business functions)
• Strategic (be)
• Effective (be result oriented)
• Characteristics of effective marketing:
• Identifying target market – market research / focus advertising expenditure
• Segment your markets
• Coherent brand image

3. The Market
• Mass Market: Products that have universal appeal
• Generic (Normal) products
• Large distribution
• Many outlets
• Lower prices
• Niche market: Smaller section of a larger market
• Strong USP
• Small volumes
• High selling price
• Market Size: Total no. of sales in the market
• Value or Volume??
• Market Share = ( Value of one businesses sales/Total sales in the market ) X 100
Benefit of Mass
Lower price
Economics of scale
Ease in advertising
Benefit of Niche
Higher Price
Profit Margin greater
USP therefore brand loyalty

4. The Market
• Example Calculations
1) A business has 30 % market share and have revenue of £360,000. What is the
total size of the market.
Answer
(£360,000/30%) X 100 = £1.2 million
2) What is the percentage growth rate in sales?
2013 = £127,900 2014 = £154,600
Answer
[(154600-127900)/127900] X 100 = 20.9%

5. Market Research
• Collection of Data from Market.
• Can be Primary (Collected first hand) or Secondary (Collected second hand)
research.
• Can be Qualitative (Opinion based) or Quantitative (Numerical) research.
Benefit of
Primary
Research
Drawbacks of
Primary Research
Specific to
companies
needs
Expensive
Up to Date Time consuming
to collect
Benefit of
Secondary
Research
Drawbacks of
Secondary
Research
Cheaper than
Primary
Not Specific
Instant Not Up to Date

6. Market Positioning
• Market Map
• Gap in the Market is usually Low Price High Quality as it is unprofitable.
• Differentiation: degree to which consumers perceive a brand to be different to the
competition
• Unique design/features
• Distribution
• Advertising
• Adding Value: the difference between the cost of inputs and the final price of the good.
Benefit of Market Map
Can find gap in the market
Cheap to construct

7. Demand
• Factors affecting demand:
• Price
• Substitutes
• Consumer trends
• Advertising
• Demographics
• External shocks

8. Supply
• Factors affecting supply:
• Costs of production
• Technology
• Taxes
• Government subsidies
• External shocks

9. Price Elasticity of Demand (PED)
Remember
Queue
(Quantity)
before you Pee
(Price)
• Can sell at a higher price if demand is price inelastic as the company will
not see a large fall in demand as price increases.
• There is a threat of substitutes if demand is price elastic… A small change
in price will result in a large change in quantity.
• Practice Calculations:
https://www.tutor2u.net/business/quiz/priceelasticity/quiz_html5.html

10. Income Elasticity of Demand (YED)
• Normal goods e.g. Milk, will have a positive but small change in quantity demanded as income increases,
therefore value is close to 0.
• Luxury goods e.g. Gucci, will have a positive and large change in quantity demanded as income
increases, therefore the value is greater than 1.
• Inferior goods e.g. Primark, will have a negative change in quantity demanded as income increases,
therefore the value will be negative.
• Factors influencing YED
• Is the good a necessity or indulgence?
• Who buys the product
• Why do it?
• Sales forecasting
• Studying income demographics
• Financial planning
• YED =

11. Product and service design
• The design process:
Market Research Full scale manufacture
• Changes in social trends:
• Concerns over resource depletion
• Designing for waste manufacturing
• Recycling
• Ethical sourcing
• The Design Mix:

12. Branding and promotion
• Types of Branding:
• Individual brand
• Brand family
• Corporate brand
• Ways to build a brand:
• USP
• Advertising
• Sponsorships
• Social Media
• Changes in branding due to social
trends:
• Viral marketing
• Social media
• Emotional branding
• Promotion:
• Persuasive advertising
• PR
• BOGOF
• Seasonal price promotion
Essay Question:
• What is the importance of
branding in helping
businesses entering a new
market?
• Assess the importance of
global marketing?

13. Pricing Strategies
• Types of Pricing Strategies:
• Skimming – high pricing
• Penetration – low pricing
• Cost-plus (applying mark-up to cost)
• Competitive
• Predatory (reducing price to prevent new entrants gaining
market share)
• Psychological (e.g. 99p)
• Factors determining pricing strategy:
• Product differentiation
• Strength of brand
• Amount of competition
• PED
• Stage in PLC
New products
Existing products

14. Distribution
• Physical channel
• Direct to retailer
• Be your own retailer
• Direct online
Essay Question:
• Importance of selling online.

15. Product Lifecycle and portfolio
• Extension
strategies:
• Product upgrade
• Promotion

16. Product Lifecycle and portfolio
• Problem Child = Introduction
• Star = Growth
• Cash Cow = Maturity
• Dog = Decline

17. Marketing strategy
• Keys to successful marketing:
• Strategy is about the future
• Strategy must be achievable
• Strategies for niche and mass:
Mass
Many distribution outlets
Control over advertising
Control over pricing
Niche:
USP
Directed advertising
High pricing

18. Intro to managing people
• People as an asset:
• Nurtured / trained / consulted with
• Effective people management:
• Right number of staff
• Staff fit the business culture
• Planning staffing needs:
• How many
• What skills
• When
• Installing staff motivation:
• Train
• Praise
• Incentivise

19. Approach to staffing
• Flexible Workforce:
• Core workforce: Full time, main required staff for business, e.g. law firm requires
lawyers.
• Flex workers: temporary, flexible, part time workers, e.g. reception staff.
• Contract workers: employed for specific tasks, e.g. advertising firms.
• Multi skilling
• Outsourcing

20. Recruitment, Selection & Training
• Process:
1. Vacancy arises
2. Job description & person specification listed
3. Internal & external recruitment takes place
4. Selection of candidate
5. Appointment
6. Training (induction, on the job, off the job)
Benefit of
Internal
recruitment
Drawbacks of
internal
recruitment
Known
applicant
Conflict among
colleagues
No reference Limited choice
Shorter
training
New vacancy
needs filling
Benefit of
External
recruitment
Drawbacks of
External
recruitment
New ideas Expensive
New skills Longer process

21. Organisational design
• Types of structures:
• Tall : more layers, smaller span of control
• Flat : less layers, larger span of control
• Matrix
Tall Flat Matrix
Benefits • Clarity and
managerial
control
• Close
supervision of
workers
• Clear lines of
responsibility
• Clear promotion
structure
• Flexible and
adapt to
changes better
• Faster
communication
• More
democratic
style
• Efficient
information
exchange
• Increased
motivation
• Access to more
resources
Drawbacks • Communication
takes long
• Wrong message
interpretations
down and up
the hierarchy
• Heavy
managerial
workload
• Confusion due
to large span of
control
• Less trust in
managers as
many
employees
report to them
• Expensive to
maintain
• Internal conflict
• Internal
complexity

22. Motivation in theory
• Taylor – scientific management
• One best way
• Piece rate
• Divisions of labour
• Mayo – human relation approach
• Bonus methods
• Rest periods
• Refreshments
• Group work
• Innovate work layout
• Maslow – hierarchy of needs
• Herzberg – two factor theory
• Hygiene factors
• Motivators
• Job enrichment
• Motivation not movement
Doing something
because you have to

23. Motivation in practice
• Financial reward systems
• Piecework
• Commission
• Profit share
• Performance-related pay
• Empowering employees
• Empowerment
• Delegation
• Consultation
• Team working
• Multi-skilling
• Working together to achieve objectives
• Future development
• Flexible working
• Home-working
• Term-time only
• Job sharing
• Job enlargement
• Job rotation
• Job enrichment
• Job enlargement

24. Leadership
• Leaders & Managers:
• “Managers do things right, Leaders do the right thing”
• The job role
• The person
• Types of leadership
• Autocratic
• Democratic
• Paternalistic
• Laissez-faire
• Theory X & Y
• What type is best?
• Crisis
• Reactional
• Abilities of leader
• Nature of the work
• Skills of workers

25. Roel of an entrepreneur
• Creating an setting up a business:
• Generating business ideas
• Spotting an opportunity
• Small business research
• Running and expanding a business
Running a successful business
• Listen to criticism
• Eye for detail
• Take a step back
• Love making customers happy
• Intrapreneurship – has the personal
characteristics of an entrepreneur but works
within a large organisation
Expanding a business
• Establishing that extra demand exists
• Ensure appropriate finance is in place
• Ensure ‘people’ are in place

26. Entrepreneurial motives and characteristics
• Characteristics – Passion / Determination / Market understanding
• Risk-taking – Calculating pay-offs / intuition
• Skills – Financial / Problem solving / Networking
• Motives
• Non Financial: Control / Challenge / Independence / Home working
• Financial: Profit maximisation / profit satisficing

27. Business objectives
• Types of business objectives: (They have to be SMART):
• Growth, Profit maximisation, Sales maximisation, Market share, Cost efficiency, Employee
welfare, Customer satisfaction, Social objectives
• Mission statements:
• “A statement clarifying the reason for the businesses existence”

28. Forms of business
• Unlimited liability
• Limited liability
• Sole traders
• Partnerships
• Ltd
• Plc
• Franchising
• Social enterprise

29. Business choices
• Opportunity cost / Non Monetary opportunity cost
• “The benefits lost when choosing the next best alternative”
• Developing a business idea:
• Generation of ideas
• Deciding between opportunities
• Estimating potential sales / costs
• Initial investment needed (borrowing? Gearing ratio?)
• Consider timing
• Have we got the necessary skills??
• Choices and trade-offs
• “Accepting one thing to achieve more of another”

30. Moving from entrepreneur to leader
• Small business growth
• “Growth stresses systems”
• The risks of overtrading
• “When a business expands at a rate that can not be sustained by its capital base”
• Inappropriate finance
• Liquidity issues
• Over investment in fixed assets
• Cash-flow issues
• Problems of adjustment from entrepreneur to leader
• Hard to delegate
• Changes in management structure
• Poor communication
• Loss of direction
• Loss of control