Question 1

What is the difference between primary and secondary market research?

Accepted Answer

Primary research involves collecting new data directly from sources, such as through surveys, interviews, or focus groups. It is tailored to the business's specific needs but can be time-consuming and expensive. Secondary research uses existing data, like government reports, industry publications, or competitor analysis. It is cheaper and quicker but may not be as relevant or up-to-date. Businesses often use both to get a complete picture.

Question 2

How do you choose the right pricing strategy?

Accepted Answer

The choice depends on the business's objectives, target market, and competition. For example, penetration pricing (low initial price) is used to gain market share quickly, while price skimming (high initial price) works for innovative products with little competition. Cost-plus pricing ensures a profit margin but ignores demand. Competitive pricing matches rivals, and psychological pricing (e.g., £9.99) appeals to emotions. Evaluate each strategy's pros and cons in context.

Question 3

What is market segmentation and why is it important?

Accepted Answer

Market segmentation divides a broad market into smaller groups with similar characteristics, such as age, location, income, or lifestyle. It allows businesses to tailor their marketing mix to specific segments, making campaigns more effective and efficient. For example, a luxury car brand targets high-income individuals, while a budget brand targets cost-conscious buyers. Without segmentation, marketing efforts may be wasted on uninterested customers.

Question 4

Can you explain the product life cycle with an example?

Accepted Answer

The product life cycle has four stages: introduction (product launched, sales low, high promotion), growth (sales rise, competitors enter), maturity (sales peak, market saturated), and decline (sales fall, profits drop). For example, the Nintendo Wii was introduced in 2006 (introduction), became hugely popular (growth), faced competition from Xbox Kinect (maturity), and eventually sales declined as newer consoles emerged (decline). Extension strategies like price cuts or new features can prolong the cycle.

Question 5

What are the 7Ps of the marketing mix?

Accepted Answer

The 7Ps are: Product (features, quality, branding), Price (strategy, value), Place (distribution channels, location), Promotion (advertising, sales promotions, PR), People (staff, customer service), Process (systems for delivery, ordering), and Physical Evidence (tangible cues like packaging, store design). They are all controllable variables that a business can adjust to meet customer needs and achieve objectives. For service businesses, People, Process, and Physical Evidence are especially important.

Question 6

How does marketing help a business gain a competitive advantage?

Accepted Answer

Marketing helps a business differentiate itself from competitors by understanding customer needs and delivering superior value. For example, through unique product features, lower prices, better customer service, or strong branding. Effective market research identifies gaps in the market, while segmentation and targeting allow precise positioning. A well-executed marketing mix creates a unique selling point (USP) that attracts and retains customers, leading to increased sales and market share.

The role of marketing

Topic Overview

Key Concepts

What You Need to Demonstrate

Marking Points

Examiner Tips

Common Mistakes

Frequently Asked Questions

Before You Start

Likely Command Words

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Related Topics in OCR GCSE Business

Break-even

Business activity

Business aims and objectives

Business growth