Study Notes
Overview
Welcome to the essential guide for OCR GCSE Business (J204), Section 2: The Role of Marketing. This topic is fundamental to understanding how any business operates, from a local coffee shop to a global giant like Apple. Marketing is the bridge between a business and its customers. Examiners are looking for candidates who can move beyond simple definitions and analyse how marketing decisions impact a business's success. You will need to master the Marketing Mix (the 4 Ps), understand the difference between primary and secondary research, and explain how businesses use market segmentation to target customers effectively. This guide will equip you with the precise knowledge and analytical skills needed to explain marketing strategies and evaluate their effectiveness, ensuring you can construct the developed chains of reasoning required for the highest marks.
The Purpose of Marketing
Marketing is formally defined as identifying, anticipating, and satisfying customer needs profitably. It is a strategic function that involves understanding the customer and the market to make informed decisions. Its primary goals are to increase revenue and market share, build a strong brand image, and foster customer loyalty.
Identifying and Anticipating Customer Needs
This is achieved through Market Research. Businesses must listen to customers to discover what they want, what problems they have, and what they think of competitors. This can be done through two main methods:
- Primary (Field) Research: Gathering new, first-hand data for a specific purpose. It is up-to-date and directly relevant. However, it is often expensive and time-consuming.
- Secondary (Desk) Research: Using existing data that has been collected by someone else. It is cheap and quick to access but may be outdated or not specific enough.
Satisfying Customer Needs: The Marketing Mix (4 Ps)
Once a business understands its customers, it uses the Marketing Mix to meet their needs. This is a set of tactical marketing tools that a business blends to produce the response it wants in the target market. All four elements must be integrated and work together.
1. Product
This refers to the physical good or intangible service. Key decisions relate to its features, design, quality, branding, and packaging. A crucial concept is the Product Life Cycle, which tracks a product's sales over time.
- Introduction: Low sales, high costs, heavy promotion needed.
- Growth: Sales rise rapidly, competitors may enter.
- Maturity: Sales peak, the market is saturated.
- Decline: Sales fall. Businesses may use extension strategies (e.g., new features, new markets) to prolong the cycle.
2. Price
This is the amount a customer pays for the product. The pricing strategy must reflect the product's value, the target market, and the competitive landscape.
- Penetration Pricing: A low initial price to gain market share quickly.
- Price Skimming: A high initial price to maximise revenue from early adopters (often for tech or luxury goods).
- Competitive Pricing: Setting prices in line with rivals.
- Cost-Plus Pricing: Calculating the production cost and adding a percentage mark-up.
- Psychological Pricing: E.g., £9.99 instead of £10.00 to appear cheaper.
3. Place
This refers to how the product gets to the customer (the distribution channel). The choice of place affects a product's accessibility and its brand image.
- Direct Distribution: Selling straight to the consumer (e.g., via a brand's own website or store).
- Indirect Distribution: Selling through intermediaries like retailers or wholesalers.
- E-commerce: Selling online has revolutionised distribution, allowing businesses to reach a global audience 24/7.
4. Promotion
This involves all the ways a business communicates with its customers, from advertising to public relations. The goal is to inform, persuade, and remind customers about the product.
- Above-the-line: Mass media advertising (e.g., TV, radio, billboards).
- Below-the-line: More targeted methods (e.g., social media marketing, sales promotions, email marketing, sponsorship).
Market Segmentation
Few businesses can appeal to all customers in a market. Market Segmentation is the process of dividing a market into smaller groups of consumers with similar characteristics. This allows a business to create a more focused and effective marketing strategy.
- Demographic: Age, gender, income, social class, family size.
- Geographic: Country, region, urban/rural.
- Psychographic: Lifestyle, personality, values, interests.
- Behavioural: Buying habits, brand loyalty, usage rate.