Exam Revision Recall A1

• Computing
• Upper Secondary (Key Stage 4)
• BTEC

BTEC Component 3 Exam

A1 Targeting and Segmenting the Market

What is a market?

1. A group of buyers and sellers of a good or service.
2. The geographical area where an enterprise operates.
3. The market an enterprise wants to sell its products to.
4. The number of competitors in the industry.

What is a target market?

1. The total number of products an enterprise wants to sell.
2. The geographical area where an enterprise operates.
3. The market an enterprise wants to sell its products to.
4. The number of competitors in the industry.

What is Market Segmentation?

1. Setting the price of products based on competitors' pricing strategies.
2. Breaking down a large market into smaller groups of customers.
3. Identifying the number of products a company offers in the market.
4. Determining the distribution channels for a company's products.

Give two ways a business could segment the market.

Market Segmentation Types

1. Demographic - Age, Gender, Income, Race, Religion

2. Geographic - Location 

3. Psychographic - Interests, Lifestyle

4. Behavioural - Buying behaviour

Explain one advantage of segmenting the market.

Why Segment the market?

1. To understand their customers interests and needs better.

2. To make products for a certain market segment (group of people).

3. To choose marketing methods that will attract the customers they want.

Identify demographic factors for segmenting the market.

1. Age, Gender, Income, Race, Religion
2. Interests and Lifestyle
3. How often you use a product/loyalty.
4. Location

Identify geographic factors for segmenting the market.

1. Age, Gender, Income
2. Interests and Lifestyle
3. How often you use a product/loyalty.
4. Location

Identify psychographic factors for segmenting the market.

1. Age, Gender, Income
2. Interests and Lifestyle
3. How often you use a product/loyalty.
4. Location

Identify behavioural factors for segmenting the market.

1. Age, Gender, Income
2. Interests and Lifestyle
3. How often you use a product/loyalty.
4. Location

What does B2B mean?

1. Selling goods/services to other businesses.
2. Selling goods/services to consumers (people that use the product).

What does B2C mean?

1. Selling goods/services to other businesses.
2. Selling goods/services to consumers (people that use the product).

A2 4Ps of the marketing mix

What is the marketing mix?

1. The process of identifying competitors in the market
2. The total revenue generated by a company's products
3. The set of activities that an enterprise uses to attract their target market
4. The number of employees working in the marketing department

4Ps Marketing Mix

The set of activities that an enterprise uses to attract their target market.

Product

Goods and the services that the business sells. The product must meet the needs of the target customers.

Product - Goods and the services that the business sells. The product must meet the needs of the target customers.

Price - Pricing strategy used by the business (choosing what they will charge).

Place - Where you sell your product. How you get the product to the consumer. Could be digital (online) or physical (in person).

Promotion - Communication that tries to encourage customers to buy products. For example adverts on television and money-off coupons in magazines.

Product Portfolio

All the products (goods and services) that an enterprise offers.  

Product - Goods and the services that the business sells. The product must meet the needs of the target customers.

Price - Pricing strategy used by the business (choosing what they will charge).

Place - Where you sell your product. How you get the product to the consumer. Could be digital (online) or physical (in person).

Promotion - Communication that tries to encourage customers to buy products. For example adverts on television and money-off coupons in magazines.

Lots of similar products.

Range of different products.

Branding

Logo, the symbols, the colours and the images used. All of these should be consistent and show the main activity of the enterprise, its values and its style. 

Product - Goods and the services that the business sells. The product must meet the needs of the target customers.

Price - Pricing strategy used by the business (choosing what they will charge).

Place - Where you sell your product. How you get the product to the consumer. Could be digital (online) or physical (in person).

Promotion - Communication that tries to encourage customers to buy products. For example adverts on television and money-off coupons in magazines.

Benefits of branding

1. Makes an enterprise memorable and stand out. Could increase sales and share of the market.

2. Customers usually trust brands.

3. Can often charge more for branded products.

Price

Goods and the services that the business sells. The product must meet the needs of the target customers.

Product - Goods and the services that the business sells. The product must meet the needs of the target customers.

Price - Pricing strategy used by the business (choosing what they will charge).

Place - Where you sell your product. How you get the product to the consumer. Could be digital (online) or physical (in person).

Promotion - Communication that tries to encourage customers to buy products. For example adverts on television and money-off coupons in magazines.

What is Penetration Pricing?

1. Setting a high price for a luxury product.
2. Matching prices with competitors.
3. Offering a low price when the product is launched.
4. Adding the cost of production to determine the selling price.

Penetration Pricing

Low price when the product is launched so more people become interested.

Advantages	Disadvantages
1. Increase Sales	1. Low selling price means lower profit
2. Increase interest in the business	2. Customers might think the product is low quality.

What is Price Skimming?

1. Setting a high price when the product is launched and reducing over time.
2. Lowering prices to match competitors.
3. Increasing prices gradually over time.
4. Offering discounts to loyal customers

Price Skimming

High price when the product is launched, for

example, high-tech products such as phones.

Advantages	Disadvantages
1. Increase profits when product is launched.	1. Customers might wait for price to drop.
2. Customers may think the product is high quality.	2. Sales might be low at high price.

What is Competitive Pricing?

1. Setting a price based on production costs.
2. Offering a price lower than or equal to competitors.
3. Increasing prices gradually over time.
4. Adjusting prices according to market demand.

Competitive Pricing

Use a similar price to competitors, for example, ASDA doing LIDL price match on products.

Advantages	Disadvantages
Don’t lose sales to competitors.	Customers might be happy to pay more, but don’t because of your pricing.

What is Cost Plus Pricing?

1. Setting a price based on production costs plus the profit you want to make.
2. Offering a price lower than or equal to competitors.
3. Increasing prices gradually over time.
4. Adjusting prices according to market demand.

Cost Plus Pricing

Work out how much the product has cost to make and then add on the profit they want to make.

Advantages	Disadvantages
1. Easy to work out.	1. Customers might be happy to pay more than this price.
2. Costs always covered.

What is Premium Pricing?

1. Setting a price based on production costs plus the profit you want to make.
2. Offering a price lower than or equal to competitors.
3. Increasing prices gradually over time.
4. Setting a high price for a luxury product.

Premium Pricing

High price for a desirable or luxury product, for example, cars or luxury brands. 

Advantages	Disadvantages
1. High profits help cover development costs.	1. Customers might wait for price to drop.
2. Increases brand image.	2. Sales might be low at high price.

Place

Where you sell your product. How you get the product to the consumer. Could be digital (online) or physical (in person).

Online

Physical

Promotion

Promotion is any communication that tries to encourage current and potential customers to buy products. 

For example adverts on television and money-off coupons in magazines.

What is the promotional message?

What is the promotional medium?

Name two advertising methods.

Advertising

Method	Example
Moving Image (Video)	TV, Cinema, YouTube
Print	Magazines, Leaflets, Billboards
Ambient	Bus stops, Shopping Centres
Digital	Company Website, Social Media
Audio	Local/National Radio

Name two methods of public relations (PR)

Public Relations

Public relations (PR) and online public relations (OPR) involves building and maintaining an enterprise’s reputation – its image – through the media and online. 

Method	What is it?
Press Release	Getting articles written about the business by the media.
Sponsorships	Sponsoring a charity, sports team, or person.
Exhibitions	Events where lots of businesses show off their products.

Public Relations

Advantages

1. Can be free if from a neutral source like a newspaper
   
2. Reaches wide audience
   
3. Brand image improved and sales
   

Disadvantages

1. No control over the story being written, could be negative
2. News story might not be picked up by the media
   

Name two personal selling methods.

Personal Selling

Personal selling is where a representative of an enterprise contacts potential customers directly.

1. Face to Face
2. Email
3. Telephone
4. Video

Name two direct marketing methods.

Direct Marketing

Direct marketing is when an enterprise communicates with a customer directly to try sell them something. Could be by post, phone, or email.

Advantages	Disadvantages
Could be a positive interaction leading to sales.	Uninvited communication could be ignored.
Could introduce customers to a product	Uninvited communication could be unwelcome

Name two Sales Promotion methods.

Sales Promotion

Sales promotion is specifically designed to boost sales. Offering an incentive to persuade current and potential customers to buy products.

 

1. Coupons
   
2. Free Samples
   
3. Loyalty Discounts
   
4. BOGOF
   

Advantages – Could get people to try product/buy more of it

Disadvantages – Impact on profits

What factors could impact your choice of promotion?

Choice of promotion

1. Cost to enterprise
2. Experience of the entrepreneur
   
3. Competitors Activities
4. Appropriateness to product

Trust Reputation Loyalty

Importance of brand image

Shows quality, value, variety and customer service.

Importance of reputation

Impacts how people view your business and therefore whether they will buy from you.

Budget

Financial planning tool where you set targets for what sales revenue you will make, what expenditure you will have going out.

Sales/Revenue Budgets – Budgeting what you think will be coming in

Expenditure Budgets – Budgeting what you think will go out. Will take account of costs out, such as bills, land, wages.

Budget Variances

Budgeted £20,000 of Sales Revenue from a product. Actual Revenue £15,000.

1. Adverse
2. Favourable

Budgeted £1500 of Expenditure on Bills. Actual Expenditure £1900.

1. Adverse
2. Favourable

Budgeted £20,000 of Sales Revenue from a product. Actual Revenue £25,000.

1. Adverse
2. Favourable

Name an internal source of finance (money from within the business or from existing contacts)

Internal Sources of Finance

1. Personal money from the owner/borrowing off friends and family.
2. Sale of assets - Selling an unused asset such as a property, or piece of equipment.
3. Retained profit - Money from sales kept in the business.

External Sources of Finance

Source	Explanation
Mortgages	Loan against a property
Share Capital (Business Angels)	Selling part of the business to an investor.
Hire Purchase	Monthly payments to buy a vehicle or machinery. Includes a cost of interest.
Leasing	Monthly payments to borrow a vehicle or machinery.
Loan	Borrow money over a fixed amount of time for a certain amount of interest.
Peer to peer lending	Borrowing money from smaller investors.
Trade Credit	Getting products now and paying in 30-90 days.
Bank Overdraft	Extra money available in your bank account.
Crowd Funding	Raising money from a large number of people.

Mortgages

Leasing

Hire Purchase

Share Capital

Loan

Peer to Peer

Crowdfunding

Overdraft

Trade Credit

Loan against a property

Selling part of the business to an investor.

Monthly payments to buy a vehicle or machinery. Includes a cost of interest.

Borrow money over a fixed amount of time for a certain amount of interest.

Monthly payments to borrow a vehicle or machinery.

Borrowing money from smaller investors.

Getting products now and paying in 30-90 days.

Extra money available in your bank account.

Raising money from a large number of people.