3.1.3 Marketing management

Topic 6: Identifying, anticipating and understanding customer needs (market research)

Key ideas

• Market research gathers and analyses information about customers, competitors and markets. It is used to reduce risk, identify opportunities, understand needs and test ideas.
• Primary and secondary research:

Primary (field) research	Secondary (desk) research
New data collected first-hand for a specific purpose: surveys, interviews, focus groups, observation, test marketing	Existing data: government statistics (ONS), market reports (e.g. Mintel), company accounts, the internet
✅ Specific, up to date, confidential	✅ Cheap, quick, often large samples
❌ Expensive, time-consuming, risk of sampling bias	❌ May be outdated, not specific, available to rivals

• Quantitative and qualitative data:
  • Quantitative data are numerical (e.g. "62% would buy"). They are easy to analyse statistically but explain little about why.
  • Qualitative data are opinions, feelings and motives, e.g. from focus groups. They give rich insight but are subjective and hard to generalise.
• Confidence levels and confidence intervals:
  • A confidence level (e.g. 95%) tells you how sure you can be that the true population value lies within the confidence interval (the range, e.g. ±3%).
  • Example: "40% of customers would buy, ±4% at a 95% confidence level" means we are 95% confident the true figure lies between 36% and 44%.
  • Larger samples give narrower intervals and more reliable results, but they cost more.
• Market mapping:
  • Products or brands are plotted on two axes, e.g. price (high/low) against quality, or luxury against basic.
  • Purposes:
    • identify gaps in the market;
    • see competitors' positions;
    • position or reposition a product.
  • Limitations:
    • A gap may exist because there is no demand.
    • It is based on perception.
    • It shows only two variables.
• Influences on how market research is conducted:
  • risk: high-risk launches justify more research;
  • cost (budget);
  • time;
  • need for reliability.

Glossary

Term	Definition
Primary research	Collecting new data first-hand.
Secondary research	Using data that already exist.
Sample	A subset of the population surveyed.
Confidence level	The probability that the true value lies within the confidence interval (e.g. 95%).
Confidence interval	The range within which the true value is expected to lie.
Market map	A diagram positioning products on two dimensions to show competition and gaps.

Self-test

Q1: A survey finds that 55% of customers prefer a new flavour, with a ±5% interval at a 95% confidence level. Interpret this. A: We can be 95% confident that the true proportion of all customers preferring the flavour lies between 50% and 60%.

Q2: Give one limitation of market mapping. A: A gap in the map may exist because there is no customer demand for that combination (e.g. high price with low quality).

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Topic 7: Markets and marketing data

Key ideas

• Types of market:
  • B2B (business to business): e.g. a parts supplier to car makers. It involves fewer, larger customers, personal selling, negotiated prices and long-term relationships.
  • B2C (business to consumer): mass advertising, branding and retail distribution.
  • C2C (consumer to consumer): platforms such as eBay and Vinted. The business earns fees and relies on trust systems (ratings) and network effects.
  • Goods versus services: services are intangible, perishable and inseparable from the provider, so people, process and physical evidence matter. Goods are tangible and can be stored.
• Market conditions:
  • Degree of competition: monopoly through to many competitors.
  • Competitive behaviour: price wars, innovation, advertising.
  • Market growth: growing markets allow growth without stealing share; in mature or declining markets, firms must take share from rivals.
• Calculations (see the formula sheet):
  • market size (by value or volume) and the size of segments;
  • market and sales growth;
  • market share;
  • sales per region, product or store;
  • return on marketing spend.
• Sales volume and sales value:
  • Volume = units sold.
  • Value = revenue (£).
  • Volume can fall while value rises, if prices increase.
• Correlation:
  • Positive: both variables rise together, e.g. advertising spend and sales.
  • Negative: as one rises the other falls, e.g. price and quantity.
  • Strong or weak: how closely points fit a line.
  • ⚠️ Correlation is not causation.

Worked example

The UK market for plant-based snacks was worth £240m in 2025 and £276m in 2026. Firm X's sales were £34.5m in 2026, up from £30m in 2025.

• Market growth = (276 − 240) ÷ 240 × 100 = 15%.
• Firm X's sales growth = (34.5 − 30) ÷ 30 × 100 = 15%.
• Market share in 2025 = 30 ÷ 240 × 100 = 12.5%. Market share in 2026 = 34.5 ÷ 276 × 100 = 12.5%.
• Interpretation: X's sales grew strongly, but only at the market's rate, so its share is unchanged. It is keeping pace, not outperforming.

Return on marketing spend: a campaign costing £40,000 generated £60,000 profit, so the return = 60,000 ÷ 40,000 × 100 = 150%.

Self-test

Q1: Sales volume falls by 5% but sales value rises by 3%. Explain how. A: The price per unit must have risen enough to more than offset the fall in units sold, so revenue increased.

Q2: Why is a strong positive correlation between advertising and sales not proof that advertising caused the sales? A: Other factors (e.g. season, rising incomes, a competitor exiting the market) may have caused both, or the relationship may be coincidental.

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Topic 8: Demand (including price and income elasticity)

Key ideas

• Influences on demand:
  • price;
  • prices of substitutes and complements;
  • consumer incomes;
  • tastes and fashions;
  • advertising and branding;
  • demographics;
  • seasonality;
  • economic conditions;
  • interest rates;
  • external shocks.
• Price elasticity of demand (PED) = % change in quantity demanded ÷ % change in price. PED is normally negative.
  • Elastic (more than 1, ignoring the sign): quantity is very responsive to price.
  • Inelastic (less than 1): quantity is not very responsive.
• Influences on PED:
  • the number of substitutes;
  • brand loyalty;
  • necessity versus luxury;
  • the proportion of income spent;
  • the time period.
• Price changes and revenue:

PED	Price ↑	Price ↓
Elastic (>1)	Revenue falls	Revenue rises
Inelastic (<1)	Revenue rises	Revenue falls

• Income elasticity of demand (YED) = % change in quantity demanded ÷ % change in income.
  • Positive: a normal good. If YED is above +1, the good is income elastic (often luxuries, e.g. foreign holidays).
  • Negative: an inferior good, e.g. value-range food, whose demand rises in a recession.

Worked example (PED and revenue)

A café sells 1,000 smoothies a week at £4.00, giving revenue of £4,000.

• If PED = −2.5 and the price rises 10% to £4.40:
  • Quantity falls by 25%, to 750.
  • Revenue = £4.40 × 750 = £3,300, a fall of £700.
  • Elastic demand means a price rise reduces revenue.
• If PED = −0.4 and the price rises 10%:
  • Quantity falls by 4%, to 960.
  • Revenue = £4.40 × 960 = £4,224, a rise of £224.
• Calculating PED from data: the price rises from £4.00 to £4.40 (+10%) and quantity falls from 1,000 to 850 (−15%). PED = −15 ÷ 10 = −1.5, so demand is elastic.

Worked example (YED)

Incomes rise by 4% and demand for premium coffee machines rises by 10%: YED = 10 ÷ 4 = +2.5. They are a normal, income-elastic good, so sales will be very sensitive to the economic cycle. If YED for a value-brand pasta = −0.5, a 4% fall in incomes (recession) increases demand by 2%.

Glossary

Term	Definition
Demand	The quantity customers are willing and able to buy at a given price.
PED	The responsiveness of quantity demanded to a change in price.
YED	The responsiveness of quantity demanded to a change in income.
Normal / inferior good	A good whose demand rises / falls as income rises.
Substitute	An alternative product.
Complement	A product used together with another.

Self-test

Q1: Price falls by 8% and quantity demanded rises by 4%. Calculate PED and state the effect on revenue. A: PED = 4 ÷ −8 = −0.5. Demand is inelastic, so the price cut will reduce revenue.

Q2: Why might a supermarket's own-brand value range have negative YED? A: When incomes fall, consumers trade down from branded goods to cheaper value ranges, so demand rises. When incomes rise, they switch back to premium products.

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Topic 9: Target market

Key ideas

• Market segmentation divides a market into groups of customers with similar characteristics:
  • Demographic: age, gender, income, socio-economic group, family life-cycle, ethnicity.
  • Geographic: region, country, urban or rural, climate.
  • Psychographic: lifestyle, values, personality, interests.
  • Behavioural: usage rate, loyalty, benefits sought, occasion.
• Purpose and value of segmentation:
  • It allows the marketing mix to be targeted, so spending is used more efficiently.
  • It helps identify opportunities and build loyalty.
  • Limitation: it may miss customers outside the segments.
• Influences on choosing and entering a target market:
  • the size and growth of the segment;
  • profitability;
  • competition;
  • the firm's resources and strengths;
  • the costs of entry;
  • fit with objectives and the brand.
• Niche and mass markets:

	Niche	Mass
✅	Less competition; premium prices; loyal customers; specialist expertise	Economies of scale; large sales potential; spreads risk
❌	Small market limits growth; vulnerable if demand changes or big firms enter	Intense competition; price pressure; high marketing costs

• Adapting the marketing mix for the target market. Example: the luxury segment needs premium pricing, exclusive distribution and lifestyle promotion.

Self-test

Q1: Give an example of behavioural segmentation. A: Targeting frequent users with loyalty rewards, e.g. a coffee chain's app rewarding regular customers.

Q2: Give one advantage and one disadvantage of operating in a niche market. A: Advantage: the firm can charge premium prices because of specialist appeal and less competition. Disadvantage: the small size limits growth, and the firm is vulnerable if larger firms enter.

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Topic 10: Marketing objectives and planning

Key ideas

• Marketing objectives (AQA list):

Objective	Meaning
Lead generation	Attracting potential customers' interest and contact details.
Sales	Volume or value targets.
Market share	The firm's % of total market sales.
Brand awareness	The % of the target market who recognise the brand.
Customer retention	Keeping existing customers (repeat purchase).
Engagement	Interaction with content, e.g. likes, shares, comments.
Conversion	Turning leads or visitors into paying customers (conversion rate).

• Influences on marketing objectives:
  • corporate objectives;
  • finance;
  • competitors;
  • market conditions;
  • the product's stage in its life cycle;
  • operations capacity;
  • the economy.
• The marketing budget is the amount allocated to marketing. Its influences:
  • the firm's finances and objectives;
  • competitors' spending;
  • the stage of the product life cycle (e.g. a launch needs heavy spending);
  • the expected return on marketing spend.
  • Its significance: it constrains which activities are possible.
• Implications of changes in demand for the marketing mix:
  • Rise in demand: raise prices, or ensure stock and distribution keep up.
  • Fall in demand: promotions, price cuts, product changes, new markets.
  • Cyclical demand (linked to the economic cycle): adapt the range and pricing in recession.
  • Seasonal demand: time promotions, use off-peak pricing, diversify the product range.
• Interrelationships with other functions:
  • Finance: budgets.
  • Operations: capacity and quality to meet promised demand.
  • HR: sales staff and training.
• Competitiveness: effective marketing decisions (e.g. a strong brand, the right price) give a competitive advantage.

Self-test

Q1: Distinguish between lead generation and conversion. A: Lead generation means attracting potential customers and capturing their interest or contact details. Conversion means turning those leads or visitors into actual purchasers.

Q2: How might a business respond to seasonal demand? A: It could use off-peak discounts or promotions to boost quiet periods, build inventory before peaks, use temporary staff, or diversify into products whose demand peaks at different times.

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Topic 11: Marketing mix – product

Key ideas

• The product life cycle (PLC) has five stages:
  • Development: costs but no sales; negative cash flow.
  • Introduction: low sales, high promotion costs; usually loss-making; skimming or penetration pricing.
  • Growth: rapidly rising sales; profit begins; competitors enter.
  • Maturity: sales peak and level off; intense competition; cash flow is strongest.
  • Decline: falling sales; the firm considers withdrawal or extension.
• Significance of the PLC for planning and other functions:
  • Marketing: promotion and pricing at each stage.
  • Finance: cash flow is negative early and positive in maturity.
  • Operations: capacity rises in growth.
  • HR: staffing levels.
• Extension strategies (AQA list):
  • advertising: e.g. new campaigns;
  • rebranding;
  • lowering the price;
  • adapting the product: new flavours, sizes, features or packaging.
• The Boston Matrix (product portfolio analysis) plots market share (relative, horizontal) against market growth (vertical):

	High market share	Low market share
High growth	Star: high sales, needs investment to keep up; potential future cash cow	Question mark (problem child): needs heavy investment, uncertain future
Low growth	Cash cow: generates cash with little investment, which funds stars and question marks	Dog: low returns; consider divesting or keeping for a niche

• Value: it helps balance the portfolio and allocate the budget.
• Limitations:
  • It is a snapshot.
  • It ignores profitability.
  • The categories are simplistic.
  • Dogs may still be profitable or support other products.
• New product development (NPD):
  • Stages: idea generation → screening → concept testing → business analysis → product development → test marketing → launch.
  • Purpose: growth, replacing declining products, competitiveness.
  • Challenges: high cost and a high failure rate, uncertain demand, long lead times, cash-flow strain.

Self-test

Q1: Name the four AQA extension strategies. A: Advertising, rebranding, lowering the price, and adapting the product.

Q2: How should a firm use a cash cow? A: Milk it for cash with minimal investment, and use the surplus to fund stars and promising question marks.

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Topic 12: Marketing mix – price

Key ideas

• Influences on price:
  • marketing objectives;
  • the target market;
  • the level of demand;
  • PED;
  • costs;
  • competitors' actions;
  • the rest of the marketing mix, which must be consistent (e.g. premium product → premium price).
• Impact of price: on sales volume, revenue (depending on PED) and profit margins. A higher price gives a higher margin per unit but may sell fewer units.
• Pricing methods:

Type	Method	Description / when used
Cost-based	Cost-plus	Unit cost plus a % mark-up. Simple and covers costs, but ignores demand and competitors. Example: unit cost £20 + 40% mark-up = £28.
Demand-based	Penetration	A low launch price to gain share quickly. Suits mass markets and elastic demand. Risk: low margins, hard to raise later.
	Price skimming	A high launch price for innovative products, lowered over time. Recovers R&D costs. Needs a unique product and early adopters.
	Dynamic pricing	Prices change in real time with demand (e.g. airlines, ride-hailing, event tickets). Maximises revenue, but can anger customers.
Competition-based	Premium	Priced above rivals to signal quality or exclusivity.
	Going rate	Matches the market price, where products are similar.
	Discount	Priced below rivals, through permanent discounts or promotions.

Self-test

Q1: When is price skimming suitable? A: For an innovative or unique product with little competition, where early adopters will pay a premium. It helps recover high development costs, e.g. a new technology product.

Q2: Give one problem of cost-plus pricing. A: It ignores demand and competitors' prices, so the price may be too high to sell or lower than customers would pay (lost profit).

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Topic 13: Marketing mix – distribution (place)

Key ideas

• A distribution channel is the route a product takes from producer to consumer. Its purpose: make products available where and when customers want them, cost-effectively.
• Channels:
  • Direct, producer → consumer: e.g. e-commerce, own shops, farm shops.
    • ✅ Higher margins, control over the brand experience, customer data.
    • ❌ The firm bears logistics and storage costs; limited reach; it needs the website and delivery capability.
  • Through intermediaries: producer → retailer → consumer; or producer → wholesaler → retailer → consumer.
    • ✅ Wider reach, expertise, bulk breaking, storage and display.
    • ❌ A lower share of the margin and less control over presentation and price.
• Multi-channel distribution (e.g. online, own stores and other retailers):
  • ✅ Greater reach and convenience, e.g. click-and-collect; spreads risk.
  • ❌ Complex inventory management, higher costs, possible channel conflict.

Self-test

Q1: Give one advantage and one disadvantage of selling through a wholesaler. A: Advantage: the wholesaler breaks bulk and reaches many small retailers, saving the producer distribution costs. Disadvantage: the producer receives a lower price and loses some control over how its products are sold.

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Topic 14: Marketing mix – promotional mix

Key ideas

• Purpose of promotion:
  • inform;
  • persuade;
  • remind;
  • build the brand.
• Methods:
  • Advertising: TV, radio, print, outdoor, online. Wide reach and builds awareness, but expensive and hard to measure.
  • Social media and influencers: targeted, cheap, interactive, can go viral. Risks: negative comments, influencer controversies and authenticity concerns. In the UK, influencer adverts must be labelled (e.g. #ad) under ASA/CAP rules.
  • Sales promotions: BOGOF, coupons, discounts, loyalty points. They give short-term boosts but may damage the brand and margins.
  • Sponsorship: association with events, teams or programmes. Builds image and awareness; costly; return is hard to measure.
  • Personal selling:
    • Face-to-face selling, especially for B2B and high-value items.
    • Account managers and sales teams manage client relationships, which builds long-term loyalty and repeat sales.
    • It is expensive per customer.
  • Branding: a strong brand allows premium pricing and builds brand loyalty, which reduces PED.
    • Own-label brands (supermarket brands) compete with manufacturer brands on price.
• Influences on the promotional mix:
  • the target market;
  • the budget;
  • the product type (B2B or B2C);
  • the stage of the PLC;
  • competitors;
  • the channels available;
  • legal and ethical constraints.

Self-test

Q1: Why is personal selling more common in B2B markets? A: B2B customers are fewer, buy in larger quantities and have complex needs. Account managers can tailor solutions and build long-term relationships, which justifies the high cost per customer.

Q2: Give one risk of using influencers. A: Reputational damage if the influencer behaves controversially, or loss of trust if promotion is not disclosed.

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Topic 15: Digital technology and marketing

Key ideas

• Digital technology, including AI, in marketing:
  • Social media campaigns: targeted, measurable and shareable.
  • Content marketing: valuable content (blogs, videos, guides) that attracts and keeps customers.
  • Search engine optimisation (SEO): improving a website's content and structure so it ranks higher in organic (unpaid) search results.
  • Pay per click (PPC): paid adverts (e.g. on search engines), where the advertiser pays each time a user clicks.
  • Website cookies: small data files that track user behaviour. They enable personalisation and retargeting. Under UK GDPR and PECR rules, non-essential cookies need consent.
  • AI:
    • chatbots;
    • personalised recommendations;
    • automated content generation;
    • predictive analytics;
    • ad targeting.
• Measures of success in digital marketing:
  • search performance (ranking);
  • click-through rate (CTR) = clicks ÷ impressions × 100;
  • time spent on the site;
  • conversion rate = purchases ÷ visitors × 100;
  • the number of users or subscribers;
  • advertising revenue.
  • Example: an advert shown 200,000 times receives 3,000 clicks (CTR = 1.5%), and 150 of those clicks buy (conversion rate = 5%).
• Customer Relationship Management (CRM) uses systems and data to manage relationships across:
  • customer acquisition;
  • retention;
  • lead generation;
  • pipeline management: tracking prospects through the sales stages.
• Data analytics:
  • segmentation;
  • campaign performance tracking;
  • personalisation;
  • predictions;
  • dynamic pricing.
• Competitiveness:
  • Digital technology lowers the cost per customer reached, enables precise targeting, and gives faster feedback, so small firms can compete with large ones.
  • Drawbacks:
    • cost of systems and skills;
    • data-protection risks;
    • ad-blockers;
    • crowded channels.

Self-test

Q1: Distinguish between SEO and PPC. A: SEO improves a website's organic (unpaid) ranking in search results over time. PPC buys paid ad placements, and the advertiser pays each time a user clicks.

Q2: 50,000 people visited a website and 1,250 made a purchase. Calculate the conversion rate. A: 1,250 ÷ 50,000 × 100 = 2.5%.

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Topic 16: International marketing (A-level only)

Key ideas

• Purpose and value:
  • growth beyond a saturated home market;
  • economies of scale;
  • spreading risk across markets;
  • extending the PLC;
  • access to fast-growing emerging markets.
• Challenges:
  • cultural and language differences;
  • legal and regulatory differences, e.g. labelling and advertising rules;
  • exchange-rate risk;
  • distribution logistics;
  • local competition;
  • tariffs and trade barriers;
  • the cost of market research.
• Adapting the marketing mix:
  • Standardisation (a global approach): lower costs and a consistent brand, but it may not suit local tastes.
  • Adaptation (glocalisation): changing the product, price, promotion or place for local markets.
    • Example: McDonald's in India has no beef products.

Self-test

Q1: Give one advantage of standardising the marketing mix internationally. A: It gives economies of scale in production and advertising, and a consistent global brand image, so costs are lower.

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Topic 17: Ethical issues in marketing (A-level only)

Key ideas

• Product:
  • safety;
  • planned obsolescence;
  • unhealthy products, e.g. the UK restrictions on promoting foods high in fat, sugar and salt (HFSS);
  • environmental impact of packaging.
• Promotion:
  • misleading claims, including greenwashing;
  • targeting children or vulnerable people;
  • undisclosed influencer advertising;
  • invasive data use.
  • In the UK, the Advertising Standards Authority (ASA) regulates adverts.
• Pricing:
  • price gouging;
  • "drip pricing" with hidden fees;
  • exploiting loyal customers (the "loyalty penalty"; the FCA banned it in home and motor insurance renewals in 2022);
  • dynamic pricing controversies, e.g. surge pricing for concert tickets.
• Ethical marketing can build trust and a premium image. Unethical marketing risks fines, regulation and reputational damage.

Self-test

Q1: Give one ethical issue in pricing. A: Dynamic or surge pricing that exploits high demand (e.g. for event tickets), or hidden "drip" fees that make the true price unclear.

Assessment checkpoint: 3.1.3 Marketing management test.

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Topic 27: HR objectives and planning

Key ideas

• HR objectives (AQA list):
  • the number and skills of employees;
  • employee turnover and retention;
  • employee engagement: commitment and enthusiasm;
  • employee costs;
  • equality, diversity, inclusion and belonging (EDIB).
• Influences on HR objectives:
  • corporate objectives;
  • finance;
  • the labour market (skills shortages, wage rates);
  • the law (e.g. the National Living Wage, equality law);
  • technology (automation);
  • culture;
  • competitors.
• HR (workforce) planning compares the current workforce with future needs and plans for:
  • recruitment (internal or external);
  • training;
  • retention;
  • redeployment: moving staff to other roles;
  • redundancy: when jobs are no longer needed.
• Influences on HR planning:
  • the current workforce (age profile, skills);
  • future needs (growth, new technology);
  • skills and numbers gaps;
  • the labour market.
• Forms of employment:

Form	✅ For the business	❌ For the business / worker issues
Full-time, permanent	Commitment, loyalty, skills retained	Higher fixed costs; less flexibility
Part-time	Covers peaks; lower cost; attracts carers and students	More management and training per hour worked
Temporary	Cover for seasonal peaks or absence	Less commitment; repeated training
Zero-hours	Maximum flexibility; pay only for hours used	Insecure for workers; low morale; reputational risk
Freelance	Specialist skills on demand; no employment costs	Higher hourly rate; less control or loyalty

• Flexible employment (flexible hours, location, contracts) lets firms match labour to demand and attract talent. In the UK, employees have had a right to request flexible working from day one of employment since April 2024.
• Interrelationships with other functions and competitiveness:
  • The right number of skilled people supports operations (productivity, quality) and marketing (customer service).
  • Labour costs affect finance and pricing.

Self-test

Q1: Give one advantage and one disadvantage of zero-hours contracts for a business. A: Advantage: labour can be matched exactly to demand, so the business pays only for the hours needed. Disadvantage: workers may feel insecure, which lowers motivation and loyalty and raises staff turnover and recruitment costs.

Q2: What is redeployment? A: Moving existing employees to different roles or locations within the business instead of making them redundant.

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