methods of advertising, e.g. social media, direct/targeted emails, leaflets, billboards

3.3.4 Promotion – Advertising Methods (Integrated Cambridge IGCSE Business Studies Notes)

1. Understanding Business Activity (Unit 1)

• Purpose of business: to satisfy human needs and wants by producing goods or services.
• Needs vs. wants: needs are essential (food, shelter); wants are desires shaped by culture and income.
• Types of enterprises: sole trader, partnership, private limited company (Ltd), public limited company (PLC).
• Size measures: number of employees, turnover, market share.
• Objectives: profit‑maximisation, growth, market‑share, social‑responsibility – must be measurable (SMART).
• Stakeholders: owners, managers, employees, customers, suppliers, community, government.

2. People in Business (Unit 2)

3. Marketing – The Full Unit (Unit 3)

3.1 The Marketing Mix (4 Ps)

1. Product: core, actual, augmented; life‑cycle stages (introduction, growth, maturity, decline).
2. Price: pricing objectives, strategies (penetration, skimming), factors (cost, competition, demand).
3. Place (Distribution): channels, logistics, location decisions.
4. Promotion: communication tools – see sections 3.2‑3.5.

3.2 Market Research & Segmentation

• Primary research: surveys, interviews, observation – provides fresh data.
• Secondary research: published reports, statistics – cheaper, quicker.
• Sampling: random, stratified, convenience – affects reliability.
• Segmentation variables: demographic, geographic, psychographic, behavioural.
• Target market selection: evaluate segment size, growth, accessibility, profitability.

3.3 Promotion – The Promotional Mix

Tool	Purpose	Typical Example
Advertising	Build awareness & persuade	TV commercial, Instagram ad
Sales promotion	Stimulate short‑term purchase	Buy‑one‑get‑one‑free coupon
Public relations (PR)	Maintain favourable image	Press release, charity sponsorship
Direct marketing	Communicate directly with individuals	Targeted email, SMS blast
Personal selling	Provide detailed information & build relationships	In‑store sales assistant
Sponsorship	Associate brand with event or cause	Football team kit branding
E‑marketing (digital)	Reach online audiences, drive traffic	Google Search ads, influencer posts

3.4 Advertising Methods – Detailed Review

3.4.1 Social Media Advertising

• Key platforms & typical audiences
  • Facebook – 25‑54 yr, broad interests.
  • Instagram – 18‑34 yr, visual‑driven.
  • Twitter – 18‑45 yr, news & real‑time.
  • TikTok – 13‑24 yr, short‑form video.
  • LinkedIn – 25‑55 yr, B2B professionals.
• Ad formats: image, video, carousel, Stories, influencer‑sponsored posts.
• Targeting ability: demographics, interests, behaviour, location, look‑alike audiences.
• Cost structure: PPC (pay‑per‑click) or CPM (pay‑per‑thousand impressions). Example – Facebook CPM £5‑£8, CPC £0.30‑£0.70.
• Measurability: impressions, clicks, CTR, conversion rate, CPA, ROAS.
• Example: 2‑week Instagram campaign – 12 000 clicks, £600 spend → CTR 2 %, CPA £5 per sale.

3.4.2 Direct / Targeted Email Marketing

• Sent to a pre‑compiled list (customers or prospects).
• Personalisation (name, past purchase, birthday offer) raises relevance.
• Typical metrics: open‑rate 20‑25 %, click‑through 3‑5 %, conversion 2‑4 %.
• Cost: often < £0.10 per email with in‑house software.
• Example: 5 % discount email to 5 000 subscribers → 22 % open, 4 % CTR, £3 500 sales, ROI ≈ 300 %.

3.4.3 Leaflets (Printed Direct‑to‑Consumer)

• Physical flyers, brochures, coupons – distributed by hand, post or in‑store.
• Best for local/regional campaigns where geography defines the market.
• Typical response rate 1‑2 % (e.g., 100 replies from 5 000 leaflets).
• Cost drivers: design, printing, distribution – average £0.15 per piece.
• Example: Coffee shop printed 2 000 leaflets (£300) → 40 new customers, ROI ≈ 133 %.

3.4.4 Billboards (Outdoor Advertising)

• Large static or digital displays in high‑traffic locations.
• Message must be simple – 5‑7 words, strong visual.
• Reach: up to millions of impressions per month (depends on site).
• Cost: £5 000‑£30 000 per month for prime city locations; digital boards may charge per impression.
• Measurability: indirect – traffic counts, brand‑recall surveys, QR‑code scans.
• Example: Regional supermarket billboard → 1.2 million impressions, 0.3 % footfall lift → £12 000 extra sales.

3.4.5 E‑Commerce & Online Display Advertising

• Banner ads on websites, Google Search ads, product listings on platforms (Amazon Sponsored Products).
• Targeting by keywords, browsing behaviour, purchase intent, retargeting.
• Typical CPM £2‑£4; average CPC for Google Search £0.80‑£1.20.
• Metrics: impressions, CTR, conversion rate, ROAS.
• Example: Google Search for “organic baby formula” – 4 % conversion, £1.00 CPC, ROAS 5:1.

3.5 Comparison of Advertising Methods

Method	Typical Reach	Cost (per month)	Targeting Ability	Measurability	Typical Use
Social Media	Very high – global (millions)	£200‑£2 000 (ad spend)	High – demographics, interests, behaviour, location	High – impressions, clicks, conversions, CPA	Brand awareness, product launches, flash sales
Direct/Targeted Email	Medium – list‑based (thousands‑tens of thousands)	£50‑£300 (platform fees)	Very high – personalisation, purchase history	High – open‑rate, CTR, sales per email	Customer retention, special offers, event invites
Leaflets	Local‑regional (hundreds‑tens of thousands)	£0.10‑£0.20 per piece	Low – geographic only	Low – response via coupons/QR codes	Local promotions, grand openings, coupons
Billboards	High – regional‑national (millions of impressions)	£5 000‑£30 000	Low – location only	Low – indirect (traffic counts, surveys)	Brand building, large‑scale awareness
E‑Commerce / Online Display	High – national/international (platform dependent)	£300‑£5 000 (ad spend)	High – keyword, intent, retargeting	High – ROAS, conversion rate, CPA	Direct sales, product‑specific promotions

3.6 Advantages & Disadvantages (Summarised)

1. Social Media
   • Advantages: precise targeting, real‑time feedback, viral potential, low entry cost.
   • Disadvantages: algorithm changes, ad‑blocking, constant content demand.
2. Direct/Targeted Email
   • Advantages: highly personal, cheap per contact, easy ROI tracking.
   • Disadvantages: spam risk, list hygiene required, limited to existing contacts.
3. Leaflets
   • Advantages: tangible, good local visibility, simple design.
   • Disadvantages: low response, easy to discard, environmental impact.
4. Billboards
   • Advantages: high visibility, reinforces brand, reaches commuters.
   • Disadvantages: expensive, limited message space, poor demographic targeting.
5. E‑Commerce / Online Display
   • Advantages: direct link to purchase, measurable ROI, flexible budgeting.
   • Disadvantages: competitive bidding can raise costs, click‑fraud risk, needs good landing pages.

3.7 Legal and Ethical Considerations (Unit 6 – External Influences)

• Misleading advertising: Must not contain false statements, exaggerations or omitted material (ASA, UK).
• Consumer protection laws: Consumer Protection from Unfair Trading Regulations 2008 – require honesty and clarity.
• Data protection: GDPR compliance – obtain consent, provide opt‑out, secure personal data.
• Targeting vulnerable groups: Ethical issues when promoting high‑sugar foods, alcohol or gambling to children.
• Environmental concerns: Excessive printed leaflets or non‑recyclable billboard materials.

3.8 Evaluating Promotional Effectiveness (AO4 – Evaluation)

1. Set clear objectives (e.g., increase sales by 10 % in three months).
2. Choose appropriate KPIs – reach, impressions, CTR, conversion rate, sales lift, ROI.
3. Collect baseline data before the campaign (pre‑campaign sales, brand‑recall scores).
4. Monitor during the campaign – use analytics dashboards, email reports, traffic counters.
5. Analyse post‑campaign results – compare against objectives, calculate ROI:
   ROI = (Revenue – Cost) ÷ Cost × 100 %
6. Make recommendations – continue, modify or abandon the method based on cost‑effectiveness and strategic fit.

3.9 Linking Promotion to the Other 3 Ps

• Product life‑cycle: New‑product launches need high‑awareness ads (social media, billboards); mature products often rely on sales promotions and loyalty emails.
• Pricing strategy: Premium pricing pairs with high‑visibility, high‑cost media (billboards, premium magazine ads); discount pricing works well with direct email offers and coupons.
• Place (distribution): Online retailers use e‑commerce advertising to drive traffic to their website; a local shop may favour leaflets and local billboards.

3.10 Choosing the Right Advertising Method

Use the flowchart below (diagram placeholder) to match the method to the business’s:

• Target market (age, location, media habits)
• Budget constraints
• Campaign objectives (awareness vs. sales)
• Need for measurability & control
• Timeframe (short‑term push vs. long‑term brand building)

3.11 Quick Revision Checklist

• Define promotion and its place in the 4 Ps.
• List the six elements of the promotional mix.
• Identify at least four advertising methods; give one advantage & one disadvantage of each.
• Explain how targeting differs between social‑media ads and billboards.
• Describe two key performance indicators for a social‑media campaign.
• State one legal and one ethical issue that can affect any advertising method.

3.12 Sample Classroom Activity

Task: In groups of 3‑4, design a mini‑advertising plan for a new product (e.g., a sustainable water bottle).

1. Choose two advertising methods from the list.
2. Justify your choices using the comparison table – consider reach, cost, targeting and measurability.
3. Set a clear objective (e.g., “Generate 500 sales in the first month”).
4. Identify the KPIs you will track and explain how you will calculate ROI.
5. Present the plan to the class; peers provide feedback on feasibility, legal/ethical issues and alignment with the 4 Ps.

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4. Operations Management (Unit 4)

• Production methods: job, batch, flow (mass) production – choose based on product type and demand forecast.
• Break‑even analysis: Fixed costs ÷ (Price – Variable cost per unit) = Break‑even volume.
  
• Quality control & assurance: inspection, statistical process control, ISO standards.
• Location decisions: factors – transport costs, labour availability, market proximity, government incentives.

5. Financial Information & Decisions (Unit 5)

6. External Influences (Unit 6)

• Economic environment: business cycle (expansion, peak, recession, trough); fiscal policy (taxation, government spending); monetary policy (interest rates, inflation).
• Environmental considerations: sustainability, carbon footprint, waste reduction – can affect brand image and legal compliance.
• Globalisation: advantages – larger markets, economies of scale; disadvantages – increased competition, exchange‑rate risk.
• Multinational corporations (MNCs): benefits – access to technology, capital, brand reputation; drawbacks – cultural differences, repatriation of profits.
• Exchange‑rate fluctuations: affect import costs and export competitiveness; businesses may use hedging or price adjustments.

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7. Integrated Summary for Exam Revision

When answering IGCSE Business Studies questions, remember to:

1. Identify the relevant unit (e.g., Marketing, Operations, Finance) and use the appropriate terminology.
2. Apply concepts to real‑world examples – e.g., link a social‑media campaign to the product’s life‑cycle stage.
3. Analyse advantages, disadvantages and possible alternatives (AO3).
4. Evaluate effectiveness using quantitative data (ROI, break‑even, ratios) and qualitative factors (brand image, ethical concerns) (AO4).