Learning Objective
By the end of this unit students will be able to:
- Explain the full Cambridge Business (9609) syllabus – from the basic business environment to the development of a coordinated marketing strategy.
- Analyse market, product and financial data using the required analytical tools.
- Design a complete, integrated marketing plan that aligns with overall business objectives, both domestically and internationally.
- Monitor, control and adapt the plan using appropriate performance indicators.
1. Business & Its Environment (AS – Syllabus Block 1)
1.1 Key Concepts
- Enterprise – creation of goods/services to satisfy needs; involves risk‑taking and innovation.
- Entrepreneur – individual who identifies opportunities, mobilises resources and assumes risk.
- Business Plans – written statements of objectives, market analysis, organisational structure, financial forecasts and risk assessment.
1.2 Business Structure
| Sector | Ownership Type | Typical Example |
|---|
| Primary | Private Ltd., State‑owned | Coal mining co. |
| Secondary | Public limited company (PLC) | Automobile manufacturer |
| Tertiary | Franchise, Sole trader | Fast‑food outlet |
1.3 Size, Growth & Objectives
- Measurement of size – turnover, number of employees, market share.
- Growth indicators – organic growth, mergers & acquisitions, diversification.
- Business objectives – profit maximisation, sales growth, market‑share, CSR, sustainability.
- SMART objectives – Specific, Measurable, Achievable, Relevant, Time‑bound.
1.4 Stakeholders
| Stakeholder | Interest |
|---|
| Owners/Shareholders | Profit, return on investment |
| Employees | Job security, wages, development |
| Customers | Quality, price, service |
| Suppliers | Stable orders, timely payment |
| Government | Tax revenue, regulation compliance |
| Community & NGOs | Environmental & social impact |
2. Human‑Resource Management (AS – Syllabus Block 2)
2.1 Purpose of HRM
To acquire, develop, motivate and retain the people needed to achieve organisational objectives.
2.2 Core HRM Activities
| Activity | Key Points |
|---|
| Workforce Planning | Analyse current skills, forecast future needs, identify gaps. |
| Recruitment & Selection | Job analysis → advert → shortlisting → interview → offer. |
| Training & Development | Induction, on‑the‑job training, CPD, e‑learning. |
| Motivation & Appraisal | Maslow, Herzberg, McGregor; performance‑related pay, MBO. |
| Employee Relations | Trade unions, collective bargaining, grievance handling. |
| Redundancy & Restructuring | Legal requirements, severance, outplacement. |
2.3 Example – Retailer Recruitment Funnel
- Advertise vacancy on job board.
- Receive 120 applications → shortlist 30.
- Conduct group assessment centre → select 8.
- Final interview → offer to 5 candidates.
3. Marketing Fundamentals (AS – Syllabus Block 3)
3.1 Role of Marketing
- Identifies and satisfies customer wants and needs.
- Links corporate objectives with market opportunities.
- Creates value through exchange.
3.2 Market Types
| Market | Characteristics |
|---|
| Consumer (B2C) | Emotional buying, smaller purchase size, many buyers. |
| Industrial (B2B) | Rational buying, larger purchase size, fewer buyers. |
| Mass Market | Broad appeal, standardised product. |
| Niche Market | Specialised needs, limited segment. |
3.3 Demand & Supply Basics
- Demand curve – relationship between price and quantity demanded.
- Supply curve – relationship between price and quantity supplied.
- Equilibrium – where the two curves intersect.
- Factors shifting curves – income, tastes, technology, input costs.
3.4 Segmentation, Targeting & Positioning (STP)
- Segmentation bases: demographic, geographic, psychographic, behavioural.
- Targeting: single‑segment, concentrated, differentiated, mass.
- Positioning statement – “For target segment, brand offers key benefit because reason to believe.”
3.5 Market Research Process
- Define the problem & objectives.
- Develop research plan – primary vs. secondary, qualitative vs. quantitative.
- Design data collection – surveys, focus groups, observation.
- Sampling – probability vs. non‑probability, sample size.
- Collect data.
- Analyse & interpret.
- Present findings & make recommendations.
3.6 The 4‑Ps (Extended to 7‑Ps for Services)
| Ps | Key Elements |
|---|
| Product | Core benefit, features, branding, life‑cycle, Boston Matrix. |
| Price | Pricing objectives, cost‑plus, competition‑based, psychological, price elasticity. |
| Place | Distribution channels, logistics, e‑commerce, intensive/selective/exclusive. |
| Promotion | Advertising, sales‑promotion, public relations, direct & digital, IMC. |
| People | Customer‑facing staff, training, service culture. |
| Process | Service delivery procedures, technology, queuing. |
| Physical Evidence | Facilities, branding, online interface. |
4. Operations Management (AS – Syllabus Block 4)
4.1 Transformational Process
Inputs (labour, capital, materials) → operations → Outputs (goods/services).
4.2 Production Methods
| Method | Typical Use | Key Advantages |
|---|
| Job Production | Custom furniture | High flexibility |
| Batch Production | Bakery items | Economies of scale for small batches |
| Flow (Mass) Production | Automobiles | Low unit cost, high volume |
4.3 Productivity & Capacity
- Productivity = Output ÷ Input (e.g., units per labour hour).
- Capacity utilisation = (Actual output ÷ Maximum possible output) × 100 %.
- Techniques – Just‑In‑Time (JIT), lean production, outsourcing.
4.4 Example – Fast‑Food Chain Operations
- Standardised recipes → batch production.
- Drive‑through & delivery → intensive distribution.
- JIT inventory of fresh ingredients to minimise waste.
5. Finance & Accounting (AS – Syllabus Block 5)
5.1 Why Finance is Needed
- Start‑up capital, working‑capital for day‑to‑day operations, investment in plant & equipment.
- Ensures solvency, supports growth, enables risk‑taking.
5.2 Sources of Finance
| Source | Type | Typical Cost |
|---|
| Bank loan | Debt | Interest 4‑8 % |
| Retained earnings | Internal equity | Opportunity cost of not distributing |
| Share issue | External equity | Dividend expectations |
| Leasing | Hybrid | Rental payments |
5.3 Working‑Capital Management
- Current assets – cash, receivables, inventory.
- Current liabilities – payables, short‑term loans.
- Cash‑conversion cycle = Inventory days + Receivables days – Payables days.
5.4 Budgeting & Forecasting
- Sales forecast → production budget → cash‑flow forecast.
- Break‑Even Analysis:
Break‑Even Volume (units) = Fixed Costs ÷ (Price – Variable Cost per unit)
- Ratio analysis – profitability (ROA, ROE), liquidity (current ratio), efficiency (inventory turnover).
6. Why a Coordinated Marketing Strategy is Essential (A‑Level – Topic 8)
- Ensures every marketing activity contributes to common business goals.
- Provides a clear decision‑making framework for product, price, place and promotion.
- Optimises resource allocation, avoids duplication and waste.
- Maintains brand consistency across all domestic and international channels.
- Facilitates systematic monitoring, control and timely adaptation to market changes.
7. Marketing Analysis – Key Foundations (8.1)
7.1 Elasticities
| Elasticity | Formula | Interpretation | Limitations |
| Price Elasticity of Demand (PED) |
\(\displaystyle PED = \frac{\% \Delta Q_d}{\% \Delta P}\) |
|PED| > 1 = elastic; |PED| < 1 = inelastic; |PED| = 1 = unit‑elastic. |
Cannot be calculated when price change = 0; assumes ceteris paribus. |
| Income Elasticity of Demand (YED) |
\(\displaystyle YED = \frac{\% \Delta Q_d}{\% \Delta Y}\) |
Positive = normal good; Negative = inferior; >1 = luxury. |
Ignores substitution effects; short‑term income changes may be temporary. |
| Cross‑price Elasticity (XED) |
\(\displaystyle XED = \frac{\% \Delta Q_{dA}}{\% \Delta P_B}\) |
Positive = substitutes; Negative = complements. |
Requires reliable data on two related products. |
| Advertising Elasticity (AED) |
\(\displaystyle AED = \frac{\% \Delta Q_d}{\% \Delta A}\) |
Measures responsiveness of demand to advertising spend. |
Assumes other marketing variables remain constant. |
7.2 Product Development Cycle & Sources of Ideas
- Idea Generation – market research, customer feedback, competitor analysis, R&D, internal brainstorming.
- Screening & Evaluation – feasibility, profitability, brand fit.
- Concept Development & Testing – prototype, focus groups, test‑markets.
- Business Analysis – CVP, break‑even, ROI.
- Product Development – engineering, design, pilot production.
- Market Testing – limited launch, performance data collection.
- Commercialisation – full‑scale launch, post‑launch review.
7.3 Sales Forecasting Techniques
| Method | How It Works | Advantages | Disadvantages |
|---|
| Moving‑Average (Quantitative) |
Average of sales over a fixed number of past periods. |
Simple; useful for stable demand. |
Ignores trends & seasonal spikes. |
| Exponential Smoothing |
Weighted average giving more importance to recent data. |
Responsive to recent changes. |
Requires selection of smoothing constant. |
| Trend Projection (Regression) |
Fits a line (or curve) to historical data to predict future sales. |
Captures linear trends. |
Assumes trend continues unchanged. |
| Delphi Technique (Qualitative) |
Expert panel provides independent forecasts; consensus reached. |
Useful for new products or markets. |
Time‑consuming; subjectivity. |
| Market‑Testing |
Launch in a limited area, extrapolate results. |
Real‑world data. |
Costly; may not be fully representative. |
8. Marketing Strategy – Planning & Approaches (8.2)
8.1 Contents of a Formal Marketing Plan (Cambridge 5‑Step Model)
- Objectives – SMART marketing goals (e.g., 10 % market‑share increase in 12 months).
- Resources & Constraints – budget, staff, technology, legal limits.
- Research & Situation Analysis – PESTLE, SWOT, competitor review, market segmentation.
- Marketing‑Mix Programme – detailed actions for the 4‑Ps/7‑Ps.
- Monitoring & Control – KPIs, review timetable, contingency plans.
Benefits
- Clear direction and accountability.
- Improved inter‑departmental coordination.
- Financial justification of marketing spend.
- Systematic performance measurement.
Limitations / Criticisms
- Can be overly rigid in fast‑changing markets.
- Time‑consuming and costly to produce.
- Reliance on inaccurate forecasts or assumptions.
- Risk of a “plan‑driven” culture that stifles creativity.
8.2 Strategic Tools & Approaches (required by the syllabus)
| Tool / Approach | Purpose | Key Elements | Typical Use in Strategy |
|---|
| SWOT Analysis | Identify internal strengths & weaknesses and external opportunities & threats. | Strengths, Weaknesses, Opportunities, Threats. | Basis for choosing strategic direction (growth, defence, retrenchment). |
| PEST / PESTLE | Analyse macro‑environmental forces. | Political, Economic, Social, Technological, Legal, Environmental. | Anticipate trends affecting market attractiveness. |
| Porter’s Five Forces | Assess industry competitiveness. | New entrants, Suppliers, Buyers, Substitutes, Rivalry. | Inform positioning, barriers to entry and pricing power. |
| Ansoff Matrix | Explore growth options. | Market Penetration, Market Development, Product Development, Diversification. | Select the most appropriate growth strategy. |
| Blue‑Ocean Strategy | Create uncontested market space. | Value innovation, ERRC (Eliminate‑Reduce‑Raise‑Create) grid. | Useful when existing markets are saturated. |
| Scenario Planning | Prepare for uncertain futures. | Develop multiple plausible future scenarios; test strategic fit. | Risk management and long‑term resilience. |
| Force‑Field Analysis | Identify forces driving or restraining change. | List driving & restraining forces; assign weightings. | Decide viability of a strategic change. |
| Decision Trees | Visualise choices, probabilities and outcomes. | Branches for decisions, chance nodes, payoff values. | High‑risk investment or entry‑mode decisions. |
8.3 Approaches to Developing the Marketing Strategy
| Approach | Primary Focus | Typical Tools Used | Strengths | Limitations |
|---|
| Market‑Oriented | Customer needs & wants. | Voice of Customer, segmentation, market research. | High relevance; strong loyalty. | May ignore internal capabilities. |
| Product‑Oriented | Product features, technology, innovation. | R&D pipeline, product‑life‑cycle analysis. | Leverages technical expertise. | Risk of market mismatch. |
| Competitor‑Oriented | Relative positioning vs. rivals. | SWOT, Porter’s Five Forces, benchmarking. | Proactive defence/offence. | Can become reactive if over‑focused on rivals. |
| Integrated Marketing Communications (IMC) | Consistent brand messaging across all channels. | Advertising, PR, direct, social media, promotional mix. | Brand coherence; synergy effects. | Requires strong internal coordination. |
| Digital‑First | Online presence, data‑driven decisions. | SEO, SEM, analytics, content marketing, social listening. | Real‑time feedback; cost‑efficiency. | Dependence on technology; privacy concerns. |
| International / Global | Expansion beyond domestic borders. | Global PESTLE, Porter’s, Ansoff (market development), entry‑mode analysis. | Access to larger markets; economies of scale. | Cultural, legal, operational complexities. |
8.4 International Marketing – Key Concepts
- Globalisation – increasing inter‑dependence of economies, leading to similar consumer needs across borders.
- Entry Modes
- Exporting (direct or indirect)
- Licensing / Franchising
- Joint Venture / Strategic Alliance
- Wholly‑Owned Subsidiary (greenfield or acquisition)
- Standardisation vs. Adaptation
- Pan‑global (standardised) – same product, price, promotion worldwide (e.g., Apple).
- Localisation (adapted) – modify mix to suit cultural, legal, economic differences (e.g., McDonald’s menu).
- Strategic Choice Factors
- Market size & growth potential.
- Competitive intensity.
- Regulatory environment.
- Company resources and risk appetite.
9. Integrated Step‑by‑Step Development Process
- Define Business Objectives – revenue growth, market‑share target, profitability, CSR goals.
- Conduct Situational Analysis
- Macro‑environment: PESTLE.
- Industry forces: Porter’s Five Forces.
- Internal audit: SWOT.
- Strategic mapping: Ansoff or Blue‑Ocean insights.
- Analyse Market & Segmentation
- Identify demographic, psychographic, geographic, behavioural bases.
- Use market‑research data and elasticity calculations to gauge segment size and price sensitivity.
- Select Target Markets
- Evaluate attractiveness (size, growth, competition) and fit with resources.
- Decide on single‑segment, concentrated, differentiated or mass‑market approach.
- Develop Positioning Statement
Format: For [target segment], [brand] offers [key benefit] because [reason to believe].
- Choose Strategic Approach & Tools
- Match the chosen approach (market‑oriented, product‑oriented, etc.) with appropriate analytical tools.
- Example: A market‑penetration strategy may rely on price‑elasticity analysis and competitive‑price benchmarking.
- Design the Marketing Mix (4Ps/7Ps)
- Product – core benefit, features, branding, life‑cycle stage, Boston Matrix positioning.
- Price – pricing objectives, cost‑plus, competition‑based, psychological, elasticity‑driven.
- Place – distribution channels, logistics, e‑commerce platforms, intensive/selective/exclusive coverage.
- Promotion – IMC mix, media selection, message hierarchy, digital tactics.
- Extended Ps (People, Process, Physical evidence) for services.
- Plan Integrated Communications (IMC)
- Define media mix (paid, owned, earned).
- Set timing & sequencing (teaser → launch → post‑launch).
- Allocate creative resources and set KPIs (reach, frequency, CPM, conversion).
- Budgeting & Financial Planning
- Forecast sales using the chosen forecasting method (moving average, regression, Delphi).
- Prepare a detailed cost sheet – production, promotion, distribution, overheads.
- Calculate break‑even point and expected ROI.
- Monitoring, Control & Adaptation
- Set performance indicators – market share, sales growth, profit margin, brand awareness.
- Review timetable – monthly, quarterly, annual.
- Contingency plans – alternative pricing, promotional push, market‑exit criteria.
10. Quick Revision Checklist (Exam‑Style)
- Define the business’s overall objectives and link them to marketing goals.
- Complete a PESTLE and SWOT analysis – note at least two key points for each.
- Identify the most appropriate strategic tool (e.g., Ansoff, Porter’s) for the chosen growth option.
- State the target market(s) using STP language.
- Write a concise positioning statement.
- Outline the 4‑Ps actions – give one specific example per P.
- Choose a forecasting method and show the basic calculation (e.g., break‑even volume).
- List two KPIs you would use to monitor the plan.