A Level Business Year 1 Notes

EDEXCEL A LEVEL Business Year 1 Notes

IDEA 45% is SALE!

• Various percentages and keywords are displayed on the cover page, including:
  • 45%
  • 25%
  • Time
  • Team
  • Marketing
  • Internet
  • Business
• Mentions Ian Marcousé, Andrew Hammond, and Nigel Watson as authors.
• It is endorsed for edexcel and promotes dynamic learning.

EDEXCEL A LEVEL Business Year 1

• Lists Ian Marcousé, Andy Hammond, and Nigel Watson as authors.
• Promotes dynamic learning.

Resource Endorsement

• The resource offers high-quality support for the associated Pearson qualification.
• It fully covers the teaching and learning content of the specification.
• Demonstrates an appropriate balance between subject skills, knowledge, and understanding.
• Endorsement does not cover assessment activities or processes. Pearson examiners did not contribute to examination papers.
• The official specification should always be referred to for definitive guidance.
• Endorsement of a resource doesn't mean it's required or the only suitable material.

Publication Information

• Published in 2015 with multiple impressions (10 9 8 7 6 5 4 3 2 1) from 2015 to 2018.
• Copyright © 2015 Ian Marcousé, Andy Hammond, and Nigel Watson.
• All rights reserved; no reproduction without permission from the publisher.
• Papers used are natural, renewable, and recyclable products from sustainable forests.
• Illustrations by Aptara, Typeset in 11/13 pt Bembo Std by Aptara, Inc.
• Printed in Italy for Hodder Education, an Hachette UK Company.
• ISBN 9781471847769, eISBN 9781471847776.

Table of Contents

Theme 1: Marketing and People

• Section 1.1: Meeting Customer Needs
  • Introduction to marketing
  • The market
  • Market research
  • Market positioning
• Section 1.2: The Market
  • Demand
  • Supply
  • Markets and equilibrium
  • Price elasticity of demand
  • Income elasticity of demand
• Section 1.3: Marketing Mix and Strategy
  • Product and service design
  • Branding and promotion
  • Pricing strategies
  • Distribution
  • Product life cycle and portfolio
  • Marketing strategy
• Section 1.4: Managing People
  • Introduction to managing people
  • Approaches to staffing
  • Recruitment, selection, and training
  • Organizational design
  • Motivation in theory
  • Motivation in practice
  • Leadership
• Section 1.5: Entrepreneurs and Leaders
  • Role of an entrepreneur
  • Entrepreneurial motives and characteristics
  • Business objectives
  • Forms of business
  • Business choices
  • Moving from entrepreneur to leader

Theme 2: Managing Business Activities

• Section 2.1: Raising Finance
  • Introduction to finance
  • Sources of finance: internal and external
  • Liability and finance
  • Planning and cash flow
• Section 2.2: Financial Planning
  • Sales forecasting
  • Sales, revenue, and costs
  • Break-even
  • Budgets
• Section 2.3: Managing Finance
  • Profit
  • Liquidity
  • Business failure
• Section 2.4: Resource Management
  • Introduction to resource management
  • Production, productivity, and efficiency
  • Capacity utilization
  • Stock control
  • Quality management
• Section 2.5: External Influences
  • Economic influences
  • Legislation
  • The competitive environment
• Quantitative skills for Business
• How to revise for Business exams
• Answers to the questions in Chapter 48

How to Use This Book

• Context is crucial in Business; theory is only true when intelligently placed into a business situation.
• The book provides many ‘Real business’ cases and up-to-date examples.

For Students:

1. To be read: before or after the teacher tackles a topic for reinforcement.
   • Includes Revision questions to help absorb material.
2. As a reference resource:
   • Excellent index to track down specific areas.
3. As a revision resource:
   • Use the ‘Five whys and a how’ feature to test knowledge.
   • Proceed to ‘Evaluation’; if confident, move on, otherwise re-read the chapter.
   • Test yourself against the specification online. URL given in transcript.
   • Tackle all numerical questions in Chapter 48.

For Teachers:

1. Textbook for trust and to change things up a bit.
   • Students can teach themselves Quality management, with careful reading, notes, and answering Revision questions.
   • Focus on application to the real world.
   • Encourage students to take their own initiative with the reading.
2. Edexcel Business A level Year 1 Answer Guide with answers and mark schemes for short questions, case studies, and ‘extended writing’ questions.
   • Exam Pack for Edexcel Business AS/First Year is published by A–Z Business Training Ltd located at www.a-zbusinesstraining.com.

Acknowledgements

• Research includes Google, the Financial Times, The Grocer, and business websites.
• Salvatore Falcone and Matteo Pantani are constant sources of real business life.
• Isla Billett and Colin Leith contributed to the Edexcel specification.
• Nigel and Andrew (co-authors), Beth Cleall, and Graeme Hall at Hodder provided qualities to the book.
• Students and student teachers, Yan Wu, Sujagan Sivananthan, Lauren Cox, Neetu Rathore, and Yasmin Safar, provided inspiration.
• Family, especially Maureen, and grandchildren are acknowledged for their support.
• The subject itself, ever-changing business, is acknowledged.

Copyright Material

• A series of image credits are listed for various pages within the book.

Theme 1 Marketing and People

• This is a marketing and people concept diagram showing Strategy and multiple other things to have a successful business

Section 1.1 Meeting Customer Needs: 1 Introduction to Marketing

• Definition: Marketing is the department targeting the right product at the right target market with the right price, promotion, and place.
  • Linked to: The market, Ch 2; Market positioning, Ch 4; Product and service design, Ch 10; Branding and promotion, Ch 11; Marketing strategy, Ch 15.
• Peter Drucker: Aim of marketing is to know and understand the customer so well, the product/service fits and sells itself.
• Paul Gillin: ‘Think like a customer.’
• Communicate customer benefits clearly and consistently.
  • L’Oréal: ‘Because I’m worth it’.
  • Tesco: ‘Every Little Helps’.
• Marketing isn’t simple; if circumstances change, marketing may have to change.

1.2 Marketing Objectives

• Marketing objective: Marketing target or goal that an organisation hopes to achieve (e.g., boost market share from 9 to 12 percent within two years).
• Marketing objectives steer business direction.
• Operating a business without objectives is like driving a car without a destination.
• Increased probability of success with marketing objectives because decision making is more focused.
• Targets should be quantifiable, measurable, and set within a time frame.
• Example: Nestlé’s Objective - ‘To achieve a 9 per cent increase in the sales of KitKat by the end of next year.’

Real Business: Marketing Objectives in the Non-Profit Sector

• Charities need marketing to keep brands alive and donations flowing.
• Typical marketing objectives include:
  • Raise brand awareness: Percentage of the market that knows your brand, recognizing it from a list or recalling it unaided.
  • Brand loyalty: Consumers returning to your brand rather than switching between brands.
  • Corporate image: Improving reputation to protect income from donors.

1.3 Marketing Strategy

• Marketing strategy is the medium- to long-term plan to achieve marketing objectives.
• Hugh Davidson's POISE acronym for effective marketing strategy:
  • P: Prioritise and focus.
  • O: Objective.
  • I: Integrate (coordinate all 4Ps).
  • S: Segment.
  • E: Evaluate.

Real Business: King Digital's Candy Crush Saga

• Launched in November 2012 with the highest daily app usage by 2014.
• Grossed an estimated $900,000 a day.
• Clever combination of free play with some irresistible 69p upgrades.

1.4 Making Sure Your Marketing is Effective

• Effective marketing begins by identifying an opportunity.
• Small businesses gain insights from owner contact with customers.
• Large businesses undertake formal market research.
• Design products and services to match consumer preferences.
• Decide on a launch marketing mix, including decisions on price, distribution, and promotion.

Figure 1.2 The Marketing Process Listed in Transcript. No specific Marketing Process given.

1.5 Why is Effective Marketing Important?

• Consumers are rational and seek fairly priced products that satisfy their needs.
• Competitive markets reward firms that satisfy consumer needs.
• Customer loyalty is crucial; failure leads to market share and profit loss.
• Effective marketing responds quickly to changes in consumer tastes.
• Failure to adapt can force firms out of business; examples include HMV, Jessops, and Blockbuster.

Real Business: Walkers Sensations

• Sales declined by 2009 due to newer brands.
• Walkers relaunched Sensations in 2010 with new packaging and flavors.
• Success brought the brand new distribution outlets in supermarkets by 2012–2013.

1.6 The Characteristics of Effective Marketing

• Identifying the target market
  • Aim product at everyone who can afford it, then focus on a segment.
  • Space tourism example: thrill-seekers vs. luxury.
  • Success requires understanding target customers' needs and wants.
  • Consider interests and lifestyle.
• Clear idea of age, sex, and personality of the target market enables focus:
  • Market research
  • Advertising spending
  • Segment your markets
• Sky Broadcasting example: wide range of channels for kids, sports fans, and music types.
• A coherent brand image through a coherent marketing mix.
  • Marketing success depends on getting all four mix decisions right.
  • Coordinate marketing mix elements (product, price, place, promotion) to avoid confusion.
  • First, determine the brand image you want to create: price, promotion & distribution must coincide with brand image.
• Word-of-mouth marketing through the internet is very important.

1.7 Short-Termist Marketing = Ineffective Marketing

• Short-termism: Firm pursues strategies boosting short-run profits, even if these damage long-run profitability.
• Examples:
  • High prices designed to exploit consumer loyalty/dominant market position.
    *WHSmith increasing prices led to falling sales.
  • Short-run, sales-driven marketing:
    • Employees are motivated by targets and bonuses.
    • Sales targets lead to unethical practices (BBC Investigation).
      *Mis-selling creates demand initially, however, bad publicity may hit demand if unethical practices are exposed.

1.8 Introduction to Marketing – Evaluation

• Marketing looks easy but is harder than it looks.
• New product launch success rate by big UK companies is less than 20 percent.
• A short-termist approach based on cynicism will backfire.
• Abraham Lincoln: ‘You can fool all the people some of the time, and some of the people all of the time, but you cannot fool all the people all the time.’

Key Terms

• Marketing Mix: the plan for getting the right blend of product, price, promotion, and place (the 4Ps).
• Marketing Objectives: targets for the marketing department (e.g., increasing sales by 15% within 12 months).
• Market Segmentation: dividing a market by age, gender, or income to find underserved areas (e.g., bikes for older people).
• Marketing Strategy: medium-to-long-term plan for achieving objectives delivered through the marketing mix.

1.9 Workbook Revision Questions

• A series of revision questions are provided in the text

1.10 The Role of Chance/Luck

• Effective marketing usually requires careful planning, but success sometimes happens by chance.
• Morgan cars, a conservatively run private business, is used as an example. The company's production methods and designs have hardly changed in 50 years.
• Morgan has not deliberately engineered its successful use of segmentation; it has happened accidentally, and the company has been fortunate.

2. Research Measurement of Sales Potential of New Brands

• KitKat Chunky Double Caramel is discussed to explain consumer research
  *Consumer Research example to show market segment targeting and how products are amplified using digital and social media campaign.

Extended Writing

1. A digital-only radio station is focused on personal finance. Keen to help teenagers learn more about money.
2. Evaluate the best way to build attendance figures at a local sports club of your choice.

Section 1.1 Meeting Customer Needs: 2 The Market

• Definition: The market is where buyers meet sellers, either face-to-face or online.
• Linked to: Market research, Ch 3; Market positioning, Ch 4; Pricing strategies, Ch 12; Marketing strategy, Ch 15.

2.1 Mass Marketing

• Mass marketing aims to create products/services with universal appeal by targeting the whole market.
• Goal: Everyone should be a consumer of the product.
• Ultimate prize is generic brands: brands so associated with product that customers treat the brand as though part of the product category (e.g.,