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Summary Edexcel A level Business Paper 1 - theme 1 & 4 25,40 €
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Summary Edexcel A level Business Paper 1 - theme 1 & 4

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This is a booklet that covers the entire syllabus of theme 1 and 4 for Edexcel a level business - all you need to know for PAPER 1 and can also be used for paper 3. It has all the notes and perfectly summarises them for you to help you understand them easier and faster

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  • 2 avril 2024
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Edexcel A level
Business
Paper 1
Theme 1 &
4
Revision
booklet
Page 1 of 70

,1.1 Meeting customer needs
1.1.1 The market:
Market – Where buyers and sellers interact.

Mass and niche markets:
Mass market – An unsegmented market in which products are offered to every customer
through mass retailers or independent stores and promoted through mass media.
 Cheaper goods so attract larger audience.
 Economies of scale, due to mass production lowering average cost per unit.
 High sales figures.
 Standard quality.
 Lack of customer loyalty due to many suppliers.
 No USPs, so hard to stand out.

Niche market – The subset of the market in which specialist and specific products are
offered to small and specific group of customers.
 Specific, so businesses can charge higher prices -> Brand loyalty with inelastic PED
 Unique and high quality.
 Less competition.
 Higher costs due to specifications.
 Small range of customers, forces business to constantly innovate and improve to
retain customers.

Formula for market share:
Sales of business
----------------------- x 100
Total market sales


Dynamic market – A market that is constantly and quickly changing.
 Examples of changes: Technological advancements, consumer preferences in a
market, marketing techniques(eg E-commerce) , product differentiation
 Competition encourages dynamism, as businesses don’t want to do nothing and
lose market share in a market where there are many suppliers.

Risk – When the potential outcomes of a decision are known
Uncertainty – None of the outcomes are known in advance



Page 2 of 70

,1.1.2 Market Research
Market research – Gathering information about consumers' needs and preferences.

Purpose of research:

 Identify customer needs and make products accordingly -> Higher customer satisfaction
and brand loyalty

 Reduce risk of business failure and prevent wastage of resources

Qualitative data – Data that observes non-numerical values. More opinions and subjectivity

Methods of gathering qualitative data: Open Questionnaire, survey, interviews, focus groups

-------------------------------------------------------------------------------------------------------------------------

Quantitative data – Data that observes numerical values. More objective

Methods of gathering quantitative data: Questionnaire, statistics(census), technology.

-------------------------------------------------------------------------------------------------------------------------

Primary research – Research conducted by the business/entrepreneur themselves with the aim of
finding new data.

Examples of primary research: Questionnaires, surveys, focus groups, observation.

--------------------------------------------------------------------------------------------------------------------------

Secondary research – Research found via external sources using existing data.

Examples of secondary research: Internet (websites), graphs and charts (databases), old surveys
and questionnaires.

-------------------------------------------------------------------------------------------------------------------------

Limitations of conducting different types of research:
 Data may outdated/inaccurate -> Misunderstanding of customer preferences and market
prices -> Cost outweighs benefits and business unable to gain exposure -> Opportunity cost and
short-term financial strain

 Cost of conducting primary research -> Requires extensive work and funding to carry out
with large scale project -> Demotivating for entrepreneur due to greater financial risk and longer
working hours -> Cost may outweigh benefit -> Less commitment

 Sample size may not be reflective of entire population/market -> Product/marketing
strategy only appeals to limited group of people within mass market -> Restricts business sales
potential -> Difficult to strengthen brand in long term

 Data may be subjective -> Polarising issues with regards to preferences among customers ->
Risk of alienating proportion of the customer base by making a decision -> Reliance on retaining
other part of customer base -> Constant innovation required -> High financial cost

How to avoid bias:

 Larger sample size

Page 3 of 70

, Market Orientation:
A business can either be product orientated or market orientated:

Product oriented – Whereby they focus on the product they want to make and sell. E.G Model T Ford.

 Motivated to create product -> Full commitment and passionate -> Higher productivity and quality of
product -> Increased customer satisfaction -> Strengthens brand loyalty

 Invention of potentially revolutionary idea -> Disrupts status quo of the market and stands out from
competition -> Higher demand for product -> Increased customer loyalty -> Strengthens brand loyalty
creating price inelastic demand

 Cost and time of inventing a new product -> Requires significant time planning and investment to
fund -> Market may have changed by the time product has been made or invention may have been
taken -> Significant risk and potential opportunity cost

 May not meet customer demands and expectations -> Risk of product failing due to lack of customer
consideration -> Costs outweigh benefits -> Opportunity cost with large financial strain

Market oriented – Whereby they focus on what the market wants from a product. E.G Nike custom shoes.

 Meets customer expectations and demand of the market -> Higher customer satisfaction and
retention -> Strengthens brand loyalty and ability to charge higher prices (price inelastic demand)

 Customers will give feedback based on the product they’ve asked for -> Enables business to improve
product quality via modifications and innovation in order to improve customer satisfaction ->
Increased customer satisfaction and retention sales -> Strengthens brand loyalty

 Less motivated to create product as it may not be what entrepreneur wants -> Reduced productivity
and potentially fall in product quality due to less commitment -> Lower customer satisfaction ->
Reduced brand loyalty and market share

 Customers may demand product that requires extensive investment and research -> Maximises
consumer welfare but not business profits -> Financial strain on business -> Upward pressure on
existing product lines -> Fall in sales if loyalty is not strong -> Detrimental to business’ performance
What dictates the orientation a business will pick:

 The nature of the product.

 The views of those in control.

 The nature and size of the market.

 The degree of competition.
Why businesses are moving to market orientation:

 Customers know more about what they want.

 Internet – E-Commerce to sell to wider range of customers.

 Risky to be product orientated.

 More competitors – Business need to sell what is in demand.

 Product that the business may want to make and sell may be in a saturated market.

 Expensive creating new innovative products.

 Patent issues with other businesses who may also be innovating.




Page 4 of 70

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