Competitive Environment

Remember it, Test it!

Remember it, Test it!


Business Studies A Level - Market Research– Market research is where data is gathered and analysed from the marketplace so that the goods or services of a company can meet the needs of the consumers.

  • – A marketing budget outlines what the business wants to achieve in terms of sales revenue, sales volume, profit and expenditure.
  • – A marketing budget can be set in a number of ways.
  • – Products tend to come under two main categories: consumer products and producer products.
  • – Consumer products are brought and used by individuals within the home.
  • – Producer products are brought by businesses.
  • – In order to develop a new product there are a number of stages required.
  • – A lot of product ideas don’t make it to the market place while many that do get launched fail within a few months.
  • – A product goes through various stages within its ‘life’ during which its level of sales changes: development, introduction, growth, maturity, saturation and decline.
  • – If a business believes that a product can continue to reach higher sales levels then they might decide to use one or more extension strategies.
  • – The Boston Matrix is a method used to analyse a business’ product portfolio. The products are divided up into four categories depending on their share in the market and their growth level: problem child, stars, cash cows, and dogs.
  • – Asset-led marketing is where a business creates a strategy which is based on what strengths and assets it knows it has.
  • – Promotion is how a business makes consumers aware of its products. It’s used to attract consumers to buy the product thereby creating sales revenue.

Business Studies A Level - Billboard Advertising– Advertising allows businesses to reach a wider audience and thereby have a greater impact.

  • – Within the UK there are two bodies which monitor advertisements: the Advertising Standards Authority (ASA) and the Independent Television Commission (ITC).
  • – A business creates a certain image in the minds of their consumers through branding and packaging.
  • – A loss leader doesn’t make a profit itself but attracts customers in who’ll then buy profit-making products as well as loss leaders.
  • – The quantity of products sold and the profit-margin is dictated by the price level of the product.
  • – A business can use number of strategies to calculate the best product selling price.
  • – The concept is how the demand changes if one factor that influences the demand of a product is changed.
  • – Price elasticity of demand looks at whether the demand changes if the price of the product changes.
  • – Price elasticity = percentage change in quantity demanded / percentage change in price
  • – Income elasticity of demand is how demand changes in respect to changes in the incomes of the consumers.
  • – Income elasticity of demand = percentage change in quantity demanded / percentage change in income
  • – Advertising elasticity of demand is how demand changes in response to a change in the advertising expenditure which is used to promote it.
  • – Advertising elasticity of demand = percentage change in quantity demanded / percentage change in advertising expenses
  • – Distribution channels are the intermediaries that transport the product in order to make it available to consumers.
  • – A recent trend with businesses is to cut out as many intermediaries as they can. This reduces the final price and also gets the product to the consumer much faster.

Business Studies A Level - Competitiveness– Competitiveness enables a business to survive and grow within their market.

  • – There are a number of determinants regarding the competitiveness of a business.
  • – There is a wide range of markets which provide products and services.
  • – In order to survive smaller businesses need to ensure that their product has a Unique Selling Point (USP).
  • – Which markets a business competes in depends on the type of market: perfect competition, monopolistic competition, oligopolies or monopoly.



1. Alice is manager of the production team at a toy company. An objective for this year is to come out with a new product.

Business Studies A Level - Toysa) Describe the stages that Alice and her team need to go through before launching the new product nationally.

b) Alice is aware that many products fail after their launch. Suggest two ways in which she could avoid her new product failing.

2. Alice and her team manage to come up with a new toy. After the launch, costs are still high compared to sales. After a number of months the product becomes profitable. What stage of its product life-cycle is this toy probably at?

3. After sales have reached their peak Alice decides she wants to extend the ‘life’ of this product. Provide three extension strategies she could use.

4. Andy managers the promotional department for a watches company. He is currently working on an advertisement campaign for a new watch for young, female professional the company is set to launch. He is keen to produce a television advertisement.

a) Give the three criteria Andy should follow in order for his advertising campaign to be successful.

b) Name two other ways in which Andy could reach his demographic.

c) In the UK there are two bodies which monitor advertisements. Name one and describe its role.

Business Studies A Level - Tool Belt5. Kathrin works in the marketing department for a up-and-coming DIY centre. She is in charge of ensuring the price level of products. It is important that she takes the objectives of the business into account.
a) Name two other factors she should take into account when pricing products.

b) Businesses can use a number of pricing strategies to calculate the best product selling price. Give two strategies Kathrin could use and explain your answers.


1) a) Answer should include:

  • – Generating ideas: when coming up with ideas Alice and her team need to take a number of issues into consideration including if the product meets the objectives of the company, if the business has the capacity to deal with a new product, or if new personnel will be needed.
  • – Testing the concept: primary research is required to find out what consumers think of the new idea. From this research the production team can make changes to the product that will make it better for the market.
  • – Cost and revenue analysis: production costs and the selling price should be analysed in order to figure out the profitability of the product.
  • – Prototype development: a prototype can now be developed based on the market research. The development stage must be carefully documented as any changes made later will be both costly and time-consuming.
  • – Test marketing: before being properly launched a business may decide to test market the product in a small geographical region first. If the product receives a good response then the product can be launched on a national basis. Otherwise, modifications, maybe to the price or packaging, need to be made first.

b) Answers include:

  • Get the product out on to the market quickly.
  • Get the product out on to a number of markets.
  • Ensure an efficient after-sales service.

2. The growth stage.

3. Answers include:

  • Change the toy’s packaging.
  • Modify the toy itself.
  • Find a new market for the product.
  • Find different ways in which the toy could be used.

4. a) Answer must include:

  • It has to reach its target audience.
  • It must be attractive and appealing to its target audience.
  • It must bring in a higher amount of money through sales revenue then it took to produce the campaign.

b) Answers include:

  • Advertising in women magazines
  • Advertising on the radio.
  • Advertising on Internet sites aimed at women.
  • Advertising in the cinema.

c) Answers include:

  • The Advertising Standards Authority (ASA): this ensures that any advertisements shown in newspapers, magazines or posters are ‘true, decent, fair and legal’. If consumers complain about an advertisement then it’ll be looked into and could end up being banned.
  • The Independent Television Commission (ITC): this keeps a check on advertisements broadcast on the radio, television and cinema. As with the ASA, consumer complaints are taken very seriously and could lead to a business being banned from advertising completely.

5. a) Answers include:

  • Industry competition
  • Distribution channels
  • Business image

b) Answers include:

  • Cost-pricing: ensures a percentage profit.
  • Mark-up pricing: ensures a percentage profit.
  • Demand-orientated pricing: based on how the customer views the product.
  • Competition-orientated pricing: ensures that the business keeps up with any competition.