Marketing and the Market
What this domain tests
Marketing questions test the marketing mix, market segmentation, market research methods and the product life cycle. You must be able to choose and justify a price, promotion or distribution decision for a given small-business scenario, and to interpret simple market data.
Core concepts
- Segmentation divides a market by demographics, geography, income, lifestyle or usage; the target market is the segment chosen.
- Primary research is collected first-hand (surveys, interviews, observation, test marketing) - specific but costly and slow. Secondary research uses existing data (government statistics, trade reports) - cheap and fast but possibly dated or insufficiently specific.
- The 4Ps: product (features, branding, USP), price, place (manufacturer → wholesaler → retailer → consumer, or direct), promotion (advertising, sales promotion, personal selling, PR, digital).
- Pricing: cost-plus, penetration (low launch price to build share), skimming (high launch price aimed at innovators), competitive and psychological pricing.
- Product life cycle: development, introduction, growth, maturity, decline - extension strategies include new packaging, new markets and added features.
Worked example
Unit cost is €8 and the firm applies a 25% markup, giving €8 × 1.25 = €10. The nearest competitor charges €9.50. Reasoning: cost-plus guarantees the margin, but at €10 the product is about 5% dearer with no stated USP, so volume may fall. A penetration price of €9.20 sacrifices margin for share. The decision should be justified by the firm's objective (profit margin versus market share) and by price sensitivity of the target segment.
Traps that cost marks
Confusing market research with segmentation; describing promotion as only advertising; calculating markup on the selling price instead of on cost; ignoring that secondary data may be outdated; recommending a price without linking it to costs, competitors or objectives.