Page 144 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 3 Marketing

■ The price of competitors’ products – most businesses are in very competitive
markets. If the products of businesses are very similar then consumers are most
likely to buy the product that has the lowest price.
■ Changes in consumer income – consumers can only buy products if they have the
money to do so. If consumer income falls, for example if a worker loses their job,
then they will have less money to spend. When consumers have less money to
spend, they will buy what they need for living, for example water, food, shelter. They
will spend less money on goods which might be considered a luxury, for example
take-away meals, mobile (cell) phones or holidays.
■ Changes in population size and structure – if a country’s population
grows in size then this increases the size of the market. This could increase
business sales. The structure of the population might also change over time.
For example, in some countries there are fewer children being born, but people
are living longer. We say that a country with more elderly people and fewer
children has an ‘ageing’ population. The sale of products for children will fall,
but the sale of products for older people will rise.
■ Changes in tastes and fashion – it is easy to see the effects on sales of changes in

clothing fashion. However, other products also become more, or less, popular with
changes in consumer tastes and fashion. For example, in some countries consumers
are more aware and concerned about healthy eating. This has increased the
demand in these countries for healthier food and drink. Producers have responded
by reducing the sugar or salt content of their products, for example Diet Pepsi.
■ Spending on advertising and other promotional activities – almost all
142 businesses spend money promoting their goods or services. Some national and
multinational businesses spend huge amounts of money on a single advertising
campaign. Most advertising and promotional activities of businesses are
aimed at persuading consumers to buy their products instead of competitor
products. Businesses also spend money on advertising to create a brand image.

Consumers will often pay more for a product simply because of the brand name,
even though there are similar much cheaper products on the market. A good

example of how branding affects demand is the trainer (running shoe) market.
Many consumers, especially the young, prefer to buy shoes manufactured by
Nike and other well-known brands rather than the cheaper alternatives that do
not have a strong brand image.

ACTIVITY 10.1

Working in small groups, search through newspapers and magazines for advertisements for different products. See if you
can find examples of advertisements for products for each of the factors discussed above.
Cut the advertisements out and for each factor make a poster for display in your business studies classroom or
noticeboard.