IB Business Management HLTopic 4 — MarketingPaper 1 & 2Core idea~9 min read
What Marketing Does and How Markets Work
Most people think marketing means adverts. It doesn’t. Marketing is the whole job of working out what people want, then making sure your business is the one that gives it to them — at a price that still leaves a profit. Adverts are just the noisy last step.
📘 What you need to know
A market is any place, real or online, where buyers and sellers meet to do a deal.
Marketing aims to identify, anticipate and satisfy customer needs and wants profitably. All four words matter.
Needs are things you cannot live without. Wants are everything else, however badly you want it.
Product orientation starts with the product and then hunts for buyers. Market orientation starts with the buyers and then builds the product.
A niche market is a small slice of a bigger market. A mass market is the broad middle of it.
Niche means high prices, small volumes, fat margins. Mass means low prices, huge volumes, thin margins.
Market research is the bridge between what customers think and what the business decides to do.
What a market actually is
A market is not a building. It is any situation where someone who wants to sell meets someone who wants to buy. A car boot sale is a market. So is a shopping centre, a phone app that sells trainers, and the trading floor where currencies change hands.
Every market behaves differently, and that matters more than it sounds. The market for bread barely moves when incomes fall, because people still need to eat. The market for holidays falls off a cliff. So a business selling holidays has to watch the economy far more closely than a bakery does.
Why this is your first exam skill: before you answer anything in Topic 4, ask yourself what kind of market the business is in. The same marketing decision can be brilliant in one market and hopeless in another.
What marketing is trying to do
The definition worth learning
Marketing = identify → anticipate → satisfy customer needs and wants, profitably
Read those four jobs slowly, because each one is a different piece of work:
Identify — find out what people want now. This is market research.
Anticipate — work out what they will want next year, before they ask for it.
Satisfy — actually deliver it, at the right price, in the right place.
Profitably — do all of that and still make money. A business that delights customers at a loss is not doing marketing well; it is doing charity.
Needs and wants are not the same thing
A need is essential to stay alive or function: food, water, shelter, basic clothing. A want is a desire for something particular. You need food; you want a burrito from the place near school. You need shoes; you want a specific pair of trainers.
Marketers are mostly in the wants business. Needs are already covered by cheap basics, so the money is made by turning “I need shoes” into “I want those shoes”. That single sentence explains branding, packaging and most advertising.
Two ways to run a business
Every business faces one early choice: do you build the product first and then look for customers, or find the customers first and then build the product? That choice has a name.
Product orientation bets that the product is good enough to sell itself. Market orientation removes most of that bet before a penny is spent on production.
So which one is better?
Market orientation is usually safer, because you already know somebody wants the thing. But product orientation is not stupid — it is how genuinely new products get invented. Nobody asked for the first smartphone, because nobody knew it was possible. Customers can only tell you about improvements to things they already know.
Question
Product orientation
Market orientation
Where does it start?
With an idea, an invention or a skill the business already has
With research into what customers say they need
Main risk
You build something nobody wants and drift away from the market
You only ever make small improvements and never invent anything new
Steady demand, loyal customers, lower chance of a flop
In an exam, never write “market orientation is better”. Write why it is better for this business. A pharmaceutical company researching a new drug cannot ask patients to design it. Context is where the marks are.
Niche markets and mass markets
Once you know your market, you decide how much of it to chase. Aim at nearly everybody, or aim at one small group and serve them better than anyone else?
The niche business ignores most of the market on purpose. It wins by knowing one small group better than the big firms bother to.
Feature
Niche market
Mass market
Who it targets
A narrow group with a shared, specific need
Broad segments, the general public
Scale of production
Small
Large
Average cost per unit
High, because there are few economies of scale
Low, because of economies of scale
Prices and volumes
High prices, low sales volume
Low prices, high sales volume
Profit margin per item
High
Low, but made up for by volume
Biggest danger
The small group stops buying and there is no back-up
Heavy competition and price wars
Watch the wording: “niche” describes the market, not the size of the business. A giant company can run a niche brand, and a tiny company can sell mass-market products.
Worked examples
WORKED EXAMPLE 1
Ridge Boards designs skateboards in its own workshop. The owner builds a board he is proud of, then asks shops to stock it. Identify the marketing approach used and explain one risk of it. [4 marks]
Step 1: Name the approach
Ridge Boards is product orientated — the board is designed first, buyers are found afterwards.
Step 2: Give the evidence from the case
The owner builds what he is proud of, not what research says skaters are asking for.
Step 3: Explain one risk, in context
If skaters have moved on to wider decks, Ridge Boards has already paid for stock nobody wants, so cash is tied up in unsold boards.
Product orientation, risk = unsold stockTwo marks for identifying with evidence, two for a developed risk. Always tie the risk back to the case.
WORKED EXAMPLE 2
A new bakery can either sell standard bread to the whole town, or sell gluten-free bread to the small group who need it. Recommend one option. [6 marks]
Step 1: Set out the mass-market option
Standard bread = high volume, low price, but the supermarket down the road already sells it cheaper.
Step 2: Set out the niche option
Gluten-free = fewer customers, but they will pay more and cannot buy it easily elsewhere.
Step 3: Weigh them up
A new bakery has no economies of scale, so it cannot win a price war on standard bread.
Recommend the gluten-free nicheThen add the “but”: if the group is too small, sales may not cover fixed costs, so the bakery should check demand first.
💡 Exam tip
Learn the four-word chain identify, anticipate, satisfy, profitably. It earns definition marks in seconds.
When a question says “explain”, one sentence is not enough. Make a point, then say so what for that business.
Use the words from the case study back in your answer. Examiners are looking for application, not general theory.
For niche vs mass, the deciding factor is usually economies of scale. Small firms rarely win on price.
Never say a business is “market orientated because it advertises”. Advertising is not research.
Finish evaluation questions with a judgement and a condition: “provided that demand is large enough to cover fixed costs”.
⚠ Common mix-up
Marketing is not selling. Selling shifts what you already made. Marketing decides what to make in the first place.
Needs vs wants. A phone is a want, however impossible life feels without one. Don’t lose an easy mark here.
Niche does not mean small business. It means a small slice of a market.
Market orientation is not automatically right. Say when it suits the business, and when it doesn’t.
Sales volume vs sales value. Volume counts units. Value counts money. Mixing them up wrecks the next page.
“Profitably” gets forgotten in the definition. Without it you have described a hobby, not marketing.
Up next: Market Share and Market Growth — how to measure whether all this marketing is actually working, with the two formulas you will be asked to calculate.
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