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11.1

Demonstrate an understanding of the importance of identifying competition in the market

Demonstrate

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DEMONSTRATE The specification defines this as: prove or make clear by reasoning or evidence, illustrating with examples or practical application. A good approach for this verb is to make a point and then back it up with a real example to show you understand it in practice.

Why identifying competition matters

Direct vs Indirect Competition

Direct competitors sell a similar product to the same target market. Indirect competitors sell something different but target similar customer needs or wants.

E.g. Another bakery down the street is direct competition for a bakery. The deli in a nearby SPAR is indirect competition.

Why Identifying Competitors Matters

Helps a business understand who it is competing against so it can position itself effectively.
Allows a business to learn from what rivals have done well or poorly.
Helps spot current consumer preferences and identify gaps in the market nobody else is filling.

Competitive Advantage

A feature or quality that sets a business apart from its competitors. It can come from price, quality, speed, brand, innovation, or a unique service experience.

A clear advantage helps a business stand out, build customer loyalty, and grow.

How to Capitalise on a Competitive Advantage

Use it consistently across the marketing mix — make it visible in the product, price, promotion, and place.
Keep investing to improve it, as today's advantage may not last.
Monitor rivals and adapt as markets shift.

11.2

Use Porter's Five Forces Model to identify and analyse competition and identify the competitive advantage of a business

Use / Analyse

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ANALYSE The specification defines this as: study or examine something in detail, break down in order to bring out the essential elements or structure; identify parts and relationships, and interpret information to reach conclusions. When applying this model, a good approach is to name each force, explain what it measures, apply it to the specific business in the question, and reach a conclusion about competitive advantage.

The five forces

1. Threat of New Entrants

What it measures: how easy it is for new competitors to enter the market.

High when: Start-up costs are low and customers are open to switching.
Low when: Strong brands dominate, start-up costs are high, or access to retail space is limited.

2. Bargaining Power of Suppliers

What it measures: how much influence suppliers have over the business.

High when: Few suppliers exist or they offer something unique and hard to replace.
Low when: There is a wide choice of suppliers offering similar products or services.

3. Bargaining Power of Customers

What it measures: how much influence customers have on prices and products.

High when: Customers have lots of options, can easily compare, and switching is simple.
Low when: There is less choice or customers rely on the business for quality or specialist service.

4. Threat of Substitutes

What it measures: how likely customers are to switch to a different type of product that meets the same need.

High when: Alternatives are cheaper or more convenient.
Low when: The product is unique, experience-based, or difficult to replace.

5. Competitive Rivalry

What it measures: how intense competition is among existing businesses in the market.

High when: Many businesses offer similar products and compete on price, speed or advertising.
Low when: A few dominant brands operate and customers tend to stay loyal.

Using the Model

After applying all five forces, summarise where the business is strongest and where it faces the most pressure. This points to where the business's competitive advantage lies — the area where it is best placed relative to competitors.

11.3

Outline the strategies employed by a business to adapt or expand

Outline

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OUTLINE The specification defines this as: give the main points; restrict to essential points of information. A good approach for this verb is to name the strategy clearly and briefly explain what it involves, without going into the depth you would for “describe” or “explain.”

Adaptation strategies

Adaptation Strategies

Update products or enter new customer segments.
Reduce costs through automation or AI.
Diversify into new products, services or markets.
Invest in staff development or encourage intrapreneurship.
Improve sustainability or branding to meet changing customer expectations.

Organic expansion (using own resources)

New Markets

Sell to new locations or customer groups using the business's own internal resources. Grows the business gradually without relying on outside companies.

E.g. A bakery opens a second shop in a nearby town.

E-commerce

Selling online allows a business to reach more customers without opening extra physical locations.

E.g. A local bookshop sets up an online store and begins delivering across Europe.

Franchising

The franchisor allows others (franchisees) to run new outlets using the brand name, logo, products, and systems in return for a fee. E.g. Supermac's, Starbucks, and SPAR use this in Ireland.

Benefit: Faster growth, lower capital needed from the franchisor.
Challenge: Risk to brand reputation if a franchisee delivers poor service.

Inorganic expansion (working with or acquiring other businesses)

Takeover / Acquisition

One business takes control of another by buying over 50% of its shares. E.g. Meta took over Instagram and WhatsApp.

Benefit: Rapid market access, eliminates a competitor, gains new assets.
Challenge: Very expensive, potential stakeholder hostility, possible regulatory issues.

Merger

A voluntary joining of two or more firms for mutual benefit. A single new legal entity is formed and neither party controls the other. E.g. Kraft and Heinz merged to form KraftHeinz.

Benefit: Faster access to new markets, spreads risk through diversification.
Challenge: Industrial relations issues, clash of cultures between staff.

Strategic Alliance

An agreement between two businesses to pool resources and/or expertise for a specified period or project, while keeping separate identities. E.g. Uber and Spotify partnered so Uber customers could stream music during rides.

Benefit: Shared risk, access to each other's customer base.
Challenge: May share systems that weaken a competitive advantage; contributions may be unequal.

11.4

Appreciate the potential of technology to support adaptation and expansion

Appreciate

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APPRECIATE The specification defines this as: recognise the meaning, value, or importance of something. A good approach is to name the technology, explain what it does, and make clear why it is valuable for the business — not just name it.

Five ways technology supports a business

Technology and Business Growth

Speed and convenience: Apps and online systems make it easier for customers to browse, order, and pay.
Expanding reach: E-commerce platforms like Shopify allow businesses to sell globally without physical stores.
Smarter decisions: Tools like Google Analytics help businesses track customer behaviour and improve marketing.
Cutting costs: Chatbots and AI automate repetitive tasks, freeing staff for higher-value work.
Building loyalty: Social media platforms help businesses engage customers and enter new markets at low cost.

11.5

Conduct a cost-benefit analysis to analyse the implications of business expansion

Conduct

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CONDUCT The specification defines this as: perform an activity. For a cost-benefit analysis, a good approach is to actually carry it out — identify and explain specific benefits, then specific costs, using details from the scenario provided, and finish with a reasoned conclusion.

What a cost-benefit analysis does

Purpose

Compares the potential gains of an expansion decision with the possible risks and costs, helping a business decide whether growth is worth pursuing at a given time. It is typically used before a major decision like a takeover or merger.

Potential Benefits of Expansion

Can grow revenue and increase market share.
May reduce unit costs through economies of scale.
Boosts brand visibility in new markets.
Can provide access to new skills, technology, or products.

Potential Costs of Expansion

Can require significant financial investment.
Increases market risk — success in a new market is never guaranteed.
May cause culture clashes between staff from different businesses.
Risk of losing focus on the core business or quality issues as the business stretches.

Reaching a Conclusion

After identifying the benefits and costs, weigh them up and state whether, in your view, the expansion appears justified. The conclusion should refer specifically to the details of the scenario provided.

11.6

Outline strategies that a business may employ to adapt based on their marketing mix and/or business model

Outline

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OUTLINE The specification defines this as: give the main points; restrict to essential points of information. A good approach is to name the external driver, identify which P of the mix or which aspect of the model was adjusted, and briefly explain the connection.

Three external drivers of change

Customer Demographics

As society changes in age, income, values, and lifestyle, so do customers. A business needs to adapt to stay relevant.

Marketing mix example: A newspaper targeting older readers could adapt its product by launching a mobile app and shift its promotion to TikTok to reach younger audiences.

Business model example: A subscription model with personalised deliveries suits modern consumers who value convenience.

Competition

New rivals may enter with lower prices, fresher branding, or better technology. A business that doesn't respond risks losing customers.

Marketing mix example: A pharmacy facing competition from chains could launch click-and-collect and retrain staff to offer personalised advice.

Business model example: Amazon added a marketplace model and an affiliate model to respond to growing online competition.

Economic Factors

During inflation or recession, customers become more price-sensitive. A business needs to adapt its value offering to stay financially sustainable.

Marketing mix example: A premium coffee shop during a cost-of-living crisis could introduce value deals and a loyalty card.

Business model example: Netflix added a low-cost, ad-supported subscription tier to retain users who were cancelling due to rising living costs.

The 7 Ps reminder

7 Ps of the Marketing Mix

When adapting the marketing mix, a business can adjust any of the 7 Ps: Product, Price, Promotion, Place, People, Process, or Packaging. Always link the specific P being changed to the external driver that is causing the need for change.

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Choose a learning outcome to quiz yourself on, or quiz all 6 at once.

Chapter 11 appeared in the SEC sample papers across both levels. LOs 11.1, 11.2 and 11.5 were examined in the sample papers — those questions and suggested solutions are below. LOs 11.3, 11.4 and 11.6 did not appear in the sample papers, so a practice question and suggested approach is included for each.

11.1 Identify competitive advantage and recommend a launch strategy HL Paper 1 · Q1(e) ▼

Question asked

Identify Glow Inc's potential competitive advantage and, based on this advantage, recommend an appropriate strategy for launching their new product on the market.

Context: Glow Inc is a creative agency known for sustainability and innovative design.

Suggested solution

The following is a suggested approach to this question based on the specification verb and the scenario. It is offered as a study aid, not as a definitive answer.

Glow Inc's competitive advantage is its creativity and commitment to sustainability in design. This sets them apart from competitors who use more standard approaches.

Price: Position the product at a premium level to reflect its sustainable value, rather than competing on price alone. This reinforces the brand image built around quality and responsibility.

Promotion: Use digital marketing and partner with environmentally conscious influencers to highlight Glow Inc's sustainability story and reach the target market where they are.

This approach connects the launch strategy directly to the competitive advantage identified, which is what the verb “recommend” invites — a justified proposal, not just a general idea.

11.2 Analyse the competitive forces using Porter's Five Forces Model HL Paper 1 · Q1(e)(i) ▼

Question asked

Analyse the competitive forces in the market for Glow Inc using Porter's Five Forces Model.

Context: Glow Inc operates in the creative and design agency market.

Suggested solution

A suggested approach for “analyse” questions using this model: name the force, explain what it measures, apply it to the business in the scenario, and give a High/Medium/Low judgement with a reason.

Threat of New Entrants — Medium/High. A skilled designer needs little more than software and a laptop to start up, so barriers to entry are relatively low and new competitors can enter without major investment.

Bargaining Power of Suppliers — Low. Glow Inc's main inputs are design software and talent. Software has set prices and there is a wide pool of creative talent in the market.

Bargaining Power of Customers — High. Clients can easily compare agencies on price, reputation, and portfolio. Switching from one agency to another is straightforward.

Threat of Substitutes — Medium. Businesses could use freelancers, in-house designers, or AI design tools instead of a full agency.

Competitive Rivalry — High. The creative agency market has many competitors of varying sizes competing on price, quality, and specialisation.

Conclusion: Glow Inc faces the most pressure from competitive rivalry and customer power. Its sustainability focus and creative reputation are its strongest points of differentiation in this market.

11.2 Name the two missing forces from the diagram OL Paper 2 · Q2(d) ▼

Question asked

Porter's Five Forces Model. Name the two forces missing from the diagram.

Forces shown: Threat of New Entrants, Bargaining Power of Suppliers, Competitive Rivalry.

Suggested solution

Bargaining Power of Customers (also called Bargaining Power of Buyers)

Threat of Substitutes

11.5 Conduct a cost-benefit analysis of a business takeover HL Paper 2 · Q5(b) ▼

Question asked

Conduct a cost-benefit analysis of the proposed move by Mars.

Context: Mars sought to acquire Kellanova (makers of Pringles) in a $36 billion deal, offering $83.50 per share — 33% above market price. The regulator was expected to investigate.

Suggested solution

The verb “conduct” means to perform the analysis — a good approach is to identify specific benefits, then specific costs using figures from the scenario, and finish with a conclusion that weighs them up.

Benefit — Rapid market access: By acquiring Kellanova, Mars instantly enters the snacks and breakfast sector without building those products from scratch, saving significant time and development costs.

Benefit — Removes a competitor: Kellanova reported an operating profit of $1.873 billion in 2024. Bringing this into Mars's portfolio removes a significant rival and increases Mars's overall market position in the global food industry.

Cost — Very high financial outlay: Mars is offering 33% above the market price per share — a large premium with no guarantee of success, putting pressure on cash flow and profitability.

Cost — Regulatory risk: The deal would make Mars a global food leader second only to Nestlé. Regulators may investigate whether this concentration of market power is acceptable, potentially delaying or blocking the deal.

Conclusion: The strategic benefits are significant, but the high purchase premium and regulatory uncertainty make this a high-risk move. Mars would need to weigh whether the long-term market gains justify the short-term financial strain.

11.3 Outline strategies a business can use to expand Practice Question ▼

Practice question

Outline three strategies a small Irish food business could use to expand into new markets.

Suggested approach

E-commerce: The business could set up or develop its online store, selling directly to customers across Ireland and internationally without the cost of opening new premises.

Franchising: The business could allow other operators to run new outlets under its brand name and systems in return for a fee, enabling brand expansion without the full cost of managing each new location.

Strategic Alliance: The business could partner with a complementary business — for example, a food delivery platform — to access a new customer base and share the costs of entering a new market.

11.4 Technology supporting adaptation and expansion Practice Question ▼

Practice question

Describe two forms of technology that support adaptation or expansion for a business.

Suggested approach

E-commerce: E-commerce platforms allow a business to sell products online to customers anywhere, removing the need for additional physical locations. All Real Nutrition uses its online store to sell protein products internationally, reaching customers well beyond its Irish base.

Social media: Platforms like Instagram and TikTok allow businesses to promote products and engage directly with customers at relatively low cost. Gym+Coffee used social media to grow its brand and attract a younger audience across Ireland and internationally.

11.6 Adapting the marketing mix and business model Practice Question ▼

Practice question

Outline strategies a business may employ to adapt based on two of the following external drivers: customer demographics, competition, or economic factors. Refer to the marketing mix or business model in your answer.

Suggested approach

Customer demographics — Marketing mix: As customers get younger, a traditional newspaper could adapt its product by launching a mobile app, and shift its promotion strategy to TikTok and Instagram to attract a new demographic.

Economic factors — Business model: During a cost-of-living crisis, Netflix added a lower-cost, ad-supported tier, adapting the business model by combining subscription income with advertising revenue to retain price-sensitive customers who might otherwise cancel.

📌 Know all five forces by name — from memory

You must be able to recall all five forces without prompting: Threat of New Entrants, Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of Substitutes, and Competitive Rivalry. Questions have asked students to name missing forces from a diagram — straightforward if you know them, costly if you don't.

📌 Applying “analyse” to Porter's Five Forces

The specification says “analyse” means to study something in detail, identify parts and relationships, and interpret information to reach conclusions. A good approach when applying this to Porter's Five Forces is to name each force, explain what it measures, apply it specifically to the business in the question, give a High/Medium/Low judgement with a reason, and finish with a conclusion about competitive advantage.

📌 What “conduct” means for a cost-benefit analysis

The specification says “conduct” means to perform an activity. For a cost-benefit analysis, a good approach is to actually work through it — name and explain specific benefits, then name and explain specific costs using details from the scenario given, and finish with a conclusion that weighs them up. Using the figures from the text provided strengthens the answer considerably.

📌 Organic vs inorganic — know the difference clearly

Organic expansion uses the business's own resources to grow gradually — e-commerce, franchising, entering new markets. Inorganic expansion involves working with or acquiring other businesses — takeovers, mergers, strategic alliances. If a question specifies “inorganic” strategies, e-commerce and franchising would not be appropriate answers.

📌 For LO 11.6 — always name the P and link it to the driver

When discussing how a business adapts its marketing mix, a clear answer will name the specific P being changed (product, price, promotion, place, people, process, or packaging) and link it directly to the external driver causing the need for change (demographics, competition, or economic factors). Keeping this connection clear is what makes the answer specific rather than vague.