marker research and market mix revision

Question 1

Define marketing mix

Answer 1

Four marketing decisions needed for the effective
marketing of a product. Price, product, promotion and
place (2)

Question 2

Define Market research

Answer 2

Process of gathering, analysing and interpreting
information about the market [2]

Question 3

Identify two methods of primary market research that Anouk could use. [2]

Answer 3

Questionnaires/survey, interviews, observations, focus group

Question 4

Identify two methods of secondary market research. (2)

Answer 4

Government statistics
• Newspaper OR magazine articles
• Internet OR online sources
• Paying for market research agencies
• Trade associations reports
• Company records

Question 5

Identify and explain two advantages of market research to Grimshaw. [4]

Answer 5

Advantages could include:
* greater awareness of consumer needs [k] so can adapt its phone/features to match whatcustomers want [app]
* able to forecast likely future trends [k] so can improve focus of new product development[app]
* appreciate the strength of competitors [k] so can change marketing strategy to compete
* knowledge of consumers’ views of company products/image [k] as first time entering
country T [app]
* reduces risks/products launched with more confidence [k] as know what features
customers want [app]
* help gain competitive advantage [k] as can set effective pricing/promotion strategy to suit
country T’s customers [app]
* produce the correct amount of product [k] to avoid wastage of expensive parts [app]
* helps set price [k]

Question 6

Do you think Ameliaís business would benefit from primary market
research? Justify your answer. (6)

Answer 6

• It is expensive [k] spends a lot on packaging [app] therefore may not be able to afford it [an]
• It is time consuming [k] she has already done secondary research
  [app] so how much more can she find out [an]
• Collect precise information[k] on sweets [app] so that she can
  produce the most appropriate products[an]
• Secondary data may be outdated [k] [app]Needs might have
  changed [an]
• Help better target promotion /in pricing decisions [k] especially as
  new business [app]

Question 7

Identify and explain two possible reasons why GBUís market research might not be useful to the Marketing Director.

Answer 7

ï Wrong / leading questions asked [k] for a mass market product [app]
ï Wrong people asked / not representative [k] as may not buy beauty products [app]
ï Wrong sample size [k] as may need to speak to more than 2000 [app]

Question 8

Define focus group

Answer 8

Customers who have similar characteristics to the target market who give their opinions on a product / service

Question 9

Do you think Samira should use secondary research or a focus group
to gather market research information? Justify your answer (6)

Answer 9

Secondary market research:
Low cost way to gain information [k] so money saved can be used for
other purposes [an]
Readily available [k] so decisions can be made quickly [an] about
whether to increase prices [app]
May be out of date [k] which means the information may not be relevant [an]

Focus group
Highly detailed responses OR chance to ask for explanations/follow up questions [k] which could allow her to make more informed decisions [an] such as whether to offer the delivery service [app]
Competitors do not have access to this information [k]
Some group members can influence what others say [k] leading to
unreliable results [an]
High cost [k] which is not helpful at a time when revenue has fallen [app]
Time consuming to set up/carry out [k]

Question 10

Outline two factors which could affect the accuracy of ABAís market
research.

Answer 10

• Sample selected / type of sample / sample not representative of the
  population / how carefully sample drawn up [k] of consumers buying
  (short-distance) flights [app]
• Wrong sample size / sample too small [k]
• Type of market research / wrong method research chosen / who
  carried out the research [k] to collect feedback about customer
  experiences [app]
• People may not answer truthfully / people say what you want to hear / may not (fully) answer questions [k] leading to the business
  choosing the wrong pricing method [app]
• Wording of questions / wrong questions asked / poorly written
  questions / people do not understand the questions [k] so donít gather
  views about sustainable development [app]
• Way / how questions are asked by the interviewer [k] as may be used
  in 60 countries [app]
• Where carry out market research [k]
• Age of the information / data out of date [k]
• Bias [k]
• Time available [k]

Question 11

Identity and explain two reasons why packaging might be important for HPT (6)

Answer 11

• Protection [k] as (frozen) food could be easily damaged / perish [app]
• Inform [k] could include nutritional information on labels or how to cook the food [app]
• Promotion [k] attractive wrappings could encourage people to buy the food to taste [app]
• Style or colour of packaging could help boost brand image [k] as it could help products
  stand out on the shelves [app]
• Easier to store [k].

Question 12

Identify two possible reasons why cameras might have a short product life cycle. [2]

Answer 12

Actions of competitors, fashion/changing tastes, availability of new
technology, availability of substitutes (e.g. phones with camera features).

Question 13

Define competitive pricing

Answer 13

Setting a price similar to that of competitors products which are already established in the market. [2]

Question 14

Identify and explain two possible pricing methods that Amelia might
use

Answer 14

penetration pricing [k]
* price skimming [k]
* cost plus pricing [k]
* promotional pricing [k]
* competitive pricing [k]

Question 15

State two distribution channels a business might use (2).

Answer 15

• Wholesalers
• Retailers
• Direct to customers/Online/Internet/website
• Use of agents

Question 16

Identify two reasons why good customer service is important for Keypeople. [2]

Answer 16

customer feels valued / good public relations / creates higher level of
customer satisfaction / leads to repeat business (brand loyalty) / can lead to word of mouth recommendations/ motivation of workers/brand image

Question 17

Anouk could use either leaflets or local newspaper advertising as methods of promoting her jewellery. Recommend which method you think Anouk should use. Justify your answer. [6]

Answer 17

Advertising in local papers:
* Low cost [k] so she will be able to afford this [an] in her $50 budget [app]
* Would widen her target audience [k] as many people read newspapers [an]
* Not everyone reads newspapers [k] so her target audience might not be aware of her business [an]
* Repeat adverts can be expensive [k]. Using up the marketing budget [app].

Leaflets:
* Easy to distribute to lots of people [k] could widen her possible audience [an] to help
increase her sales revenue above $3000 [app]
* Can be kept for reference [k] for when people want to buy rings or bracelets as presents
[app]
* Can be colourful [k] which will attract people’s attention [an]
* People might see them as junk [k] so throw them away [an].

Question 18

Anyshade’s Finance manager believes that reducing prices is the best way to increase sales revenue. Do you agree? Justify your answer. [6]

Answer 18

• Low prices could make Anyshade more competitive [k] as paint [app] is cheaper than competitors so could increase volume of sales [an] but there is no guarantee that sales
  will increase [eval]
• Competitors reaction might lead to a price war which could result in fewer sales [k] if rivals
  offer better promotions [an]
• Price might not be reason why buy [k] as known for quality [app] so lower price might be seen as lower quality so fewer people want to buy [an]
• The business does not know why people buy paint [k] so lower prices might not affect its sales revenue [an]
• It depends on the price elasticity of demand
• Awareness of other issues affecting sales such as promotion, place could be discussed

Question 19

Do you think cost-plus is the best pricing method for a new business
to use when selling products to a niche market? Justify your answer. (6)

Answer 19

Cost-plus
* Know cost can be covered [k] and can make a profit per item [an]
* Simple and easy to calculate [k] so saves time when setting prices [an]
* Prices may be higher than competitors [k] leading to a fewer sales [an]
* Little incentive to control costs [k] Other pricing methods might include:
* Penetration pricing [k] as setting a lower price than competitors should attract customers [an]
* Competitive pricing [k] but the business will have limited or no control
over the price [an] so may not be able to recover its costs [an]
* Price skimming [k] customers may expect / be willing to pay more in a niche market [an]
* Promotional pricing [k]

Justification might include:
Cost plus pricing is simple and easy to calculate [k] so saves time when setting prices [an]. Although penetration pricing [k] setting a lower price than competitors should attract customers [an]. Cost plus pricing is the best pricing method as covering costs is important for a new business [eval].
Although the price maybe slightly higher this is less important in a niche
market where there are likely to be fewer alternatives [eval].

Question 20

Do you think competitive pricing is the best method for an established business to use? Justify your answer. (6)

Answer 20

Price will not discourage customers from buying [k] so maintain customer loyalty [an]
Prevents business losing market share [k] which could result in less revenue [an]
Customer may be prepared to pay more (if it is a popular brand) [k]
Need another way to attract customers [k] which could increase costs [an]
May not cover the costs [k] so may find it difficult to break even [an]
Takes time/money to find out competitorís prices [k]

Other methods can be discussed such as:
Cost-plus pricing [k]
Know that the costs will be covered [an]
Know their profit margin / can make a profit per item [an]
Easy to calculate/apply [an]
Does not consider what competitors do / prices may be higher than competitors [an]
Does not take account of changes in demand/spending patterns [an] so could lead to fewer sales being made [an]
Little incentive to control costs [an]
Promotional pricing [k]
Help attract sales [an]
Helps to renew interest in a product if sales are falling [an]

Justification might include:
Competitive pricing will not discourage customers from buying [k] so will buy again [an]. However, if you base your prices solely on competitors, you might not be able to cover costs [k] which makes it difficult for a business to break-even [an]. No, as it depends on what they sell - while cannot ignore what other businesses charge -
especially if it ís a competitive market ñ but if the business has a good reputation which an established business might have [eval] it may be able to use other pricing methods that allow it to charge more [eval].

Question 21

Identify and explain two methods of promotion (other than promotional pricing) that Mabel might use. [4]

Answer 21

• Free gifts / samples [k] give customers small bottles of shampoo to try [app]
• Demonstrations [k] let people watch whilst she shows possible styles on people’s hair [app]
• Loyalty cards [k] e.g. customers get a free haircut if they visit a set number of times [app]
• Advertising (allow only once) [k] e.g. local paper / radio / television / leaflets to let potential customers know about her new business [app]
• Sponsorship / public relations [k]
• Competitions [k] customers will book appointments to have a chance of winning prizes
  [app]

Question 22

Explain one method of primary market research and one method of
secondary market research Veronique could have used. (6)

Answer 22

Primary market research:
* Questionnaire [k] as provides up-to-date information/specific to her
business [an] about trends for festivals [app]
* Interviews [k] to obtain in depth details/opinions [an] about different type of flowers [app]
* Online survey [k] as more likely to get responses/can reach out to more people [an]
* Focus group [k] as provides detailed information about consumer
tastes/as allows for follow-up questions [an]
* Observation [k] as avoids interviewer bias [an]
* Test marketing [k] so the cost of any problem is limited to a smaller
number of products [an]

Secondary market research:
* Government statistics [k] as being official would provide more accurate
data [an] to help her improve her cash flow forecast [app]
* Online sources/internet research [k] which is low cost/readily available [an] which can be helpful for a new business [app]
* Market research agency reports [k]
* Trade associations/data from similar businesses/commercial data [k]

Question 23

Identify and explain two possible extension strategies that SENG could use for one of its types of camera.

Answer 23

Add new features/version
* Change colour of camera to suit popular tastes
* Update image with new packaging
* Target new markets or market segments

Question 24

Define product oriented business (2)

Answer 24

A product orientated company is one that focuses on making a product and then tries to find a market afterwards.

Question 25

What is meant by a ‘market orientated’ company? [2]

Answer 25

market orientated business is one that produces products in response to the requirements of the customers. Focus is on the market rather than on the product.

Question 26

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