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3.1. The nature of marketing
A subsection of Business Studies, 9609, through 3. Marketing (AS Level)
Listing 10 of 42 questions
Post Scent (PS) PS is a private limited company operating in country H. It sells perfume for men and women using its own website. PS purchases the perfume in large quantities from various manufacturers and then sells it in smaller quantities to its customers. Most of the perfumes are sold in glass bottles. PS has two main ways in which it sells perfume: • A website where customers can purchase a range of perfumes. The perfumes are priced to be lower than high street competitors. • A subscription service where customers pay a monthly fee for a mystery perfume to be delivered each month. All of PS’s products are delivered to customers’ homes using the postal service. The packages can be left in a mailbox or in a safe place outside of the home. PS has an aim to improve the sustainability of its operations. PS uses incremental budgeting. Table 1.1 shows the budgeted and actual cost and revenue data for 2023. Table 1.1 Budgeted and actual cost and revenue data for 2023 ($000) Budgeted Actual Variance Revenue x Direct costs y Indirect costs z The directors of PS have decided that the business needs a Marketing Manager. The role of the Marketing Manager will be: • to plan the recruitment and training of a new sales team • to organise the production of digital promotions • to advise the Board of Directors on changes to the PS product portfolio. The directors have shortlisted five suitable applicants and plan to invite them all to an assessment centre as part of the recruitment process. Identify one feature of a private limited company. Explain the term sustainability. Refer to Table 1.1. Calculate the variances in 2023 (x, y and z) and state whether each variance is favourable or adverse. Explain one benefit to PS of using incremental budgeting. Analyse one advantage and one disadvantage to PS of using an assessment centre when selecting a Marketing Manager. Evaluate the role of effective packaging for PS.
9609_s24_qp_22
THEORY
2024
Paper 2, Variant 2
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Pencil Pushers (PP) Jacqueline is a sole trader who owns PP. She set up the business six months ago to manufacture pencils. The market for pencils in PP’s country is separated into the niche market of supplying pencils for schools and the mass market. When she started the business, Jacqueline decided to target the mass market. Table 3 shows Jacqueline’s initial market research into the two markets. Table 3: Initial market research data Mass market Schools market • 10 producers are in the market. Each producer has 7% – 12% market share. • Sold through many retailers, including online retailers. • Branding and reputation are very important. • One producer is in the market with 100% market share. • Sold directly through e-commerce. • Branding and reputation are not important. PP is establishing a good reputation as a reliable supplier of pencils to shops that sell stationery. However, as a relatively new business, PP has had to use penetration pricing to build up a customer base. She sells each pack of five pencils for $1. PP holds a large inventory so that orders can be delivered quickly. PP employs four full-time production workers in one factory. The production process is capital intensive. Production data for the factory is in Table 4. Table 4: Production data for PP’s factory Maximum capacity per month 75 000 pencils Monthly fixed costs $8 500 Variable costs per 100 pencils $3 PP has no trade payables but Jacqueline is concerned about the cash flow of PP. The latest cash flow forecast showed that PP might run out of cash in three months’ time. This is mainly because the shops which sell PP’s pencils demand 30–60 days to pay for their orders. Define the term ‘capital intensive’ (line 19). Briefly explain the term ‘niche market’ (lines 2–3). Calculate how many packs of pencils PP must sell to break even each month. Explain how Jacqueline could use your answer to 2. Analyse two methods Jacqueline could use to improve PP’s cash flow. Evaluate Jacqueline’s decision to target the mass market.
9609_s18_qp_23
THEORY
2018
Paper 2, Variant 3
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MX Bikes (MXB) MXB is a successful public limited company with many stakeholders. It has been trading for 15 years. It makes a range of bicycles and is currently the market leader for mountain bikes in country J. MXB’s high-quality mountain bikes are sold at a high price to high-income leisure users. They are sold in a limited number of specialist bicycle shops. shows the annual revenue of mountain bike manufacturers in country J for 2022. 0 MXB JW AB PE LK Manufacturer JT SB Other Sales revenue ($000) Annual revenue of mountain bike manufacturers in country J for 2022 To grow the business and improve the sustainability of operations, MXB expanded its product portfolio by launching a range of electric scooters. This is a new and expanding market in country J, targeting the urban youth market. MXB’s business objectives are reviewed regularly by Rani, the Managing Director. Rani is concerned that MXB’s sales of mountain bikes have declined by 12% over the past year. Demand for mountain bikes in country J has remained static. She has asked the Marketing Director to recommend extension strategies to increase MXB’s market share. Identify one stakeholder of a business. Explain the term sustainability. Refer to . Calculate MXB’s market share of the mountain bike market in country J. Explain one reason why MXB’s objectives may change. Analyse one advantage and one disadvantage to MXB of growing by launching a new product range of electric scooters. Evaluate how MXB can change its marketing mix to extend the product life cycle of its range of mountain bikes.
9609_s23_qp_22
THEORY
2023
Paper 2, Variant 2
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Planting Pots (PP) Emily and Kabir are entrepreneurs. In 2012 they set up PP in country K. As the business grew, they converted it from a partnership into a public limited company. Kabir and Emily own 50% of the shares between them. PP manufactures decorated pots for plants in its factory in country K. The pots can be used indoors and outdoors. The market for decorated pots is growing in country K and the business environment is dynamic. Some market data is shown in Table 2.1. Table 2.1: Market data for decorated pots (units sold) (units sold) Total market sales in country K 3.2 m 4.1 m PP market sales 0.8 m 0.82 m PP has 90 employees. Table 2.2 shows some data about PP’s employees. Table 2.2: PP’s employee data Type of employee Payment method Main task Creative designers Piece rate Create new designs for pots Machine workers Time-based Batch production of pots Supervisors Salary Supervise creative designers and machine workers Managers Profit sharing Make decisions in functional areas The directors of PP have decided to build an additional factory. The capital cost will be $1.5 m. The additional factory will allow PP to develop its product portfolio. The construction of the factory can start as soon as the directors have decided on a source of finance. Define the term ‘batch production’ (line 17). Explain the role of an ‘entrepreneur’ (line 1). Refer to Table 2.1. Calculate the change in PP’s market share between 2020 and 2021. Explain one implication for PP of a fall in market share. Analyse two factors which may affect PP’s choice of a source of finance to build the additional factory. Refer to Table 2.2 and other information. Evaluate PP’s use of different payment methods for its employees.
9609_w22_qp_23
THEORY
2022
Paper 2, Variant 3
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Questions Discovered
42