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3. Marketing (AS Level)
A section of Business Studies, 9609
Listing 10 of 93 questions
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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Planet Internet (PPI is a public limited company. It is an internet service provider. The business provides fast internet connections to households within country X. Customers pay an average of $10 per month for the service. More than 80% of the households in the country can access PI’s services. The business offers new customers 3 free months of internet service, if they sign a contract for a minimum of 12 months. Very few of PI’s customers switch to a competitor’s service after the minimum 12 month contract has finished. The internet service market is very competitive. PI has an objective to become the largest internet service provider in country X. The Marketing Director, Alisha, believes that if PI is going to achieve its objective then the company needs new customers. She thinks that the key to gaining more new customers is to focus on promotion. Alisha has prepared some secondary market research comparing PI with its main competitors in country X (See Table 2.1). Some of the directors are disappointed with the financial performance of PI compared to its competitors. Table 2.1: Research about the internet service providers in country X, 2018 Planet Internet (PTotally Broadband (TB) W Solutions (WS) Market share 31% 32% 15% Value of market share $12.4bn $12.8bn $6bn Gross profit margin 74% 70% 70% Net profit margin 8% 12% 16% Working capital ($45 000) $300 000 $0 Current ratio 0.9:1 3:1 1:1 Define the term ‘objective’ (line 8). Explain the term ‘secondary market research’ (line 12). Refer to Table 2.1. Calculate the total value of the internet service market in country X. Explain one suitable way, other than market share, to measure the size of PI. Analyse one above the line promotional method and one below the line promotional method which PI could use to gain new customers. Refer to Table 2.1. Evaluate the financial performance of PI compared to its competitors.
9609_s19_qp_21
THEORY
2019
Paper 2, Variant 1
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Hot Bubblez (HB) Karen is a sole trader who operates a service business called Hot Bubblez (HB) from her own home. It is a laundry service in town P. Each day Karen spends the morning collecting laundry from customers’ homes. Karen then washes, dries and irons the laundry and then delivers it back to customers’ homes in the evening. She owns two washing machines, two drying machines and one iron. Each batch of washing takes approximately two hours to wash, dry and iron. Karen has completed some market research about which method of laundry households use in town P (see ). There are 60 000 households in town P. Use a laundry service 20% Do laundry at home 65% Go to a laundry shop 15% : The percentage of households using each laundry method in town P Karen has 300 households that use HB’s laundry service. Karen would like to employ someone to do the collections and deliveries. Karen has always relied upon customer recommendations to promote HB. However, she has not been able to gain any new customers and she thinks it is time for new promotion methods to be used. She would like to target the hotel laundry market. Table 1.1 shows some data about the local hotel market. Table 1.1: Data about the local hotel market Number of hotels in town P Number of hotels outside town P but within 30 miles of HB Proportion of hotels which have their own laundry service 50% Define the term ‘service’ (line 1). Explain the term ‘sole trader’ (line 1). Refer to and any other relevant information. Calculate HB’s share of the laundry service market. Analyse two factors which could affect the scale of HB. Explain one appropriate method of recruitment for Karen to find a new employee to do collections and deliveries. Evaluate appropriate promotion methods for HB to target the hotel laundry market.
9609_s21_qp_22
THEORY
2021
Paper 2, Variant 2
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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
93