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8.1. Marketing analysis
A subsection of Business Studies, 9609, through 8. Marketing (A Level)
Listing 10 of 27 questions
Wet Water (WW) WW is a new business set up by Puja. WW will operate in the primary sector. It will take water from a local lake and process it into drinking water. The details of the product and market are outlined in Fig. 2. Fig. 2: Product and market details for WW WW product details • water will only be sold in country X • it will be sold in bottles targeted at a niche market of consumers who purchase bottled water and regularly take part in sport • no harmful chemicals will be used in the production process • flow production will be used • bottles will be distributed through wholesalers to retailers Market details for country X • the population is 60 million • 80% of the population purchase bottles of water • 15% of the people who purchase bottles of water regularly take part in sport • 15 brands of bottled water are already sold using mass marketing • no brands of water sold in country X currently target consumers who regularly take part in sport Puja needs to decide on suitable promotion methods for the launch of WW’s bottled water. She must also recruit a sales manager. She has designed a brief person specification (Fig. 3). Fig. 3: Person specification for the role of sales manager • must have the confidence to negotiate with retail business customers • must be able to work on his/her own and lead a team of salespeople • must be willing to develop his/her skills • must have good time-management • must be a good communicator Define the term ‘primary sector’ (line 1). Briefly explain the term ‘flow production’ (line 10). Refer to Fig. 2. Calculate the market size of WW’s target market. Explain one benefit to WW of targeting a niche market. Analyse how having two of Goleman’s emotional intelligence competencies could help the person selected fulfil the role of sales manager. Recommend suitable promotional methods for the launch of WW bottled water. Justify your recommendation.
9609_w18_qp_22
THEORY
2018
Paper 2, Variant 2
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Coffee Company Local (CCL) CCL is a family business in country Y. It manufactures and sells coffee powder, which is used to make coffee drinks. To make coffee powder CCL transforms coffee beans purchased from primary sector businesses into a fine powder. To make the powder, CCL roasts the beans, then grinds them into large pieces. Hot water is added to these large pieces, which transforms them into a liquid. When this liquid is cool, it is frozen and broken into tiny pieces that form the coffee powder. The coffee powder is then put in jars. CCL uses product differentiation when selling the jars of coffee, as shown in Table 2.1. Table 2.1 CCL’s coffee products Product Description Boston matrix analysis Forecast proportion of total revenue (2024) A CCL’s own brand Cash cow 29% B A national supermarket’s own label product Question mark 30% C Quality product sold in a niche market Question mark 15% D Non-branded product sold to wholesalers Cash cow 26% In 2023 CCL’s total revenue was $10 million. Total revenue is forecast to increase by 10% in 2024. The owners are concerned about CCL’s long-term future, given the position of each product within the Boston Matrix. The market for coffee products in country Y is forecast to grow by 25% over the next five years. CCL would like to increase the added value of its coffee products to benefit from the forecast market growth. Identify one strength of a family business. Explain the term niche market. Refer to Table 2.1 and other information. Calculate the forecast total revenue of product C in 2024. Explain one benefit to CCL of using a budget. Analyse one advantage and one disadvantage to CCL of using Boston Matrix analysis. Evaluate the importance of operations to CCL’s added value.
9609_w24_qp_21
THEORY
2024
Paper 2, Variant 1
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Better Bicycles Ltd (BB) BB is a family-owned small business. The firm manufactures bicycles which are supplied to independent retailers. Recently, Lia, the Sales Director, has reported a 20% fall in monthly sales. She has asked the other directors for ideas to increase revenue. The Managing Director, Moneeb, has suggested that BB should open its own retail shop. Moneeb believes that BB has poor inventory management. BB currently uses buffer inventory control methods. There has been a build-up of inventory that is using warehouse space that could be converted to a shop at a cost of $180 000. He estimates additional yearly costs of operating the shop of $40 000. Moneeb has provided the following information in Table 1.1. Table 1.1: Financial data for selling bicycles through BB’s proposed shop Unit price Cost of sales per unit Forecast additional annual sales $300 $120 1250 units John, the Operations Manager, thinks it would be a mistake to open a shop as they have no experience in the retail sector. He thinks that sales could be increased through the existing channel of distribution. John believes that the salaried staff in the sales department are not motivated to find new independent bicycle retailers, as they rely on customers who have bought from BB for many years. Lia thinks that BB should produce a new design of foldable bicycle which would be lightweight and portable. Secondary research shows that this is a growth market with customers prepared to pay a premium price for a well-designed foldable bicycle. Lia estimates that an investment of $225 000 would be required but the gross profit margin is forecast at 50% with additional annual revenue of $500 000. Moneeb and Lia have been asked to present their proposals for increasing BB’s revenue to the other directors, who will then make a decision. Define the term ‘secondary research’ (line 20). Explain the ‘buffer inventory control method’ of managing inventory (lines 5–6). Refer to Table 1.1. Calculate the forecast gross profit margin on the retail sale of bicycles. Explain one function of John’s role as an operations manager. Analyse two methods which could be used to improve the motivation of BB’s sales staff. Recommend which proposal for increasing revenue the Directors of BB should choose. Justify your recommendation.
9609_w19_qp_23
THEORY
2019
Paper 2, Variant 3
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Electric Cars (EC) EC is a public limited company producing electric cars. Market research suggests that electric cars are in the early stage of the product life cycle. The demand for electric cars is likely to increase substantially in the next 10 years. EC is based in country X, where it is one of three electric car manufacturers. However, other manufacturers could start to produce electric cars if the forecast market growth is correct. EC’s promotion has only been aimed at high income groups. The government of country X recently announced that it will support the use of electric cars. This will help EC to achieve its objective to increase sales volume by 50% over the next two years. One year ago, EC invested $10m in new production facilities. The investment was funded by a long-term bank loan. Interest payments on the bank loan have reduced EC’s profit margin from 9% to 4%. EC will need to cut unit costs through increased efficiency. EC initially launched its cars using a price skimming strategy but sales growth has been slow. If EC can achieve a 50% growth in sales over the next two years, it will be in a strong financial position. This means it will be able to spend more on the development of a larger product portfolio of electric cars. Jancie, the Finance Director, has produced forecasts for EC’s financial data over the next two years, as shown in Table 2.1. Table 2.1: Extract from EC’s forecast financial data 2020 ($m) 2021 ($m) Inventories Cash Trade receivables Trade payables Current ratio X Define the term ‘efficiency’ (line 11). Explain the term ‘product life cycle’ (line 2). Refer to Table 2.1. Calculate the value of X. Explain one reason why EC’s liquidity is forecast to change. Analyse two reasons why clear business objectives are important for EC. Recommend changes EC could make to its marketing mix to achieve its growth objective (line 13). Justify your recommendation.
9609_w20_qp_21
THEORY
2020
Paper 2, Variant 1
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Questions Discovered
27