Gayle’s Soaps is a business which manufactures health and beauty products. Its market share has remained constant at 15% despite new businesses entering this market. The business uses market segmentation. Most of its customers are women. The Marketing manager believes the company could increase its profits if it increases the price of each of its most popular products. What is meant by ‘market share’? Identify two ways (other than gender) that Gayle’s Soaps could segment its market. Way 1: Way 2: Identify and explain two advantages of market segmentation for Gayle’s Soaps. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain three problems that a business might have when trying to enter a new market. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: Do you think that if Gayle’s Soaps decides to increase prices then this will lead to higher profits? Justify your answer.

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THEORY

2013

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Pamela is a sole trader. She started her successful photography business 30 years ago. She specialises in taking pictures of people and places for use in posters, calendars and fashion magazines. It is a niche market. Pamela uses cost-plus pricing as part of her marketing mix. Offering a high quality service is important to Pamela and her 2 employees. Define ‘cost-plus pricing’. Define ‘marketing mix’. Outline two reasons why offering a high quality service might be important for Pamela’s business. Reason 1: Reason 2: 1 12 Explain two advantages to Pamela of operating as a sole trader. Advantage 1: Explanation: Advantage 2: Explanation: Do you think operating in a niche market will help a small business have a better chance of success than operating in a mass market? Justify your answer. [ 1 12

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THEORY

2021

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Travelscene is a company that specialises in holiday tours for people with interests in sport. It arranges trips like ski holidays and group visits to major events such as the Olympic Games. This is a niche market. Travelscene is a very profitable business. The company has an excellent reputation as an efficient business. It employs experienced tour managers who look after the needs of tourists during their trip. It currently has a vacancy for a tour manager. What is meant by the term ‘a niche market’? What is meant by ‘an efficient business’? Identify and explain two qualities that a new Travelscene tour manager will need. Quality 1: Explanation: Quality 2: Explanation: Identify and explain three possible reasons why Travelscene is a very profitable business. Reason 1: Explanation: Reason 2: Explanation: Reason 3: Explanation: The management of Travelscene is thinking of starting a new range of family beach holidays, aimed at the mass market. Do you think that this would be a good idea? Justify your answer.

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THEORY

2011

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Koni Travel sells holidays to customers in niche markets in country Y. Most of its holidays are expensive and are aimed at high income customers. Over 80% of Koni Travel’s customers have used the company before. The holiday market in country Y is large and is divided into a number of segments. Many of Koni Travel’s competitors spend money on market research and advertising. What is meant by ‘niche markets’? Identify two ways of segmenting a market. Way 1: Way 2: Identify and explain two reasons why market research information might not be useful to a business in making decisions. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three reasons why a holiday company would spend money on advertising. Reason 1: Explanation: Reason 2: Explanation: Reason 3: Explanation: Do you think offering cheaper holidays would be a good idea for Koni Travel? Justify your answer.

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THEORY

2012

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Walt owns a company which has developed a new computer game for adults. A focus group report shows customers like it. Walt has been considering the marketing mix, including the packaging for this product which is likely to be sold in many countries. ‘I don’t want to use a wholesaler as it would affect my profit margin’ he said. What is meant by a ‘focus group’? Identify two reasons why packaging might be important for the new computer game. Reason 1: Reason 2: Explain why the profit margin might be important for Walt’s business. Identify and explain two advantages to Walt if he decided to use a wholesaler to distribute his products. Advantage 1: Explanation: Advantage 2: Explanation: Consider two possible methods of promotion that Walt could use for the new game. Recommend which method he should use. Justify your answer.

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THEORY

2015

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$LAND sells a wide range of products from food to toys. It has 400 shops in country B. $LAND's marketing strategy is based on penetration pricing. $LAND does no advertising and buys all its products directly from manufacturers. Revenue and profit have increased despite the country being in recession. The Marketing Director wants to expand the business by opening shops in other countries. He believes $LAND will be successful in other countries. What is meant by ‘marketing strategy’? What is meant by ‘penetration pricing’? Identify and explain two possible advantages to $LAND of advertising. Advantage 1: Explanation: Advantage 2: Explanation: 1 10 Identify and explain one advantage and one disadvantage to $LAND of buying direct from manufacturers. Advantage: Explanation: Disadvantage: Explanation: Do you think that $LAND will be successful in other countries? Justify your answer. [ 1 10

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THEORY

2016

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WFG is a private limited company in country X. It owns 120 supermarkets, of which 20 are operated as franchises. One of WFG’s objectives is to expand by opening 30 more shops in the next 18 months. The Managing Director said: ‘Market research shows that fewer people are going to the local markets every day to buy their food. It is important for us to set prices at the right level.’ The Managing Director is thinking about whether to introduce new technology into the business. Define ‘market research’. State two objectives (other than expansion) a business might have. Objective 1: Objective 2: State four factors a business should consider when deciding the price of a product. Factor 1: Factor 2: Factor 3: Factor 4: [ 1 24 Explain two factors WFG should consider when deciding whether to introduce new technology into its business. Factor 1: Explanation: Factor 2: Explanation: Do you think selling franchises is a better way for a retail business to expand than opening more of its own shops? Justify your answer. 1 24

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THEORY

2020

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ABA provides short-distance flights between 60 countries. It is a multinational company based in country X. ABA uses market segmentation when deciding on its pricing method. The marketing department is carrying out market research to gain feedback on customer experiences. ABA is considering ways in which it can contribute to sustainable development. Define ‘market segmentation’. Identify two pricing methods. Method 1: Method 2: Outline two factors which could affect the accuracy of ABA’s market research. Factor 1: Factor 2: 1 17 Explain two benefits to ABA of being a multinational company. Benefit 1: Explanation: Benefit 2: Explanation: Do you think using renewable energy is the best way for a tertiary sector business to contribute to sustainable development? Justify your answer. [ 1 17

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THEORY

2021

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Delwar makes car tyres. The business is located in country Z. At present, all its sales are to customers in country Z. Delwar is the market leader in this country. Fig. 1 gives data regarding its market share. The total value of car tyre sales in country Z in 2010 was $50m. This market is no longer growing. The Managing Director of Delwar thinks that exporting tyres is the way forward. There will be both costs and benefits of exporting tyres. Fig. 1: Bar chart showing market share % market share = Delwar year = other companies What is meant by the term ‘market leader’? Calculate the value of Delwar’s sales in 2010. Identify and explain two possible reasons why the market for car tyres in country Z is no longer growing. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three methods Delwar could use to increase its market share in country Z. Method 1: Explanation: Method 2: Explanation: Method 3: Explanation: Do you think Delwar’s profits would increase if the business were to export its tyres? Justify your answer.

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THEORY

2011

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F&G is a leading fashion retailer. It has 20 shops in country C. The business uses market segmentation. Its target market is men aged between 25 and 40 years old. The Marketing Director has been looking at the marketing data shown in Table 1. She is worried that the amount the business spends on marketing is not cost effective. She would like to close down all F&G shops and just use e-commerce. Table 1 F&G’s marketing budget F&G’s market share Total value of the men’s clothing market Year $25m 15% $500m $40m 12% $700m What is meant by ‘marketing budget’? Calculate the value of F&G’s revenue in 2016. Identify and explain two benefits of market segmentation to F&G. Benefit 1: Explanation: Benefit 2: Explanation: 1 17 Identify and explain two possible reasons why the amount F&G spends on marketing might not be cost effective. Reason 1: Explanation: Reason 2: Explanation: Do you think F&G should close down all its shops and just use e-commerce? Justify your answer. [ 1 17

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THEORY

2016

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