1.1 Exam Q Flashcards
(10 cards)
Assess the likely reasons for Hot Chip using mainly quantitative market research data. (10)
Hot Chip could quickly and easily collect quantitative market research data [KJ. They gathered 30-40 responses and recorded items bought, giving clear data for their start-up planning. This likely helped them open sooner. However, by acting fast, they may have missed important qualitative insights from interviews or focus groups, especially about topping preferences (Apl.
These insights could have helped develop a product range tailored to customer demands, improving the business’s chances of success
Hot Chip’s owners might lack the skills to analyse detailed qualitative data. Quantitative data, such as graphs, is easier to understand and helps justify their business plan clearly to lenders.
This could improve the chance of getting loans (An]. However, quantitative data alone lacks depth, making it harder to convince investors fully. Qualitative data provides a deeper understanding of customer motivations and preferences. Ignoring qualitative research may worry lenders, particularly because Hot Chip targets a specific niche market in a different town.
It may also mean the products fail to meet customer needs. Early sales might then be lower than expected, harming the business’s chance of survival
Overall, focusing on quantitative data may have been a sensible decision for Hot Chip. It was useful for quickly completing market research at lower cost. Yet, relying only on quantitative data was risky [E]. Without qualitative insights, Hot Chip might fail to meet customers’ exact needs, resulting in weak early sales of chips and toppings. This could also reduce lenders’ confidence in their business plan, making it harder to secure start-up finance. This would add financial pressure on the owners, possibly limiting Hot Chip’s future growth across the UK
Assess the consequences to a business, such as Spotify, of operating in a dynamic market. (12)
Dynamic markets experience rapid and significant changes over short periods (K]. The music streaming market has grown rapidly, reaching over 220 million subscribers globally by 2020
Spotify entered this highly competitive market and distinguished itself from established rivals like Apple illunes and Amazon Music by introducing unique features such as video clips. These innovations appealed to users streaming on smartphones and laptops, significantly boosting Spotify’s popularity and helping it become a market leader in the US and Europe. However, the increased popularity of home devices like Google Home and Amazon Echo [Ap], which are not suitable for video content, poses a challenge. To remain competitive, Spotify needs continuous innovation, potentially raising its costs significantly
Changes in regulations can also heavily impact dynamic markets. Streaming services like Spotify must pay high royalties to artists and labels, and these costs are influenced by copyright and royalty legislation. If regulations become more favourable, weaker competitors could exit the market, potentially allowing Spotify to increase its market share and achieve profitability for the first time (An]. However, stricter regulations could increase costs significantly, creating financial pressure. Unlike Amazon and Apple, Spotify has no other profitable divisions to cover streaming losses, placing it at greater financial risk [E]
Overall, Spotify should continue investing in innovation to differentiate its services. Its strong brand recognition and current market leadership provide advantages. However, Spotify must carefully monitor and respond to regulatory changes and competitor actions. Maintaining its unique position through ongoing innovation and effective promotion is essential to compete with powerful rivals like Apple and Amazon and ensure long-term viability
Assess two ways restaurant chain companies such as Jamie’s Italian ‘positively disrupt’ the competitive market in which they operate. (8)
Jamie Oliver’s fame as a celebrity chef gave his restaurant a strong advantage when it opened in 2008 [Ap]. Customers trusted his brand, expecting a memorable dining experience, as he would not risk damaging his reputation with poor quality. Other new restaurants would struggle to match this trust due to their unknown quality. However, some people saw Jamie’s Italian as simply extending his existing fame into restaurants rather than offering something genuinely new. Specialist or established restaurants with loyal customers may therefore not have been greatly affected
Jamie s Italian focused on high-quality ingredients [KJ. This could raise expectations among mid-market diners. Combined with excellent customer service, diners experienced standards usually found in more expensive restaurants. Competitors might therefore be forced to improve their own quality and service, benefiting customers through more choice and better value [An]. However, improving quality significantly usually means higher costs. Jamie’s Italian might then need to set higher prices, positioning itself closer to high-end restaurants rather than its original mid-market competitors. As a result, Jamie’s Italian might not have significantly impacted mid-market restaurants
Assess a likely trade-off for Bon Bon’s of not having mass market ambition.’ (10)
A trade-off happens when a business gains something but loses something else as a result [K]
For Bon Bon’s, the trade-off from not having mass market ambition’ might be lower sales and reduced potential for fast growth. This is because it chooses not to supply supermarkets or larger high street chains. These bigger stores might allow access to a much wider customer base, leading to higher revenue and possibly more profit. For example, in 2020 the UK sweet market was worth £2,456 million, and the sales from convenience stores alone were £445 million in 2018 [Ap]. Choosing not to enter this wider market could mean Bon Bon’s misses out on these opportunities
However, the trade-off might not be entirely negative. By staying out of the mass market, Bon Bon’s can protect its niche identity. It supplies sweets to specialist shops, tourist attractions and delicatessens, offering hand-packed products in unique packaging. This creates a strong brand image, helping the business stand out from mass-produced alternatives, which could allowit to charge higher prices per unit. This focused strategy may help Bon Bon’s survive in a competitive and growing market where customers are seeking something different or more traditional [An]
The trade-off is likely to depend on Bon Bon’s long-term aims. If the goal is slow, steady growth and maintaining a premium identity, then avoiding the mass market may be the right choice.
However, if market demand continues to grow, especially in the convenience sector, Bon Bon’s may eventually need to widen its ambitions to take advantage of these trends
Assess the possible limitations of secondary market research to restaurant chain companies, such as Jamie Oliver’s (10)
Secondary market research is data collected by someone else, often for a different purpose, but then used by businesses to inform their decisions [K)
For a restaurant chain like Jamie Oliver’s, this type of research may have some clear limits.
Firstly, some data may not reflect the business’s customers. For example, if the information is national and general, it may not show the views of customers who visit Jamie s Italian. This could lead to decisions that don’t meet their needs. The business might change its menu or pricing based on trends that don t apply to its actual diners, reducing customer satisfaction [An]. Also, reports from sources like Minte may be expensive to access. For a business like Jamie Oliver’s, which was under financial pressure, these costs may not have been worth it
However, secondary research does have some benefits. It can be accessed quickly. If consumer tastes change - such as a rise in vegan diets - Jamie Oliver’s could use published data to spot the trend and update its menu without needing to carry out new research. This is especially usefullin a fast-changing market like eating out [Ap]. Still, the accuracy of this data can t always be checked, and it may be out of date or biased, making it less helpful
Overall, secondary research may have supported quick decisions, but its limits - such as lack of specific customerinsight - may have reduced its value to a unique restaurant chain like Jamie Oliver’s
Assess the likely importance of its market positioning to the success of a business, such as Emirates. (12)
Market positioning means how a business wants customers to view its brand or products, compared to competitors. This is often done by highlighting product quality, design, or price [K)
Emirates positions itself as a high-quality airline offering luxury service, such as excellent customer care and business class features. This strategy makes it stand out from airlines that focus mainly on low prices, such as Spirit Airlines. As a result, Emirates can charge higher prices, which may increase its profit margins. This money can be used to reinvest in better planes and more services, helping the airline stay successful over time. In a market with many competitors, this strong image may encourage repeat purchases and build brand loyalty [An]
However, positioning alone may not guarantee success. Other factors, such as flight times, routes, and price, are important too. Some customers may care more about cheap tickets than comfort. During times of recession, demand for luxury services may fall, meaning Emirates’ focus on quality could limit customer numbers
Even so, positioning seems key for Emirates. The global airline market grew every year between 2010 and 2015, with nearly 3.75 billion passengers forecast in 2016 (Ap]. To win these passengers, Emirates strong brand image helps it stay ahead of rivals such as British Airways.
As Emirates serves many business customers, a reputation for quality service and comfort may matter more than price
The importance of positioning depends on the market. In price-sensitive markets, other factors may matter more. But for Emirates, targeting long-haul and business travellers, a focus on quality and image is likely to bring success in both the short and long term
Assess the likely value to Derby Theatre of producing and staging shows that recognise the cultural diversity of Derby’s population (12)
Producing and staging culturally diverse shows means creating performances that reflect the different ethnic and cultural backgrounds of the local community [KJ. Derby has a growing
*White, other population (3% to 4.2% from 2011 to 2016), and a higher proportion of BME people than the UK average (25% vs 20%). This suggests there is demand for more diverse performances. These shows could bring in bigger audiences and increase ticket sales. That may also lead to more money spent at the bar and cafe, which currently ranges from 50p to £3.50 per head [Ap]. This is helpful as Derby Theatre depends on box office income and receives £795,000 from the Arts Council
The Arts Council supports diversity in theatre. If Derby Theatre includes more diverse shows, it may protect or even increase its future funding. This is important, as the theatre nearly closed in 2008 and was only saved by the University of Derby. Including a wider range of people could also improve the theatre’s image and role in the city [An]
However, putting on diverse shows might cost more. New props, costumes or actors may be needed. This could be difficult for a small theatre with only 575 seats and 50 staff. Some shows may only appeal to small groups, so ticket sales might not cover the costs. This is a risk, especially for a theatre that has struggled before (E]
Overall, the long-term value of diverse shows is likely to be high. It supports funding, builds stronger links with the community, and shows Derby Theatre reflects modern society. These benefits may outweigh the extra costs, especially if it helps the theatre grow and stay open in future
Assess the likely value of secondary market research data to Deliveroo’s marketing. (12)
One reason secondary market research is likely to be valuable to Deliveroo is that it is relatively cheap and quick to access [K]. Deliveroo can access data from YouGov Brandindex, a professional market research agency, which already collects information on consumer attitudes [Ap]. This means Deliveroo does not need to spend extra time or money conducting its own research. The data is also likely to be reliable because it is collected by experts with experience in tracking changes in brand perception and customer satisfaction. This is especially useful to Deliveroo. It wants to evaluate the success of a new marketing campaign focused on emotional branding and ‘food happiness’. However, while YouGov is a trusted source, there is still a risk that the data may not reflect the views of Deliveroo’s actuall customers. This could lead to poor marketing decisions [E]
Another reason it is useful is because secondary data can highlight trends over time. Online sales trends, media reports, and public reviews can help Deliveroo understand changing consumer food delivery preferences. This helps them make better decisions about pricing, advertising or promotions. This is vital in a fast-moving and competitive market [An]. However, rivals like Uber Eats and McDelivery can also use the same data. As a result, it may not provide a unique competitive advantage. Additionally, YouGov may charge high fees, raising Deliveroo’s marketing costs
In conclusion, secondary research is likely to be valuable to Deliveroo. It relates directly to their recent marketing efforts and can offer insights with low effort and cost. However, the value of this data depends on its accuracy and whether Deliveroo’s rivals, such as Uber Eats, also have access to it. In the short term, it helps shape marketing decisions quickly, but in the long term, Deliveroo may need more targeted primary research to maintain a competitive edge
Cost competitiveness and product differentiation are two key strategies to achieve global competitive advantage.
Evaluate these two strategies and recommend which one would be better to achieve a global competitive advantage for a business, such as Cadbury. (30)
Cost competitiveness means having lower costs than competitors. Product differentiation involves offering products that stand out due to quality, innovation, brand identity, or customer service[K]. Cadbury is known for differentiated products like Dairy Milk and Crème Eggs, which have distinctive branding and strong promotion. Differentiation could help Cadbury succeed globally, as innovative products like Oreo bars appeal strongly to customers. Differentiating by quality could justify higher prices, boosting revenue and helping Cadbury grow in new markets
However, differentiation requires large investments in market research and product development, especially when entering unfamiliar markets. Cadbury currently sells in only 40 markets and might struggle initially to build brand recognition overseas [Ap]. Its shift away from Fairtrade could also harm its global reputation, limiting differentiation based on social responsibility [An]
Cost competitiveness might be easier to achieve globally. Cadbury has invested £75m to improve factory efficiency, helping reduce production costs [Ap]. Manufacturing chocolate in ten countries also allows Cadbury to benefit from economies of scale, lowering the cost of ingredients. Lower costs mean Cadbury can set competitive prices, gaining market share internationally, especially important as global ingredient prices rise [An]
However, cost-cutting has risks. Changes to ingredients or product quality have caused negative reactions from customers, hurting Cadbury’s reputation. Tariffs following Brexit also mean importing products from other countries like Poland is less cost-effective, increasing overall costs [E]
Overall, differentiation is the better strategy for Cadbury’s global competitive advantage.
Cadbury’s strong brand and history of successful innovation make differentiation more likely to succeed internationally. Although cost competitiveness helps manage rising costs, differentiation will better position Cadbury to compete effectively with global rivals like Mars and Nestle by creating products customers truly value
Derby University has set the objective for Derby Theatre to increase its box office income by 40% by 2022. Its management team has decided that it could either produce and stage more shows that recognise the cultural diversity of Derby’s population or launch a Derby Theatre live tour across the Midlands.
Evaluate these two options and recommend which one would be better to increase
Derby Theatre’s box office income.
Producing and staging culturally diverse shows can help Derby Theatre (DT) attract new audiences and boost revenue. Putting on performing arts events by international writers and performers could attract new theatregoers [K]. The ‘white, other’ (Eastern European descent) population of Derby is expected to increase from 3% in 2011 to 4.2% in 2016. In 2011 only 75% of Derby’s population was white, British compared to the UK’s 80% [Ap]. Their needs are unlikely to be met by existing standard programmes in this regional theatre. A wider range of performances would likely also be attractive to DT’s existing clients. They may be keen to enjoy different cultural experiences. Greater ticket sales volumes may increase revenue. As well as this, greater visitor numbers should increase the volume of sales of refreshments at the theatre’s bars. As a result DT’s income should rise [An]
However, diverse shows may cost more to stage, requiring extra investment in costumes, props, and specialist actors. These extra costs could lower profits, even if ticket sales increase.
If the performances only appeal to small minority groups, DT may struggle to fill its 575-seat theatre. This could reduce average income per show and make it harder to meet the 40% box office income target [E]
Launching a Derby Theatre live tour may also increase income. A tour across the Midlands would raise awareness of DT’s productions, helping build a wider audience beyond Derby. Extract G shows DT already works with 9 partner organisations across the region [Ap]. These relationships could be used to help with logistics and promotion. If a tour is marketed well and includes popular shows, it may attract large audiences and increase income. However, the costs of travel, venue hire, and staff may be high. Also, the quality of shows may drop in non-specialist venues, which could harm DT’s reputation and reduce return visits
Overall, staging more culturally diverse shows may be a better option for DT. The population of Derby is becoming more diverse, and this strategy fits with DT’s community mission and Arts Council funding requirements. A wider range of shows could increase attendance and bar sales without the extra cost and risk of touring. DT also lacks the brand profile of major theatre companies, which may make touring less successful unless a high-profile name is used. In the short term, a tour might raise awareness, but in the long run, diverse programming is more sustainable and better supports DT’s role as a civic-minded local theatre
