past papers

Question 1

What is meant by marketing strategy?

Answer 1

The methods used to achieve marketing objectives

Question 2

What is meant by product portfolio?

Answer 2

The range of products sold by a business

Question 3

What is meant by entrepreneur?

Answer 3

A person who sets up a business with the hope of reward

Question 4

How might a business use income elasticity of demand? (4)

Answer 4

To estimate how demand will respond as a result of change in income
Falling income means shoppers buy cheaper goods so business (name) would choose to stock cheaper products

Question 5

How could social trends affect channels of distribution for a business (8)

Answer 5

-channels of distribution are the methods a business uses to get their products from manufacturer to consumer
-Growth of the trend to shop online means moving from market trader to set up distribution warehouse as this will allow them to reach more customers
-However some people may prefer the experience of shopping in store so wouldn’t choose to shop online/don’t trust the quality of products bought online

Question 6

Could increase distribution through the post office or online sales
Evaluate and recommend which would be most profitable

Answer 6

Post office
-Opened new markets increasing demand/sales which may boost profits
-Post office have loyal traditional customers who are more likely to buy through the post office than online as they are more comfortable and trust them more increasing sales
-Costs and marketing shared with the post office reducing average costs and increasing profits

Online
-Great online presence could reduce costs and due to the trend of online shopping could boost sales and profit
-Increased capacity so can increase amount of sales done online

-Should use post office as there may be higher competition online which could reduce sales so more marketing needed to stand out increasing costs and lowering profit
-Online as a larger target market can be reached and there is a increase in mobile technology used so greater demand for online stores

Question 7

What is competitive pricing?

Answer 7

When a business sets a price similar to competitors selling similar products

Question 8

What is market orientation?

Answer 8

The business finds out needs and wants of the customers and responds to them

Question 9

Ways to build a brand

Answer 9

Advertising
Social media
Differentiate
Will Increase awareness and may allow the sales of a wider range of products

Question 10

2 factors that could influence PED for a clothing range

Answer 10

-Availability of substitutes, likely have multiple competitors eg.Next selling similar products so by cutting prices overall revenue should increase
-However the extent of the influence that PED has depends on how loyal customers are to the brand

-Whether they are selling luxury or essential goods, clothing could mainly be seen as a luxury item and therefore would be price elastic as demand would decrease if income fell due to customers spending on goods they see as necessary

Question 11

What is meant by a public limited company

Answer 11

Owned by shareholders and shares are available to the public on the stock exchange

Question 12

What is a franchise?

Answer 12

A business is allowed to trade using the brand of an existing firm in return of a fee

Question 13

Two benefits of operating in a franchise

Answer 13

-Franchisor provides training for franchisee which lowers costs
-However initial fees can be costly especially for well known businesses

-The brands are already established and well recognised which can lead to increased sales so there is a lower risk of failure
-There are restrictions on actions and decision making due to having to follow the rules and business model of the franchise

Question 14

Market share formula

Answer 14

Sales of business
————————- x100
total market sales

Question 15

How could a company research the protein bar market (4)

Answer 15

Conducting primary or secondary research
Could conduct primary by asking sports people such as runners what snacks they like
Could conduct secondary using the internet to find out what types of bars are currently sold
This could help produce bars that fit the wants of the target market increasing sales

Question 16

Two methods that could be used to promote protein bars (8)

Answer 16

-Creation of a TV advert using a sports role model convincing people to purchase
-However this is expensive and the target market is pro active people who may be out running rather than watching TV

-Could use sales promotion and give introductory offers such as buy one get one free, this can quickly boost sales and encourage customers to trail, if successful could create loyalty to the product
-If brand name is already established discounts may not be needed as people will trust the brand and be willing to try at full price

Question 17

Assess the importance of adapting to market change (8)

Answer 17

-change is important to keep up with competitors
-If there is no change by producing new products the business may loose market share as customers trends and tastes change the needs need to be met
-The change may be short term so the costs that are involved in product development may not be recovered from sales

-Need to keep up with changes to make up for sales lost from products that people no longer want to buy

Question 18

What is market growth? (2)

Answer 18

An increase in sales for a product

Question 19

What is competitive advantage? (2)

Answer 19

Using differentiation/USP to have an edge over competition

Question 20

Two methods a hotel could use to develop customer loyalty (8)

Answer 20

-Could use a loyalty card for guests to get points for each stay to lead to a discount or free stay in the future
-However customers may not be interested if the hotel is only found in a few locations as they may want to travel to new places rather than returning to the same one

-Provide a personal service to guests to increase satisfaction
-May not differentiate enough from other hotels

Question 21

How could (business) use the boston matrix (4)

Answer 21

Boston matrix is a method used to analyse a businesses product portfolio
-Categorise the products to help make decisions on marketing and investment
-Identify products that are dogs (not doing well)
This can help the business to spend less on marketing off dogs (example) and invest in stars (example)

Question 22

What is meant by span of control? (2)

Answer 22

Number of employees that a manager is responsible for

Question 23

What is meant by business to business marketing?(2)

Answer 23

Businesses promoting the sale of products to other businesses for their use

Question 24

What is a sole trader? (2)

Answer 24

A business owned by one person who has unlimited liability

Question 25

How could market orientation benefit a business (4)

Answer 25

Businesses products are based around the customers needs and wants -Replying to customer feedback -providing services businesses are looking for Could lead to more sales as services offered are what customers need

Question 26

Explain a reason a business might use an extension strategy (4)

Answer 26

An extension strategy is a method used to lengthen the life of a product -May have to improve/restyle product Can be less likely to fall into decline stages of the product life cycle

Question 27

Assess the likely benefits of becoming a private limited company (10)

Answer 27

-Will allow the business to raise finance easier by selling shares -Profits may have to be shared between shareholders whereas all profit was kept as sole trader -Shareholders have a say in decisions so could cause conflict -Limited liability so less risk of losing personal possessions due to the business being a separate legal entity -As shares can only be sole privately with the agreement of existing shareholders the amount of finance that can be raised may be limited -It depends on if family and friends are interested in buying shares when more fianace is needed

Question 28

What is meant by market size (2)

Answer 28

The total amount of customers in a market measured by volume

Question 29

What is differentiation (2)

Answer 29

Making a product stand out from competition

Question 30

Evaluate innovation and changes to promotional methods Recommend which one is likely to be more effective at improving business profitability (20)

Answer 30

Innovation is coming up with new ideas and turning them into a marketable product -Development of new products attracting new customers potentially from different segments increasing sales and therefore profit on each product sold -The cost of developing and producing the new products is expensive making it difficult to make profit Promotion is the way in which a business gains awareness of its products -Advertise existing/new products on social media to (whoever the target is) , if they like the product they will likely share them on social media increasing awareness resulting in more sales and increased profitability -Social media is only useful if the product appeals to the target market and if the post reaches the target market as if not posts will be ignored as they are found irrelevant which will increase promotion costs without an increase in sales decreasing profitability

Question 31

What is viral marketing? (2)

Answer 31

Encouraging customers to share information through existing social media platforms

Question 32

How could a USP help build a brand (4)

Answer 32

USP is a feature that distinguishes a product from competitors -makes product different to all others Could result in customers preferring to buy that brands products over others

Question 33

Assess how important retail stores are in increasing sales of products

Answer 33

-Some customers may prefer to see and touch the product in person before buying which they wouldn’t be able to do if ordering online -However online retail is increasingly popular due to its convenience so selling online could reach broader audience increasing sales -If product is sold in a branded shop with a good reputation and brand lotalty customers may trust the product due to being associated with a established business -However selling through stores means prices may have to increase as they don’t have to pay any fee to retailers which could mean customers will look for alternative products from competitors -Depends on whether the store would stock the whole range of products and demonstrate its UsP to customers in store

Question 34

Explain how social trends affect choice of promotion (4)

Answer 34

Social trends are changing patterns in consumer behaviour reflected in changing demands -Use social media Reach more customers due to social media’s increasing popularity

Question 35

Assess two methods to increase customer loyalty (8)

Answer 35

-Excellent customer service increases satisfaction so more customers return -Members may just expect this service as they’ve never had a bad experience with the company so aren’t influenced by this method -Cheaper costs than main companies allow customers to save money so are less likely to switch to competitors -May be harder to retain customers as they aren’t as well known or trusted, lower costs perceived as lower quality

Question 36

Benefits of strong branding

Answer 36

Reduce PED-customers loyal to brands so business can increase price with little effect on sales Add value-Customers willing to pay more as they perceive the product as different to others so premium prices can be charged

Question 37

What is rebranding Why is it done

Answer 37

Creating a new image for an established brand eg.changing name Can allow brand to reach new customers and differentiate However may cause confusion or lead to loss of current customers

Question 38

What is meant by sponsorship

Answer 38

Supporting another business/person by giving them money or a product