e)Do you think adding new features to a product is the best extension strategy for a
manufacturing business to use? Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether adding new features is the best extension
strategy for a large manufacturer to use.
This is a general question so there are no marks for application
Points might include:
• Product appears more appealing [k] attracting new / more customers or sales [an] increasing
revenue [an]
• High cost of development / market research [k] which the business may not be able to afford [an]
• Customers may dislike changes [k] reducing sales [an]
• Adds value to product [k] therefore can charge a higher price [an]
Other strategies might include: • Finding new markets [k] widening customer base [an]
• Adapt / change the packaging [k] improving the appeal [an] but existing customers may not
recognise the product [an]
• Increase advertising / marketing / promotion [k] remind customers that the product still exists
[an]
• Sell through additional outlets [k]
e) Do you think it is always better for a start-up business to use primary market research, rather
than secondary market research, when making decisions? Justify your answer.
Primary market research: • Relevant / up to date data gathered [k] so should help you find out what
you want to know [an]
• High cost / time to collect information [k] which a new business might not be able to afford [an] •
Only available to own business [k]
• May find it difficult to find people that represent target market / population [k]
Secondary market research:
• May not be relevant / outdated [k] which can lead to wrong decisions [an]
• Readily available [k]
• Cheap [k]
• Can collect wide range of information [k]
Justification might include: Primary research collects business specific data [k] helping to find out
what you want to know [an]. Secondary research is cheaper than primary to collect [k] which could
help reduce costs [an]. As this is a start-up business finance may be limited therefore secondary
research may be better for them. [eval]. However the information must be from a reliable source.
[eval]
( e)Do you think advertising in specialist magazines is the best way for a business to promote highquality products? Justify your answer.
Specialist magazines
• Attract specific customers/target market [k] increasing sales [an]
• Able to use colour/pictures [k] which can help attract attention [an] • Can keep for future
reference [k]
• Magazines are often only published once a week/month [k]
• Not everyone reads/buys specialist magazines [k]
Other possible methods include:
• Social media/Facebook/Twitter [k] as large potential market / cover wide area / seen by many
people [an]
• Newspapers [k] not everyone reads them [an] so can restrict target market/ lead to fewer sales
[an] • Leaflets [k] but people may throw them away/seen as litter [an]
Justification might include: A disadvantage of specialist magazines is that it is likely to be seen by a
small number of people [k] which can reduce its potential sales [an]. I think social media [k] is a
better option as customers can still be targeted but also it allows the business to cover many people
[an]. This would allow them to build a bigger customer base [eval] to maximise potential revenue
[eval].
( e) Explain how NLR’s pricing decisions might be affected at two different stages of the product
life cycle.
Points might include:
 During introductory stage [k] the business may set a low price to attract customers [an] to their
hand cream [app]
 At growth stage [k] prices may be lowered due to increased competition [an]
 At maturity stage [k] price is likely to be similar to competitors to retain market share [an] for the
branded products[app]
 During decline stage[k] discounts might be offered to maintain sales/ sell of remaining inventory
[an]
Skimming pricing [k] can be used at the introductory stage to recover development costs [an] of new
packaging [app]
 Penetration pricing [k] in some market segments [app]
 Cost plus pricing [k]
 Competitive pricing [k]
 Promotional pricing [k]
(e) Do you think adding new features to a product is the best extension strategy for a
manufacturing business to use? Justify your answer
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether adding new features isthe best extension strategy
for a large manufacturer to use.
Points might include:
• Product appears more appealing [k] attracting new / more customers or sales [an] increasing
revenue [an]
• High cost of development / market research [k] which the business may not be able to afford [an]
• Customers may dislike changes [k] reducing sales [an]
• Adds value to product [k] therefore can charge a higher price [an]
Other strategies might include:
• Finding new markets [k] widening customer base [an]
• Adapt / change the packaging [k] improving the appeal [an] but existing customers may not
recognise the product [an]
• Increase advertising / marketing / promotion [k] remind customers that the product still exists [an]
• Sell through additional outlets [k]
Other appropriate responses should also be credited.
Justification might include:
Adding new features involves high development costs [k] which the business may not be able to
afford [an]. Finding new markets [k] could increase sales revenue [an]. There is a risk that customers
may not like the new features [eval] so it’s safer and cheaper to try to find new markets. [eval]
This is a general question so there are no marks for application.
Some points could be awarded for different options or as [k] / [an], but do not award the same point
twice.
For evaluation to be awarded justification will usually follow on from relevant analysis of points.USP
[k] attracting customers away from competitors [an]
Do you think giving out free samples is the best method of sales promotion for a business to use
when promoting a new food product? Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether free samples are the best method of sales
promotion for a business to use when promoting a new (food) product.
Points might include:
Free samples:
• Encourages potential customers to try something [k] which can persuade them to buy [an]
• Trying is likely to be more effective than just telling someone about it [k] as the taste is an
important part of the buying process [an]
• Tempts existing customers to buy more [k] which can increaserevenue [an]
• Cost of providing samples [k] can decrease profit margin [an]
• Way to use up inventory [k]
• No guarantee people will buy [k]
Other options could include:
• Buy one get one free [k] would generate some income [an]
• Point of sale displays [k] raise awareness of the product [an]
Other appropriate responses should also be credited.
Justification might include:
• Encourages potential customers to try something new [k] which can persuade them to buy [an].
However, the cost of providing samples [k] can decrease the profit margin. [an] Free samples are the
best method despite the cost [eval] as taste is important when buying food [eval]
Do you think using wholesalers is the best way for a large business to distribute its products?
Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether wholesalers are the
best channel of distribution for a large business to use.
Points might include:
• Transport costs to the retailer is paid for by the wholesaler [k] so
reduces costs to manufacturer [an]
• Can help sell goods to a larger market [k] leading to higher revenue[an]
• Wholesalers buy in large quantities [k] reducing distribution costs [an]
• Wholesalers will advertise and promote products [k]
• Another middleman will take some of the profit [k]
• Producer loses some control over the marketing [k]
Other options could include:
• Selling direct to customers [k] ensures more control over the marketing mix [an]
• Using a retailer [k]
Justification might include:
• Wholesalers will pay slightly lower prices [k] which will reduce thebusinesses profit margin. [an] By
selling direct to customers [k] this will give the firm more control over marketing. [an] Selling directly
to customers maybe the best way to protect its brand image. [eval] Fora large business image is
likely to have a big impact on in their sales. [eval]
(e) Do you think advertising in specialist magazines is the best way for a business to promote highquality products? Justify your answer.
Award up to 2 marks for identification of relevant points .
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to whether advertising in specialist magazines is the
best way for a business to promote high-quality products.
Points might include:
Specialist magazines
• Attract specific customers/target market [k] increasing sales [an]
• Able to use colour/pictures [k] which can help attract attention [an]
• Can keep for future reference [k]
• Magazines are often only published once a week/month [k]
• Not everyone reads/buys specialist magazines [k]
Other possible methods include:
• Social media/Facebook/Twitter [k] as large potential market / cover wide area / seen by many
people [an]
• Newspapers [k] not everyone reads them [an] so can restrict target market/ lead to fewer sales
[an]
• Leaflets [k] but people may throw them away/seen as litter [an]
Other appropriate responses should also be credited.
Justification might include:
A disadvantage of specialist magazines is that it is likely to be seen by a small number of people [k]
which can reduce its potential sales [an]. I think social media [k] is a better option as customers can
still be targeted but also it allows the business to cover many people [an]. This would allow them to
build a bigger customer base [eval] to maximise potential revenue [eval].6
This is a general question so there are no marks for application.
For evaluation to be awarded justification will usually follow on from relevant analysis of points.
Some points could be awarded for different options, and some could be presented as either [k] or
[an] but only award once.
( e)Do you think giving out free samples is the best method of sales promotion for a business to
use when promoting a new food product? Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether free samples are thebest method of sales
promotion for a business to use when promoting a new (food) product.
Points might include:
Free samples:
• Encourages potential customers to try something [k] which can persuade them to buy [an]
• Trying is likely to be more effective than just telling someone about it [k] as the taste is an
important part of the buying process [an]
• Tempts existing customers to buy more [k] which can increase revenue [an]
• Cost of providing samples [k] can decrease profit margin [an]
• Way to use up inventory [k]
• No guarantee people will buy [k]
Other options could include:
• Buy one get one free [k] would generate some income [an]
• Point of sale displays [k] raise awareness of the product [an]
Other appropriate responses should also be credited.
Justification might include:
• Encourages potential customers to try something new [k] which can
persuade them to buy [an]. However, the cost of providing samples
[k] can decrease the profit margin. [an] Free samples are the best
method despite the cost [eval] as taste is important when buying
food [eval].
(C) Outline two possible advantages to ALB of using retailers to
distribute its products.
Award 1 mark for each relevant advantage.
Award 1 mark for each relevant reference to this business.
Points might include:
• Access to many customers / able to attract people passing by / high footfall / wide distribution is
possible [k] which can help increase revenue for its trainers [app]
• Lower storage costs / does not need large storage space / cost of holding inventories is paid (in
part) by retailer [k] so has more space / funds for its wool [app]
• Can act as promotion / retailer will pay for advertising and other promotion [k] which could help
raise awareness about protecting the environment [app]
• Can sell in large quantities to retailers [k]
( e) Explain two possible reasons why demand for Kemala’s best-selling product is price inelastic.(
Points might include:
• Unique/no (close) substitutes [k] as its high-quality [app] so an increase inprice is likely to result in
a lower percentage change in demand [an]
• Considered a necessity/need [k] so customers likely to remain brand loyal(even if the price
increases) [an] for the hand cream [app]
• Low proportion of income spent on product [k] so customers would still buy(if the price increased)
[an] increasing revenue above $480 000 [app]
Other appropriate responses should also be credited
( e)Do you think it is always better for a business to sell to a mass market? Justify your answer.
Points might include:
Mass marketing:
• (Potential for) high sales/customers [k] increases revenue [an]
• Benefit from economies of scale [k] so lower average/unit costs (an)
• Spreads risk [k] so falling sales in one area may be offset by sales elsewhere [an]
• High levels of competition [k] may mean have to lower prices [an]
Niche marketing [k]
• May be possible to charge higher prices [an] which can increaseprofit margin [an]
• Able to closely meet customer needs [an] could lead to highcustomer loyalty [an]
• Opportunity to earn higher profits might attract new competitors [an]so prices may have to be
reduced [an]
Other appropriate responses should also be credited.
Justification might include:
Businesses in a mass market may benefit from economies of scale [k]which reduces average costs
[an]. However, a niche market [k] may bebetter as businesses are able to charge higher prices [an]. I
think it isbetter for a business to operate in a mass market because loweraverage costs may allow
lower prices which is likely to attract morecustomers which could mean a higher overall amount of
revenue than is possible in a niche market. [eval]. [eval]
(e) Explain how NLR’s pricing decisions might be affectedat two different stages of the product life
cycle.
Points might include:
hand cream [app]
tors to retain market share [an] for the
brandedproducts[app]
[an]
an] of
new packaging [app]
( e) Do you think promoting the brand image is the most important role of packaging? Justify your
answer.
Points might include:
uct attract customers/stand outagainst competitor's products [k] which can
help increase/maintain sales [an] leading to higher revenue [an]
[k] so the product does not get damaged/can be kept fresh [an] which can
help reduce the amount of wastage [an]
storage/transport costs [an]
[k] as a business might have to identify the ingredients to avoid legal action
[an]
Justification might include:
Packaging helps the product stand out against competitor's products [k] helping increase sales [an].
Protecting the product is important [k]to keep the product fresh [an] This is the most important role
because damaged goods will not sell [eval] Therefore, brand image is not the most important role
although customers need to be aware of the product, to buy. [eval