PART 2 Question 7 – 1999 – Business In Action
Part 2
Enterprise
Business in Action
Question 7 – 1999
The marketing function of an organisation is said to be the cement that holds all its parts together.
It secures the organisation’s future.
(A ) Outline the Stages involved in the development process of a new product or service.
Step 1: Idea Generation
This involves the search for possible product ideas which the Company feels it will want. Many ideas
must be generated to find a few that will be successful. The sources may be within or outside the
business and brainstorming is one technique which is often used.
Step 2: Product Screening
This involves selecting the product ideas which have the best potential for sales. The products that are
selected at this stage have the greatest potential for development. However, care must be exercised not
to reject products which if developed could be marketed successfully. Market research will be conducted
to determine the response of customers.
Step 3. Concept Development
This involves developing basic ideas into a detailed version of the new product. The emerging product
should be capable of satisfying basic consumer needs. The features of the product which make it
different from other products on the market is called its unique selling point (USP).
Step 4: Feasibility Study
This looks in detail at the product’s commercial feasibility. Can the product be produced at a cost and
sold at a price, which will enable a profit to be made?
Consumer demand must be analysed through market research and the type of marketing mix for the
product will be considered.
Step 5: Prototype Development.
This stage involves the production of one of a small number of units of the product. It can be an
expensive and tedious phase of the process as production difficulties and modifications to the product
are identified and clarified.
Step 6: Test Marketing and Product Launch
The new product is released on the market on a small scale to the target market. Consumer reaction is
compiled and any necessary changes to the marketing mix must be made. If the test marketing proves
unsuccessful a decision to postpone the launch or abandon the project could be taken. Assuming the test
marketing goes well the business will commence production and the advertising and promotional
campaign will be implemented.
(B) Explain the advantages of a business enterprise adopting the marketing concept.
This refers to a situation where a business adopts a customer-orientated approach, i.e. the importance of
customer needs and requirements. This will give an obvious advantage to the Company in that it will
produce goods with features and qualities which will satisfy customer needs. This will result in more
sales and greater profits.
Producing goods which meet the requirements of consumers reduces the risk of failure for new products.
It will also result in less customer dissatisfaction, reducing the Company’s costs in relation to wastage
and replacement goods.
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PART 2 Question 7 – 1999 – Business In Action
(C) Evaluate the elements of the marketing mix using a product or service of your choice.
PRODUCT - Cadbury’s Snowflake
The new product is a flake bar made of white chocolate combined with a milk chocolate coating. The
new bar is a development of the flake and twirl bars. The name snowflake was chosen after extensive
market research and the company deciding to use the traditional purple wrapper so synomous with the
Cadbury brand name. Customers will therefore automatically associate the product with the well
established Cadbury name.
PRICE
Pricing is vital to the success of a product. A detailed cost analysis indicated that the cost of production
would be similar to the existing flake bar. Various price assumptions were assessed until the optimum
price was decided and potential profits were calculated. A price of 45p/57c was chosen which was
competitive and value for money.
PROMOTION
Cadbury used an extensive TV and billboard campaign to launch the product. Cadburys is the sponsor of
a number of prominent TV programmes including Coronation Street and the broad appeal of this
programme alone would ensure a wide audience. The product was launched in and around the same time
as Cadburys introduced a special chilled counter-top unit for its products. This will help to ensure that
people can enjoy the snowflake at its best even during the warmer summer weather.
PLACE
The snowflake bar joined the rest of the extensive Cadbury range on the counters of retail outlets. The
strategic location of their products near to checkout areas will assist the sale of their new product.
Cadburys has a wide distribution network of wholesale and retail outlets all over the country and the
location of the new bar alongside the existing product range will prove most beneficial.
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