CAIE A-Level Business A2 8.2.2 Marketing…proaches

[Maximum number: 20]

Performance Vehicles (PV)

Jack (a mechanic) and Jimmy (a car salesperson) set up PV as a private limited company in 2010. PV was initially financed through savings and a personal bank loan. The capital raised was used to finance a car sales showroom, a workshop and tools.

PV bought previously owned cars at low cost, repaired any faults and sold them in its showroom.

Timeline of PV

2010–2011
Competition in PV’s market is high.
Business objective of sales maximisation with a focus on low prices.
Low-cost local advertising is used to establish the business.
Cash flow is variable and profit margins low.

2012
Jimmy identifies a niche market to restore and sell rare old cars.
A strong brand identity develops and profit margins increase.

2013
Specialist magazines are used to exploit growing brand awareness.
Business objective changes to profit maximisation.

2014
PV features in a television programme about the restoration of rare old cars.
Sales increase by 50%.
Recruitment of experienced mechanics.

2015
PV accepts a two-year contract to appear in the car restoration television programme (see Appendix 1).
Pricing method changes to skimming.

2016
Sales continue to grow rapidly as the PV brand becomes better known.
PV purchases a large industrial unit and invests in specialist technology (see Appendix 2).

2017
Television contract ends.
Sales decline for the first time.

2018–2021
PV sponsors FAST, a Formula 2 car-racing team (see Appendix 3).
Sales do not grow.

Appendix 1: Data about the two-year contract to appear in the car restoration television programme (2015)

• Niche audience of people who like car restoration.
• Estimated viewing figures of 2 million worldwide.
• PV will not receive a fee from the television company, but PV’s logo and product placement will appear in every programme.
• PV is allowed to sell branded merchandise, made popular by the programme, on its website.

Appendix 2: PV purchases land and invests in technology in 2016

• New industrial unit financed by mortgage.
• Gearing ratio increases to 75%.
• New specialist technology financed by retained profit.
• Quality improvements marketed as a unique selling point (USP).
• PV reduces its marketing budget.

	2018–19	2019–20	2020–21
Annual sponsorship costs ($m)	2	3	4
League finishing position	3	2	7
TV viewing figures per race (m)	15	16	20
Target demographic	Male 45–60	Male 45–60	Male 45–60

Appendix 3: Key Formula 2 sponsorship data 2018–2021

Evaluate PV's marketing strategy between 2012 and 2021.

Level	AO1 Knowledge and understanding 3 marks	AO2 Application 2 marks	AO3 Analysis 8 marks	AO4 Evaluation 7 marks
3			7–8 marks Developed analysis of the overall strategy that identifies connections between causes, impacts and/or consequences.	6–7 marks Effective evaluation A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context.
2	2–3 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question.	2 marks Developed application of relevant point(s) to the business context.	4–6 marks Developed analysis of individual strategic element(s) that identifies connections between causes, impacts and/or consequences.	3–5 marks Developed evaluation • A developed judgement/conclusion is made. • Developed evaluative comments which balance some key arguments.
1	1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question.	1 mark Limited application of relevant point(s) to the business context.	1–3 marks Limited analysis that identifies connections between causes, impacts and/or consequences.	1–2 marks Limited evaluation • A judgement/conclusion is made with limited supporting comment/evidence. • An attempt is made to balance the arguments.
0	0 marks No creditable response.	0 marks No creditable response.	0 marks No creditable response.	0 marks No creditable response.

Evaluate PV's marketing strategy between 2012 and 2021.

Level

AO1 Knowledge and understanding 3 marks

AO2 Application

2 marks

AO3 Analysis

8 marks

AO4 Evaluation

7 marks

3

7-8 marks
Developed analysis of the overall strategy that identifies
connections between
causes, impacts and/or
consequences.

6-7 marks

Effective evaluation

A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context.

2

2-3 marks

Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question.

2 marks
Developed application of relevant point(s) to the business context.

4-6 marks
Developed analysis of
individual strategic element(s) that
identifies connections between causes,
impacts and/or
consequences.

3-5 marks

Developed evaluation

- A developed judgement/conclusion is made.

- Developed evaluative comments which balance some key arguments.

1

1 mark

Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question.

1 mark

Limited application of relevant point(s) to the business context.

1-3 marks

Limited analysis that identifies connections between causes, impacts and/or consequences.

1-2 marks

Limited evaluation

- A judgement/conclusion is made with limited supporting comment/evidence.

- An attempt is made to balance the arguments.

0

0 marks

No creditable response.

0 marks

No creditable response.

0 marks

No creditable response.

0 marks

No creditable response.

1

Indicative content:

AO1 Knowledge and understanding

No other AO2, AO3 or AO4 marks can be awarded without AO1.

Candidates must show knowledge and understanding, they cannot just mention a key term.

- Strategy - A plan of action to achieve a long term aim.

- Marketing - the act of promoting and selling products and services.

- The contents of a marketing plan: objectives, resources, research, marketing mix (price, product, place, promotion).

AO2 Application

Candidates must apply their answers to marketing and marketing strategy.

- Strong brand identity begins in 2012 with rare old cars.

- Promotion in specialist magazines is used which changes objective to profit maximisation.

- Pricing method later changes to skimming.

- Use of TV restoration programme to raise brand awareness in 2015-16 leading to increased brand awareness worldwide.

- Use of website and social media to gain customers, brand awareness and sales.

- Sponsorship of Formula 2 team to raise brand awareness 2018-2021.

AO3 Analysis

Candidates need to identify an element of the marketing strategy and provide developed analysis to get to A2, this then needs to be counterbalanced to get to A3. If a candidate does this twice, they will gain 8 marks.

- A strategy to sell rare old cars in the niche market led to increased brand awareness. [A2] This brand awareness must have been high to attract the interest of a TV company which further developed the brand image. However, this will require specialist marketing to reach the niche. [A3]

- The marketing focus changes again to increasing brand awareness with the TV programme. This shows that PV is responsive to marketing opportunities and objectives can be fluid. [A2] But relies on product placement rather than direct advertising which may take longer to improve sales. [A3]

1

- The sponsorship of FAST continues to focus on brand awareness through an international platform. [A2] However, the sponsorship may not fit with the branding strategy as although costs are increasing by $\$ 2 \mathrm{~m}$ per year, the sponsored team is not providing the success necessary to increase or strengthen the brand image which leads to the marketing being abandoned. [A3]

AO4 Evaluation

Candidates MUST answer the question - a judgement on the strategy between 2012 and 2021. The development and support of this judgement will help them to move through N2 and N3.

To award N 3 the answer must be in context and draw upon the previous analysis.

Evaluation will largely depend on the points raised in the analysis of the marketing strategy of PV.

- Overall judgement required on the balance between strengths and weaknesses of PV's approach to its marketing strategy. [N1]

- The lack of a formal marketing plan suggests that PV is opportunist, and the approach is based on opportunity rather than a considered marketing strategy. Sales had stalled in 2017 and seemed to struggle to increase indicating the strategy had not worked.

- The TV programme was an effective and low-cost advertising method as the programme paid for filming, editing and managing the tv schedule which met the marketing strategy and objectives at the time. This also led to alternative revenue streams which suggests that the strategy to allow filming was successful.

- The sponsorship deal, while it could have been lucrative, was reliant on the FAST team who did not perform by 2020-21 - possibly impacting sales while the costs grew to $4m.

Accept all valid responses.

CAIE A-Level Business A2 8.2.2 Marketing Strategy Approaches Topic Practice

Question 1