CAIE A-Level Business AS 3.1 The Nature of Marketing Questions

Practise defining demand and markets, calculating market share and analysing orientation, segmentation and B2B or B2C choices before evaluating marketing's role in success.

Exam points

define demand or supply and trace how a named factor changes quantity, price or revenue
calculate market share from business and total market sales, retaining the percentage basis
analyse how market type, orientation or segmentation changes the marketing decisions in the case

Covered syllabus points

3.1.1—Marketing role 3.1.2—Demand and supply 3.1.3—Markets 3.1.4—Consumer and industrial marketing 3.1.5—Mass marketing and niche marketing 3.1.6—Market segmentation 3.1.7—CRM

[Maximum number: 8]

Analyse two reasons why there should be a close link between the marketing objectives of a business and its corporate objectives.

Indicative content
Responses may include:
AO1 Knowledge and understanding
Marketing objectives are objectives set by a business and its marketing
department to engage in marketing activities that will support corporate
objectives.
Specific marketing activities include increasing product awareness, strengthen
customer relationships, and strengthen the business brand - activities that
would normally be supportive of corporate goals
- To stop any conflict that might arise between corporate and marketing
objectives
- Ensure that there are appropriate strategies and tactics for the business
- Will ensure that corporate objectives are more likely to be achieved
- Marketing objectives and activities can make a significant contribution
only if they are closely linked to the corporate objectives.
- Harder to achieve corporate objectives without marketing objectives.
- Would waste resources
AO2 Application
- Conflict might arise when the marketing department decides to follow its
own objectives, e.g., lower prices when dynamic pricing is needed
- Corporate objectives require all departments, particularly marketing
department, to pursue supportive objectives. To increase market share
the marketing department could increase sales through a social media
advertising campaign
- If marketing objective is domestic growth and corporate objective is
expanding into overseas markets
- Increased spending on irrelevant/unnecessary marketing activities -spending money on market research when corporate objective is
minimising costs

6(a)

AO3 Analysis
Reasons for close links between marketing and corporate objectives
- If marketing plans for new products - involves research and development
expenditure - must have approval of corporate management and support
the corporate objective on the product portfolio
- If marketing decides that market share of some products should be
increased - using product life cycle approach - should not conflict with
stated corporate intent as stated in the latest corporate plan
- A focus on the existing brand by marketing - should align with latest
mission statement of the business
- Targeting new overseas customers - could conflict with corporate goals
to expand the business which may seek to concentrate on the domestic
market
- Marketing proposals to strengthen/change the customer relationship -
may conflict with corporate pans to explore a new customer relationship
model
- Marketing initiatives to increase sales and revenue - with more
aggressive advertising and promotion may conflict with a new corporate
proposal to strengthen the existing corporate social responsibility
approach
- More use of online marketing activities may not be in the objectives and
plans of corporate management
- These marketing objectives need to support the corporate
objectives/priorities - marketing isa functional division of the total
business
- Corporate objectives set the context and discipline for marketing activities
- there should be close links and effective communication
- The impact on a business of an independent marketing department -business could drift and become dysfunctional
- Corporate objectives focus on the desired performance and results of the
total business and marketing is just one component part of the business -this implies close links and corporate responsibility and accountability
Accept all valid responses.

[Maximum number: 3]

Fizzy Drinks (FD)

FD is a private sector business that manufactures an international brand of carbonated drinks. Its slogan was 'A premium drink for premium customers'. The market for FD's drinks is very competitive, with 7 national and 12 international brands all competing in the same market. Recently FD lost the title of market leader to TR, one of its largest competitors. TR is a multinational public limited company.

Table 2.1 FD financial data 2023

Employee morale has dropped as a result of the negative feedback. Key employees have left to work for FD's competitors. The lack of experienced employees has led to a drop in the productivity of the production process.

Explain the term demand.

[Maximum number: 6]

Custom motorcycles (CM)

CM is a private limited company. It was set up by Joyce, who identified a gap in the market for specialist motorcycle components. CM's engineers make the components using job production. The engineers are highly skilled, trained and motivated and very proud of their high-quality products which are sold using price skimming.

CM was featured in a popular motorcycle magazine in autumn 2022, which has increased CM's reputation for quality unique products. This led to an increase in CM's sales as shown in Fig. 2.1.

Fig. 2.1: CM's sales data 2022-2023

Lead times for CM's products have increased from 4 weeks to 10 weeks. This has put additional pressure onto CM's engineers, who are salaried employees. They often have to work evenings and weekends.

Harry, the Sales Manager, thinks demand is going to continue to increase. He wants CM to employ more skilled engineers and continue to use job production. However, Joyce wants CM to invest in new technology and change from using job production to batch production.

(a)

Explain the term demand.

[ 3 ]

Explain the term demand.

Figure for Answer to Question (a) — CAIE A-Level Business AS

Indicative content

AO1 Knowledge and understanding

Knowledge of demand ${ }^{\kappa}$ may include:

- the number of consumers willing to pay at a given price

- the quantity of a product that consumers are willing/(and able) to buy at a given price (in a specific time period).

2(a)(ii)

AO2 Application

Limited application ${ }^{\Delta^{\mathrm{FP}}}$ applies knowledge of demand to one of the below

Developed application ${ }^{\mathrm{AFP}}+{ }^{\mathrm{AFP}}$ applies knowledge of demand to two of the below

Can change as a result of a change in any of the following factors:

- consumer incomes

- prices of substitute goods and complementary goods

- population size and structure

- fashion and taste

- advertising and promotion

Can affect:

- pricing

- production

- Examples of demand

Accept all valid responses.

(b)

Refer to Fig. 2.1. Calculate the total market growth between summer 2022 and summer 2023.

[ 3 ]

All question bank results loaded

Covered syllabus points

Question 1

Question 2

Question 3

Question (a)

Question (b)