2(d)
Level
AO1 Knowledge and
AO2 Application
AO3 Analysis
AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks
1
1 mark
1 mark
1 mark
1-2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to the that identifies connections
- A judgement/ and/or factor(s) is used to business context. between causes, impacts conclusion is made answer the question. and/or consequences. with limited supporting comment/ evidence.
- An attempt is made to balance the arguments.
0
0 marks
0 marks
0 marks
0 marks
No creditable response.
No creditable response.
No creditable response.
No creditable response.
Indicative content
AO1 Knowledge and understanding
Knowledge of changing elements of the marketing mix (max 2□ s ), including:
- The marketing mix (four Ps)
- Product: new, adapt etc, including knowledge of product portfolio analysis (eg PLC, Boston Matrix)
- Price: maintain, increase, reduce etc.
- Place: new channels, new distribution methods etc.
- Promotion: advertising, digital, direct etc.
AO2 Application
Limited application applies knowledge of the marketing mix to MXB's product life cycle of mountain bikes once. Developed application □ applies knowledge of the marketing mix to MXB's product life cycle of mountain bikes twice.
- Market leader for mountain bikes
- Sales revenue for mountain bikes fell by 12% over the past year
- MXB has traded successfully for 15 years
- Public limited company / shares sold publicly
2(d)
Use of Fig 2.1
- Market/demand for mountain bikes is currently static
- Mountain bikes are currently sold in specialist bicycle shops
AO3 Analysis
Limited analysis - candidate shows one link in the chain of analysis.
Developed analysis - candidate shows two or more links in the chain of analysis.
- Increased promotion - promotions can be expensive and may have minimal impact if the market has reached the maturity stage of the product life cycle and/or other rivals are spending a lot on promotions. Promotions will offer a short-term boost to demand and can increase brand recognition, thereby supporting sales of other types of bikes
- New models could be introduced - updating the mountain bike range may stimulate new sales. However, the R&D involved with developing new products could be expensive, and the additional sales may not justify the expenditure.
- New brands could be created to help reposition the products.
- The price of the mountain bikes could be changed to help stimulate the demand. The pricing strategy could be changed, e.g. if a price skimming approach is used the price could be lowered, or a promotional price discount offered to generate a short term boost in demand. Although the sales revenue generated for every product sold will reduce, the reduction should lead to increased demand which will increase market share and may boost profitability if a large enough increase in the volume sold is achieved.
- New markets could be targeted, e.g. new market segments and/or new geographic areas. MXB could sell its mountain bikes to additional countries.
- The mountain bikes are currently sold in specialist bicycle shops. MXB could sell its mountain bikes in additional shops and/or online.
AO4 Evaluation
Annotate evaluative judgements in the left -hand margin and evaluative comments in the right-hand margin.
Limited evaluation □ unsupported judgement and/or a weak attempt at evaluative comment
Developed evaluation □ supported judgement and/or reasonable evaluative comment Developed evaluation in context supported judgement in context and/or reasonable evaluative comment in context.
- The most appropriate extension strategy depends on the budget available. After spending money to develop and launch the new range of scooters the business may not have as much finance available.
- Will demand for mountain bikes fall in the future? Is the static demand for the product generally a sign that the product has entered the maturity phase of the product life cycle?
- Should MXB focus its resources on electric scooters as this market is expanding?
2(d)
- Is market share the most important measure of success, or is profitability and/or spreading risk from a diversified
product portfolio more important?
- The extension strategy may generate a short-term boost to sales/market share, but will it be sustained in the long-
term?
- Does the MXB brand extend from mountain bikes to electric scooters?
Accept all valid responses.
Exemplar and annotations
MXB could reduce the price - of their mountain bikes, which may lead to an increase in sales □ However, since MXB's
consumers are high-income leisure users □, a lower price may damage the brand image.
Alternatively, MXB could expand their distribution channels and sell in more places than a limited number of specialist
bike shops -- for example through their own website.
Overall, the better solution would be to change the distribution channels as this would be unlikely to damage the brand
reputation. MXB already has the highest market share, so it has the most to lose by reducing price, but very little lose
by selling on their own website □.
However, whether this is enough may depend on the actions of the competitors. If PE, the second largest producer,
reduces its price, then MXB may have no choice but to also lower their prices to maintain their market share □
AO1 - 2 marks
AO2 - 2 marks
AO3 - 2 marks
AO4 - 6 marks
TOTAL - 12 marks