Practise Edexcel Business questions on global marketing, adapting products and promotion for international customers and cultural contexts.
Source for use with Extract E Becoming a global brand with local tastes The challenge for many brands is finding the right balance between maintaining global standards of quality and presentation, while still retaining the flexibility to adapt to local preferences. Finding this balance will be especially important for many global brands. For some products the objective maybet, to educate the consumer and the world into same in India as they do in Iceland. However, when it comes to food every home has a preference. Häagen-Dazs started as a simple ice-cream delivery business in New York in 1961 with only three flavours, chocolate, vanilla and coffee. Since then it has become a global brand, working with many distinct local markets and introducing new flavours and innovative ways of connecting the product with the consumer. For example, green tea ice-cream, which in US and European markets is still a niche product, is consistently among its most popular flavours in Asian markets. In Singapore and Malaysia, on account of the climate, there has always been strong ligheetsher flavours and refreshing sorbets and Häagen-Dazs' product mix
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- A global brand is recognised across several different countries and
continents
- A local approach means adapting some part of the marketing mix to cater
for local differences in taste/culture
- McDonald's and Starbucks adapt their menus to suit local tastes such as no
beef in India and the McAloo Tikki burger. Kit-Kat alters the flavours and
type of chocolate to suit different markets
- Taking local preferences into account means that many potential sales
may be gained as the product/marketing is more likely to appeal to local
tastes
- This is also likely to give a business a competitive advantage over rivals
who may not have followed such a policy
- It may cost more to research and adapt to local tastes but the potential
gains from increased sales may outweigh these extra costs
- For some businesses having the same global business model is simply not
an option such as McDonald's beef burgers cannot be used in India
- However, some products and services are universal and therefore little or
no adaptation to social and cultural differences is needed when trading
internationally - Sony/Apple/Ferrari
- Not having to adapt to local differences when trading internationally saves
time and money in researching and adapting to the demands of individual
markets
- A standardised product gains recognition and becomes known on a global
scale such as Coca-Cola's bottle/red and white lettering
- This builds consumer loyalty and encourages repeat purchases and is a
source of competitive advantage
- Attempting to localise a product may actually damage the brand as
consumers may prefer the 'western brand' or the image that goes with it
- such as fashion brands like Gucci, McCartney
- Nevertheless, by using some local elements, a business can get the best of
both worlds - the power and protection of a global brand such as
Häagen-Dazs and the precise targeting of local tastes to maximise sales
- Much will depend on the product or service and it is more likely that food
eech hore productor will need to be more aware of local preferences than
| Level | Mark | Descriptor |
|---|---|---|
| 0 | No rewardable material. | |
| Level 1 | 1-4 | Isolated elements of knowledge and understanding. Weak or no relevant application of business examples. An argument may be attempted, but will be generic and fail to connect cause(s) and/or consequence(s)/effect(s). |
| Level 2 | 5-8 | Elements of knowledge and understanding, which are applied to the business example. Arguments and chains of reasoning are presented but connections between cause(s) and/or consequence(s)/effect(s) are incomplete. Attempts to address the question. A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation. |
| Level 3 | 9-14 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses developed chains of reasoning, so that cause(s) and/or consequence(s)/effect(s) are complete, showing an understanding of the question. Arguments are well developed. Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion. |
| Level 4 | 15-20 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses well-developed and logical, coherent chains of reasoning, showing a range of cause(s) and/or effect(s). Arguments are fully developed. Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendation(s). |
Source for use with
Extract G
Starbucks increases efforts to compete for market share in China
In the past decade, the number of Starbucks stores in the Chinese mainland increased nearly ten times, and it will reach 6,000 by the end of 2022. Faced with pressure from competitors such as Luckin Coffee and Tims China, Starbucks has been changing its strategy for tackling the country’s domestic market. By 2025, it plans to open 3,000 new stores, covering 300 cities in China, at an average rate of one new store every nine hours. In addition to this, the business will make full use of its digital platform and continue to develop its delivery business. In 2022, orders for Starbucks’ products from mobile platforms in China accounted for 47% of its revenues, which mainly corresponded to the pick-up and food delivery businesses. At present, there are more than 5,000 exclusive delivery riders and it takes only 19 minutes on average to deliver Starbucks coffee to customers. By 2025, the business plans to double the sales volume of its delivery business. The sale of bottled coffee in supermarkets, is now seen as a way of increasing Starbucks’ revenue in the Chinese market. It plans to supply ready-to-drink coffee to 550,000 supermarkets and convenience stores by 2025. Coffee-related goods and gifts are also expected to help achieve an annual growth rate of 30% in sales with the help of e-commerce channels.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make but this does not imply that any of these must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Place is one of the 4 Ps in the marketing mix and refers to how the
customer accesses and buys the product or service
- It covers not just where the purchase takes place but the channels used to get the product to the customer and the means by which the
customer buys the product
- Increasingly, this involves a digital platform rather than a physical
outlet
- Starbucks started as a single shop in Seattle but has expanded all over the globe
- It is still expanding its physical outlets, with 3,000 new ones planned in
China over the next three years. So place, in the physical sense, is still
a crucial part of Starbucks' marketing strategy
- In order to compete for market share against competitors such as
Luckin Coffee, Starbucks is developing its digital platform and growing
its online business, another way (or place) in which customers can buy
its products
- It plans to double the sales of its delivery business by 2025 and
increase online sales by an annual 30%
- Another change in its strategy is to supply bottled and canned coffee to over 550,000 supermarkets and stores by 2025, thus giving customers yet another way to buy
- It would seem therefore that for Starbucks, place is a crucial part of both its marketing strategy and marketing mix
- However, this does not mean that other factors are not important in its growth strategy
- Unless the product is perceived by customers to be of good quality they will not buy it in preference to Luckin Coffee or other rivals, therefore
Starbucks needs to make sure that the product appeals to consumers
- If the expansion into the supermarkets is to be successful they will have to develop the right type of canned and bottled drinks that will appeal to consumers, this again shows the importance of the product
- Even if the product is what the consumers want, the price has to be set at the right level. China is a competitive market, if it is too high they will not sell and if it is too low it may not be profitable
- The final 'P' of promotion is also important because unless potential
customers are aware of the range of products and services that
Starbucks has to offer they will not buy them. Therefore Starbucks
must ensure that suitable promotional campaigns are in place
- From Starbucks' point of view it would seem that in China, place is the
most important factor but the other 3 Ps are also important
- For other global businesses it will depend on what they are trying to achieve, the nature of their products and the market they are operating
in
| Level | Mark | Descriptor |
|---|---|---|
| 0 | No rewardable material. | |
| Level 1 | 1-4 | Isolated elements of knowledge and understanding. Weak or no relevant application of business examples. An argument may be attempted but will be generic and fail to connect causes and/or consequences. |
| Level 2 | 5-8 | Elements of knowledge and understanding, which are applied to the business example. Arguments and chains of reasoning are presented but connections between causes and/or consequences are incomplete. Attempts to address the question. A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation. |
| Level 3 | 9-14 | Accurate knowledge and understanding, supported by relevant and effective use of the business behaviour/context. Uses developed chains of reasoning, so that causes and/or consequences are complete, showing an understanding of the question. Arguments are well developed. Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion. |
| Level 4 | 15-20 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses well-developed and logical, coherent chains of reasoning, showing a range of causes and/or effect(s). Arguments are fully developed. Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendations. |
Source for use with Extract D Here are four big opportunities Harley-Davidson will tackle in the future Harley-Davidson is an American manufacturer of large, powerful motorcycles designed for use on the American highways. However, the motorcycle market in the US has been declining for years. Young Americans are not buying motorcycles as they used to and there are now fewer young riders. Harley-Davidson is considering a new global strategy and is developing several key areas. The brand has a loyal and committed global following. It will continue to produce the large and profitable motorcycles that have made it a worldwide icon. At the same time, it is developing a range of lighter, middle-weight motorcycles to compete with the likes of Ducati and Japanese manufacturers in the US and European markets. Overseas, it will focus on Asia and especially India, where the motorcycle market is expected to experience considerable growth in the coming years. The problem is that although motorcycles are a favoured form of transportation there, people prefer much smaller bikes than Harley-Davidson currently makes. So it plans to set up overseas partnerships with Asian companies to manufacture and sell new smaller motorcycles in the profitable Asian markets. Harley-Davidson has also developed an electric motorcycle which went on sale in 2019. Like electric cars, electric motorcycles have not yet experienced rapid growth in the key markets of the US and Europe. The overall market is small but expected to grow. Electric motorcycles should also be poised for growth in Asia, notably China, where the government is backing electrification.
Evaluate the usefulness of Ansoff's matrix for a business such as Harley-Davidson, when developing a global marketing strategy.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Ansoff's matrix is a tool designed to highlight the elements of a
business strategy that will lead to growth and the development of a
successful business portfolio
- It divides a business on the basis of the products it has or could have
and the markets it has or could have
- It indicates the relative risk of the options and can guide decision
making
- By concentrating on its existing big bikes it is following a market
penetration strategy
- This is the least risky option because it is profitable and has loyal
global customers but is unlikely to lead to high future growth
- By producing smaller middle-weight bikes it can increase market share
in the US and Europe, this is product development
- This is slightly riskier, as although Harley-Davidson has expertise in bike
production it faces established competition from Ducati and the
Japanese manufacturers
- Market development is a possibility that Harley-Davidson has rejected
as the new and rapidly growing markets do not want their existing
products
- This leaves diversification, the riskiest strategy of all, with new
products and new markets
- Harley-Davidson is following this with its new bikes and joint ventures in
the Asian markets. It does not have the expertise yet to manufacture
smaller bikes and working with a partner can be fraught with
problems, particularly in Asia
- Harley-Davidson is also developing a completely electrically powered
bike which may or may not be successful. It has to overcome
consumer resistance and the risk of China being more successful with
its own electric motorcycles
- However, Ansoff is only a theoretical and simplistic tool that takes no
account of changing economic and market conditions
- It does not take into account the actions of competitors that will react
to Harley-Davidson's strategy and develop their own plans
- While Ansoff's matrix may be a starting point on which to base a
strategy, it cannot be used alone to justify the decision that is made
- Much more research is needed into market conditions and consumer
preferences
| Level | Mark | Descriptor |
|---|---|---|
| 0 | No rewardable material. | |
| Level 1 | 1-4 | Isolated elements of knowledge and understanding. Weak or no relevant application of business examples. An argument may be attempted, but will be generic and fail to connect cause(s) and/or consequence(s)/effect(s). |
| Level 2 | 5-8 | Elements of knowledge and understanding, which are applied to the business example. Arguments and chains of reasoning are presented but connections between cause(s) and/or consequence(s)/effect(s) are incomplete. Attempts to address the question. A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation. |
| Level 3 | 9-14 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses developed chains of reasoning, so that cause(s) and/or consequence(s)/effect(s) are complete, showing an understanding of the question. Arguments are well developed. Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion. |
| Level 4 | 15-20 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses well-developed and logical, coherent chains of reasoning, showing a range of cause(s) and/or effect(s). Arguments are fully developed. Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendations. |
Source for use with Extract D Australian farmers turn to global niche markets From banana flour to organic milk, innovative Australian farmers are taking advantage of the rise of valuable global niche markets due to more health-conscious shoppers. In the north of Australia, banana grower Krista Watkins was concerned with the 500 tonnes of wasted green bananas being dumped from local farms every week. Then came the idea to establish the world’s first green banana processing facility which has now grown to three factories producing 50 different products. “We’re the first people in the world to commercialise banana flour,” Krista said. “We are gluten-free, vegan and Australian-made.” Other farmers’ waste products including sweet potatoes and broccoli are also being converted to powder as the processing operation grows. More than 3,000km further south, dairy farmers Graham and Melissa Clay have recently secured organic certification. The family farm has undergone a major change in the past three years as it gets rid of pesticides and herbicides once thought essential to dairy production. Australian Consolidated Milk general manager, Peter Jones, said that while organic dairy was once thought to be unprofitable, farmers could convert and take advantage of premium prices. “It is a niche market, but it is a niche market that’s growing not just in Australia, but globally,” he said. Converting to organic production can be expensive but organic milk offers a more stable price, with consumers happy to pay extra. About 0.7% (80,000,000 litres) of Australia’s milk is organic.
Evaluate whether or not a business benefits by operating in a global niche market.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- A global niche market is a smaller segment of a larger global market
with special characteristics such as specialised products/services often
commanding premium prices and having a low PED
- Products/services such as banana flour and organic milk are likely to
have a high degree of added value and therefore command a
premium price increasing profitability
- Consumer demand in a niche market, particularly by health-conscious
customers, can be more price inelastic, which may enable a higher
price to be charged
- Competition in niche markets is usually low, only 0.7% of milk in
Australia is organic, with brand loyalty and product differentiation
reducing direct competition
- Targeting very specific tastes and cultures is more likely to gain
customer satisfaction and loyalty and gain a competitive advantage
- Smaller markets allow a business to develop more effective marketing
and sales strategies, thereby boosting sales and profitability
- Closer relationships with customers are possible increasing brand
loyalty and enabling products/services to be more precisely targeted to
customers
- However, businesses in niche markets can rely too much on one
area/product/service which can be adversely affected by changes in
tastes
- Some niche markets are based on fads or the latest trends, although
demand is increasing it may not last
- Although niche markets have less competition, they are not
monopolies and competition may increase as other producers see the
advantages of producing banana flour and organic milk
- Global niche markets are limited in size and may not permit expansion
or the ability to reap the full benefits of economies of scale
- If a business becomes too successful, it may run the risk of being taken
over by a larger company - such as Green & Blacks and Cadbury
- Over time, niche markets can expand and become mass markets and
so a business can lose the advantages of being a niche producer
| Level | Mark | Descriptor |
|---|---|---|
| 0 | No rewardable material. | |
| Level 1 | 1-4 | Isolated elements of knowledge and understanding. Weak or no relevant application of business examples. An argument may be attempted, but will be generic and fail to connect causes and/or consequences. |
| Level 2 | 5-8 | Elements of knowledge and understanding, which are applied to the business example. Arguments and chains of reasoning are presented but connections between causes and/or consequences are incomplete. Attempts to address the question. A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation. |
| Level 3 | 9-14 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses developed chains of reasoning, so that causes and/or consequences are complete, showing an understanding of the question. Arguments are well-developed. Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion. |
| Level 4 | 15-20 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses well-developed and logical, coherent chains of reasoning, showing a range of cause and/or effect(s). Arguments are fully developed. Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendations. |
Sources for use with
Extract A
Peru clothing industry welcomes tariff barrier to block large increase in clothing imports
A report by the Peruvian competition authority said that imports of clothing into Peru rose by 254% between 2016 and 2020. As a result, imports have increased their share of the Peruvian clothing market to 13.4%. The report warns that there is a danger of damage to the domestic clothing industry and urges the government to increase tariffs on imports. The clothing industry employs over 420,000 people and is 8% of Peru’s manufacturing output.
Extract B
Branding lessons from Inca Kola, the Peruvian fizzy drink that beat Coca-Cola
Anyone who has visited Peru is aware of the passion that Peruvians have for Inca Kola. With its yellow-gold colour, sweet flavour and secret formula, this fizzy drink is one of the few soft drink brands more popular than Coca-Cola in their home market. Currently, Inca Kola is the market leader in Peru with 26% of soft drink sales, closely followed by Coca-Cola, with 25.5%. Coca-Cola now owns Inca Kola but has found it difficult to sell the Peruvian cola into global markets. One of the challenges for Coca-Cola is the distinctive smell, taste and colour of Inca Kola. Although very popular in Peru, it has not become popular with foreign buyers who seem to prefer black colas to yellow colas. 5 5 10
3
Extract C
How Peru became one of the biggest markets for Foreign Direct Investment (FDI) in South America
Peru has a stable economy with strong growth. In the first quarter of 2021, Peru attracted $3.47bn of FDI, more than all of Peru’s FDI in 2020. The World Bank predicts its GDP will grow by 3.9% in 2022 and that it will be the second-fastest growing economy in South America. Peru has 21 Free Trade Agreements (FTAs) in force. In addition, it has 28 investment agreements with countries including Canada, Brazil, Chile, Japan and Switzerland. Peru has a low public debt to GDP ratio and is predicted to have the second-lowest inflation rate in South America. It has a good infrastructure and a supportive government with a stable legal framework. All this has made Peru a prime location for FDI, particularly in renewable energy, manufacturing, food, tourism, retail and technology. The average salary for an employee in Peru increases by 9% every 17 months. The global average is 3%.
Extract D
Remittances*: the hidden engine of globalisation
According to the World Bank, the number of people in the world who live outside the country where they were born has risen from 153 million in 1990 to 270 million in 2020. It is estimated that these migrants from around the world will send a combined $689bn back home. For the first time these remittances will overtake foreign direct investment (FDI) as the biggest inflow of funds to developing countries. The large difference in income between developed and low-income countries means that job opportunities abroad will continue to be attractive. The World Bank expects another 550 million people to become migrant workers by 2030. The global trend is towards more migration, not less and the push from poor countries will be met by a pull from the rich ones. *A remittance is the term used for money that migrants send back to their home country
Discuss the importance of different tastes and preferences for a global business.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of the
points that candidates may make but this does not imply that any of these must
be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Different countries have different tastes and preferences and a global
business may need to adapt its products to match them
- Some countries are different, perhaps because of religious beliefs.
McDonalds does not sell beef products in India and its menus are
adapted around the world to suit local tastes
- Other countries have different rules and regulations. Some foods from
the US are banned in the EU because they contain certain additives or
processes that do not comply with EU food standards and must be
adapted before export
- Adapting to local preferences and tastes is likely to increase sales,
increase brand loyalty and increase competitiveness, which for many
businesses is essential
- Some products by their very nature are unlikely to sell well overseas.
Inca Kola has struggled to overcome a preference for black colas
elsewhere
- However, some countries are similar in nature and products pass easily
between them such as the UK and Ireland
- Some products are universal in appeal and desirable on a global basis
such as designer goods
- Electronic goods with some allowance for different leads and electrical
power supplies are easily adapted
Level
Mark
Level 0
Level 1
1-2
Level 2
3-5
Level 3
6-8