Explain Edexcel Business product differentiation by linking distinctive features, USP, quality, innovation and target-market appeal to competitiveness, demand and costs.
Sources for use with Extract A The Ice Cream Market The global ice cream market value is expected to reach $89bn by 2023 and is attracting many new businesses to the market. Unilever dominates the global market with a 22% share. It owns 8 of the 15 top selling brands. Its brands include Magnum, Cornetto and Ben & Jerry’s. Nestlé is Unilever’s closest rival having 4 brands in the top 15. The sales of low‑quality ice cream have been declining, due to the increased demand for premium ice cream. There are many factors contributing to the growth of the ice cream market. These include innovative flavours and the rise in incomes. Niche markets are developing to cater for an increase in demand for organic and naturally sweet desserts. There is an increase in demand for ice cream from consumers above the age of 50. Extract B Oppo Ice Cream Everyone loves ice cream. We all know it is a delicious treat but know it is not a healthy one. However, a business called Oppo has created an ice cream with 60% fewer calories and less sugar than standard ice cream. Oppo claims that one portion of its ice cream contains fewer calories than an apple. Brothers Charlie and Harry Thuillier came up with the idea while on holiday in Brazil. When they returned home, Charlie left his graduate job to dedicate himself full‑time to developing a healthier ice cream. During their primary market research the brothers used two methods, interviews and product trials. They interviewed people who worked in the ice cream industry including a leading industry professional named Gary Martin who had worked on the Häagen‑Dazs ice cream brand. After months of experimenting with different recipes, Charlie and Harry developed a winning recipe that replaced cream and sugar with fresh milk, coconut oil and stevia leaf. Oppo initially conducted product trials in a few supermarkets to test if the product would sell, and now the ice cream is stocked in over 1,600 UK stores. After two years of hard work in Harry’s kitchen the brothers had achieved what they set out to do. Even though they were told by some industry professionals that they would not succeed, the pair persevered and their determination paid off. The business is now continuing to grow and is expanding internationally.
Discuss the importance of product differentiation to the success of Oppo.
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
- Product differentiation is the process of distinguishing a product or
service from others, to make it more attractive to a target market
- Oppo has created an ice cream with 60% fewer calories and less
sugar than standard ice cream. Oppo claims that one portion of its
ice cream contains fewer calories than an apple - this may
differentiate them from competition and increase revenue
- It is important that Oppo differentiates its products because the
market is competitive with dominant brands and market leaders
such as Unilever and Nestlé
- The sales of low-quality ice cream have been declining, due to the
increased preference for premium ice cream. To build its brand it
is important that Oppo makes its ice cream different to stand out
in the market
- There is also an increase in demand for organic and naturally
sweet desserts due to changing social trends. Oppo uses
ingredients such as coconut oil and stevia leaf which may help
create a USP and attract new customers
- However, there are many other factors that will contribute to the
success of Oppo
- Oppo is competing with well established brands and are unlikely to
have the marketing budget and distribution channels of the major
brands. These factors are necessary to ensure Oppo succeeds and
is able to compete in the market
- It is also important that the ice cream tastes good to encourage
repeat purchase and brand loyalty. Oppo must ensure it meets the
needs of consumers by offering innovative flavours to appeal to
new segments such as the over 50's
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
Isolated elements of knowledge and understanding - recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2
3-5
Accurate knowledge and understanding.
Applied accurately to the business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s) but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced and unlikely to show the significance of competing arguments.
Level 3
6-8
Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or qualitative information, and shows an awareness of competing arguments/factors.
Question
Indicative content