Edexcel IAL Business AS 1.3.1

[Maximum number: 20]

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.

(a)

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.

Define the term 'niche market'. (Extract A, line 8)

[ 2 ]

(b)

Discuss the importance of product differentiation to the success of Oppo.

[ 8 ]

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.

(c)

During its market research, Oppo used two primary research methods, interviews and
product trials.
Assess the advantages to Oppo of using these methods when developing
its brand.

[ 10 ]

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
Primary market research is new data collected, which is specific to the
needs of the business. It is referred to as field research.
- Interviews with ice cream professionals such as Gary
Martin who had worked on the Häagen-Dazs product
range may have helped give Oppo an insight into the
ice cream market. This advice may have helped the
brothers avoid pitfalls in the industry
- Product trials have allowed Oppo to assess the products to
determine the potential success of the ice cream. Oppo was
able to gather feedback and make changes to the ice cream
before launching on a larger scale and so preventing costly
mistakes
- Selling in a few supermarkets enabled them to gather sales
data to assist with production planning for potential future
demand.
- However, using interviews may result in biased results. Many
experts told the brothers that they would not succeed in the
industry. If they had listened to this advice, they may not have
produced their winning recipe
- A disadvantage of product trials is the cost which can be
expensive and time consuming
- Selling in only a limited number of supermarkets may have
delayed the launch of new products which may mean losing
first-mover advantages
- During product trials Oppo may have run the risk of
competitors learning about their products which may be copied
and brought to the market earlier
- Results from test marketing may not be conclusive and
do not always predict success. Products that sell locally
may not sell well in other geographical areas, as
findings from the trials may not be representative of
other groups of customers

Level

Mark

Descriptor

0

A completely inaccurate response.

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

3-4

Elements of knowledge and understanding, which are applied to the business example.

Chains of reasoning are presented,but may be assertions or incomplete.

A generic or superficial assessment is presented.

Level 3

5-7

Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s).

An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.

Level 4

8-10

Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

A coherent and logical chain of reasoning, showing cause(s) and/or effect(s).

Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

[Maximum number: 10]

Sources for use with Section A

Extract A

Fresh food from small farms

Farmhopping is an online retailing service, started by Rossi Mitova, which lets small farms in Bulgaria sell their products directly to customers. Rossi started the business when a local farmer, who was struggling with rising farming costs and competition from larger farms, asked her for help.

Farmhopping is now a successful business that employs 15 people and allows people to shop online for fresh food from more than 100 small farms across Bulgaria. The online service enables the farmers to get a fair price for their produce and reduces the need to sell to intermediaries such as wholesalers and supermarkets. Farmers pay a fee to Farmhopping for using the website.

To sell on the Farmhopping website, farmers must share the same social objectives as Farmhopping. Farmers must support environmentally friendly farming methods such as not using chemicals and pesticides, ensuring fair treatment of farm animals and respecting the landscape and wildlife. Food sold on the website must be fresh, natural and organic and packaged using recyclable materials.

In 2017, Rossi Mitova was recognised as one of the top 100 women entrepreneurs and Forbes magazine included her in its social entrepreneurship awards.

Extract B

About Rossi Mitova

Rossi has always been inspired by challenging what she saw and taking action. When she was asked to help save the small farm in Bulgaria that was struggling to survive, it gave Rossi a perfect opportunity to combine her biggest passions, which were nature, food and business. Rossi worked hard to create the Farmhopping website and convince farmers to use her online service.

In an interview Rossi said, “The most challenging parts of starting the business were learning to deal with the uncertainty and to be a good leader. I have worked hard at selecting the right team and motivating them while ensuring we are true to the social objectives of Farmhopping. I have made many mistakes on the way but learn from my mistakes. I always listen to the feedback from others and work hard on continually improving the business. The one thing I am most proud of is that I never give up despite the many setbacks and challenges I have faced in business.”

(a)

Extract B

About Rossi Mitova

Rossi has always been inspired by challenging what she saw and taking action. When she was asked to help save the small farm in Bulgaria that was struggling to survive, it gave Rossi a perfect opportunity to combine her biggest passions, which were nature, food and business. Rossi worked hard to create the Farmhopping website and convince farmers to use her online service.

In an interview Rossi said, “The most challenging parts of starting the business were learning to deal with the uncertainty and to be a good leader. I have worked hard at selecting the right team and motivating them while ensuring we are true to the social objectives of Farmhopping. I have made many mistakes on the way but learn from my mistakes. I always listen to the feedback from others and work hard on continually improving the business. The one thing I am most proud of is that I never give up despite the many setbacks and challenges I have faced in business.”

Define the term ‘uncertainty’. (Extract B, line 8)

[ 2 ]

(b)

Discuss the advantages for small businesses, such as the farms in Bulgaria, of using an online retailing service to sell their products.

[ 8 ]

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

• Online retailing is the sale of goods and services using the
internet.
• Farmhopping is an example of an online retailing service which
allows farmers in Bulgaria to sell farm produce directly to
customers using a website.
• The advantage to a business is that because they are not selling
to supermarkets or wholesalers, they may be able to increase
their profit margins.
• Selling directly to consumers may help them receive a fair price
for their products and help them survive in business.
• Small businesses may not require a physical shop to sell their
products which reduces operational costs.
• Farmers can provide fresh produce directly to homes and small
businesses. They may build up a good reputation with these
customers and encourage customer loyalty and repeat purchase
to enable them to compete against the larger farms.
• However, the farmers have to pay a fee to Farmhopping which
increases the business costs and reduces profit margins.
• If the website is not reliable and/or connectivity is poor this will
impact the service and discourage customers from using it.
• The costs of distribution may be higher for a small business due
to the need to manage a high volume of smaller orders rather
than larger orders direct to supermarkets and wholesalers.

Level		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.

[Maximum number: 18]

Sources for use with Section B

Extract C
Airline Companies in the Middle East

Over the past 10 years airline companies based in the Middle East have significantly increased the number of passengers they carry each year. Competitors, Emirates, Etihad Airways and Qatar Airways have attracted travellers with competitive pricing, superior service and luxurious premium cabins. Whilst passenger numbers are increasing, these airlines are facing competition from low-cost airlines, such as Norwegian Air Shuttle and Singapore-based Scoot. These airlines are attracting customers with low-priced fares on some of the same routes. Total passengers carried (m)

Emirates Etihad Qatar Airways Years

Extract D
Emirates: Our story

We started operations in 1985 in Dubai with two aircraft and we have increased the number of aircraft and destinations each year. Today, with more than 265 aircraft, we fly to 155 destinations in 80 countries. We provide industry-leading inflight entertainment, excellent inflight food and world-class customer service. We are known all over the world for our commitment to quality, which we continually seek to improve. Our achievements in 2017 included:
• Three new destinations; Newark in the US, Phnom Penh in Cambodia and Zagreb in Croatia
• Our advertising campaign for our improved first-class service, using television celebrity and motoring expert Jeremy Clarkson
• We became the world’s first airline with one million followers on the social media site Instagram. This helps us to monitor the experiences and feedback from our customers
• In a recent study of the top 100 brands most visible on social media, we were ranked fifth after McDonald’s, Nike, Adidas and Coca-Cola.

Extract C: total passengers carried by Emirates, Etihad and Qatar Airways

(a)

Discuss how competition in the airline market may affect customers.

[ 8 ]

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.

Quantitative skills assessed:
QS9 Interpret, apply and analyse information in written, graphical and
numerical forms
Knowledge, Application, Analysis, Evaluation – indicative content
•
Competition is the rivalry among sellers trying to achieve goals such as
increasing profits, market share, and sales volume.
•
Competitors include Etihad Airways and Qatar Airways as well as low-
cost airlines, such as Norwegian Air Shuttle and
Singapore-based Scoot.
•
Emirates, Etihad and Qatar Airways have all increased the number of
passengers since 2006 so consumers benefit from more flight
destinations and a choice of carriers.
•
Competition also encourages businesses to improve the quality of
goods and services they sell – to attract more customers and expand
market share. Emirates offer good quality food and inflight
entertainment and have improved their first-class service.
•
When firms compete with each other consumers often get the best
possible prices. There is competition from Norwegian Air Shuttle and
Scoot, which are attracting customers with low priced fares. This may
lead to larger airlines reducing their prices in order to compete.
•
However, the low budget airlines are competing mainly on price. If
price of airline tickets becomes a key factor then the larger airlines
may also have to reduce prices. This may impact the quality of the
service provided in order to reduce costs of the business.
•
The increase in the number of airlines may cause congestion in and
around airports and long queuing times for services such as airport
security for all customers.
•
The costs associated with airlines are high. It may be that, in the long
term, smaller airlines such as Norwegian Air Shuttle find it difficult to
compete with larger airlines. The smaller airlines may be forced out of
the market leaving larger airlines the option of increasing prices.

Level

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.

(b)

Assess the extent to which market mapping may have been useful to Emirates in growing its business.

[ 10 ]

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
•
Market mapping is a form of market positioning. It is the use
of a 2-dimensional diagram that plots products or services in
a market using two key variables.
•
Mapping is a simple, visual tool that can utilise a variety of
variables, and may have helped Emirates understand its
position in the airline market relative to competition.
•
It may have helped Emirates spot gaps in the market. It may
have seen an opportunity to provide better inflight
entertainment.
•
It is a useful method for analysing competition. Emirates may
have used a market map to compare prices and destinations
that competitors fly to. This may have led to new flights such
as to Phnom Penh being offered to extend its flight
destinations.
•
Mapping also identifies where the market is saturated due to
a high level of competition. Emirates may have avoided these
areas/destinations and focussed on ones that were more
viable/profitable.
•
However, market mapping has its limitations. A map might
identify a gap in the market, for example destinations not
flown to, but there may be a valid reason for the gap such as
low demand or flight restrictions.
•
The market map does not guarantee success; it is a simplistic
method to help visualise the market, but needs more in-
depth research on consumer preferences and tastes before
important decisions are made.
•
Mapping shows a snapshot in time and Emirates must also
consider the strategy of its competitors, such as Etihad, in
order to compete successfully.
•
There are many other factors which may have contributed to
the growth of Emirates such as effective management and
leadership, good financial control, good advertising and
favourable economic factors.

Level

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
3–4
Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented but may be assertions or
incomplete.
A generic or superficial assessment is presented.
Level 3
5–7
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4
8–10
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information, and shows an awareness
of competing arguments/factors, leading to a supported judgement.

[Maximum number: 2]

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.

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.

Define the term 'niche market'. (Extract A, line 8)

[Maximum number: 8]

Sources for use with Section A

Extract A

Fresh food from small farms

Farmhopping is an online retailing service, started by Rossi Mitova, which lets small farms in Bulgaria sell their products directly to customers. Rossi started the business when a local farmer, who was struggling with rising farming costs and competition from larger farms, asked her for help.

Farmhopping is now a successful business that employs 15 people and allows people to shop online for fresh food from more than 100 small farms across Bulgaria. The online service enables the farmers to get a fair price for their produce and reduces the need to sell to intermediaries such as wholesalers and supermarkets. Farmers pay a fee to Farmhopping for using the website.

To sell on the Farmhopping website, farmers must share the same social objectives as Farmhopping. Farmers must support environmentally friendly farming methods such as not using chemicals and pesticides, ensuring fair treatment of farm animals and respecting the landscape and wildlife. Food sold on the website must be fresh, natural and organic and packaged using recyclable materials.

In 2017, Rossi Mitova was recognised as one of the top 100 women entrepreneurs and Forbes magazine included her in its social entrepreneurship awards.

Extract B

About Rossi Mitova

Rossi has always been inspired by challenging what she saw and taking action. When she was asked to help save the small farm in Bulgaria that was struggling to survive, it gave Rossi a perfect opportunity to combine her biggest passions, which were nature, food and business. Rossi worked hard to create the Farmhopping website and convince farmers to use her online service.

In an interview Rossi said, “The most challenging parts of starting the business were learning to deal with the uncertainty and to be a good leader. I have worked hard at selecting the right team and motivating them while ensuring we are true to the social objectives of Farmhopping. I have made many mistakes on the way but learn from my mistakes. I always listen to the feedback from others and work hard on continually improving the business. The one thing I am most proud of is that I never give up despite the many setbacks and challenges I have faced in business.”

Discuss the advantages for small businesses, such as the farms in Bulgaria, of using an online retailing service to sell their products.

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

• Online retailing is the sale of goods and services using the
internet.
• Farmhopping is an example of an online retailing service which
allows farmers in Bulgaria to sell farm produce directly to
customers using a website.
• The advantage to a business is that because they are not selling
to supermarkets or wholesalers, they may be able to increase
their profit margins.
• Selling directly to consumers may help them receive a fair price
for their products and help them survive in business.
• Small businesses may not require a physical shop to sell their
products which reduces operational costs.
• Farmers can provide fresh produce directly to homes and small
businesses. They may build up a good reputation with these
customers and encourage customer loyalty and repeat purchase
to enable them to compete against the larger farms.
• However, the farmers have to pay a fee to Farmhopping which
increases the business costs and reduces profit margins.
• If the website is not reliable and/or connectivity is poor this will
impact the service and discourage customers from using it.
• The costs of distribution may be higher for a small business due
to the need to manage a high volume of smaller orders rather
than larger orders direct to supermarkets and wholesalers.

Level		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.

[Maximum number: 8]

Sources for use with Section B

Extract C
Airline Companies in the Middle East

Over the past 10 years airline companies based in the Middle East have significantly increased the number of passengers they carry each year. Competitors, Emirates, Etihad Airways and Qatar Airways have attracted travellers with competitive pricing, superior service and luxurious premium cabins. Whilst passenger numbers are increasing, these airlines are facing competition from low-cost airlines, such as Norwegian Air Shuttle and Singapore-based Scoot. These airlines are attracting customers with low-priced fares on some of the same routes. Total passengers carried (m)

Emirates Etihad Qatar Airways Years

Extract D
Emirates: Our story

We started operations in 1985 in Dubai with two aircraft and we have increased the number of aircraft and destinations each year. Today, with more than 265 aircraft, we fly to 155 destinations in 80 countries. We provide industry-leading inflight entertainment, excellent inflight food and world-class customer service. We are known all over the world for our commitment to quality, which we continually seek to improve. Our achievements in 2017 included:
• Three new destinations; Newark in the US, Phnom Penh in Cambodia and Zagreb in Croatia
• Our advertising campaign for our improved first-class service, using television celebrity and motoring expert Jeremy Clarkson
• We became the world’s first airline with one million followers on the social media site Instagram. This helps us to monitor the experiences and feedback from our customers
• In a recent study of the top 100 brands most visible on social media, we were ranked fifth after McDonald’s, Nike, Adidas and Coca-Cola.

Extract C: total passengers carried by Emirates, Etihad and Qatar Airways

Discuss how competition in the airline market may affect customers.

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.

Quantitative skills assessed:
QS9 Interpret, apply and analyse information in written, graphical and
numerical forms
Knowledge, Application, Analysis, Evaluation – indicative content
•
Competition is the rivalry among sellers trying to achieve goals such as
increasing profits, market share, and sales volume.
•
Competitors include Etihad Airways and Qatar Airways as well as low-
cost airlines, such as Norwegian Air Shuttle and
Singapore-based Scoot.
•
Emirates, Etihad and Qatar Airways have all increased the number of
passengers since 2006 so consumers benefit from more flight
destinations and a choice of carriers.
•
Competition also encourages businesses to improve the quality of
goods and services they sell – to attract more customers and expand
market share. Emirates offer good quality food and inflight
entertainment and have improved their first-class service.
•
When firms compete with each other consumers often get the best
possible prices. There is competition from Norwegian Air Shuttle and
Scoot, which are attracting customers with low priced fares. This may
lead to larger airlines reducing their prices in order to compete.
•
However, the low budget airlines are competing mainly on price. If
price of airline tickets becomes a key factor then the larger airlines
may also have to reduce prices. This may impact the quality of the
service provided in order to reduce costs of the business.
•
The increase in the number of airlines may cause congestion in and
around airports and long queuing times for services such as airport
security for all customers.
•
The costs associated with airlines are high. It may be that, in the long
term, smaller airlines such as Norwegian Air Shuttle find it difficult to
compete with larger airlines. The smaller airlines may be forced out of
the market leaving larger airlines the option of increasing prices.

Level

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.

[Maximum number: 2]

Extract A

The History of Nando's

Nando's is a fast-food restaurant chain started by Fernando Duarte and Robert Brozin in South Africa. It sells a range of spicy chicken and vegetarian dishes. Entrepreneurs Fernando and Robert took a risk and opened the first Nando's restaurant in 1987 after enjoying spicy chicken in a Portuguese restaurant. By the end of 1989 they had opened three more restaurants. Today, there are Nando's restaurants in most major cities around the world. All its restaurants have a trendy, fun and unique design by local designers and artists.

Extract B

Nando's Indian menu (selected items)

Table for Question 7 — Edexcel A-Level Business AS

Extract C

Employees at Nando's

Employees who work at Nando's are called Nandocas. Nando's employees are seen as family members and it aims to treat them as an asset to the business. It states, 'Nando's is not just about the chicken, it's about the people that make the chicken.' In 2022 Nando's was named as one of the UK's best large companies to work for. In South Africa, Nando's has a programme called Harambee that recruits young unemployed people and gives them skills to prepare them for the workplace. Nando's uses a training programme called Buddy. A buddy is an employee who has completed all job roles in the business. Buddies supervise new employees to pass on their knowledge and skills.

Extract D

Market research at Nando's

Before opening stores in China, Nando's conducted primary market research to understand Chinese food preferences and dining habits. Two hundred surveys were carried out with Chinese chefs, restaurant owners and managers. A random sampling survey method was used to conduct the primary market research.

Extract A

The History of Nando's

Nando's is a fast-food restaurant chain started by Fernando Duarte and Robert Brozin in South Africa. It sells a range of spicy chicken and vegetarian dishes. Entrepreneurs Fernando and Robert took a risk and opened the first Nando's restaurant in 1987 after enjoying spicy chicken in a Portuguese restaurant. By the end of 1989 they had opened three more restaurants. Today, there are Nando's restaurants in most major cities around the world. All its restaurants have a trendy, fun and unique design by local designers and artists.

Define the term 'risk'. (Extract A, line 4)

[Maximum number: 10]

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.

During its market research, Oppo used two primary research methods, interviews and
product trials.
Assess the advantages to Oppo of using these methods when developing
its brand.

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
Primary market research is new data collected, which is specific to the
needs of the business. It is referred to as field research.
- Interviews with ice cream professionals such as Gary
Martin who had worked on the Häagen-Dazs product
range may have helped give Oppo an insight into the
ice cream market. This advice may have helped the
brothers avoid pitfalls in the industry
- Product trials have allowed Oppo to assess the products to
determine the potential success of the ice cream. Oppo was
able to gather feedback and make changes to the ice cream
before launching on a larger scale and so preventing costly
mistakes
- Selling in a few supermarkets enabled them to gather sales
data to assist with production planning for potential future
demand.
- However, using interviews may result in biased results. Many
experts told the brothers that they would not succeed in the
industry. If they had listened to this advice, they may not have
produced their winning recipe
- A disadvantage of product trials is the cost which can be
expensive and time consuming
- Selling in only a limited number of supermarkets may have
delayed the launch of new products which may mean losing
first-mover advantages
- During product trials Oppo may have run the risk of
competitors learning about their products which may be copied
and brought to the market earlier
- Results from test marketing may not be conclusive and
do not always predict success. Products that sell locally
may not sell well in other geographical areas, as
findings from the trials may not be representative of
other groups of customers

Level

Mark

Descriptor

0

A completely inaccurate response.

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

3-4

Elements of knowledge and understanding, which are applied to the business example.

Chains of reasoning are presented,but may be assertions or incomplete.

A generic or superficial assessment is presented.

Level 3

5-7

Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s).

An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.

Level 4

8-10

Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

A coherent and logical chain of reasoning, showing cause(s) and/or effect(s).

Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

[Maximum number: 10]

Sources for use with Section A

Extract A
The soft drink industry is dominated by Coca-Cola and PepsiCo

Two brands of soft drinks, Coca-Cola and PepsiCo, have dominated the non-alcoholic drinks market for many years. The brands are well known and recognised around the world. Coca-Cola is the larger of the two companies with more than 500 brands. The companies do not have major threats from competition because they both have high levels of brand loyalty, extensive distribution networks and huge economies of scale. They spend enormous amounts of money on innovation, advertising, marketing, and strengthening their distribution channels.

Extract B
Coca-Cola: Who we are

We are the world’s largest soft drinks company. Our brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, Powerade, Minute Maid and Gold Peak. Over 1.9 billion of our drinks are enjoyed by consumers in more than 200 countries each day.

Our market research on Diet Coke

We focus on the needs of our consumers by going into the market to listen to their views and collect feedback on new drinks. One of our recent research projects focused on Diet Coke, known as Coca-Cola light in most international markets. The drink is sold in more than 110 countries. Our aim is to offer new flavours and a modern look to the product to attract new consumers as well as maintaining the brand loyalty of our current fans. As part of the research, we used face-to-face surveys to gather data from more than 10,000 people. We wanted their ideas and views on new packaging and new flavours, including Ginger Lime and Twisted Mango. These new products will be available in 2019.

Our rewarding work environment: benefits and rewards

We value our workers and understand working is not just about pay and benefits. We provide a positive working environment to enable staff to build a career and also maintain a good work-life balance. We regularly assess our benefits programs to ensure employees receive the benefits they value. The financial benefits include competitive pay, annual bonuses and performance-related pay.

Assess the advantages for a company, such as Coca-Cola, of using face-to-face surveys when collecting market data.

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 face-to-face survey is a research method used where the
interviewer communicates directly with the respondent using
a questionnaire.
•
As part of the research Coca-Cola surveyed more than 10,000
people to get their ideas on new packaging and flavours of
Diet Coke.
•
Face-to-face interviews are a type of primary research and
should provide new and specific data for Coca-Cola about its
drinks. This data can be used to ensure Coca-Cola meets
customer needs.
•
As part of the face-to-face survey Coca-Cola can incorporate
taste tests to trial new flavours. The new packaging designs
can also be shown to those surveyed to ascertain the
reaction of consumers to ensure they meet consumer needs.
This will reduce the risks of unpopular flavours being
launched.
•
The interviewer can clarify any queries the consumers have
about the questions asked in the survey, and keep the
respondent on track to completion, unlike online and postal
surveys which suffer from low response rates.
•
However, cost is the major disadvantage for face-to-face
interviews. Coca-Cola would require many people to conduct
the 10,000 interviews.
•
If Coca-Cola used online or postal surveys it would have been
able to target more people.
•
10,000 are only a small fraction of Coca-Cola’s customer base
and may not be representative.
•
The quality of data received will depend on the ability of the
interviewer to gather data well and not influence the
responses of those interviewed in any way, otherwise the
results may be bias/inaccurate.

Level

Descriptor

0
A completely inaccurate response.
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
3–4
Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented, but may be assertions or
incomplete.
A generic or superficial assessment is presented.
Level 3
5–7
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4
8–10
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information and shows an awareness of
competing arguments/factors, leading to a supported judgement.

[Maximum number: 6]

Extract A About The Coffee House The Coffee House is a chain of coffee shops in Vietnam. The Coffee House opened its first shop in 2014 and within four years it had 100 shops across the country. Its shops are located on busy high streets in Vietnam's large cities. Coffee shops have grown in popularity in Vietnam and have attracted successful international businesses such as Starbucks. The Coffee House is an innovative brand that has been built by offering an attractive space, excellent customer service and product quality at affordable prices. The mission of the business is to 'deliver happiness'. It aims to provide excellent customer satisfaction as well as providing the employees with an enjoyable place to work. The Coffee House is recognised for its innovation by:
- creating a unique design for each shop to provide a welcoming atmosphere that feels like home
- regularly updating menus to adapt to changing tastes and trends
- providing dedicated and comfortable spaces where people can work
- being one of the first businesses in Vietnam to launch a mobile app to allow customers to order their drinks online
- investing in its own farm in Vietnam to provide coffee beans for its shops.

Extract B Leading coffee shop brands in Vietnam in 2022 (by number of shops)

Analyse two methods of secondary research The Coffee House could use to help grow its business.

[Maximum number: 10]

Extract A

The History of Nando's

Nando's is a fast-food restaurant chain started by Fernando Duarte and Robert Brozin in South Africa. It sells a range of spicy chicken and vegetarian dishes. Entrepreneurs Fernando and Robert took a risk and opened the first Nando's restaurant in 1987 after enjoying spicy chicken in a Portuguese restaurant. By the end of 1989 they had opened three more restaurants. Today, there are Nando's restaurants in most major cities around the world. All its restaurants have a trendy, fun and unique design by local designers and artists.

Extract B

Nando's Indian menu (selected items)

Table for Question 11 — Edexcel A-Level Business AS

Extract C

Employees at Nando's

Employees who work at Nando's are called Nandocas. Nando's employees are seen as family members and it aims to treat them as an asset to the business. It states, 'Nando's is not just about the chicken, it's about the people that make the chicken.' In 2022 Nando's was named as one of the UK's best large companies to work for. In South Africa, Nando's has a programme called Harambee that recruits young unemployed people and gives them skills to prepare them for the workplace. Nando's uses a training programme called Buddy. A buddy is an employee who has completed all job roles in the business. Buddies supervise new employees to pass on their knowledge and skills.

Extract D

Market research at Nando's

Before opening stores in China, Nando's conducted primary market research to understand Chinese food preferences and dining habits. Two hundred surveys were carried out with Chinese chefs, restaurant owners and managers. A random sampling survey method was used to conduct the primary market research.

Assess the likely disadvantages to Nando's of using random sampling.

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 random sample is one of the methods researchers use to choose a sample from a larger population
- This method means that there is an equal chance that
any of the subjects in a population will be chosen
- Random sampling relies on having a full list of the entire population of chefs and experts in the food industry. This
data may be difficult to collect
- It may take a considerable amount of time to gather
information from a wide range of people over a large geographical area such as China. This may prove costly
to Nando's
- It can be impractical/or not possible to use a completely random technique, e.g. the target group may be too large to assign numbers to
- Random sampling is designed to be a representative of a
community or demographic, but there is no guarantee that the data collected will be representative of restaurant personnel in China
- However, the use of random sampling is likely to remove
bias for Nando's
- Modern technology makes it much easier to create a random sample
- If the chefs and food experts are chosen at random, each individual in the food industry has the same probability of being selected
- This should create fair/balanced results which more accurately represent the larger group as a whole

Level	Mark	Descriptor
	0	A completely inaccurate response.
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	3-4	Elements of knowledge and understanding, which are applied to the business example. Chains of reasoning are presented, but may be assertions or incomplete. A generic or superficial assessment is presented.
Level 3	5-7	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s). An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.
Level 4	8-10	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. A coherent and logical chain of reasoning, showing cause(s) and/or effect(s). Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

[Maximum number: 18]

Extract E About GoPro GoPro was started by Nick Woodman in 2002. He was looking for a way to film himself and his friends when they were surfing. He designed a small camera, which he fixed to a strap on his wetsuit. The business has grown internationally and now sells the GoPro cameras in over 100 countries. The cameras attach to helmets and sports equipment. This gave GoPro a unique selling point when it was first launched. GoPro is committed to ethical sourcing. It requires suppliers to treat workers with respect by paying fair wages and providing safe working conditions. It does not allow the use of underage workers and requires that the manufacturing processes used do not damage the environment.

Extract F From Product Orientation to Consumer Orientation When GoPro started it used a product orientation approach. However, GoPro soon faced competition from other businesses such as Sony and DJI. Less expensive cameras became available in the market, and some customers were opting to simply take videos with their smartphones. In response to falling sales, GoPro conducted market research and developed a new range of cameras. These were aimed at a wider market, including firefighters, musicians, new parents and television broadcasters.

Extract G Social Media Users of GoPro cameras share their adventures and experiences on social media sites such as Instagram, YouTube and Facebook. GoPro organises sporting events around the world and participants upload their videos. The most viewed GoPro video, of a bicycle backflip, had over 134 million views.

Figure for Question 12 — Edexcel A-Level Business AS

(a)

Discuss the positive impact of ethical sourcing on a business such as GoPro.

[ 8 ]

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
- Ethical sourcing is when a business buys materials/products that are
produced using fair working conditions and/or with no negative impact
on the environment
- GoPro expects its suppliers to treat its employees fairly and provide a
safe working environment. This may provide good publicity and
enhance the reputation of GoPro leading to an increase in its sales of
cameras
- The ethical conduct may attract new investors who are ethically
minded, which will help to continue to grow the business and compete
with businesses such as Sony
- However, sourcing ethically can be costly. Suppliers paying fair wages
for example may push up the cost of the camera parts.
- It is important that the GoPro cameras remain competitive with Sony
and DJI. If the cameras become too expensive more people will revert
to taking videos on smartphones rather than buying a specific camera
- It is debateable whether consumers are concerned with ethical
sourcing or whether they are more concerned with the performance
or price of goods
- Consumers may not even be aware of the ethical stance of the
business when they make a decision about buying a product

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.

(b)

Assess the benefits of using a product orientation approach for a business such
as GoPro.

[ 10 ]

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 orientation is where the business develops products based
on what it is good at producing, rather than researching the market
to find out what a consumer wants
- A market orientation approach means a business researches the
market and reacts to customer feedback
- One advantage is GoPro can save time and money by not
researching customer opinions. This keeps costs lower which may
lead to a lower price for the cameras
- GoPro was the first to create and sell the new technology. Collecting
consumer opinions on a new product/technology may not have
yielded significant insights from consumers
- Some products are argued to create a need or want in the customer,
especially products with a very high technological content like the
cameras
- However, new competitors such as Sony have put more pressure on
GoPro to react to consumer wants and become more market
orientated
- Market research identified new groups of people to sell to such as
firefighters and parents. Therefore, consumer research is important
to the growth of the business
- In the short term, a product orientation approach is likely to have
given GoPro first mover advantage and helped to establish the brand
- However, as competitors entered the market and consumers became
more knowledgeable about the technology, a market orientation
approach is a safer approach for GoPro

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	3-4	Elements of knowledge and understanding, which are applied to the business example. Chains of reasoning are presented, but may be assertions or incomplete. A generic or superficial assessment is presented.
Level 3	5-7	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s). An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.
Level 4	8-10	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. A coherent and logical chain of reasoning, showing cause(s) and/or effect(s). Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information, and shows an awareness of competing arguments/factors, leading to a supported judgement.

[Maximum number: 10]

Sources for use with Section B

Extract C
Airline Companies in the Middle East

Over the past 10 years airline companies based in the Middle East have significantly increased the number of passengers they carry each year. Competitors, Emirates, Etihad Airways and Qatar Airways have attracted travellers with competitive pricing, superior service and luxurious premium cabins. Whilst passenger numbers are increasing, these airlines are facing competition from low-cost airlines, such as Norwegian Air Shuttle and Singapore-based Scoot. These airlines are attracting customers with low-priced fares on some of the same routes. Total passengers carried (m)

Emirates Etihad Qatar Airways Years

Extract D
Emirates: Our story

We started operations in 1985 in Dubai with two aircraft and we have increased the number of aircraft and destinations each year. Today, with more than 265 aircraft, we fly to 155 destinations in 80 countries. We provide industry-leading inflight entertainment, excellent inflight food and world-class customer service. We are known all over the world for our commitment to quality, which we continually seek to improve. Our achievements in 2017 included:
• Three new destinations; Newark in the US, Phnom Penh in Cambodia and Zagreb in Croatia
• Our advertising campaign for our improved first-class service, using television celebrity and motoring expert Jeremy Clarkson
• We became the world’s first airline with one million followers on the social media site Instagram. This helps us to monitor the experiences and feedback from our customers
• In a recent study of the top 100 brands most visible on social media, we were ranked fifth after McDonald’s, Nike, Adidas and Coca-Cola.

Extract C: total passengers carried by Emirates, Etihad and Qatar Airways

Assess the extent to which market mapping may have been useful to Emirates in growing its 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
•
Market mapping is a form of market positioning. It is the use
of a 2-dimensional diagram that plots products or services in
a market using two key variables.
•
Mapping is a simple, visual tool that can utilise a variety of
variables, and may have helped Emirates understand its
position in the airline market relative to competition.
•
It may have helped Emirates spot gaps in the market. It may
have seen an opportunity to provide better inflight
entertainment.
•
It is a useful method for analysing competition. Emirates may
have used a market map to compare prices and destinations
that competitors fly to. This may have led to new flights such
as to Phnom Penh being offered to extend its flight
destinations.
•
Mapping also identifies where the market is saturated due to
a high level of competition. Emirates may have avoided these
areas/destinations and focussed on ones that were more
viable/profitable.
•
However, market mapping has its limitations. A map might
identify a gap in the market, for example destinations not
flown to, but there may be a valid reason for the gap such as
low demand or flight restrictions.
•
The market map does not guarantee success; it is a simplistic
method to help visualise the market, but needs more in-
depth research on consumer preferences and tastes before
important decisions are made.
•
Mapping shows a snapshot in time and Emirates must also
consider the strategy of its competitors, such as Etihad, in
order to compete successfully.
•
There are many other factors which may have contributed to
the growth of Emirates such as effective management and
leadership, good financial control, good advertising and
favourable economic factors.

Level

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
3–4
Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented but may be assertions or
incomplete.
A generic or superficial assessment is presented.
Level 3
5–7
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4
8–10
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information, and shows an awareness
of competing arguments/factors, leading to a supported judgement.

[Maximum number: 10]

Sources for use with Extract A The global chocolate market Chocolate is a multi-billion-dollar market and is expected to reach high levels of growth within the next few years. Rising incomes in many countries and the widespread availability of chocolate are leading to increased demand. However, uncertainty in the supply of cocoa, which is the main ingredient in chocolate, is likely to raise the cost of producing chocolate. This may be a major challenge for chocolate retailers. There are suggestions in the media that there are health benefits from consuming chocolate, particularly dark chocolate that contains a larger proportion of cocoa. Analysts believe that as well as increased demand for dark chocolate, other areas of growth will be:
· festive chocolate
· seasonal chocolate
· organic chocolate
· fair-trade chocolate

The global chocolate market is segmented by type and sale frequency. Based on chocolate type, the market is classified as milk chocolate, dark chocolate, and white chocolate. The milk chocolate segment remains the largest selling chocolate. Based on sale frequency, the market is categorised as daily chocolate, premium chocolate and seasonal chocolate.

Extract B The top five global chocolate manufacturers (2018)

Company	Revenue 2018 ($USbn)
Mars Wrigley Confectionery (USA)	18.00
Ferrero Group (Italy)	12.40
Mondelēz International (USA)	11.80
Meiji Co Ltd (Japan)	9.70
Hershey Co (USA)	7.80

Extract C Working at Ferrero The Ferrero Group, a family run business, started in 1946 and today is one of the largest chocolate companies in the world. Employees are referred to as ‘family’ . All employees, from the day they start, are expected to involve themselves in all aspects of the business. Employees receive a competitive wage. Ferrero provides employees with extensive training programmes including on-the-job training and management support. Ferrero shows its employees respect, helps them grow in their careers, asks them for suggestions and welcomes their feedback.

Assess the advantages of market segmentation to a business in the chocolate 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
• Segmentation is dividing the market into groups of people with similar
attributes or common characteristics.
• The global chocolate market is segmented in a number of ways such as type of chocolate, sale frequency, organic and seasonal chocolates.
• Focusing on specific market segments allows a company such as
Ferrero to analyse segments of the markets and tailor products to
meet the particular needs of those customers.
• Market segmentation helps to direct advertising and promotion to
specific groups of customers, e.g. those looking for health benefits,
and therefore help to make marketing more effective.
• Market segmentation can help chocolate suppliers to identify
underserved customers, such as those seeking organic and fair-trade
chocolate, which provide the opportunity to increase sales.
• It helps a company to focus on the most profitable and productive
segments of the market to increase revenue and profitability.
• However, segmentation increases costs. When a company attempts to
serve different groups of customers the cost of production rises as
well as research, promotional and distribution costs.
• By focusing on providing niche chocolates there is a danger that this
specialisation could lead to problems if consumers change their
purchasing habits significantly.
• The market segments identified may be too small, e.g. organic
chocolate, and may not generate sufficient sales to be viable/profitable
for the business.

Level	Mark	Descriptor
	0	A completely inaccurate response.
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	3–4	Elements of knowledge and understanding, which are applied to the business example. Chains of reasoning are presented, but may be assertions or incomplete. A generic or superficial assessment is presented.
Level 3	5–7	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s). An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.
Level 4	8–10	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. A coherent and logical chain of reasoning, showing cause(s) and/or effect(s). Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

[Maximum number: 2]

Extract A

China's smartphone market

In 2021, the sale of smartphones in China decreased by 9% due to component shortages and lower consumer spending. Smartphone users in China are now keeping their devices longer before upgrading to new models. However, sales of Apple smartphones increased due to its new camera and 5G features giving it a competitive advantage.

Extract B

Market share of smartphone sales in China 2021

Figure for Question 15 — Edexcel A-Level Business AS

Extract C

The folding smartphone is likely to remain a niche product

In 2021, 1.3 billion smartphones were sold globally. Seven million of these were folding models. This represents 0.5% of the smartphone market. It is predicted that by 2025, this share could rise to 1.8%. One of the most popular folding phones is the Samsung Galaxy Z Flip3, priced at over $1 000.

Extract D

Realme aims to compete with Apple and Samsung

Realme is a Chinese business that started in 2018. It manufactures and sells smartphones. Realme has been successful in markets where consumers are seeking high specification phones and fashionable designs at a low price. It is now the second-largest smartphone provider in India. In 2021, Realme launched its smartphones in Europe and other regions outside of China in an attempt to increase its 6% global market share. It sold 20 million smartphones in 2021, an increase of 48% from the previous year. In comparison, Apple sold 80 million smartphones in the period of October to December 2021. Realme aims to sell 85 million smartphones in 2022.

Extract A

China's smartphone market

In 2021, the sale of smartphones in China decreased by 9% due to component shortages and lower consumer spending. Smartphone users in China are now keeping their devices longer before upgrading to new models. However, sales of Apple smartphones increased due to its new camera and 5G features giving it a competitive advantage.

Define the term 'competitive advantage'. (Extract A, line 5)

[Maximum number: 8]

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.

[Maximum number: 10]

Extract A About The Coffee House The Coffee House is a chain of coffee shops in Vietnam. The Coffee House opened its first shop in 2014 and within four years it had 100 shops across the country. Its shops are located on busy high streets in Vietnam's large cities. Coffee shops have grown in popularity in Vietnam and have attracted successful international businesses such as Starbucks. The Coffee House is an innovative brand that has been built by offering an attractive space, excellent customer service and product quality at affordable prices. The mission of the business is to 'deliver happiness'. It aims to provide excellent customer satisfaction as well as providing the employees with an enjoyable place to work. The Coffee House is recognised for its innovation by:
- creating a unique design for each shop to provide a welcoming atmosphere that feels like home
- regularly updating menus to adapt to changing tastes and trends
- providing dedicated and comfortable spaces where people can work
- being one of the first businesses in Vietnam to launch a mobile app to allow customers to order their drinks online
- investing in its own farm in Vietnam to provide coffee beans for its shops.

Extract B Leading coffee shop brands in Vietnam in 2022 (by number of shops)

Assess the benefits to The Coffee House from adding value to its products
and services.

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
- Added value is the increase in value that a business creates when producing a product/service. It is the difference between the price of product/service and the cost of the inputs involved in providing
it
- The Coffee House has added value by designing an atmosphere that feels like home where people come together to meet friends
- The Coffee House has added value by allowing customers to use their mobile devices to buy coffee online. This has given convenience to its customers and responding to changes in shopping trends. This
may increase revenue for the business
- Offering a service with added benefits, such as dedicated work areas,
may differentiate it from competitors such as Highland and attract
more customers
- A firm that is adding substantial value may be operating profitably as the selling price can be higher because of the added value
- However, adding value, such as providing dedicated work areas
may be expensive and may mean high investment which may
lead to lower profit margins in the short term
- Ordering drinks on-line is now quite common and may not help to
differentiate the business any more
- Uniquely designed stores may be costly to provide which may
increase the costs and the price to the consumer. This may result
in fewer customers in this competitive market
- Some consumers may not be interested in the design of a coffee shop and it may not influence their decision on which coffee shop to choose

Level	Mark	Descriptor
	0	A completely inaccurate response.
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	3-4	Elements of knowledge and understanding, which are applied to the business example. Chains of reasoning are presented, but may be assertions or incomplete. A generic or superficial assessment is presented.
Level 3	5-7	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s). An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.
Level 4	8-10	Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. A coherent and logical chain of reasoning, showing cause(s) and/or effect(s). Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.

Edexcel A-Level Business AS 1.3.1 Meeting Customer Needs Questions

Exam points

Covered syllabus points

Covered syllabus points

Question 1

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Question 2

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Question 3

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Question 4

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Question 8

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Question 11

Question 12

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Question 13

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Question 15

Question 16

Question 17