Edexcel IAL Business Unit 1 Marketing & People

Knowledge 2
Up to 2 marks for defining the term 'niche market' e.g.
- The subset of a large/mass market (1) that focusses
on a segment of the population (1)

.

Knowledge 1, Application 2, Analysis 1

Quantitative skills assessed:

QS3: construct and interpret a range of standard graphical forms.

Knowledge

1 mark for correctly constructing a supply and demand diagram with correctly labelled axes as 'price' and 'quantity' (1)

Application

Up to 2 marks for:

Showing supply and demand curves with original equilibrium (1)

Shifting the supply curve to the right (1)

Analysis

1 mark for showing the new equilibrium and its effect on price (decreasing) and quantity (increasing) (1)

Knowledge 2, Application 2, Analysis 2
Knowledge
Up to 2 marks for defining price elasticity of demand (PED), or
giving a correct formula e.g.
OR
For giving two factors that would influence PED for ice cream
e.g.
Application
Up to 2 marks for answers contextualised to the ice cream
market e.g.
- Some consumers will be brand loyal to businesses such as
Unilever that dominates the global market owning 8 of the
15 top selling brands (1)
- The global ice cream market value is expected to reach $89
bn by 2023 and is attracting new businesses to the market
(1)
Analysis
Up to 2 marks for reasons / causes / consequences for ice
cream businesses, e.g.
- This may lead to inelastic demand for market leaders that
are able to increase the price without significantly reducing
consumer demand (1)
- This may lead to more elastic demand if there is increased
competition in the market allowing customers to switch
brands (1)

(6)


Questio
n

Indicative content

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

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.



Questio
n

Answer

Mark

Knowledge 2
Up to 2 marks for defining the term 'marketing objective' e.g.
- A goal the business aims to achieve (1) through its marketing activities (1)

Knowledge 1, Application 2, Analysis 1

Quantitative skills assessed: QS2: calculate, use and understand percentages and percentage changes QS7: interpret values of price and income elasticity of demand.

Knowledge 1 mark for identifying a suitable formula e.g. - Percentage change in quantity demanded / percentage change in price (1)

Application Up to 2 marks for calculating the correct data:
$$1000 / 2500 \times 100=40$$

Analysis 1 mark for calculating the price elasticity of demand - 40 /-20=-2(1)

NB If no working is shown award marks as below:

If answer given is -2 award 4 marks

(4)

Question

Analyse two factors, other than price, that may have caused an increase in the demand for Pukka tea.

Indicative content guidance

Mark

Knowledge 2, Application 2, Analysis 2
Knowledge
Up to 2 marks for defining demand, e.g.
- Quantity of goods or services (1) willing/able to purchase at a given price/time (1)
OR
For giving two possible causes of increased demand for Pukka tea e.g.
Application
Up to 2 marks for answers contextualised to Pukka, e.g.
- More people are buying goods that are healthier, in pursuit of a healthier life (1)
Analysis
Up to 2 marks for reasons / causes / consequences for Pukka e.g.
- This may lead to increased sales for Pukka as they are selling products that align with changing social trends (1)
- The increase in sales of Pukka tea may indicate more customers are able to afford to buy more expensive products such as premium speciality teas (1)

Question

Discuss the barriers to entrepreneurship Sebastian may have faced when considering starting a business.

Indicative content

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.
Indicative content
- Entrepreneurship is the activity of setting up a business, taking on risks, normally in the hope of making a profit
- There are many barriers to entrepreneurship including access to finance, lack of skills and the fear of failure/lack of confidence
- Whilst Sebastian had a passion for plants and
conservation, he may not have had any business skills to help him start the business
- It is possible that Sebastian did not have sufficient access to finance to fund the start-up costs of a new business
- As the speciality tea market is growing, Sebastian may have been faced with a high level of competition. It may have been difficult/costly to establish a brand name
- However, Sebastian overcome his lack of knowledge by forming a partnership with Tim who had worked as a business consultant and is likely to have possessed the know-how about business start-ups
- The two partners both possessed entrepreneurial
characteristics needed to start a business. They were both hard working and determined to succeed
- They both shared a passion for the product as they were both concerned about the environment and healthy living.
This gave them the same business objective to pursue

Level

Mark

Level 0

Level 1

1-2

Level 2

3-5

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

Assess the challenges that a business, such as Pukka, may have faced when moving from a niche to a mass marketing strategy.

Indicative content

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 niche marketing strategy appeals to a smaller segment of a
larger market where consumers have specific needs and wants.
Mass marketing aims to target the highest number of potential
customers
- One challenge is the change in promotional costs. It is likely the promotional strategy would have changed from lower cost/below the line advertising to more expensive/above the line advertising.
This may affect the cash flow for Pukka
- Changing to a mass marketing strategy would require changes to the distribution networks. In order to reach a global audience, it is
likely that Pukka extended its distribution globally involving more retailers and wholesalers
- Pukka is likely to have faced more competition. This may have
led Pukka to reduce the price of its tea to compete with established businesses
- However, the volume sold by Pukka is likely to be much higher.
This may lead to lower unit costs/economies of scale and
increased profitability
- Mass marketing may create less of a risk to Pukka. It may be less
vulnerable to the economic change of individual economies
- The speciality tea market is set to grow by $50bn by 2027
providing Pukka with an opportunity to increase its revenue and profits
- There are both risks and rewards for businesses using a mass
market strategy, and success depends on effectively managing the change to benefit from economies of scale

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.

Question

Evaluate whether on-the-job training is likely to be the most effective type of training used by Walt Disney.

Indicative content

Knowledge 2
Up to 2 marks for defining the term 'risk' e.g.
- An action or decision/something that can planned for or
considered (1) which may result in a loss/where outcomes are unknown (1)

Knowledge 1, Application 2, Analysis 1
Knowledge
1 mark for identifying a benefit of market mapping e.g.
Application
Up to 2 marks for answers contextualising the benefit, e.g.
- The market mapping may have shown how many restaurants served spicy/vegetarian food (1)
- The research may have shown a lack of restaurants that appealed to a younger audience (1)
Analysis
1 mark for reasons/causes/consequences of using market
mapping e.g.
- Analysing the competition will have allowed Nando's to
identify any potential gaps in the market to differentiate its business and/or create a unique selling point (1)

Knowledge 2, Application 2, Analysis 2
Knowledge
Up to 2 marks for defining employees as an asset, e.g.
- Employers recognise the input of employees (1) as an important
business resource (1)
OR
For providing two advantages of treating employees as an asset,
e.g.:
Application
Up to 2 marks for answers contextualised to Nando's, e.g.:
- The employees who work as a buddy at Nando's will feel more
valued (1)
Analysis
Up to 2 marks for reasons/causes/consequences for Nando's of
treating employees as an asset, e.g.:
- This will provide a feeling of involvement in the workforce and
may make the employees more productive, leading to a high
level of customer service in the restaurants (1)
- This should provide employee loyalty to the business and help
Nando's reduce employee turnover and minimise recruitment
and training costs (1)

Question

Discuss the advantages to a business, such as Nando's, of using psychological pricing.

Indicative content

Indicative content guidance
QS9 Interpret, apply and analyse information in written, graphical and
numerical forms
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
- Psychological pricing involves tactics that are designed to
appeal to a customer's emotional response to prices
- One psychological pricing strategy is to set a price slightly
below a round figure e.g. charging 199 rupees rather than
200 rupees in the Indian restaurants
- Many consumers are cost-conscious. This may give Nando's
the opportunity to increase its sales if consumers feel like
they are getting a good deal
- If Indian consumers are in the habit of comparing prices for
fast-food then psychological pricing may persuade them to
choose Nando's over its competitors
- However, if all businesses use psychological pricing, then
they do not stand out from the competition
- Many people are not fooled emotionally and would rather the
figure be rounded e.g. to 200 rupees
- Customers may be more influenced by the food quality or
location of the restaurant

Level

Mark

Level 0

Level 1

1-2

Level 2

3-5

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

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

Indicative content

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.