IB Business Management SL 4.4 Market Research Question Bank

Pablo's Peanuts (PP)
Pablo recently emigrated from Argentina to Miami, Florida, which has a large Hispanic* population. However, he could not find caramelized peanuts - known as garrapiñada -at any of the Latin American markets in Miami. These tasty sweet snacks, sold by street vendors, are very popular in Latin American countries. Pablo began testing different recipes to make the snack himself. Once convinced he had the perfect product, he conducted primary market research in several Hispanic neighbourhoods. He was overwhelmed by the positive response.
As a result, Pablo set up Pablo's Peanuts ( P P ) as a private limited company. He then purchased a food truck (a large vehicle equipped to cook and sell food). From Tuesday to Sunday, he drove to different Latin American markets in the Miami area to cook and sell his product. PP soon became profitable, but meeting demand was difficult.
Pablo wants PP to grow. To do this, he needs a second food truck and an employee. The second truck would require an investment of $\$ 100000$. Pablo's break-even analysis shows that the expected increased output would more than double PP's profits if the cost of fuel for the food trucks remains constant.
Pablo is considering two options to finance the second truck:
- Option 1: A local Miami bank, clearly impressed by the break-even analysis data, is willing to lend Pablo $\$ 100000$ with a 10 % interest rate.
- Option 2: A business angel, Ana Perez, with a strong portfolio of Latin American food products, has approached Pablo. She is offering $\$ 100000$ for 35 % of shares in PP.

* Hispanic: relating to Spain or to Spanish-speaking countries, especially those of Central and South America

Explain two reasons why Pablo conducted primary market research.

SGS


SGS operates a worldwide delivery business. SGS's aim is to deliver all packages on time, at low prices, anywhere in the world. Its Chief Executive Officer (CEO) Jean-Paul Lominé is known even by customers as an autocratic leader. Twice a year he sets prices and targets for costs and customer satisfaction.
S G S has three main competitors, Company A, B and C.

Primary market research revealed that customers value delivery on time, but many would pay higher prices for a more environmentally friendly service. It also showed that customers did not know whether SGS followed socially responsible "green" (environmentally friendly) practices. Customers also believed that the company's current autocratic leadership style did not fit with "green" practices.

Jean-Paul decided to change his leadership style from autocratic to situational*. He wrote a new aim for S G S : to make it the world's greenest delivery company. He ordered the Operations Department to recommend possible strategies. The Operations Department suggested two:
- purchase new, energy-efficient airplanes
- adopt new software to set fuel-saving air routes.

The Finance Department calculated that purchasing new airplanes would be a significant cost resulting in higher prices to customers. Tactically SGS would purchase a new airplane each time an existing airplane required significant expenditure to keep it flying. Adopting new software would require major computer upgrades, but the cost of the investment would be quickly recovered from fuel savings. The Marketing Director reported to Jean-Paul that if customers did not realize that SGS was now more environmentally friendly, they might think that it had only increased prices. Jean-Paul, however, refused to listen to the Marketing Director.

\footnotetext{
* situational: style of leadership that is also called situation leadership
}

Identify two methods of primary market research that SGS may have used.

Secco Vineyards (SV)


Secco Vineyards (SV) is a family-owned business producing wine in Sonoma, California. In 1947, SV opened using cost-plus (mark-up) pricing. For SV's customers, the wines were medium priced and available in local grocery stores.
In 1977, Joe Secco, grandson of the founder, created a new strategy. He re-branded SV's wine for a niche premium market.
- SV began to sell directly to customers at its winery instead of in local grocery stores.
- SV stopped using cost-plus (mark-up) pricing and began to sells its wines at much higher prices than before.
- Regular wine tastings and promotional events were held at its winery. At these events, wine experts would promote SV's wines by creating an elegant experience based on a luxurious culture of wine consumption: stylish wine glasses, classical music and food that complements the wine.
However, SV has recently faced intense competition and sales have fallen. Local wine producers and overseas competitors have entered the market with similar market positioning. In order to maintain its brand image, S V has not changed its pricing strategies.
SV conducted secondary market research about other possible markets in the US for its premium wines. The research suggested that other possible markets for high-quality wines, such as those of S V, exist. As a result, S V is considering two options to increase sales in addition to its current distribution channel:
- Option 1: open a business-to-consumer (B2C) e-commerce store
- Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

With reference to SV, explain one advantage and one disadvantage of using secondary market research.