CAIE IGCSE Business Studies 3 marketing

Award 1 mark for each relevant advantage (max 2).

Award 1 mark for each relevant reference to this business (max 2).

Award 1 mark for each relevant explanation (max 2).

Points might include:

- Easier to match products to existing customer needs [k] reducing wastage [an] as know which are the popular types of skincare products [app]

- Improve / good reputation / brand image [k] so less promotion needed / lower cost (of advertising) [an] by this private sector business [app]

- Increase sales / customers [k] which could increase revenue / market share [an] above $36m [app]

- Encourages existing customers to try new products [k]

- May be able to increase prices [k] which would increase profit margin [an]

Other appropriate responses should be credited.

To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.

The following words are likely to be appropriate for this question:

- Skincare or examples such as face cream

- Marketing mix

- Sustainable development

- 30% (market share)

- Private sector business

- $ 120 million (total value of market sales)

- $ 36 million (revenue)

Other appropriate examples in context can be credited.

Some points could be [k] or [an] but do not award the same point twice e.g. repeat customers.

Increase market share is [an] only.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.

Award up to 2 marks for a justified decision as to which is the most important element of the marketing mix for a business.

Points might include:

This is a general question so there are no
marks for application.
Promotion [k]

- Raises awareness / informs potential customers [an] leading to more sales [an]

- Attracts / persuades potential customers [an] increasing revenue [an]

- Creates / builds brand image [an] increasing customer loyalty [an]

- Way to communicate with customers [an]

Product [k]

- Without a product there is nothing to sell / if dislike the product customers will not buy it [an]

- A poor / bad quality product will not last long in the market [an] so time / money spent developing it would be wasted [an]

- Good quality product can encourage customer loyalty [an]

- Good quality can improve brand image [an]

Place [k]

- Close / near target market / customers [an] to ensure sales [an]

- A suitable location might have high rent [an] leading to increased costs / higher prices [an]

Price [k]

- A low price could create image of low quality [an] damaging its reputation [an]

- If price is too low, may not cover costs [an]

- If the price is too high, the business may be less competitive [an] lowering market share [an]

- If the price is too high, could lead to fewer sales (as customers cannot afford it) [an
Other appropriate responses should be credited.

Justification might include:

One element is promotion [k]. This is important as more people are aware of your business [an]. The product also matters [k] as this is what people are buying so without a product there is nothing to sell [an]. Product is the most important element, because if it is unique, this can help the business standout [eval] which means the business has a better chance of attracting / maintaining customers. [eval]

Identify two reasons why consumer spending patterns might change.

Award 1 mark for each reason (max 2).

Points might include changes in:

- Price of product

- Price of competitors products/increased competition

- Incomes/wages/unemployment/business cycle or examples

- Population size/structure/life stage of consumers

- Taste/fashion/preferences

- Advertising/promotion

- Technology

- Taxation

- Interest rates

- Exchange rates

- Weather/season

Other appropriate responses should be credited.

Only award the first two responses given.

Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which is the best method of market research for a manufacturing business to use to make business decisions.

Points might include:

- Government sources/statistics [k] provide information from a wide number of people [an]

- Using internet/online sources [k] which is free / low cost / immediately available [an]

- Information from trade associations/journals [k] as specifically about the industry [an]

- Market research agency reports [k] can often be expensive/provide detailed information [an]

- Questionnaire [k] as provides up-to-date information / specific to the business [an]

- Interviews [k] to obtain in depth details/opinions [an]

- Survey [k] can reach out to more/large number of people [an]

- Focus group [k] as it provides detailed information / allows for follow-up questions [an]

- Test marketing [k] so the cost of any problem is limited to a smaller number of products [an]

- Observation [k] low cost [an]

- Newspapers/magazines [k]

Other appropriate responses should be credited.

This is a general question so there are no marks for application.

Candidates must identify the method of market research to access the knowledge marks not just state primary/secondary.

Analysis can refer to an advantage/disadvantage of method.

Some development can be used for more point, but only award once.
Justification might include:

Government statistics [k] provide information from a wide number of people [an]. A focus group [k] can provide detailed information about consumer tastes [an].

Government statistics are better because they are based on wide samples whereas a focus group is based on a few existing customers so it may not identify what is happening in the market overall so the business may not produce the right product. [eval] [eval]

Award two marks for a full definition. Award one mark for a partial definition.

A small, usually specialised, segment of a much larger market [2]

Partial definition e.g. small part / segment of a (large) market [1]

OR Part of the market with specific needs / characteristics [1]

Award 1 mark per impact (max 2).

Points might include:

- Cannot make misleading / false claims in advertisements / adverts may have to be changed or withdrawn / influence where / when / who it can be advertised

- Increase costs / time spent on marketing

- May have to change what is written on packaging / ensure product description is accurate on packaging / make sure information promotion / packaging is not misleading

- Cannot sell underweight goods

- Cannot charge less than minimum price set / cannot charge more than maximum price set / cannot fix prices (with competitors)

Other appropriate responses should also be credited.

Award 1 mark for each relevant reason (max 2).

Award 1 mark for each relevant reference to this business (max 2).

Points might include:

- Increase sales / customers [k] of his handmade product [app]

- To differentiate the product (from competitors) [k] when using ecommerce [app]

- Helps promote / aids recognition [k] of his furniture [app]

- Create / maintain customer loyalty / customers will keep buying its products rather than competitors [k] which could be important for this start-up business [app]

- Can charge higher price [k] helpful as it's a niche market [app]

Other appropriate responses should also be credited.

To use words from the stem as
application the reference must be
appropriate (i.e. make sense) in relation
to the point being made.

Award 2 marks for identification of each relevant threat (max 2).

Award 2 marks for each relevant reference to this business (max 2).

Award 2 marks for each relevant explanation (max 2).

Points might include:

- More competition / difficult to stand out from competition [k] especially as it's a new business [app] leading to less revenue [an]

- No passing trade [k] so could mean fewer sales [an] which could influence Caleb's location decision [app]

- Not everyone has access to the internet [k] which reduces its target market [an] for this niche market product [app]

- Cost to design / maintain website [k] increasing cash outflows [an]

- Lack of personal service / no face-to-face contact with customers [k] which might make it difficult to develop brand loyalty [app] which could damage its reputation [an]

- Need to pay for pop-ups to advertise on popular sites / feature at top of search engine listings [k]

- Risk of hackers / fraud [k]

Other appropriate responses should also be credited.

To use words from the stem as application the reference must be appropriate (i.e. make sense) in relation to the point being made.

The following words are likely to be appropriate for this question:

- (Handmade) furniture or examples such as tables/chairs

- Legal controls over marketing

- Location decision

- New business / start-up

- Niche market

- Brand loyalty (is important)

- Entrepreneur

Other appropriate examples in context can still be credited.

Award 1 mark per way (max 2).

Points might include:

- No misleading promotion/advertising

- No price fixing/charging very high prices where there is little or no competition

- No selling faulty/dangerous goods/certain ingredients

- Ensure products are fit for purpose

- Price reductions must be genuine

- Increased costs to meet the legal controls/pay fines

- Spend longer time ensuring they meet the legal controls

- May need to alter packaging

- Restrictions on advertising certain products to some age groups/places.

Other appropriate responses should also be credited.

Only award the first two responses given.

Award 1 mark for each relevant advantage/disadvantage (max 2).

Award 1 mark for each relevant reference to this business (max 2).

Points might include:

Advantages:

- Helps establish a high-quality image/customers may think it is a good quality [k] which may also help as want to be ethical [app]

- Can quickly recover research/development costs [k] which is important as developed a new product [app]

- Higher revenue per item [k] for its chocolate [app]

- May have a lower break-even output [k]

Disadvantages:

- High price might discourage (potential) customers [k] for this social enterprise [app]

- High prices/profitability could encourage competitors to enter market [k] so may not be able to support local farmers [app]

Other appropriate responses should be credited.

To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.

The following words are likely to be appropriate for this question:

- Social enterprise

- Cocoa beans

- Local farmers

- Chocolate (bar)

- Retailers

- Ethical

- (Developed) a new product

- Legal controls over marketing

Other appropriate responses can be credited.

Award 1 mark for identification of each relevant advantage/disadvantage (max 2).

Award 1 mark for each relevant reference to this business (max 2).

Award 1 mark for each relevant explanation (max 2).

Points might include:

Advantages:

- Producers can sell in large quantities to retailers [k] increasing revenue [an] from its new product [app]

- Reduced costs (compared to selling direct to consumers) [k] increasing profit margin [an] in this social enterprise [app]

- Retailer shares the cost of holding inventory [k] lowering expenses [an]

- Retailers will promote the product [k] reducing the cost of promotion/increasing sales [an]

- Access wider range of customers [k]

Disadvantages:

- No direct contact with consumer [k] about its chocolate bar [app] so may not adapt to changing needs [an]

- Final price (paid by consumer) is often high [k] so may be uncompetitive [an]

- Retailer takes some of profit away from the producer [k]

- Producer loses some control of marketing mix [k]

- Retailers usually sell competitors' products as well [k]

Other appropriate responses should also be credited.

To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.

The following words are likely to be appropriate for this question:

- Social enterprise

- Cocoa beans

- (Make) bars of chocolate

- Ethical

- (Local) farmers

- Legal controls over marketing

Other appropriate responses can be credited.