IB Business Management SL 4.5 The seven Ps of the marketing mix Question Bank

1. Pelican Pies (PP)
Pelican Pies (PP) produces high-quality pies that have limited brand loyalty outside of their local market. The prices of the pies are higher than those of PP's competitors.

For 2018, PP's owner, Austin, is looking to increase sales beyond the local market by lowering prices and spending a greater proportion of PP's promotional budget on above-the-line methods such as regional newspaper advertisements. To finance this type of promotion, Austin will have to increase his loan amount by $ 10000.

1. Calorie Count (CC)
Evana Dox has recently set up her own business, called Calorie Count (CC). She has identified a precise market segment: local middle-aged people struggling to have a healthy lifestyle because of long working hours. Customers will order meals in the morning, and in the evening Evana will deliver the meals.
Evana is converting the ground floor of her house into a professional kitchen complying with all hygiene standards and food safety regulations. She will employ her niece Athena, a graduate from a catering college. 60 % of the initial investment and start-up costs will come from Evana's personal savings; the other 40 % will be financed by external sources.
Evana has carried out secondary market research and found that the net profit margin in catering businesses of the same size is 35 %. However, for her new business Evana knows that her net profit margin will be much lower.
For her first year of operations, she aims for a net profit margin of 15 %. In the first year, she hopes to sell an average of 50 meals per day, 5 days per week. She estimates that each meal would be sold at an average price of $ 17. This price, Evana believes, will be competitive and will generate an adequate contribution per meal for her business to be successful.
CC uses a cost-based pricing strategy, with the following estimated costs:
- variable cost per meal: 70 % of selling price
- fixed cost per annum: $ 42000.

1. Sotatsu Electronics (SE)
Sotatsu Electronics (SE) manufactures electronic products and is famous for its innovative televisions. In late 2015, SE introduced a new high-definition television with twice the quality of the best-selling television of its chief competitor. Determining that it would be two years before its competitors could have a similar product, SE adopted a price skimming strategy.