The Marketing Mix (7 P's) (DP IB Business Management: HL): Exam Questions

Pure Spices Limited specialises in organic spices sourced from local farmers. To grow its market share, the company plans to expand into premium grocery stores with a new product line of luxury spice gift sets. The product design incorporates sustainable packaging, reflecting the company’s commitment to environmental responsibility.

The marketing team is evaluating the product’s place in the marketing mix. They are considering exclusive distribution agreements with upscale grocery chains and a premium pricing strategy to position the spice sets as luxury items. However, Pure Spices faces challenges in balancing these strategies with its mission to support affordability for farmers and sustainability in sourcing.

Pure Spices Ltd. specialises in organic spices sourced from local farmers. To grow its market share, the company plans to expand into premium grocery stores with a new product line of luxury spice gift sets. The product design incorporates sustainable packaging, reflecting the company’s commitment to environmental responsibility.

The marketing team is evaluating the product’s place in the marketing mix. They are considering exclusive distribution agreements with upscale grocery chains and a premium pricing strategy to position the spice sets as luxury items. However, Pure Spices faces challenges in balancing these strategies with its mission to support affordability for farmers and sustainability in sourcing.

UrbanRide Scooters is a rental service offering electric scooters in urban areas. The company is launching a new subscription model that provides unlimited scooter usage for a monthly fee. The marketing team is focusing on pricing and promotion as key elements of the marketing mix to attract customers.

The team plans to use a penetration pricing strategy to encourage sign-ups during the launch phase, offering significant discounts for early subscribers. Promotional efforts include social media campaigns targeting young professionals and partnerships with local businesses to advertise the subscription service. UrbanRide must balance the costs of these strategies with the need to build a sustainable revenue model.

UrbanRide Scooters is a rental service offering electric scooters in urban areas. The company is launching a new subscription model that provides unlimited scooter usage for a monthly fee. The marketing team is focusing on pricing and promotion as key elements of the marketing mix to attract customers.

The team plans to use a penetration pricing strategy to encourage sign-ups during the launch phase, offering significant discounts for early subscribers. Promotional efforts include social media campaigns targeting young professionals and partnerships with local businesses to advertise the subscription service. UrbanRide must balance the costs of these strategies with the need to build a sustainable revenue model.

Witts Office Supplies is a large retailer specialising in office essentials such as stationery, printers, and office furniture. The company’s primary customers are businesses, and its stores are located on retail parks, offering convenience and easy access.

Witts is planning to launch a new business account service aimed at small and medium-sized enterprises (SMEs). The service will offer bulk discounts, next-day delivery, and dedicated account managers. To ensure the success of this service, Witts is focusing on the people and processes elements of the marketing mix. This includes training staff to handle account-specific requests efficiently and introducing a streamlined order system for bulk purchases.

However, Witts is concerned about maintaining its high service standards while managing the increased demand expected from the new business account customers.

Witts Office Supplies is a large retailer specialising in office essentials such as stationery, printers, and office furniture. The company’s primary customers are businesses, and its stores are located on retail parks, offering convenience and easy access.

Witts is planning to launch a new business account service aimed at small and medium-sized enterprises (SMEs). The service will offer bulk discounts, next-day delivery, and dedicated account managers. To ensure the success of this service, Witts is focusing on the people and processes elements of the marketing mix. This includes training staff to handle account-specific requests efficiently and introducing a streamlined order system for bulk purchases.

However, Witts is concerned about maintaining its high service standards while managing the increased demand expected from the new business account customers.

GlowRide is a company that designs and sells high-performance electric bicycles. The business recently launched a new model targeting young urban commuters. To promote the new product, GlowRide is investing in a mix of promotional strategies.

The company has chosen a combination of above-the-line and below-the-line promotions. Television advertisements are used to build brand awareness, while direct marketing campaigns target specific demographics via email and social media. GlowRide is also offering limited-time discounts through its website. The company faces challenges in balancing the high costs of television advertising with the need to generate immediate sales through targeted promotions.

GlowRide is a company that designs and sells high-performance electric bicycles. The business recently launched a new model targeting young urban commuters. To promote the new product, GlowRide is investing in a mix of promotional strategies.

The company has chosen a combination of above-the-line and below-the-line promotions. Television advertisements are used to build brand awareness, while direct marketing campaigns target specific demographics via email and social media. GlowRide is also offering limited-time discounts through its website. The company faces challenges in balancing the high costs of television advertising with the need to generate immediate sales through targeted promotions.

Fresh Paws is a small company specialising in premium pet products, including organic pet food and eco-friendly accessories. To promote a new line of high-quality pet grooming products, Fresh Paws is investing in public relations (PR) and social media campaigns.

The PR campaign includes partnerships with animal shelters to promote adoption events, where Fresh Paws provides free samples of its grooming products. On social media, the company is collaborating with popular pet influencers to showcase the benefits of its grooming line. Fresh Paws aims to build brand trust and create buzz among pet owners, but it faces challenges measuring the impact of these promotional activities.

Fresh Paws is a small company specialising in premium pet products, including organic pet food and eco-friendly accessories. To promote a new line of high-quality pet grooming products, Fresh Paws is investing in public relations (PR) and social media campaigns.

The PR campaign includes partnerships with animal shelters to promote adoption events, where Fresh Paws provides free samples of its grooming products. On social media, the company is collaborating with popular pet influencers to showcase the benefits of its grooming line. Fresh Paws aims to build brand trust and create buzz among pet owners, but it faces challenges measuring the impact of these promotional activities.

CityFit operates a chain of leisure centres offering gym facilities, swimming pools, and group fitness classes. To attract more members, CityFit is launching a promotional campaign for its family membership plan. The campaign focuses on sales promotions, such as free trial classes for families and discounts for signing up during the launch period.

CityFit is also leveraging direct marketing by sending personalised emails to potential customers in nearby areas, highlighting the benefits of the family plan. The company aims to increase memberships quickly but faces challenges in maintaining the value perception of its services while offering discounts.

CityFit operates a chain of leisure centres offering gym facilities, swimming pools, and group fitness classes. To attract more members, CityFit is launching a promotional campaign for its family membership plan. The campaign focuses on sales promotions, such as free trial classes for families and discounts for signing up during the launch period.

CityFit is also leveraging direct marketing by sending personalised emails to potential customers in nearby areas, highlighting the benefits of the family plan. The company aims to increase memberships quickly but faces challenges in maintaining the value perception of its services while offering discounts.

Gourmet Snacks Ltd produces luxury crisps. The price of a 200g bag increased from $4 to $4.60, and sales fell from 20,000 to 18,000 bags per month. The management wants to determine the price elasticity of demand to assess the impact of future price changes.

FreshVeg Ltd sells organic vegetable boxes. The company recently reduced its price from $35 to $30 per box to attract more customers. Following the price cut, weekly sales increased by 50%. Management wants to calculate the PED to evaluate if the price reduction was effective.

UrbanRide Ltd. operates a bike rental service in major cities. The company recently increased the daily rental price of its basic bike package by 25%. Following the price change, the number of daily rentals dropped from 1,540 to 1,290. UrbanRide wants to calculate the PED to understand the impact of price changes on demand.

Elite Style is a well-established premium hairdressing salon located in the heart of a busy city centre. Over the last 12 years, the salon has become synonymous with personalised hair care and high-quality styling services aimed at working professionals and high-income clients. Its reputation has been built on attention to detail, luxury experiences and delivering exceptional results that reflect the salon’s premium pricing strategy

In response to shifting customer demands, Elite Style is preparing to introduce a new express styling service targeting busy professionals. The service will focus on quick, high-quality styling, including blow-dries, trims and styling touch-ups, all completed within a 30-minute timeframe. This initiative aims to attract clients looking for convenient solutions during lunch breaks or before meetings. Management has set a tentative price of $40 per appointment to reflect the salon’s premium image while remaining competitive

To justify the new service, Elite Style’s management team has relied heavily on secondary market research. Sources include industry reports on grooming trends, a competitor analysis and government data on local working populations. Data shows that 70% of full-time professionals in the city take 30–45-minute lunch breaks, and demand for quick grooming services has increased. Competitor research reveals that other express salons offer services ranging from 20 to 45 minutes, with customer satisfaction scores ranging between 82% and 91%

However, relying solely on secondary research carries risks. Specialist market reports are expensive, and there is concern that the data may be outdated or too broad for Elite Style’s niche clientele. Management recognises that additional primary market research may be needed to tailor the service to client preferences

Operationally, launching the express service will require adjustments. Elite Style will need to train existing staff, hire part-time stylists and invest in faster equipment to meet the express timeframe without compromising on quality. While the initial setup cost is estimated at $18,000, financial forecasts suggest that the express service could generate a net profit of $22,000 within six months if operational targets are met

The launch also presents opportunities for differentiation. Elite Style could bundle the express service with additional perks, such as complimentary consultations, loyalty schemes or corporate packages. The key challenge will be to ensure the service remains efficient while maintaining the premium standards the salon is known for

Table 1: Competitor Analysis

Table 2: Financial forecast for the express styling service (first six months)

Graph 1: Preferred hair styling service duration by urban professionals

The graph below shows customer preferences for express hair styling durations, based on Elite Style’s secondary market research

ActiveKids Academy provides extracurricular activity clubs for children, offering classes in gymnastics, dance and martial arts. Established eight years ago, the academy has built a strong reputation among parents for providing high-quality instruction and a safe, supportive environment for children. The academy’s mission is “to inspire confidence, fitness and fun through extracurricular activities”

The academy currently operates in two locations and is planning to expand to a third. The new location will allow the business to reach more families and offer more classes. However, this expansion will require significant investment. The costs include renting the new facility, purchasing equipment, such as gymnastics mats and martial arts gear, and hiring qualified instructors

ActiveKids Academy estimates the following costs and revenue for the new location:

• Fixed costs (e.g. rent and salaries): $45,000 per year

• Variable costs (e.g. equipment and utilities): $12 per student per session

• Revenue: $40 per student per session

To decide whether the expansion is financially viable, the academy is using breakeven analysis. This will help determine how many students need to enrol each year to cover all costs. The management team is also considering ways to increase the margin of safety to ensure the venture is profitable even if student numbers fluctuate

In the past, ActiveKids Academy has used a variety of promotional strategies to attract customers. Social media campaigns targeting parents in local communities have been highly effective, especially when combined with short-term offers such as discounted enrolment fees for new students. Partnerships with local schools have also been successful, with the academy hosting free taster sessions at school events. However, other strategies, such as print advertisements in local newspapers, have not been as successful, as they generated few enrolments when compared to the costs involved

For the new location, the academy plans to focus on promotions that directly engage parents and children. Free trial sessions will allow potential customers to experience the classes first-hand. Loyalty programmes, such as discounts for repeat enrolments or siblings being enrolled, are also being considered. To measure success, the academy will track key metrics, including enrolment numbers during promotions and conversion rates from trial sessions

The academy plans to promote the new location by combining elements of the marketing mix. Its product strategy will focus on offering popular and high-demand classes, such as gymnastics and dance, while introducing new classes such as yoga for kids. Pricing will remain competitive to attract parents, but premium classes with smaller group sizes may be offered at higher rates. Promotion will include free trial sessions, targeted social media ads and partnerships with local schools to build awareness

ActiveKids Academy’s stakeholders, including investors, are keen to understand the profitability of this new venture. Management is preparing a forecast to show the expected revenue, costs and breakeven point, as well as ideas for improving profitability over time

Table 1: Estimated costs and revenue for the new location

Table 2: Financial forecast (first year)

Table 3: Market research results

Verde Flora sells rare and exotic plants to collectors and gardening enthusiasts. The company has grown quickly, especially in online sales, but now faces cash flow problems. A forecast shows that Verde Flora will have a shortage of cash in the next three months because of seasonal demand and higher costs for imported plants. The company is proud of its reputation for high-quality products and wants to keep this standard while solving its financial problems

Verde Flora is thinking about ways to improve its cash flow. One idea is to reduce the number of plants it keeps in stock. This could free up money, but managers worry that it might cause stock shortages during busy seasons, upsetting customers. Another idea is to offer discounts to customers who pay early, which would bring in cash faster but could reduce profits. The company is also considering selling shares to an investor to raise money. This would provide long-term funding, but managers are concerned about losing some control of the business

Verde Flora also wants to improve its marketing and sales. The company uses magazine adverts, social media and influencers to attract new customers, especially urban professionals and eco-conscious gardeners. It aims to grow its customer base by 20% and increase its online visibility by 30%. Verde Flora mainly sells through its online store and delivers nationwide. Managers are now exploring partnerships with local gardening centres to allow customers to see and buy plants in person, which could improve customer convenience and boost sales

Table 1: Cash flow forecast for next quarter

Table 2: Marketing mix – Promotion and place