12 marks
Define ‘cost-plus pricing’.
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The Marketing Mix (Cambridge (CIE) IGCSE Business)
Exam Questions
4 hours40 questions24 marks
Case Study
PJA make fashion clothing for 16-25 year olds. Many of its competitors are multinational companies. PJA produce new products every 3 weeks. All PJA’s products are made in a local factory because of import quotas. The Managing Director is reviewing PJA’s financial statements using ratio analysis. An extract is shown in the table below.
Extract from PJA’s financial statements for 2020 | |
Revenue ($m) | 7 400 |
Gross profit ($m) | 3 330 |
Profit ($m) | 1 100 |
Current ratio | 1.5 |
Return on Capital Employed (ROCE) | 8% |
Outline one benefit and one limitation to PJA of developing new products.
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34 marks
Case Study
Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool. One of ALB’s objectives is to protect the environment. As part of his research, Tom calculated some costs that he could use in his break-even analysis. An extract is shown in Figure 2.1. ALB uses retailers to distribute its products. Tom thinks a successful entrepreneur has to be a good manager.
Outline two possible advantages to ALB of using retailers to distribute its products.
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42 marks
Identify one benefit and one cost to a business of developing new products.
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52 marks
Define ‘competitive pricing’.
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62 marks
State two elements of the marketing mix.
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74 marks
Case Study
Paolo wants to start up a business making cakes. He plans to sell all of his products to a wholesaler. Paolo knows the packaging for his products will be important. He has prepared some financial and sales data. An extract from this data is shown in the below table. Paolo is considering using crowdfunding as a source of finance. He knows the business will also need working capital.
Extract from Paolo’s financial and sales data | |
Average price per cake | $6 |
Average cost per cake | $4 |
Forecast average number of cake sales per day | 50 |
Outline two reasons why packaging will be important for Paolo’s business.
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84 marks
Case Study
LCT manufactures cooking pots. It has 16 employees. As a small business, LCT uses social media as its method of advertising. The owner, Carole, knows having a good brand image is important. She is analysing LCT’s break-even chart. This is shown in Fig. 2.1. Carole is considering possible ways to lower LCT’s break-even level of output.
Outline two possible benefits to LCT of having a good brand image.
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92 marks
Define ‘brand image’.
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102 marks
Define ‘marketing mix’.
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112 marks
Define ‘marketing budget’.
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124 marks
Case Study
Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and candy (sweets). When Pamela started her business 30 years ago she had no help to manage the shop. She now has 5 employees. Pamela knows maintaining customer loyalty is important. She uses competitive pricing. Most of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.
Outline two possible threats to Pamela’s business of using e-commerce.
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16 marks
Case Study
Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector activities, farming creates external costs and external benefits. Raul sells all 600 tonnes of his oranges direct to a drinks manufacturer in country E. The Government of country E plan to introduce either import tariffs or quotas. Raul said: ‘This might help country E’s Government achieve one of its economic objectives but how will it affect companies that export to country E?’
Explain two advantages to Raul’s business of selling direct to a manufacturer.
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28 marks
Explain one cost and one benefit for PPE of developing a new product.
Refer to the following insert when answering the question.
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36 marks
Do you think cost-plus is the best pricing method for a new business to use when selling products to a niche market? Justify your answer.
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46 marks
Do you think giving out free samples is the best method of sales promotion for a business to use when promoting a new food product? Justify your answer.
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56 marks
Do you think using wholesalers is the best way for a large business to distribute its products? Justify your answer.
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66 marks
Do you think competitive pricing is the best method for an established business to use? Justify your answer.
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76 marks
Case Study
CHW manufactures electrical products including cameras. The business is developing new products. The Managing Director knows that the stage of the product life cycle can influence CHW’s marketing decisions about promotion. He is analysing data for one of its products. An extract is shown in the table below. The business would also like to introduce flow production into the factory.
Extract from CHW’s data for one type of camera (2021) | |
Selling price per unit ($) | 120 |
Variable cost per unit ($) | 40 |
Fixed costs ($) | 200 000 |
Margin of safety (units) | 500 |
Explain two ways in which the stage of the product life cycle might affect CHW’s marketing decisions about promotion.
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88 marks
Explain four ways Yasin can advertise MB’s products.
Refer to the following insert when answering the question.
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96 marks
Do you think adding new features to a product is the best extension strategy for a manufacturing business to use? Justify your answer.
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106 marks
Case Study
Kemala makes high-quality beauty products. Demand for her best-selling hand cream is price inelastic. She advertises her products in specialist beauty magazines. Kemala is analysing her income statement. An extract is shown in the table below. She said: ‘When I started my business, I did not understand why cash is important’.
Extract from Kemala’s income statement 2021 ($000) | |
Revenue | 480 |
Gross profit | 192 |
Profit for the year | 72 |
Explain two possible reasons why demand for Kemala’s best-selling product is price inelastic.
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118 marks
Explain four roles of packaging for CC’s products.
Refer to the following insert when answering the question.
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126 marks
Do you think retailers are the best channel of distribution for a manufacturing business to use? Justify your answer.
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136 marks
Case Study
NLR manufactures a range of branded skincare products including hand cream. Packaging of the products is important. Like many businesses, NLR makes use of market segmentation. The Marketing Director knows the stage of the product life cycle can influence NLR’s pricing decisions. He is analysing market research data. This shows 85% of consumers expect businesses to respond to environmental pressures.
Explain how NLR’s pricing decisions might be affected at two different stages of the product life cycle.
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146 marks
Do you think selling to a wholesaler is the best channel of distribution for a start-up business to use? Justify your answer.
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156 marks
Do you think social media is the best method of advertising for a small business to use? Justify your answer.
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168 marks
Explain two limitations and two benefits to a business of developing new products.
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176 marks
Case Study
GBU is a public limited company. It makes a range of beauty products including shampoo and soaps for the mass market.
Last year GBU’s revenue fell. The Marketing Director has been looking at some results from its primary market research. It was based on a sample of 2000 people, see Fig. 4.1. She believes maintaining customer loyalty is more important than attracting new customers.
Explain two advantages to GBU of using shops as a channel of distribution.
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186 marks
Case Study
Gino owns a fast-food restaurant selling fried chicken and potato fries. He employs 5 full-time chefs and 12 part-time workers to serve the food. Communication is important and Gino has regular meetings with his part-time employees to keep them informed about any changes in the menu. It took 3 years before Gino’s business was able to break-even. He aims to achieve a Return on Capital Employed (ROCE) of 10%. Gino is always looking for ways to increase the number of customers. Inflation may be a problem for Gino’s business.
Explain two ways Gino could increase the number of customers.
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196 marks
Do you think advertising in specialist magazines is the best way for a business to promote high-quality products? Justify your answer.
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206 marks
Do you think promoting the brand image is the most important role of packaging? Justify your answer.
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112 marks
Consider the advantages and disadvantages of the following three sales promotion methods Gemma could use for the new shop.
Buy one, get 50% off second purchase
10% off everything in the shop for one week after opening
Pay a celebrity to open the shop
Recommend which method Gemma should choose to maximise revenue. Justify your answer.
Refer to the following insert when answering the question.
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212 marks
Consider the advantages and disadvantages to FO of using a wholesaler, retailer or selling direct to the customer when distributing its products. Which channel of distribution should FO use? Justify your answer.
Refer to the following insert when answering the question.
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312 marks
Consider the opportunities and threats of e-commerce for SA. Which is likely to have the greatest effect on SA? Justify your answer.
Refer to the following insert when answering the question.
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412 marks
Consider the advantages and disadvantages of the two CC brands. Which brand should CC stop producing?
Justify your answer.
Refer to the following insert when answering the question.
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512 marks
Using Appendix 3 and other information, consider the three options for the future growth of SA. Which option should Tokumbo choose? Justify your answer using appropriate calculations.
Refer to the following insert when answering the question.
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612 marks
Consider the advantages and disadvantages of the following two options for SSE to distribute its products in the new markets in other countries.
Sell direct to customers using SSE’s website
Sell to large sports retailers in other countries
Which option should SSE choose? Justify your answer.
Refer to the following insert when answering the question.
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712 marks
Consider the following three elements of a suitable marketing mix for CC’s new range of personalised mobile phone covers.
Pricing method
Method of promotion
Place - distribution channel
Justify which element is the most important.
Refer to the following insert when answering the question.
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812 marks
Consider the following three pricing methods PPE could use when launching its new product.
Cost-plus
Penetration
Skimming
Which pricing method should it use? Justify your answer.
Refer to the following insert when answering the question
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