Business

Management
Unit 4: Marketing

Workbook

Student Name ____________________

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Table of Content
Table of Content..................................................................................................................... 2
4.1 Introduction to Marketing....................................................................................................3
4.2 Marketing Planning............................................................................................................ 4
4.3 Sales Forecasting (HL only)...............................................................................................7
4.4 Market Research..............................................................................................................10
4.5 Seven P’s of the Marketing Mix........................................................................................13
4.6 International Marketing (HL only)..................................................................................... 25

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4.1 Introduction to Marketing

Soft Skin Cosmetics (SSC) (May 2021 HL)

Soft Skin Cosmetics (SSC) is a private limited company that produces a small range
of face creams and soaps. Its products are designed and produced in the United
States, and are made from safe, natural ingredients.

SSC has a product-orientated marketing approach. Tiffany Presley, one of the

company’s co-founders, believes that SSC’s consumers value health above fashion.
“The skincare market is full of toxic products, but ours are healthy even if they don’t
smell or look as nice,” she says. Chelsea Presley, SSC’s other co-founder, wants to
develop the first sunscreen free of synthetic chemicals. However, product innovation
is costly and risky. If the new sunscreen is a failure, several years of research and
development costs will be wasted, which SSC cannot afford. SSC currently lacks the
scale to innovate.

(a)​Explain one advantage and one disadvantage for SSC of having a

product-orientated marketing approach. [4]

An advantage to SSC of having a product-based marketing approach is

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a competitive advantage as making healthier products in a market of
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toxic skincare products would allow SSC to have a unique selling point and
develop greater brand awareness and loyalty.
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A disadvantage to SSC of having a product-based approach is that
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4.2 Marketing Planning

Sokol restaurant (Nov 2012 SL)

Sokol is a well-established traditional restaurant in a village in Slovenia. Sokol has a

new owner, Andrej Marinic. Andrej conducted some market research in order to
analyze Sokol’s business environment and reached the following conclusions:
●​ Sokol has a good market share: last year, it served 12,000 out of the 60,000
meals served in total by all the restaurants in the village
●​ Sokol has two target markets: (i) young locals who want to eat out with
friends, (ii) tourists who want traditional Slovenian dishes.

(a)​Calculate Sokol’s market share for the last year.​ ​ ​ ​ [2]

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(b)​Define target market.​ ​ ​ ​ ​ ​ ​ ​ [2]

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Andrej has constructed a position map using the two axes of price (cheap or
expensive) and styles of food (traditional or modern). The research showed that
Sokol is perceived as cheap and traditional. Sokol’s three main competitors have the
following characteristics:
●​ Restaurant A: very expensive and very modern
●​ Restaurant B: cheap and traditional
●​ Restaurant C: cheap and modern

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 (c)​Construct the position map of Sokol before Andrej made any changes to his
restaurant.​ ​ ​ ​ ​ ​ ​ ​ ​ ​ [4]

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The position map helps Andrej identify a new business opportunity: keeping the
same traditional style but changing to a more expensive, exclusive, up-market
image. Sokol would target two new market segments: (i) locals for special occasions
such as family celebrations, (ii) tourists who are prepared to pay higher-than-average
prices.

(d)​Explain two benefits of market segmentation and targeting specific markets

for Sokol.​ ​ ​ ​ ​ ​ ​ ​ ​ ​ [4]

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EkoLogiczne Ltd. (EL) (May 2023 SL)

EkoLogiczne Ltd. (EL) is a packaging company owned 60% by Marek Kowalski and
40% by his father. EL is a private limited company. Marek founded the company
when he realized that the rise in e-commerce would mean the demand for packaging
would always increase.

Originally, Marek imagined that EL’s unique selling point/proposition (USP) would be
to offer recyclable packaging. However, the eco-friendly market was dominated by
one large company, Big Boxes (BB), which enjoyed economies of scale. Marek
reimagined his USP: EL would have small factories that enabled customized orders
to be fulfilled quickly.

Over time, EL opened four factories across Poland and the Czech Republic. Its
customers, which included online retailers and small manufacturing companies,
placed orders online; if the factory nearest the customer was too busy with other
orders, the order would be shifted to another factory. Many customers chose EL
rather than BB for this reason. With growth, however, EL began to experience
diseconomies of scale and increasingly failed to fulfil orders on time.

(a)​Explain one advantage and one disadvantage for EL of having a unique

selling point/proposition (USP). [4]

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4.3 Sales Forecasting (HL only)
Fun-Games (Nov 2008 HL)

Fun-Games is a well known national private limited company, which prides itself on
its innovative computer games and dedicated workforce. A recession is predicted for
the coming three years in the domestic economy, so the managers of Fun-Games
are considering expansion into overseas markets. The preferred option is expansion
into nearby countries that are also members of a Free Trade Area*, although
research showed that the exchange rate had fluctuated significantly in the last few
years.

While accepting the need for a growth strategy, the marketing director is worried
about Fun-Games’ lack of experience of operating in overseas markets; cultural,
linguistic and social difficulties may be encountered. The financial director is worried
about the lack of funds for expansion. The managers of Fun-Games are considering
the best option for external expansion and intend to use median sales trend data
from the previous seven years, to help make a decision.

Fun-Games computer games sales record: 2001-2007

Financial year Median Sales

2001 5000 units

2002 5500 units

2003 4500 units

2004 8600 units

2005 9100 units

2006 9300 units

2007 11000 units

(a)​Describe one feature of a private limited company. [2]

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(b)​
(i)​ Describe how the median sales of computer games per year for
Fun-Games could have been calculated. [1]

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(ii)​ On the graph, plot the median sales of computer games per year since
2001 (show your labeling carefully). [2]
(iii)​ On the graph you plotted in (b)(ii), construct a line of best fit through
the median sales data. [1]

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 (iv)​ On the graph you constructed in (b)(iii), draw (extrapolate) a value for
median sales in 2008 and 2009 from the line of best fit. [2]

Extrapolated value 2008: …………………………………………………….

Extrapolated value 2009: …………………………………………………….

(c)​Explain one limitation in the use of the sales forecasting model for
Fun-Games. [2]

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4.4 Market Research

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 sell 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, SV 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 SV, exist. As a result, SV 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.

(a)​With reference to SV, explain one advantage and one disadvantage of using
secondary market research. [4]

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Pablo’s Peanuts (PP) (Nov 2020 SL)

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 (PP) 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.

(a)​Explain two reasons why Pablo conducted primary market research. [4]

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JVS (May 2018 SL)

JVS is a successful manufacturer of designer clothing. A marketing expert described

JVS’s brand name, Izzys, as one of the business’s major strengths. Because of its
market orientation approach, JVS spends significantly more on market research than
its competitors.

JVS’s products are:

●​ Izzys, a range of high-quality fashion jeans, which contributes 70% towards
JVS’s revenue and profit. The market for this range is not growing.
●​ IzzDen, a range of denim jackets, which is near the end of the product life
cycle. Manufacturing of this product will cease later this year.

Izzys and IzzDen are sold through high-end independent retailers throughout
countries in Europe. JVS uses a competitive pricing strategy for these two products.
Consumers perceive JVS as fashionable. They also believe that JVS’s products are
worth the premium price.

JVS is considering launching a new product, a range of fashionable shorts -Izzless-

aimed at the 15-19 age group. With this product, JVS would reach a different, but
highly competitive, market. Focus groups revealed that many low-income young
consumers want to purchase fashion shorts. JVS would sell the new shorts to mass
market discount retail stores. Consumers would also be able to order online for
next-day delivery.

(a)​Explain one advantage and one disadvantage for JVS of using focus groups
for its market research. [4]

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Easy Ride Ltd. (ER) (Nov 2022 HL)

Easy Ride Ltd. (ER) is a medium-sized private limited company that manufactures
gasoline (petrol)-powered scooters that are sold worldwide. Customers think that
ER’s scooters are good value for money. However, increased global competition in
both the gasoline-powered and electric scooter markets, and a shift in customers’
demands, has resulted in a significant drop in sales.

ER commissioned market research in the Middle East using focus groups. This
research revealed that consumers:
●​ perceive competitors as medium-price/medium-quality providers
●​ have highly innovative products as their top priority
●​ want products and production methods to be environmentally friendly.

ER’s employees have expressed dissatisfaction with the use of flow production. ER
is no longer profitable and is highly geared.

Given the pace of change in the scooter industry, ER’s management wants to react
quickly and is considering two options for research and development.

Loan capital from a bank with low interest rates, aimed at helping small to medium
enterprises (SMEs), is being considered for financing either option.

(a)​Explain one advantage and one disadvantage for ER of commissioning

market research using focus groups. [4]

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4.5 Seven P’s of the Marketing Mix

Jacob Strutz (JS) (Nov 2018 SL)

Jacob Strutz (JS) is an American multinational company that produces jeans.

Founded in 1860, for 100 years JS enjoyed steady growth in sales, mostly in the
United States and then in Canada and Mexico. In the 1960s and 1970s, when
teenagers worldwide began wearing jeans, JS’s sales increased significantly. JS’s
premier product is Strutz’s No.5 jeans, one of the best-known brands in the world.

In the late 1970s, JS operated 71 factories in the United States. In 1994, its sales
peaked at $7.6 billion worldwide, but then began to decline. In 2002, JS made the
decision to close its last remaining factories and outsource manufacturing to foreign
manufacturers, whose quality was more difficult to control. By 2017, annual sales
were only $4.5 billion. Even sales of Strutz’s No.5 jeans declined, and JS faced
intense competition, including foreign competition.

(a)​
(i)​ Draw and label a product life cycle for Strutz’s No.5 jeans. [2]

(ii)​ Explain the position of Strutz’s No.5 jeans on the product life cycle. [2]

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JS briefly experimented with fast fashion, an industry practice developed in the
United States in response to cheap, foreign imports. In fast fashion, new design
concepts are quickly manufactured once they have been tested at fashion shows.
Unfortunately, fast fashion worked against JS’s brand identity. Surveys indicated that
JS’s brand has value and inspires loyalty, though focus groups of young consumers
did not perceive JS as cool.

(b)​Explain the importance to JS of:

(i)​ Brand value. [2]

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(ii)​ Brand loyalty. [2]

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Cool Meals (CM) (Nov 2019 HL)

Cool Meals (CM) produces frozen organic ready-made meals that are sold to food
retailers throughout the country.

CM buys large quantities of organic ingredients from local farmers for its just-in-case
(JIC) stock control management. It uses a cost-plus (mark-up) pricing strategy.

CM is known for its:

●​ good-quality organic frozen meals, which are perceived as good value for
money
●​ flexibility with retailers in terms of quantity of meals supplied, credit given and
efficient delivery at pre-arranged dates
●​ corporate social responsibility (CSR) based on a long-term commitment made
to farmers to purchase large quantities of organic ingredients every four
months and pay a fair price promptly
●​ CM has an excellent working relationship with farmers, who always prioritize
CM’s requests in terms of quantity and delivery.

Recently, an economic downturn and increased competition, especially from

non-organic frozen meal suppliers, has decreased demand for frozen organic meals.

(a)​Explain one advantage and one disadvantage for CM of using a cost-plus

(mark-up) pricing strategy. [4]

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Mattie Eats (ME) (Nov 2023 SL)

Mattie Eats (ME) is a small fast-food chain selling a range of products. Between
2017 and 2021, ME expanded into small local towns.

Overall ME has been profitable, but its profits started to fall in 2020. The chief
executive officer (CEO) is concerned about the future.

The competition in the vegan fast-food industry is intense. Consumers see the
products as undifferentiated and demand value for money. Last year, ME increased
its above-the-line promotion to attract more customers.

In 2024, ME will launch a 100% vegan drink aimed at health-conscious consumers.

A loss leader pricing strategy will be used.

(a)​Explain one advantage and one disadvantage for ME of using a loss leader
pricing strategy for the new product that will be launched in 2024.

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JVS (May 2018 SL)

JVS is a successful manufacturer of designer clothing. A marketing expert described

JVS’s brand name, Izzys, as one of the business’s major strengths. Because of its
market orientation approach, JVS spends significantly more on market research than
its competitors.

JVS’s products are:

●​ Izzys, a range of high-quality fashion jeans, which contributes 70% towards
JVS’s revenue and profit. The market for this range is not growing.
●​ IzzDen, a range of denim jackets, which is near the end of the product life
cycle. Manufacturing of this product will cease later this year.

Izzys and IzzDen are sold through high-end independent retailers throughout
countries in Europe. JVS uses a competitive pricing strategy for these two products.
Consumers perceive JVS as fashionable. They also believe that JVS’s products are
worth the premium price.

(a)​Explain one advantage and one disadvantage to JVS of using a competitive

pricing strategy. [4]

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JP (May 2019 HL)

JP produces electric guitars. It is a cooperative owned by a committed workforce

who share in the management and success (or failure) of the company and its
profits. Workers enjoy having control over the workplace and are productive.
However, JP’s continued success is threatened by insufficient finance, which
prevents them from spending more on traditional promotional methods.

JP’s guitars are expensive relative to the competition but are known for their quality.
Its customers are very brand loyal. The use of social media marketing by many
famous musicians influences JP’s brand loyalty and awareness. Unfortunately for JP,
one especially famous musician using a JP guitar on social media recently received
negative publicity about his private life.

(a)​Explain one positive and one negative impact of social media marketing on
JP’s promotional strategy. [4]

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Ultimate Warrior Gym PLC (UWG) (Nov 2023 HL)

Ultimate Warrior Gym PLC (UWG) has 212 gyms nationwide. Ali Smith is the
chairman and majority shareholder. UWG’s business model involves providing
high-tech equipment and employing personal trainers (PTs). In the past, UWG has
struggled to recruit well-qualified PTs.

UWG is competitively priced, offers monthly contracts, and is open 24 hours a day,
seven days a week. UWG uses social media marketing, including online forums.
Through these forums, many members and PTs have formed friendships that give
membership a rewarding social dimension. 95% of UWG’s members renew their
monthly contract. PTs are paid minimum wage but are allowed to organize private
training sessions with UWG’s members. Consequently, it is common for only one
member of staff to be on duty at a time. Recently, a gym member was seriously
injured while lifting inappropriate weights unsupervised.

The accident was a news item in the national media and required a crisis
management response. Ali immediately recorded a video and posted it to UWG’s
social media platforms. Apologizing for the accident, he announced that the PT
contracts will be changed and they will no longer be allowed to arrange private
training sessions. Ali also offered compensation to the person who was injured.
However, an image mocking UWG was shared 50000 times on social media.

(a)​Explain one advantage and one disadvantage for UWG of using social media
marketing. [4]

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Vegan Supplies (VS) (Nov 2023 HL)

Five years ago, Michael Thompson opened Vegan Supplies (VS) as a vegan food
wholesaler selling to the restaurant industry. Two years ago, VS also began
producing its own range of high-quality vegan food. VS’s vegan product range
includes cheese and burgers, kebabs and sausages. Michael built VS’s customer
base for this product range by frequent attendance at trade exhibitions. VS mostly
employs staff who are vegan, and Michael has a broad objective of promoting
veganism. VS’s vision statement is “to build a vegan world”. Michael encourages an
organizational culture designed to promote vegan philosophy and lifestyles.

A total of 60% of VS’s sales are products purchased for resale, and the remaining
40% of sales are from VS’s own vegan product range. However, sales of the VS
brand vegan foods from their own production are increasing, and Michael is keen to
see this trend continue.

Michael works closely with suppliers and restaurants to provide the products that
restaurants want. VS mainly uses below-the-line promotion to market their products.

(a)​Explain one advantage and one disadvantage for VS of using below-the-line

promotion. [4]

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BVC (May 2016 HL)

BVC manufactures canned energy drinks. It produces the market leading energy
drink, Beta+, which is sold directly to, and exclusively in, sports clubs. BVC
encourages intrapreneurship and innovation within its organization.

To purchase Beta+ legally, the consumer has to be over the age of 18. However,
many younger teenagers illegally purchase these drinks. Sales of Beta+ have grown
dramatically.

To have legal sales to teenagers aged 17 and below, BVC created Beta Lite, which
has a much lower caffeine and sugar content than that of Beta+. Beta Lite will be
sold using long distribution channels and to a range of retail outlets.

(a)​Explain one advantage and one disadvantage for BVC of using long
distribution channels for Beta Lite. [4]

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Turners (May 2014 HL)

Turners is a famous hotel located in a large city. It is positioned as having the highest
quality of customer service and most of the employees have worked for Turners for
over ten years. Regular customers like knowing the employees at reception and
other areas of the hotel. Many customers have commented on the unique style of
customer service at Turners. They like the fact that the people in the photographs
used in promotional materials are actually the people they interact with when staying
at Turners.

Turners has an expensive, award-winning restaurant. Turners had used a premium

pricing strategy with room rates at over $1000 per night. However, new competition
from three other recently opened hotels and other changes in the external
environment have resulted in revenue becoming more cyclical. Profits are falling.

Surprisingly, the General Manager, Shane Peterson, also received some negative
customer feedback from a random sample of customers. Firstly, they claim that
Turners’ online booking system is slow and unreliable. Customers complain of an
overbooked restaurant and untidy leisure facilities. Business customers argue that
the newer competing hotels offer better customer service, high-speed internet and
other business services for no extra charge. As a result, Shane is reviewing Turners’
marketing mix.

(a)​Explain one advantage and one disadvantage to Turners of using a premium

pricing strategy. [4]

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(b)​Explain the importance of people, process, and physical evidence for Turners.
[6]

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Flussbiegung CityRoller (FC) (Nov 2016 SL)

Flussbiegung CityRoller (FC) is a privately held company that sells scooters in a

large German city. Its shop is situated in an excellent location near the city centre. In
2014, FC sold 1200 scooters at a sales price of €2200 per scooter. The business has
few variable costs.

FC only sells one brand of scooter, called Rasen, which consumers regard as high
quality.

Despite Rasen’s reputation for quality, in the last five years FC’s market share has
decreased. Rasen’s manufacturer has also been losing market share across
Germany. The problem, according to FC, is that the manufacturer does not invest
enough to update the brand’s image. Rasen scooters appeal to an older generation
in Germany, but younger people prefer products that are fashionable. FC uses below
the line promotions. These promotions do not have the same influence on market
perception as the manufacturer’s above the line promotions, which emphasize
Rasen’s quality. Another possibility for Rasen is, rather than update its brand image,
to maintain its current brand identity but try to sell its product in different geographic
markets where its current brand identity may have more appeal, such as in eastern
Europe or Africa.

(a)​ Explain the relationship between Rasen’s product life cycle and FC’s
marketing mix. [4]

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Vinn (May 2016 HL)

Vinn is an American public limited company. It mass-produces jeans sold worldwide.

Twelve years ago, production was offshored to China and Turkey to reduce
manufacturing costs. To benefit from economies of scale, Vinn sells standardized
regular-fit jeans. Vinn uses an identical marketing mix
globally.

Despite the global popularity of American jeans, Vinn has experienced a significant
fall in demand due to:
●​ customer complaints about poor quality jeans
●​ economic recessions in Vinn’s main markets. However, economic forecasts
expect improvements within two years
●​ increased global competition of mass-produced clothes
●​ anti-globalization pressure groups. For example, a local pressure group,
“B-Local”, has criticized Vinn’s undifferentiated advertising campaigns as
inappropriate for all international markets and cultures.

In addition, Vinn’s management is worried about labour costs in China rising faster
than the United States (US). It also has communication problems with its offshored
employees.

(a)​Explain one advantage and one disadvantage for Vinn of using an identical
marketing mix globally. [4]

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4.6 International Marketing (HL only)

Pacific Blue (May 2009 HL)

In 2007, the low cost airline Pacific Blue entered the New Zealand market with an
initial offer to sell 70000 tickets at low prices on flights between Auckland,
Christchurch and Wellington. Almost half of the $29 tickets were booked online
within hours. Chief executive Brett Godfrey expressed his surprise: “It almost caused
our website to crash”.

Air New Zealand and QANTAS, the established market leaders, were quick to
respond to the new competitor by cutting prices to $49. A director of Air New
Zealand doubted whether Pacific Blue could sustain these prices as part of its
long-run strategy to enter the New Zealand market. She also questioned whether the
company could satisfy demand with only 2 planes for 11 scheduled flights per day
between Auckland and Wellington, the most popular route. By contrast, Air New
Zealand uses 7 planes on the same route. A QANTAS director has commented that
Pacific Blue could face significant capacity utilization problems.

Brett Godfrey accepted that Pacific Blue might run at a loss initially, but he was also
confident about penetration pricing: “we have done this before in Australia and we
have money in the bank to survive and hope to offer more routes, subject to
government approval and the support of the New Zealand public.”

Air New Zealand and QANTAS promised to remain competitive.

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(a)​Using the information in the stimulus, evaluate two potential opportunities and
two potential threats which Pacific Blue could face when entering into a new
international market. [10]

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