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Cambridge IGCSE0450

Marketing strategy

Business Studies 0450 Chapter Notes

What this chapter covers

Marketing strategy - Justify marketing strategies appropriate to a given situationMarketing strategy - The nature and impact of legal controls related to marketingMarketing strategy - The opportunities and problems of entering new foreign markets
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Marketing strategy notes

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In this chapter

  1. 1The marketing mix and consumer decisions
  2. 2Which element matters most
  3. 3What a marketing strategy is
  4. 4Applying a strategy to the business
  5. 5Recommending and justifying a strategy
  6. 6What legal controls on marketing are
  7. 7Misleading promotion
  8. 8Faulty and dangerous goods
  9. 9Judging the impact on a business
  10. 10Growth potential of new markets
  11. 11Problem: cultural differences
  12. 12Problem: lack of knowledge
  13. 13Problems: language, tariffs and exchange rates
  14. 14Overcoming problems: joint ventures
  15. 15Overcoming problems: licensing and local staff
  16. 16Choosing how to enter a new market

1. The marketing mix and consumer decisions

The marketing mix is price, product, promotion and place. Each element can influence whether a consumer buys.

A low price may attract customers. Promotion makes potential customers aware of the product. The channel of distribution decides where and how customers can buy it.

The mix has four elements. Location is not one of them, and neither is market research.

Examiner insight

“A common mistake was to confuse the term with market research, product development or incorrectly listing elements of the marketing mix.” “However, some candidates focused on location which is not an element of the marketing mix.”

Worked example 14 marks

Briar Lane Bakery is a small bakery that has just started selling a new range of gluten-free cakes in its home town. Explain one way an element of the marketing mix could influence customers to buy the new cakes.

  1. 1

    Knowledge: promotion makes potential customers aware of a product [1]. [1]

  2. 2

    Application: local people do not yet know that Briar Lane sells gluten-free cakes [1]. [1]

  3. 3

    Analysis: once they know, customers who need gluten-free food try the cakes [1]. [1]

  4. 4

    Analysis: trial purchases raise the bakery's sales [1]. [1]

2. Which element matters most

No element is always the most important. The stage of the product, the competition and the size of the business all change the answer.

For a new product in the introduction phase, price and promotion are the two to weigh up. A business with little or no competition and established promotion and distribution has less need to work on those two.

A small business may find television too costly. A long distance to customers makes a cost effective delivery method matter more.

Examiner insight

“There were a large number of answers that included some justification in the recommendation of whether price or promotion was the most important during the introduction phase but a number of candidates just said both were important without any further justification.” “Good answers took into account the fact that there was little or no competition and that MF was already a large successful company with established promotion and distribution methods.”

Worked example 16 marks

Corvane Kitchens is a large, successful company that sells ready meals through its own delivery vans and a well-known advertising campaign. It is launching a new vegetable curry that no rival sells. Explain why promotion and distribution may be less important for Corvane Kitchens than for a new small business.

  1. 1

    Knowledge: a business with established promotion and distribution methods does not need to build them [1]. [1]

  2. 2

    Application: Corvane already has delivery vans and a known advertising campaign [1]. [1]

  3. 3

    Analysis: it can reach customers with the curry at little extra cost [1]. [1]

  4. 4

    Knowledge: with little or no competition, customers have no rival product to choose [1]. [1]

  5. 5

    Application: no other business sells a vegetable curry like Corvane's [1]. [1]

  6. 6

    Analysis: the curry can win sales without heavy promotion to pull customers away from rivals [1]. [1]

3. What a marketing strategy is

A marketing strategy is a plan based on combining elements of the marketing mix. It is used to help achieve marketing objectives.

A strategy is a combined plan, not one element on its own. Naming price or product alone is not a strategy, and neither is a bare list of the four elements.

Give both parts of the definition: the plan, and the objectives it helps to achieve. Only the best responses showed a clear understanding of the term.

Examiner insight

“This term was not well understood by a number of candidates and many provided an imprecise definition.” “Some were aware that a marketing strategy was either a plan based on combining elements of the marketing mix or it was used to help achieve marketing objectives.”

Worked example 14 marks

Fenwick Bikes is a small shop that sells bicycles to families in one town. Explain what is meant by a marketing strategy, using Fenwick Bikes as an example.

  1. 1

    Knowledge: a marketing strategy is a plan based on combining elements of the marketing mix [1]. [1]

  2. 2

    Knowledge: it is used to help achieve marketing objectives [1]. [1]

  3. 3

    Application: Fenwick Bikes could combine leaflets in the town with a low price on family bicycles [1]. [1]

  4. 4

    Analysis: the two elements together work towards the objective of more family customers [1]. [1]

4. Applying a strategy to the business

A strategy must suit this business and this product. Name a method for each element, then say why it suits the product.

‘Set a low price’ is not a method. Penetration pricing, price skimming and competitive pricing are methods. A promotion method might be free samples, local newspapers, billboards or leaflets. For place, name a channel of distribution, not a location.

Read which product the question is about. A mass market product needs a different mix from a handmade one.

Examiner insight

“Weaker candidates simply referred to the element itself and did not attempt to apply it to the new product, such as ‘setting a low price is important to attract customers’, whereas better candidates gave answers that referred to a suitable pricing method and then explained why it was suitable for this new product.” “A common error by weaker candidates was again based around the fact that they did not recognise this marketing mix was for Fizz Bomm, a mass market product, but discussed handmade chocolates instead.”

Worked example 16 marks

Tessel Pens makes personalised pens in a small workshop and sells them in one town. It is launching a new pen for students. Recommend one pricing method and one promotion method for the new pen. Explain why each is suitable.

  1. 1

    Knowledge: penetration pricing is a low price set to attract customers [1]. [1]

  2. 2

    Application: students have little money to spend on a new pen [1]. [1]

  3. 3

    Analysis: a low price encourages them to try Tessel's pen, which builds sales [1]. [1]

  4. 4

    Knowledge: free samples are a method of promotion [1]. [1]

  5. 5

    Application: Tessel could give a free pen to students at the local college [1]. [1]

  6. 6

    Analysis: students who try the pen become aware of it and may buy more [1]. [1]

5. Recommending and justifying a strategy

A recommendation is a decision. State which strategy the business should choose, and justify it with reasons from the case.

Explain why the other options are less significant. A one-sided answer, or one that says all options are important, earns less.

Answer the question asked. If it asks whether the marketing mix is suitable, say whether it is suitable and why.

Examiner insight

“Answers did not often state whether the marketing mix was suitable, which resulted in very few answers achieving the Level 3 mark band.” “Stronger candidates included a justified conclusion about the most serious problem faced by SSM, and also justified why the other problems were less significant.”

Worked example 112 marks

Hollin Juices makes fresh fruit juice and sells it at local markets. The owner is planning to sell the juice in supermarkets and to advertise it on local radio. Recommend whether this marketing strategy is suitable for Hollin Juices. Justify your answer.

  1. 1

    Knowledge: selling through supermarkets is a new channel of distribution [1]. [1]

  2. 2

    Application: supermarkets would put Hollin's juice in front of more customers than local markets [1]. [1]

  3. 3

    Analysis: more customers can buy the juice, so sales rise, but supermarkets add their own margin, which raises the price [2]. [2]

  4. 4

    Knowledge: radio is a method of promotion that makes people aware of a product [1]. [1]

  5. 5

    Application: local radio reaches the area where Hollin already sells its juice [1]. [1]

  6. 6

    Analysis: listeners become aware of the juice, so they look for it in the supermarket and sales rise [2]. [2]

  7. 7

    Evaluation: the strategy is suitable, because radio and supermarkets work together to reach more customers [2]. [2]

  8. 8

    Evaluation: radio matters more than supermarkets at first, because shoppers must know the juice before they look for it [2]. [2]

Recap

  • The marketing mix is price, product, promotion and place. Location is not an element.
  • Which element matters most depends on the circumstances: product stage, competition and the size of the business.
  • A marketing strategy is a plan combining elements of the marketing mix to achieve marketing objectives.
  • Name a method for each element, then say why it suits this product.
  • A recommendation is a decision, justified with reasons from the case.
  • Say why the other options are less significant.

7. Misleading promotion

Misleading promotion is an advert or label that gives customers a false picture of a product. Businesses are not allowed to carry out misleading advertising.

A business must change a misleading advert or label. Having to redo the promotion is a cost. Sales may also fall if the claim was the reason customers bought.

The control affects only promotion that is misleading. A truthful advert is not touched, so some businesses need to change nothing. The control applies to all businesses, not just one.

Examiner insight

“The possible impact on sales from misleading promotion was often stated but very little was usually discussed about the costs of having to redo the current promotion or that misleading promotion may not apply to the branded toys TT intends to sell.” “Only a minority of candidates referred to the advertisement in the insert and very few realised that it would only affect adverts that were misleading.”

Worked example 16 marks

Dalton Dairy sells yoghurt in tubs marked '100% natural'. The tubs contain artificial flavouring. A new law bans misleading promotion. Explain two ways this law could affect Dalton Dairy.

  1. 1

    Knowledge: misleading promotion must be redone. [1]

  2. 2

    Application: '100% natural' is false, so Dalton must redesign and reprint its tubs. [1]

  3. 3

    Analysis: the new tubs raise Dalton's costs, which reduces its profit. [1]

  4. 4

    Knowledge: sales may fall without the claim. [1]

  5. 5

    Application: customers who chose Dalton for a natural yoghurt may buy from a rival dairy. [1]

  6. 6

    Analysis: Dalton sells fewer tubs, so its revenue falls. [1]

8. Faulty and dangerous goods

Goods must be safe for the consumer. A business cannot sell dangerous goods, and it cannot sell faulty goods that do not work as they should.

A business with an unsafe or faulty product may have to change the product or stop selling it. Changing it raises costs. Stopping it loses sales. Customers who hear of the problem may lose trust, which harms the reputation of the business.

Name the effect on the business, then follow it through to sales, revenue or profit. Write about the business, not about the injured customer. "Being sued" is one point: it earns credit once, however many controls it is repeated under.

Examiner insight

“The majority of candidates could confidently discuss ‘all goods must be safe for the consumer’ and relate their answers to children and the likelihood of children being hurt if the products were unsafe.” “There were many repetitions across the three legal controls such as being sued if the legal controls were not followed.”

Worked example 16 marks

Finch Toys sells wooden toy trains for children aged two. A law says all goods must be safe for the consumer. A customer reports that a wheel on one train can come off. Explain two ways this law could affect Finch Toys.

  1. 1

    Knowledge: an unsafe product cannot stay on sale. [1]

  2. 2

    Application: a loose wheel is a danger to two-year-old children, so the train must come off sale until it is fixed. [1]

  3. 3

    Analysis: Finch sells no trains during that time, so its revenue falls. [1]

  4. 4

    Knowledge: selling unsafe goods harms the reputation of a business. [1]

  5. 5

    Application: parents will not trust Finch with toys for young children. [1]

  6. 6

    Analysis: fewer parents buy any Finch toy, so sales of its other toys fall too. [1]

9. Judging the impact on a business

The effect of a legal control depends on the business. A business that already sells high quality products and makes truthful claims may not be affected. It may even benefit from the new standards.

A business with doubtful claims or unsafe goods faces higher costs and lost sales. Use the case: its products, its claims, its customers.

Build a chain of reasoning: how the control affects the business, the impact on sales or costs, then the effect on profit. The conclusion must justify why one control has the greatest effect and why the others have less. It must not repeat earlier points.

Examiner insight

“Better answers contained a chain of reasoning, i.e. how the change affects the business, the impact on the business from the change and then the effect on the profits of the business.” “The best answers recognised that because this business already sold high quality products they may not be affected by the new legal controls and may even benefit from the new standards.”

Worked example 112 marks

Vale Cosmetics makes face creams. Its adverts say its Dawn cream 'removes wrinkles in a week', which Vale cannot prove. Its Petal cream has caused skin burns. Petal earns half of Vale's revenue. Every Vale jar already lists its ingredients.

The government introduces three legal controls: no misleading promotion; all goods must be safe for the consumer; all ingredients must be listed on the packaging. Consider the effect of each legal control on Vale Cosmetics. Which will have the greatest effect on its profit? Justify your answer.

  1. 1

    Knowledge: misleading promotion is not allowed, so it must be redone. [1]

  2. 2

    Analysis: Vale cannot prove 'removes wrinkles in a week', so it pays for new Dawn adverts. Dawn may sell less without the claim, so revenue falls. [2]

  3. 3

    Knowledge: goods must be safe, so an unsafe product cannot stay on sale. [1]

  4. 4

    Analysis: Petal causes burns, so Vale must stop selling it. Vale loses half its revenue, and customers may stop trusting its other creams. [2]

  5. 5

    Application: every Vale jar already lists its ingredients, so Vale changes nothing. [1]

  6. 6

    Analysis: there is no extra cost, so this control does not reduce Vale's profit. [1]

  7. 7

    Evaluation: decision. The safe goods control has the greatest effect. It removes the cream that earns half of Vale's revenue, while the promotion control only changes the adverts for Dawn, which stays on sale. [2]

  8. 8

    Evaluation: the least effect. The ingredients control costs Vale nothing. Vale may even benefit, because rivals that do not list ingredients must pay to reprint their packaging. [2]

Recap

  • Legal controls on marketing are laws about how a business promotes its products and what it sells.
  • Misleading promotion is not allowed. The business must redo the advert or label, which costs money, and it may lose sales.
  • The control touches only promotion that is misleading. A truthful advert stays.
  • Goods must be safe for the consumer. Faulty or dangerous goods must be changed or taken off sale.
  • Apply the impact to this business: its products, its claims, its customers.
  • Build the chain: effect on the business, then sales or costs, then profit.
  • In a conclusion, justify the control with the greatest effect and say why the others have less.
  • Do not write about minimum wage, health and safety in the factory or waste: they are not controls on marketing.

10. Growth potential of new markets

A new market in another country means more potential customers, so selling there can increase sales.

It can also help the business to spread risk. If sales fall at home, the new markets still bring in revenue.

Check what the business does abroad. Most questions have it selling there, not making goods.

Examiner insight

“These candidates recognised that selling in other countries could increase sales and/or help spread risk and were then able to correctly analyse the effect.” “Weaker candidates struggled to identify more than one benefit and often also repeated their analysis in both points.”

Worked example 14 marks

Kavya Cycles makes bicycles and sells them only to shops in Kenya. It plans to sell in Tanzania too. Explain two benefits to Kavya Cycles of selling in Tanzania.

  1. 1

    Knowledge: selling in a new country can increase sales. [1]

  2. 2

    Application: Tanzanian shops would order bicycles as well as the Kenyan shops. [1]

  3. 3

    Knowledge: it helps the business to spread risk. [1]

  4. 4

    Analysis: if Kenyan sales fall, orders from Tanzania still bring in revenue. [1]

11. Problem: cultural differences

Cultural differences include different traditions. A product that sells at home may not suit a new market.

This can reduce demand. It can make marketing less effective, because an advert may offend the local population. The business may have to adapt the product, which raises costs.

Always explain the effect on demand or on the marketing, not only that the cultures differ.

Examiner insight

“While most candidates were able to recognise cultural differences as a factor, few clearly explained how this could impact demand or the effectiveness of marketing in the new market where some advertising might offend the local population.”

Worked example 14 marks

Marenka Foods, a Polish firm, sells frozen beef pies in supermarkets at home. It plans to sell the same pies in India, where many shoppers do not eat beef. Explain one problem Marenka Foods might face because of cultural differences.

  1. 1

    Knowledge: cultural differences mean customers abroad have different traditions. [1]

  2. 2

    Application: many Indian shoppers do not eat beef, so the beef pies may not suit them. [1]

  3. 3

    Analysis: demand for the pies could be low, so sales are below what the firm expected. [1]

  4. 4

    Analysis: the firm may have to change the recipe and its adverts, which would raise costs. [1]

12. Problem: lack of knowledge

A business entering a new country may have lack of knowledge of that market. It may not know who its competitors are, which retail outlets are suitable, or what customers want.

Without local knowledge the business may not adapt its product to the needs of the market. It then finds it difficult to make sales.

Keep to the lack of knowledge. A general list of the problems of entering a market does not answer this point.

Examiner insight

“A significant number of candidates concentrated upon the general problems of entering new markets rather than problems caused by lack of local knowledge.” “Better candidates recognised that a lack of knowledge would mean that the business may not adapt its products to meet the needs of this market and therefore find it difficult to make sales.”

Worked example 14 marks

Tobias Trainers, a Brazilian firm, sells running shoes in sports shops at home. It plans to sell them in Japan. Explain one problem caused by its lack of knowledge of the Japanese market.

  1. 1

    Knowledge: a business new to a country may have lack of knowledge of its competitors. [1]

  2. 2

    Application: Tobias may not know which running-shoe brands Japanese shops sell. [1]

  3. 3

    Analysis: it cannot compare its shoes with rival shoes, so its price may not compete. [1]

  4. 4

    Analysis: shoppers buy the rival brands, so it is difficult to make sales in Japan. [1]

13. Problems: language, tariffs and exchange rates

Language differences can force a business to change its packaging and labels. This increases costs. Say what the barrier is, not only that there is one.

An import tariff can increase the price of the product in the new country, so demand falls. Do not assume the exporter pays the tariff. A quota is not a tariff.

Changes in exchange rates are another problem. There are few ways to overcome them, so a business finds them the most difficult.

Examiner insight

“Better responses correctly explained how import tariffs could increase the price resulting in lower demand, whilst language differences may mean the business has to change the packaging which increases costs.” “Common mistakes were to confuse tariffs with quotas or assuming that tariffs are paid by the exporter.”

Worked example 16 marks

Nilo Furniture, a Vietnamese firm, sells wooden chairs. It plans to export them to Canada, where the labels must be in French and English. Canada charges an import tariff on chairs. Analyse two problems for Nilo Furniture of selling in Canada.

  1. 1

    Knowledge: an import tariff increases the price of imported goods. [1]

  2. 2

    Application: the tariff is added to the price Canadian shoppers pay for Nilo's chairs. [1]

  3. 3

    Analysis: the higher price means lower demand, so Nilo sells fewer chairs than it planned. [1]

  4. 4

    Knowledge: language differences mean the packaging must change. [1]

  5. 5

    Application: every chair needs labels in French and English, not Vietnamese. [1]

  6. 6

    Analysis: printing new labels increases costs, which reduces the profit on each chair. [1]

14. Overcoming problems: joint ventures

In a joint venture a business works with another business, often a local one. It is not a merger or franchise.

The benefits are local knowledge, access to new markets and shared risk and costs. A local partner knows the market, so entry is less risky and market research costs less.

The limitations are disagreements, unequal sharing of the work and resources, and having to share profits.

Examiner insight

“Most candidates recognised that a joint venture could offer access to new markets but would also mean they would have to share profits.” “It was clear that many candidates were unfamiliar with the concept of joint ventures or confused the term with franchising or mergers.”

Worked example 18 marks

Hamza & Sons makes cricket bats in Pakistan. It plans to sell them in Australia through a joint venture with an Australian sports retailer. Explain one benefit and one limitation to Hamza & Sons of this joint venture.

  1. 1

    Knowledge: a joint venture gives local knowledge from the partner. [1]

  2. 2

    Application: the Australian retailer knows which cricket bats Australian players buy. [1]

  3. 3

    Analysis: Hamza & Sons needs less market research, so entering Australia costs less. [1]

  4. 4

    Analysis: bats chosen with this knowledge are more likely to sell, so entry is less risky. [1]

  5. 5

    Knowledge: the partners have to share profits. [1]

  6. 6

    Application: the retailer takes part of the profit on every bat sold in Australia. [1]

  7. 7

    Analysis: Hamza & Sons keeps less of what its bats earn. [1]

  8. 8

    Analysis: it has less money to invest, for example in new bat designs. [1]

15. Overcoming problems: licensing and local staff

Licensing is another method. The business gives a firm in the new country permission to make or sell its product, in return for a payment. The local firm already knows the market.

A business can also employ local people or an interpreter, or teach language skills, to overcome language problems.

Exchange-rate changes have few solutions. Give the benefit of a method and its limitation, each developed in a sentence.

Examiner insight

“Candidates found it easier to identify ways to overcome these difficulties such as employ an interpreter, teach language skills, employ local people, form a joint venture, however, there were few solutions to changes in exchange rates and better candidates realised that this was something that the business would find the most difficult to overcome.” “To gain higher marks candidates needed to include application, particularly in the conclusion.”

Worked example 14 marks

Sunvale Tea, a Sri Lankan firm, will sell tea to supermarkets in Germany. Its managers speak no German. Explain one way Sunvale Tea could overcome this problem.

  1. 1

    Knowledge: the business could employ local people who speak the language. [1]

  2. 2

    Application: a German sales manager could talk to German supermarket buyers. [1]

  3. 3

    Analysis: the buyers understand the offer, so more supermarkets stock the tea. [1]

  4. 4

    Analysis: more stockists mean higher sales, which help to cover the manager's wage. [1]

16. Choosing how to enter a new market

A business weighs the benefits and limitations of each method against the problems it faces. Which method is best depends on the business.

A good conclusion gives a decision and a reason for it. It also says why the other methods are less suitable. Repeating earlier points is not evaluation.

Examiner insight

“Recommendations often did contain some justification of why the alternative ways were rejected as less suitable for this business but did not always do much more than repeat earlier points when justifying the chosen way to use.” “Stronger candidates included a justified conclusion about the most serious problem faced by SSM, and also justified why the other problems were less significant.”

Worked example 112 marks

Brightleaf makes skin creams in Ghana. It wants to sell them in Norway but knows nothing about Norwegian shoppers. It can form a joint venture with a retailer there or license a firm there. Recommend which method to use. Justify your answer.

  1. 1

    Knowledge: in a joint venture the partner provides local knowledge. [1]

  2. 2

    Application: a Norwegian retailer knows which creams shoppers buy. [1]

  3. 3

    Analysis: Brightleaf avoids unsold creams, so entry is less risky. [1]

  4. 4

    Knowledge: in a joint venture the profits are shared. [1]

  5. 5

    Application: Brightleaf earns only part of the profit from each cream. [1]

  6. 6

    Analysis: less profit leaves less money to invest in new creams. [1]

  7. 7

    Knowledge: with licensing, a Norwegian firm pays to sell Brightleaf's creams. [1]

  8. 8

    Application: Brightleaf receives payments without selling in Norway itself. [1]

  9. 9

    Analysis: it relies on another firm to sell well, which could harm its reputation. [1]

  10. 10

    Evaluation: a clear decision, for example the joint venture. [1]

  11. 11

    Evaluation: a reason, for example the partner solves the lack of knowledge. [1]

  12. 12

    Evaluation: why licensing is weaker, for example less say in how the creams are sold. [1]

Recap

  • New markets bring more customers, so the business can increase sales and spread risk.
  • Cultural differences can reduce demand and make adverts ineffective or offensive.
  • Lack of knowledge means not knowing competitors, outlets or what customers want.
  • Language, import tariffs and exchange rates are other problems: explain the effect each has.
  • A joint venture gives local knowledge and shared costs, but means disagreements and shared profits.
  • Licensing, local staff and interpreters are other ways to overcome problems.
  • Evaluate with a decision, a reason from the case and why the alternative is weaker.

End-of-chapter exercise

Test yourself on the whole chapter. Work through these before moving on.

  1. Halden Shoes is reviewing its marketing mix. Identify two elements of the marketing mix.2 marks
  2. Orrin Gym has written a marketing strategy for next year. Define the term ‘marketing strategy’.2 marks
  3. Brindle Café is a small café with a few staff. Identify two methods of promotion it could use.2 marks
  4. Norvik Toys is launching a new wooden puzzle. Explain one way price could influence customers to buy it.4 marks
  5. Dalby Care launches a new service that looks after elderly parents. Explain why promotion is important to Dalby Care at the introduction of the service.4 marks
  6. Pell Paints makes paint in a factory and sells it to large shops a long distance away. Explain one factor Pell Paints should consider when choosing its channel of distribution.4 marks
  7. Zoral Phones sells personalised phone covers online. It is launching a new range of covers. Explain how Zoral Phones could use two elements of the marketing mix for the new range.6 marks
  8. Sandow Foods is a large, successful company. It has its own distribution vans and a well-known advertising campaign. It is launching a new ice cream that no rival sells. Explain why price may matter more than promotion and distribution for the launch.6 marks
  9. Marlow Candles makes handmade candles. It sells them at a high price in its one shop to a small number of customers. It is launching Glow, a low-cost candle for the mass market, to be sold across the country. Explain how Marlow Candles should change two elements of its marketing mix for Glow.8 marks
  10. Tarn Meals is a small business. It makes frozen meals for people with food allergies. No other business in its country makes these meals. It sells them on its own website to customers in one city. The owner plans a new marketing mix: penetration pricing, selling through supermarkets and advertising on social media. Do you think this marketing mix is suitable for Tarn Meals? Justify your answer.12 marks
  11. Define 'legal controls on marketing'.2 marks
  12. State two examples of legal controls on marketing.2 marks
  13. Orchard Pet Foods must follow two laws. One bans adverts that give a false picture of its food. The other sets a minimum wage for its staff. Identify which law is a legal control on marketing. Give a reason for your answer.2 marks
  14. Harlow Foods sells frozen pies in boxes saying 'made with only beef'. The pies contain some pork. A new law bans misleading promotion. Explain two ways this law could affect Harlow Foods.4 marks
  15. Tiny Steps Toys sells rattles for babies through 30 shops. It finds that small parts can break off its Jingle rattle. The law says all goods must be safe for the consumer. Explain two ways this law could affect Tiny Steps Toys.4 marks
  16. Corvo Phones sells a phone whose battery often fails within a week. Its adverts call it 'a battery you can rely on'. Explain two ways legal controls on marketing could affect Corvo Phones.6 marks
  17. Kestrel Bikes runs two adverts. One says its Swift bike 'weighs 7 kg', which is true. The other says Kestrel bikes are 'the lightest in the world', which is not true. A new law bans misleading promotion. Explain two ways this law could affect Kestrel Bikes.6 marks
  18. The Savoury Spoon is a café with 40 dishes on its printed menu. Some of its customers have food allergies. Its window poster says 'everything home-made', but it buys its cakes from a factory. Two legal controls are introduced: every ingredient must be listed on the menu; promotion must not be misleading. Explain how each legal control could affect the Savoury Spoon.8 marks
  19. Brightway sells three models of electric scooter online. Its Dart model earns 70% of its revenue. The Dart advert says 'the safest scooter you can buy', which Brightway cannot prove. The brakes have failed on some Darts. The advert for its Glide model says 'travels 40 km on one charge', which tests confirm. Brightway's boxes do not show what the scooters are made from. The government introduces three legal controls: promotion must not be misleading; all goods must be safe for the consumer; packaging must list the materials a product is made from. Consider the effect of each legal control on Brightway. Which will have the greatest effect on its profit? Justify your answer.12 marks
  20. Halden Home sold 4000 Ember electric heaters last winter at textdollar60 each. A fault makes some Embers overheat. The law says all goods must be safe for the consumer. Halden's advert says the Ember 'costs half as much to run as any other heater'. Halden has never tested this, and the law bans misleading promotion. The owner has two options. Option A: recall all 4000 Embers, refund every customer in full and stop selling the Ember. Option B: recall all 4000 Embers, fit a new part costing textdollar6 to each one, return them and keep selling the repaired model. The repair takes three months, and no Embers can be sold in that time. Recommend which option Halden Home should choose. Justify your answer.12 marks
  21. State two benefits to a business of selling its products in other countries.2 marks
  22. State two problems of entering a new market in another country.2 marks
  23. Zora Honey sells jars of honey to shops in Ethiopia. It plans to sell to shops in Italy as well. Explain one benefit to Zora Honey of selling in Italy.4 marks
  24. Spice Route sells very hot chilli ready meals in Mexico. It plans to sell the same meals in Sweden, where shoppers are used to mild food. Explain one problem caused by cultural differences.4 marks
  25. Baraka Coffee roasts coffee in Kenya. It plans to export bags of coffee to Turkey, which charges an import tariff on coffee. Explain how the tariff is a problem for Baraka Coffee.4 marks
  26. Asante Soap sells soap bars on market stalls in Ghana. It plans to sell them in South Korea. Explain one problem caused by its lack of knowledge of the South Korean market.4 marks
  27. Dara Motors makes electric scooters in Vietnam. It forms a joint venture with a scooter retailer in Indonesia to sell them there. Analyse two benefits to Dara Motors of the joint venture.6 marks
  28. Teodora Toys sells wooden toys in Italy. Its managers speak no Japanese. It plans to sell to toy shops in Japan. Analyse two ways Teodora Toys could overcome the language problem.6 marks
  29. Pema Outdoor makes waterproof jackets in Nepal and sells them in Nepali shops. It plans to export them to shops in Chile. Its managers have never visited Chile and speak no Spanish. Chile charges an import tariff on jackets. Consider three problems for Pema Outdoor: lack of knowledge, language differences and the import tariff. Which is the most serious problem? Justify your answer.12 marks
  30. Lumi Bakery makes biscuits in Finland and will keep making them all there. It wants to sell them in Egypt, which charges an import tariff on biscuits. Its managers speak no Arabic and know nothing about Egyptian shoppers or shops. It can form a joint venture with an Egyptian supermarket chain, which would take half of the profit, or employ two Egyptian sales staff. Recommend which method Lumi Bakery should use. Justify your answer.12 marks

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