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Business Studies · Oct / Nov 2022 · Paper 22 · Question 2

0450

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  • 2(a)[8]

    Explain four roles of packaging for CC’s products. Award 1 mark for each role (max 4). Award a maximum of 1 additional mark for each explanation in context. Relevant answers might include:

    Protects the product – as chocolate bars could be broken
    Makes it easier to transport the product in vehicles – from the factory to the small retailers
    Promotes the brand image of the product – such as the market leader called Choco
    Makes the product eye-catching – so it will stand out from competing chocolate bar brands such as Nuttybar
    Information about the product can be written on the packaging – such as that it may contain nuts as some people are allergic to nuts
    Makes it easy to open and consume the product – young children will be able to hold the bar whilst eating it in the packaging and not getting too messy
    Is suitable for the product to fit in – when moving the products around the chocolate factory For example: Protects the product from getting damaged (1)

    or the chocolate bar could be broken into several pieces leading to customer dissatisfaction (app). Application could include: chocolate bars;

    CC plan to take over NM;

    public limited company;

    imports most of its raw materials;

    cocoa beans;

    no trade restrictions in its export markets;

    aimed at young children;

    allergies;

    adult customers;

    perishable food;

    expiry date;

    ingredients;

    calories.

  • 2(b)[12]

    Using Appendix 1 and other information, consider the advantages and disadvantages of the two CC brands. Which brand should CC stop producing? Justify your answer. Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both options. Well-justified recommendation. Candidates discussing both options in detail, in context and with a well-justified recommendation including why the alternative option was rejected should be rewarded with the top marks in the band. 9–12 Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one option. Judgement with some justification / some evaluation of choice made. Candidates discussing both options in detail and applying them to the case should be rewarded with the top marks in the band. 5–8 Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the options with little/no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining both options in context should be rewarded with the top marks in the band. 1–4 No creditable response. Relevant points might include: Advantages Disadvantages Option 1 Tiabar

    Is in the growth stage of the product life cycle – sales have been growing steadily in its first year
    May have a lot of potential to grow in the future as the test marketing was positive
    New product development leads to diversification and spreads risk if sales of other products decline
    CC is already a well-known company in country X and this may make it easier to introduce and grow a new brand aimed at a different target market
    May be starting to make a profit after development costs have been recovered
    Potential for sales to grow further and for this to be a successful brand for CC – perhaps for several years to come – replacing brands that have been withdrawn
    May still be making a loss if the development costs have not yet been fully recouped
    A lot of competition from existing multinationals may make it hard to establish another brand in this market segment
    New target market for CC so less experienced in this market
    Increased competition may lead to prices needing to be reduced a little to retain customers
    Persuasive advertising used to develop brand loyalty which increases costs
    Just targeting children means a smaller target market compared to Choco Advantages Disadvantages Option 2 Choco
    The market leader and sales are at their highest
    Likely to be profitable since is a well-established brand and market leader. Profit is likely to support the development of new products
    Has the highest market share and been a very successful brand for several years
    Although competition may be high there are no new competitors entering this market
    High promotional expenditure not required since it is a well-established brand
    Could introduce extension strategies to revitalise sales
    Is at the maturity/saturation stage of the product life cycle – so sales are likely to decline in the near future without extension strategies
    May have to lower prices to retain high sales
    Next move is to the decline stage and sales fall off quickly – falling prices and profits
    Competitive pricing may lead to lower total revenue – lower profits Recommendation
    It is better to stop producing Tiabar and keep Choco because this is the market leader, and it has many brand loyal customers. The sales are higher than Tiabar and it brings in more revenue and profit for CC. If sales start to fall slightly then extension strategies can be introduced to keep the sales high.
    It is better to stop producing Choco and keep Tiabar as it is a new brand for CC and has steadily growing sales. This is a new market which has potentially higher sales in the future. Whereas Choco, although successful, may have limited opportunity for growth in the future.
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