Business Studies · May / June 2023 · Paper 11 · Question 4

0450

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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 4 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.

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4(a)[2]
Identify two factors that might affect the accuracy of market research. Award 1 mark per factor (max 2). Points might include:
Sample size
Sample chosen/who is asked
Interviewer experience/interviewer bias
Wording of the questions
Who carried out research
Age of information/when data gathered/information might be out of date
People’s actions do not always match what they say
Anonymity
Bots or use of AI Other appropriate responses should also be credited. 2 Only award the first two answers given. Notes
4(b)[2]
Identify two benefits to a business of using market segmentation. Award 1 mark per benefit (max 2). Points might include:
Able to tailor goods to specific needs of segment/know what to produce
Identify gaps in the market
To help decide best place to sell
Research is simpler
Help focus spending/make best use of resources
Help target promotion/advertising
Help set prices
Help increase sales/revenue Other appropriate responses should also be credited. 2 Only award the first two responses given. Notes
4(c)[4]
Outline two ways NLR might respond to environmental pressures. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference made to this business (max 2). Points might include:
Reduce amount of materials used/wastage [k] when making its skincare products [app]
Use recycled materials [k] for the packaging [app]
Develop environmentally friendly products [k] based on its market research [app]
Buy energy efficient/environmentally friendly machinery/use renewable energy [k]
Offer different sizes/only make to order/reduce number of products available [k]
Alter/reduce transport use [k]
Promote/support environmentally friendly causes [k]
Ask customers to reuse containers (when buying from shops) [k] as 85% of consumers (want the business to respond to environmental pressures) [app] Other appropriate responses should also be credited. 4 To use words from the stem as application, the reference must be appropriate, (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Skincare or examples such as hand cream
Packaging
85% of consumers/customers
Product life cycle
Market research
Branded Other appropriate examples can be credited. Do not award environmental pressures as [app] on its own as stated in question. Notes
4(d)[6]
Explain how NLR’s pricing decisions might be affected at two different stages of the product life cycle. Award 1 mark for each relevant stage of life cycle/pricing method (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
During introductory stage [k] the business may set a low price to attract customers [an] to their hand cream [app]
At growth stage [k] prices may be lowered due to increased competition [an]
At maturity stage [k] price is likely to be similar to competitors to retain market share [an] for the branded products[app]
During decline stage[k] discounts might be offered to maintain sales/ sell of remaining inventory [an]
Skimming pricing [k] can be used at the introductory stage to recover development costs [an] of new packaging [app]
Penetration pricing [k] in some market segments [app]
Cost plus pricing [k]
Competitive pricing [k]
Promotional pricing [k] Other appropriate responses should also be credited. 6 Attract customers/To use words from the stem as application, the reference must be appropriate, (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Skincare or examples such as hand cream
85%
Market research
Packaging
Environmental pressures
Branded (product)
Market segmentation Other appropriate examples in context can be credited. Notes
4(e)[6]
Do you think promoting the brand image is the most important role of packaging? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for justified decision as to whether promoting the brand image is the most important role of packaging. Points might include:
This can help the product attract customers/stand out against competitor's products [k] which can help increase/maintain sales [an] leading to higher revenue [an]
Protect the product [k] so the product does not get damaged/can be kept fresh [an] which can help reduce the amount of wastage [an]
Ease of storage/transport [k] which could lead to lower storage/transport costs [an]
Provide information about the product [k]
Legal requirements [k] as a business might have to identify the ingredients to avoid legal action [an]
Easy to open the container and use the product [k] Justification might include: Packaging helps the product stand out against competitor's products [k] helping increase sales [an]. Protecting the product is important [k]to keep the product fresh [an] This is the most important role because damaged goods will not sell [eval] Therefore, brand image is not the most important role although customers need to be aware of the product, to buy. [eval] 6 This is a general question so there are no marks for application.

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