Business · 3 Marketing

3.3.6 Marketing strategy

Before you start

Product (3.3.1): brand image, packaging, and the product life cycle — introduction, growth, maturity, decline — with extension strategies such as new markets or increased advertising.
Price (3.3.2): cost-plus, competitive, penetration, skimming and dynamic pricing.
Place (3.3.3): distribution direct to customers, through retailers, wholesalers or agents.
Promotion (3.3.4): sales promotion (vouchers, reward schemes, competitions, special offers / discounts) and advertising (social media, direct / targeted emails, leaflets, billboards).
Target markets: segmentation by age, income, location, gender and lifestyle (3.1.4), and mass versus niche markets (3.1.3).
Price and cost are different: price is what the customer pays; cost is what the business spends to make or supply the product.

Syllabus objectives covered (2)

importance of the different elements in the marketing mix
recommend and justify an appropriate marketing mix for a given situation

Part 1 of 5

The marketing mix is one decision, not four

The marketing mix is the combination of product, price, place and promotion that a business uses to sell a product to its target market. You met each of the four Ps on its own in 3.3.1 to 3.3.4. This subtopic asks two new things: why each one matters, and how to put all four together for a particular business.
A marketing strategy is the business's plan for how it will use the marketing mix to reach its target market and achieve a marketing objective — for example, launching a new product, increasing market share, or keeping an old product selling.
The central idea: all four Ps have to suit the same customer. So a business decides first who it is selling to, and then chooses each P to fit those people. If you begin with 'advertise on billboards' before you know who the customer is, you are guessing.
The four Ps also have to fit each other. Imagine a perfume sold in a heavy glass bottle at a high price — and then placed in a supermarket bargain bin with a 'buy one, get one free' sticker. The product and price say 'luxury'; the place and promotion say 'cheap'. Customers who want luxury are put off, and customers looking for a bargain still think it is too expensive.
That is why each P can look sensible on its own while the mix as a whole fails. Whenever you choose or judge a marketing mix, read the four choices side by side and ask: do they send the same message to the same customer?

Part 2 of 5

Why product and price matter

Product must meet the needs of the target market. It is the element the other three cannot rescue. Clever promotion can persuade someone to buy a poor product once, but they will not buy it again — and they may tell other people not to.
In consequences: a product that meets customer needs, so customers buy again and become loyal, so sales revenue is steady. A product that does not, so sales are low, the money spent promoting it is wasted, and the brand's reputation may suffer.
Product includes more than the item itself. A strong brand image lets a business charge a higher price and builds customer loyalty; good packaging protects the product and helps it stand out on a shelf (3.3.1).
Product matters most when customers think carefully before buying — expensive or technical items — and in a competitive market where the product has to be different from rivals' to be noticed.
Price is the only element that brings money in. Product, place and promotion all cost money. Price decides how much revenue each sale brings, and so whether the business makes a profit on each unit.
Price affects how many people buy. In most markets a lower price means more units sold and a higher price means fewer. So the business has to balance revenue per unit against the number of units.
Price must match the target market's income. A product for students on low incomes will not sell at a price only high earners can afford, however good it is.
Price also sends a message about quality. A price far below competitors' can make customers suspect the product is poor; a high price can support a premium image. That is one reason price and product have to agree.
Price matters most when products are very similar and easy to compare — for example online, where a competitor's price is one click away.
Trap: price is not cost. 'Price is important because it must be low' mixes them up. The cost is what the business spends; the price is what the customer pays; the difference between them is the profit on each unit. Keep the two words apart in every answer.

Part 3 of 5

Why place and promotion matter

Place: the product must be available where and when customers want to buy it. A customer who wants the product but cannot find it in the shops they use will buy a competitor's instead, and that sale is gone.
The channel also affects price and profit. Selling direct to customers means the business keeps the whole price, but it has to reach every customer itself. Selling through retailers or wholesalers reaches far more customers, but each of them needs a share of the price to make their own profit.
Place has to suit the image. An exclusive product sold through a few carefully chosen shops keeps its luxury image; the same product in every discount store loses it.
Place matters most for cheap, everyday products that people buy without much thought or on impulse — a cold drink, a snack. If it is not in the fridge at the moment they are thirsty, they buy something else.
Promotion: customers cannot buy a product they have never heard of. Promotion tells people the product exists, persuades them to choose it over competitors, and reminds existing customers to keep buying.
Promotion builds brand image, which supports the price. It is also where much of a marketing budget goes, so the method must be one the target market will actually see — and one the business can afford. A start-up with a small budget cannot pay for billboards across a country.
Promotion matters most when a product is new (the introduction stage), when a market is crowded with competitors, and when sales are falling and the business uses more advertising or sales promotion as an extension strategy.
Trap: promotion cannot fix a wrong product, price or place. Heavily advertising a product that is too expensive for its target market just spends money telling people about something they will not buy.

Part 4 of 5

Which element matters most? It depends — and you must say on what

A question may ask which element of the mix is most important for a business. No answer is right for every business, so the marks go to the reason you give using the business in the question.
The type of product. A cheap everyday product: place and price usually decide whether it sells. An expensive, luxury or technical product: the product itself and its brand image carry more weight.
The target market. Customers on low incomes: price. Busy customers with little time: place and convenience. Young customers who spend hours online: promotion on social media may be the way to reach them at all.
The competition. If the product is almost identical to rivals', the business may have to compete on price, or on being easier to find. If the product is genuinely different, promotion is needed so people learn what makes it different.
The stage of the product life cycle. A new product needs promotion so people know it exists. A mature product facing new competitors may need a price change or more promotion to keep sales up.
The business's limits. Check the stem for a budget, the costs, the size of the business. A recommendation the business cannot afford is not appropriate, however effective it would be.
How to write the justification. Pick one element. Say why it matters most for this business, using a fact from the stem. Then say why another element matters less here. The comparison is what turns a statement into evaluation.

Part 5 of 5

Recommending a marketing mix, step by step

When you are given a situation and asked for a suitable marketing mix, work through it in the same order every time, so nothing gets left out.
Step 1 — who is the customer? Find the target market in the stem: age, income, location, lifestyle. Write it in a few words at the top of your plan. Everything else hangs on it.
Step 2 — product. What does this customer need from the product? Name a feature, the brand image or the packaging, and link it to the customer.
Step 3 — price. Name a pricing method from 3.3.2 and justify it from the stem. Penetration: a new product entering a market where competitors are established. Skimming: an innovative product with few or no rivals, which some customers will pay a lot for first. Competitive: products are similar to rivals'. Cost-plus: the business needs to be sure every sale covers its costs. Dynamic: demand changes a lot by time of day or season.
Step 4 — place. Name a channel — direct, retailers, wholesalers or agents — and ask where this customer actually buys this kind of product.
Step 5 — promotion. Name a method the target market will see and the business can afford: 'targeted social media adverts', 'a reward scheme', 'leaflets delivered to nearby offices'. 'Advertise it' is not a method.
Step 6 — check the fit. Read your four choices together. Does the price match the image the product and place create? Can the business afford the promotion out of the revenue that price will bring in?
'Recommend' is not one of the eight Business command words, so a question on this objective is built from the words that are — usually a part that asks which option or element is best and ends 'Justify your answer.' Recommending means making a clear choice; justifying means backing it with evidence from the stem.
Avoid the generic mix. 'Product: good quality. Price: affordable. Place: shops. Promotion: advertising.' That could describe any business in the world, so it earns no application. Every choice needs a named method and a fact from the stem attached to it.

Worked examples

Example 1. Chillo is a new brand of bottled iced tea that sells for 1.20 dollars. Its target market is teenagers and young adults. It is sold through small convenience shops near schools and colleges and in the cafes of sports centres. Outline two reasons why place is important in Chillo's marketing mix. [4]

Show the working

Read the command word first. Outline, 4 marks, two reasons: each reason needs a point [k] and a stem fact [app]. There is no mark for development, so keep each reason to one or two sentences.
Think about what kind of product this is. A 1.20-dollar cold drink is an everyday, low-price product that people often buy on impulse, when they are thirsty. That is exactly when place matters most.
Reason 1. Point: customers buy it on impulse, so it must be available at the moment they want it. Application: near schools and colleges, where teenagers buy drinks between lessons; in sports centre cafes after exercise.
Reason 2. Point: if it is not on the shelf, the customer buys a competitor's drink instead. Application: a 1.20-dollar iced tea is easy to swap for another drink at a similar price.
Check both points are different — the first is about where the target market is; the second is about losing the sale to rivals — so neither is a repeat of the other.

Answer: 1. Drinks are often bought on impulse, so the product must be available where customers are when they want it [k] — near the schools and colleges its teenage customers attend and in sports centre cafes after exercise [app]. 2. If a drink is not in the shop, customers simply buy a competitor's instead [k], and a 1.20-dollar iced tea is easy to replace with another cheap drink [app].

Example 2. Bloom Fit is a new yoga studio opening in a small town that already has two gyms. It has 50 places in its classes each week. Explain two reasons why promotion is important for Bloom Fit. [6]

Show the working

Explain, 6 marks, two reasons: each needs knowledge, application and analysis.
Reason 1. Knowledge: a new business must make customers aware it exists. Application: Bloom Fit is new and the town's residents already know the two gyms. Analysis: without awareness, few people book and its 50 weekly places go unfilled, so revenue is low.
Reason 2 must be a different idea. Knowledge: promotion persuades customers to choose it over competitors by showing what is different. Application: it is a yoga studio competing with two gyms. Analysis: if people see why yoga suits them better than a gym, it can win customers from the gyms and gain market share.
Notice that both analysis points end on something that matters to the business — revenue, market share. 'Promotion is important because it tells people about the studio' stops at knowledge.

Answer: 1. As a new business, Bloom Fit must make people aware that it exists [k]. Residents of the town already know the two gyms but not the new yoga studio [app], so without promotion few people would book and many of its 50 weekly places would stay empty, keeping revenue low [an]. 2. Promotion can persuade customers to choose Bloom Fit instead of a competitor by showing what is different about it [k]. It is a yoga studio competing with two gyms [app], so promoting the benefits of yoga could win customers away from the gyms and increase its share of the local market [an].

Example 3. Trekka is a new business run by two mountain guides. It has designed a lightweight hiking backpack with a built-in rain cover and a lifetime free repair service. Each backpack costs 70 dollars to make. Its target market is adventure travellers aged 25–40 with high incomes. Competitors' backpacks sell for between 90 and 220 dollars. Trekka has 6000 dollars to spend on marketing in its first year. Explain how Trekka could use two elements of the marketing mix to attract its target market. Which element is likely to be the most important? Justify your answer. [8]

Show the working

Step 1 of the method: who is the customer? Adventure travellers, 25–40, high incomes. Write that down; every choice is checked against it.
Choose two elements you can apply richly. Price has numbers in the stem (70-dollar cost, 90–220 competitor range). Promotion has a limit in the stem (6000-dollar budget) and a clear problem (a new, unknown brand). Those two give the most application.
Price. Name a method: competitive pricing near the top of the competitors' range, around 180 dollars. Apply: high-income customers; unique rain cover and lifetime repairs; 70-dollar cost. Analyse: a price in the competitors' range signals quality to customers who compare brands, and a large margin over the 70-dollar cost gives profit on each backpack.
Promotion. Name a method: targeted social media adverts shown to people interested in hiking and travel, with short videos of the rain cover in use. Apply: 6000-dollar budget; adventure travellers. Analyse: the budget reaches only the people likely to buy, so less is wasted than on billboards, and seeing the feature in action persuades them to choose Trekka.
Now evaluate — choose one and give a new reason, not a repeat. The fact that settles it is that Trekka is a new brand. A well-priced backpack sells nothing if the target market has never heard of it, whereas these customers have high incomes, so a small difference in price is less likely to change their decision than whether they know about and trust the brand.
Add what the decision depends on: promotion stays most important only while the brand is unknown. Once travellers know and trust Trekka, the product itself — the rain cover, the repairs — will keep them loyal.

Answer: Price: Trekka could use competitive pricing, setting a price of about 180 dollars [k], within the 90–220-dollar range of its competitors and well above its 70-dollar cost [app]. This tells high-income travellers the backpack is a quality product, and still gives Trekka a large profit on each one sold [an]. Promotion: Trekka could use social media adverts targeted at people interested in hiking and travel [k], showing the built-in rain cover in use, within its 6000-dollar budget [app]. This means its limited budget reaches only people likely to buy, so less money is wasted than on billboards [an]. Most important: promotion is likely to be the most important element [eval]. Trekka is a new brand, and a well-designed, well-priced backpack will not sell if adventure travellers have never heard of it; because these customers have high incomes, whether they know and trust the brand is likely to matter more to them than a small difference in price [eval]. Once the brand is known, the product's features should keep customers loyal, so the balance may change later.

Where people go wrong

Mistake: Choosing each of the four Ps separately and never checking that they fit together.

Instead: After choosing, read the four choices side by side: does the price match the image the product and place create, and can the business afford the promotion?

A mix fails as a whole when its elements send different messages — a luxury product with bargain-bin promotion loses both the luxury customer and the bargain hunter.

Mistake: Writing a generic mix: 'Product: good quality. Price: affordable. Place: shops. Promotion: advertising.'

Instead: Name a method for each element (competitive pricing, direct selling, targeted social media adverts) and attach a fact from the stem to each choice.

A mix that could belong to any business earns no application marks, and without application the analysis and evaluation have nothing specific to build on.

Mistake: Claiming one element is always the most important ('price is most important because without a price nobody can buy').

Instead: Say which element is most important for this business and why, using the stem, and say why another element matters less here.

The importance of each element depends on the product, the target market, the competition and the stage of the life cycle. A reason that would apply to every business is not a justification for this one.

Mistake: Using 'price' and 'cost' as if they mean the same thing.

Instead: Price is what the customer pays; cost is what the business spends. Profit per unit is the difference between them.

An answer saying 'the price is too high, so profit falls' or 'lower costs for customers' shows confusion about the two, and the analysis chain collapses.

Mistake: Assuming more promotion will fix any sales problem.

Instead: Check first whether the problem is the product, the price or the place. Promotion only helps if customers would buy once they know about the product.

Promoting a product that is wrong for its target market spends money telling people about something they will not buy.

Check yourself

Define 'marketing mix'.
Answer
The combination of product, price, place and promotion that a business uses to sell a product to its target market.
State one reason why each of the four elements of the marketing mix is important.
Answer
Product: it must meet customer needs or customers will not buy again. Price: it is the only element that brings in revenue, and it affects how many people buy. Place: the product must be available where and when customers want to buy it, or they buy a competitor's. Promotion: customers must know the product exists and be persuaded to choose it.
Why is price the only element of the marketing mix that brings money into the business?
Answer
Price is what customers pay, so it creates revenue. Designing the product, distributing it and promoting it all cost the business money.
A company sells bottled water at 0.80 dollars in a hot tourist area with many similar brands. Which element of the mix is likely to matter most, and why?
Answer
Place (price is also a reasonable answer). Bottled water is cheap, bought on impulse by thirsty tourists and almost identical between brands, so the brand that is in the nearest fridge at the moment someone is thirsty gets the sale.
A business launches a smartwatch with a feature no competitor has. Which pricing method might suit it, and why?
Answer
Price skimming: with no direct competitors, some customers will pay a high price to own the new feature first, so the business earns a high profit per unit before rivals copy it and the price has to fall.
What is wrong with this recommendation for a new children's bookshop: 'Product: good books. Price: reasonable. Place: a shop. Promotion: advertising.'?
Answer
It is generic — it could describe any bookshop anywhere. It names no pricing method, no specific channel or promotion method, and uses no facts about the business or its customers (children and their parents), so it would earn no application marks.
Explain why a luxury handbag brand should not sell its bags through discount stores, even if that would reach more customers.
Answer
Discount stores would give the brand a cheap image that does not match its high price and luxury product, so customers who want luxury would no longer see the bags as exclusive and may stop paying the high price, while discount-store shoppers would still find them too expensive.

Exam questions

Try each part first. Open the mark scheme after you have written your answer.

Question 1. NutriBox is a new private limited company started by two chefs. It makes healthy ready-to-eat lunch boxes in a small kitchen in a city centre surrounded by office buildings. Each lunch box costs 3.20 dollars to make. Its target market is office workers aged 22–45 who have only 30 minutes for lunch. Nearby fast-food restaurants sell lunches for 5 to 7 dollars. NutriBox has 2000 dollars to spend on promotion in its first three months.

(a) Define 'marketing mix'. 2 marks No calculator

Mark scheme

pt2 Award 2 marks for clear understanding, 1 mark for some understanding. Clear understanding: the combination of product, price, place and promotion a business uses to sell a product to its target market / to meet customer needs (2). Some understanding, e.g. the four Ps / the things a business uses to sell a product (1).

(b) Outline two reasons why price is an important part of NutriBox's marketing mix. 4 marks No calculator

Mark scheme

k1 First reason identified, e.g. price must cover costs to make a profit / price affects demand / price must compare well with competitors / price signals quality / price must suit the target market.
app1 Relevant application of the first reason, e.g. each lunch box costs 3.20 dollars to make / fast-food lunches nearby cost 5 to 7 dollars / office workers / healthy lunch boxes.
k1 Second, different reason identified. Do not credit a repeat of the first reason.
app1 Relevant application of the second reason. The reference must make sense in relation to the point being made. Accept all valid responses.

(c) Explain two reasons why place is important for NutriBox. 6 marks No calculator

Mark scheme

k1 First reason identified, e.g. the product must be available where and when customers want to buy / customers will buy from a competitor if it is not easy to get / the channel affects price and profit.
app1 Relevant application of the first reason, e.g. office workers have only 30 minutes for lunch / kitchen is in a city centre surrounded by offices / nearby fast-food restaurants.
an1 Relevant development of the first reason, e.g. so customers who cannot reach it quickly buy fast food instead and NutriBox loses sales / so delivering direct to offices could increase sales revenue.
k1 Second, different reason identified.
app1 Relevant application of the second reason.
an1 Relevant development of the second reason, e.g. selling through cafes or shops reaches more customers but they take a share of the price, reducing profit per box. Accept all valid responses.

(d) Explain how NutriBox could use two elements of the marketing mix to attract office workers. Which element is likely to be the most important? Justify your answer. 8 marks No calculator

Mark scheme

k2 Up to 2 marks for identification of relevant points about two elements, e.g. product: healthy / fresh / quick to eat / attractive packaging; price: competitive or penetration pricing / a price below fast-food lunches / cost-plus; place: direct delivery to offices / a stall near office buildings / sold through office cafes; promotion: leaflets to offices / targeted social media adverts / a reward scheme / a special offer at launch.
app2 Up to 2 marks for relevant application, e.g. office workers aged 22–45 / 30 minutes for lunch / cost of 3.20 dollars / competitors charge 5 to 7 dollars / 2000-dollar promotion budget / city centre / new business. The reference must make sense in relation to the point being made.
an2 Up to 2 marks for relevant development, e.g. attracts customers from fast-food restaurants so sales increase / reward scheme builds loyalty so customers return daily / price above 3.20 dollars gives a profit on each box / promotion within the budget reaches more of the target market.
eval2 Up to 2 marks for a justified decision about which element is likely to be the most important, which does not repeat earlier points. E.g. place is most important because office workers have only 30 minutes, so however healthy and well priced the lunch is, they will buy whatever is nearest and quickest; delivering to offices removes the time problem that sends them to fast food. OR price is most important because the lunch must be close to the 5 to 7 dollars workers already pay, or they will not try an unknown new business. Accept all valid justified decisions.

Question 2. Aurum Watches makes handmade watches that sell for between 900 and 2500 dollars. It sells them only in its own three boutiques and on its own website, and it advertises in luxury travel magazines. Sales have not grown for two years. A new sales manager suggests selling the watches in supermarkets with a 'buy one, get the second half price' offer.

(a) Identify two elements of Aurum Watches' marketing mix that the sales manager's plan would change. 2 marks No calculator

Mark scheme

pt1 Place (selling through supermarkets instead of its own boutiques and website). Only award the first two answers given.
pt1 Promotion (the 'second half price' sales promotion). Accept price, as the offer lowers the price customers pay.

(b) Outline two reasons why the sales manager's plan might reduce Aurum Watches' sales. 4 marks No calculator

Mark scheme

k1 First reason identified, e.g. damages the exclusive / luxury brand image / the place does not match the product / a discount suggests low quality / existing customers may stop buying / supermarket shoppers may not be the target market.
app1 Relevant application of the first reason, e.g. handmade watches / priced 900 to 2500 dollars / currently sold only in its own three boutiques / advertised in luxury travel magazines.
k1 Second, different reason identified.
app1 Relevant application of the second reason. The reference must make sense in relation to the point being made. Accept all valid responses.

Question 3. KiwiCrunch Ltd is a private limited company owned by Priya Nair. It makes fruit snack bars and sells them only through 120 independent health-food shops. It is about to launch its first high-protein bar, aimed at people aged 18–35 who exercise regularly. Each protein bar costs $0.90 to make. The best-selling rival protein bar is sold in supermarkets for $2.50. KiwiCrunch has $30 000 to spend on marketing the launch. Its market research found that 65% of the target market buy their snacks at a gym or online.

(a) Explain two reasons why promotion is important to KiwiCrunch when it launches its protein bar. 8 marks

Mark scheme

k1 First reason identified, e.g. tells customers that a new product exists / persuades customers to try a new product / persuades customers to switch from a rival's product / creates a brand image for the new product. Award 1 mark for each reason (max. 2).
app1 First reason applied to KiwiCrunch, e.g. its first high-protein bar / people aged 18–35 who exercise / the rival bar already sells in supermarkets for $2.50 / KiwiCrunch is known for fruit bars / $30 000 marketing budget / 65% of the target market buy at a gym or online. The reference must make sense in relation to the reason.
an2 Up to 2 marks for developing the first reason, e.g. people who already buy the rival bar will not know KiwiCrunch's protein bar exists (1), so they keep buying the rival's bar and launch sales are low (1) / adverts seen by people who exercise make them want to try the bar (1), so sales rise quickly and the cost of the launch is covered sooner (1).
k1 Second, different reason identified (as above). Do not credit a repeat of the first reason in different words.
app1 Second reason applied to KiwiCrunch, e.g. customers know KiwiCrunch for fruit bars sold in health-food shops, not for protein bars / the 65% who buy at a gym or online can be reached by targeted social media adverts.
an2 Up to 2 marks for developing the second reason, e.g. a brand image linked to fitness makes the bar look different from the rival's (1), so customers are more likely to choose it and keep buying it (1) / targeted adverts reach only the people most likely to buy (1), so less of the $30 000 budget is wasted (1). Accept all valid responses.

(b) Consider the following three marketing mixes KiwiCrunch could use to launch its protein bar. Which marketing mix should KiwiCrunch choose? Justify your answer. Supermarkets: sell the bar at $1.99 in a national supermarket chain, which keeps $0.60 of every bar sold, and pay $10 000 for adverts in the supermarket's weekly leaflet. Gyms: sell the bar at $2.80 in 200 gyms, which keep $0.80 of every bar sold, and give away 5 000 free samples after fitness classes. Website: sell boxes of 12 bars for $27 on its own website, paying $3.60 to deliver each box, and spend $18 000 on social media adverts by fitness influencers. 12 marks

Mark scheme

Level 3 (9,12 marks): Excellent knowledge and understanding of relevant business concepts using appropriate terminology in context. Detailed discussion of two or more marketing mixes. Well-justified recommendation. Candidates discussing all three marketing mixes in detail, in context and with a well-justified recommendation including why the alternative marketing mixes were rejected should be rewarded with the top marks in the band.
Level 2 (5,8 marks): Good knowledge and understanding of relevant business concepts using appropriate terminology in context. Detailed discussion of at least one marketing mix. Judgement with some justification / some evaluation of choice made. Candidates discussing two or more marketing mixes in detail and in context should be rewarded with the top marks in the band.
Level 1 (1,4 marks): Limited knowledge and understanding of relevant business concepts in context. Limited ability to discuss the marketing mixes with little/no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining all three marketing mixes in context should be rewarded with the top marks in the band.

Indicative content:

Supermarkets, advantage: a national chain reaches far more shoppers than 120 health-food shops, and at $1.99 the bar is $0.51 cheaper than the rival's $2.50 bar, so price-conscious buyers may switch and sales volume could be high.
Supermarkets, disadvantage: KiwiCrunch receives only $1.39 of each $1.99, leaving $0.49 after the $0.90 cost of making the bar, so it needs very high sales to earn a good profit; and many of the 65% who buy snacks at a gym or online may never see the bar in a supermarket.
Gyms, advantage: the place matches the target market exactly (people aged 18–35 who exercise), free samples let them taste a new bar straight after a class, and $1.10 is left from each bar after the gym's $0.80 and the $0.90 cost — more than twice the supermarket figure.
Gyms, disadvantage: at $2.80 the bar costs $0.30 more than the rival bar, so some customers may buy the rival in a supermarket instead; 5 000 free samples cost $4 500 to make, 15% of the $30 000 budget; and 200 gyms reach fewer people than a national chain, so total sales may be lower.
Website, advantage: selling direct means no retailer takes a share, so $1.05 is left per bar after the $0.90 cost and $0.30 of delivery per bar; influencer adverts reach online buyers who exercise, part of the 65% found by the market research.
Website, disadvantage: $18 000 on influencers uses 60% of the budget with no guarantee of sales; customers must pay $27 for 12 bars of a product they have never tasted; and KiwiCrunch sells only through shops now, so it has no experience of selling and delivering online.
A recommendation could be, e.g.: gyms, because product, price, place and promotion all aim at the people most likely to buy, the free samples remove the doubt of trying a new bar, and each bar leaves $1.10; supermarkets are rejected because $0.49 a bar leaves little profit while competing head-on with the market leader, and the website because buyers must pay $27 up front for a bar they have not tasted. Any marketing mix can be recommended if it is well justified.

How this is examined

Choosing one of three named marketing mixes for the business in a case study, and saying why the other two lose.: A 12-mark Paper 2 case-study part (b), in the specimen's wording: 'Consider the following three … [business] could use… Which … should [business] choose? Justify your answer.' The specimen marks these by levels of response (Level 3 9–12, Level 2 5–8, Level 1 1–4), not by adding up points. For each mix, an advantage and a disadvantage, each tied to a case fact — the target market, the cost of making each unit, a rival's price, the marketing budget — and followed through to sales, revenue or profit. Outlining all three mixes with a case fact but no consequence tops out at Level 1 (4). Detailed discussion of at least one mix plus a judgement with some justification is Level 2; two or more mixes discussed in detail and in context reach the top of Level 2 (8). Level 3 needs detailed discussion of two or more mixes and a well-justified recommendation, and the top of Level 3 goes to an answer that discusses all three in detail and in context, then says why each of the other two was rejected for this business — e.g. 'not a supermarket, because after the retailer's share so little is left per unit that profit depends on very high sales'.
Choosing the best marketing mix, or its most important element, for the business in the question and defending the choice.: An 8-mark part (d): 'Explain how [business] could use two elements of the marketing mix… Which element is likely to be the most important? Justify your answer.' The Paper 2 specimen's longest parts are 12-mark case-study questions that begin 'Consider…', weigh named options against each other and end 'Justify your answer' — the same skill of choosing and justifying, at greater length. Two named elements, each with a specific method (e.g. 'competitive pricing at about 180 dollars', 'targeted social media adverts') [k], a stem fact that makes sense with it — the target market, a cost, a competitor's price, a budget [app] — and a consequence for sales, revenue or profit [an]. Then a choice of the most important element with a new reason from the stem that also says why the other matters less here [eval]. 'Promotion is most important because it tells people about the product' repeats knowledge and earns no evaluation.
Why one particular element of the mix matters for this business.: A 6-mark 'Explain two reasons why [price / place / product / promotion] is important for [business]', or the 4-mark Outline version. Explain: point, stem fact, consequence for each reason. Outline: point and stem fact only. The reason must suit the product in the stem — place matters because a cheap drink is bought on impulse; price matters because the target market has low incomes. Keep price (what the customer pays) and cost (what the business spends) apart.
Spotting a marketing mix whose elements do not fit together.: A 4-mark Outline about a proposed change — 'Outline two reasons why this plan might reduce [business]'s sales' — often a luxury product moved to a cheap channel or given a heavy discount. Name the clash [k] and apply it to the stem [app]. For a luxury watch maker, for example: 'selling in supermarkets would damage the exclusive brand image [k] of watches priced at 900 dollars and above [app]'; 'a half-price offer suggests low quality [k], which does not match handmade watches [app]'.
What the marketing mix is.: A 2-mark Define of 'marketing mix', or 'Identify two elements of the marketing mix that…'. Define: 'the combination of product, price, place and promotion used to sell a product to its target market' shows clear understanding; listing the four Ps with no idea of what they are for shows only some. Identify: the first two answers only, each one of product, price, place or promotion that fits the question.

Words to know

Marketing mix: The combination of product, price, place and promotion that a business uses to sell a product to its target market.
Marketing strategy: A plan for using the marketing mix to reach a target market and achieve a marketing objective.
Target market: The group of customers a business aims its product at, often described by age, income, location, gender or lifestyle.
Competitive pricing: Setting a price similar to competitors' prices.
Penetration pricing: Setting a low price when entering a market, to attract customers from competitors.
Price skimming: Setting a high price for a new or innovative product, then lowering it later.
Brand image: The impression customers have of a brand; a strong brand image can support a higher price and customer loyalty.

All Business lessons Next: 3.3.7 Entering new markets in other countries as a method of growth