Clean and Tidy (CT) CT is an employee-owned business that specialises in cleaning homes. The homes are cleaned during the day whilst the homeowners are at work. There are nine employees, each of whom owns an equal share of the business. CT cleans 50–60 homes each week. Most customers have been using CT for many years. There has been no sales growth for the past 12 months and the profit margin is decreasing. CT has tried to increase revenue by lowering the price of its services (see Table 2). [Table 2: Sales data] Price per hour Weekly sales (number of homes cleaned) $8 50 $6 55 CT promotes its cleaning services using above the line promotion methods. New customers contact the business through its website or by telephone. In a recent meeting of all the owner-employees, someone suggested the business move into the industrial market for cleaning. This would include cleaning offices and factories during the night. The marketing mix for CT would need to be changed significantly to attract customers in the industrial market.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2017). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [0] No creditable content
4. Content Measure of the profitability (not profit) of a business. Calculated by finding the profit for the year as a percentage of revenue. Proportion of revenue that is profit for the year.
5. Award one mark for each point of explanation: [1 mark] C Example or some other way of showing good understanding
6. [1 mark] B Through a media
7. [1 mark] A Communication/advertising/creating awareness to consumers/customers
8. Content Above The Line promotion is the use of media to promote a business and reach out to the target consumers. These include conventional media, television and radio advertising, print as well as internet. This is communication that is targeted to a wider spread of audience, and is not specific to individual consumers.
9. [3 marks] Correct answer with or without working
10. [2 marks] Attempt with correct use of figures
11. [1 mark] Formula
12. [0 marks] No creditable content
13. Formula: % Change in QD / % Change in P
14. % change in QD 5/50*100 = 10%
15. % change in P 2/8*100 = 25%
16. Answer = (-)0.4
17. Note: Minus sign not required.
18. Common incorrect answers Answer 25%/10% = 2.5 [2] Rationale Formula wrong way round
19. Common incorrect answers Answer 10%/25% [2] Rationale Obvious (implied) knowledge of formula but no attempt to calculate answer (or the attempt is wrong)
20. Common incorrect answers Answer 10%/25% = Inelastic [2] Rationale As above
21. Common incorrect answers Answer 5/2 = 2.5 [1] Rationale Candidate missed the % out of the formula (twice)
22. Common incorrect answers Answer 10% and/or 25% [1] Rationale No formula or attempt to put % changes in a formula
23. Common incorrect answers Answer Inelastic [1] Rationale Some understanding but no calculation
24. Common incorrect answers Answer Change in QD / Change in P [0] Rationale Formula is wrong – no %
25. Common incorrect answers Answer 2.5 [0] Rationale No working
26. [3] Explanation of a way PED could be used in context
27. [2] Identification of a way PED could be used in context
28. [1] Shows understanding of the use of PED
29. [0] No creditable content
30. Correct use of an incorrect answer to 1(b)(i) should be fully rewarded (own figure rule –OFR).
31. No credit for knowledge of PED or formula – already awarded in previous question.
32. Content Answers could include: Can see that cleaning services are price inelastic (OFR).
33. Content CT should not reduce their price – they should increase their price back to the original level (or increase it further).
34. Content Price is obviously not the most important factor when customers purchase cleaning services.
35. Content PED can be used to calculate revenue based on price changes.
36. Level 2 Shows understanding of employee owned businesses in context [3-4] Good analysis of one (or more) advantage(s) AND one (or more) disadvantage(s) of being an employee-owned business in context [4]
37. Level 2 Shows understanding of employee owned businesses in context [3-4] Good analysis of one (or more) advantage(s) OR one (or more) disadvantage(s) of being an employee-owned business in context [3]
38. Level 1 Shows knowledge of employee owned businesses [1-2] Limited analysis of one (or more) advantage(s) AND one (or more) disadvantage(s) of being an employee-owned business [2]
39. Level 1 Shows knowledge of employee owned businesses [1-2] Limited analysis of one (or more) advantage(s) OR one (or more) disadvantage(s) of being an employee-owned business [1]
40. Answers could include: Context: equal ownership, different skills in cleaning, each owner may have different personal contacts – cleaning homes, each owner may have different business contacts to expand into the industrial market.
41. Advantages: working together to solve problems, economies of scale, motivation from being owners/sharing profits.
42. Disadvantages: disagreements – who is in control?, if there is a manager do they have authority, do the workers have the management skills?, could be a lack of capital investment, could lead to slow decision making.
43. Knowledge and Application (4 marks) [3-4] Shows understanding of the marketing mix in context [7] Justified evaluation that follows on from a balanced argument of change(s) to the marketing mix in context
44. Knowledge and Application (4 marks) [3-4] Shows understanding of the marketing mix in context [6] Evaluation that follows on from a balanced argument of change(s) to the marketing mix in context
45. Knowledge and Application (4 marks) [1-2] Shows knowledge of the marketing mix [5] A balanced argument based on change(s) to the marketing mix in context
46. Knowledge and Application (4 marks) [1-2] Shows knowledge of the marketing mix [3-4] Argument based on change(s) to the marketing mix in context
47. Knowledge and Application (4 marks) [1-2] Shows knowledge of the marketing mix [1-2] Limited analysis of how the marketing mix might change/be changed
48. No creditable content
49. Content: Answers could include: Product - the businesses will expect evening/night-time cleaning – will CT have employees who are willing to do this? Will they expect higher remuneration for anti-social hours? However the essence the service on offer is the same.
50. Content Price - need to find out how sensitive the industrial market is to price? Likely to be more price elastic due to being a cost of business. Therefore CT may find themselves in a more competitive market and need to charge lower prices/have lower margin.
51. Content May need to move towards below the line promotion – above the line likely to be expensive to target industrial market (except trade magazines). May need to employ sales people to target businesses directly.
52. Content Industrial customers are unlikely to come to them (i.e. phone or book on internet) so CT will need to be more proactive in finding customers.