Use the data in Table 1.1 and Table 1.2 and assume no other changes. Calculate the expected revenue for the year ending 30 April 2026 if WCP increases promotional spending from $2.5 million to $3 million.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] (a) PrED = % change in quantity demanded / % change in promotional spending
2. [1] (a) Change in promotional spending = 20%
3. [2] (a) % change in quantity demanded / 20 % = 0.7
4. [3] (a) 20% × 0.7 = 14%
5. [4] (a) $21 m x 1.14 = $ 23.94 m
6. [4] (a) 23.94 m
7. [3] (a) $ 23.94
8. [K] (b) A coordinated marketing strategy integrates all aspects of the marketing mix, objectives and budget.
9. [K] (b) Marketing plan is part of marketing strategy to achieve marketing objectives within a budget.
10. [K] (b) Marketing mix as part of planning consists of price, place, promotion and product
11. [K] (b) promotional elasticity measures responsiveness of demand to changes in promotional spending
12. [K] (b) price elasticity measures responsiveness of demand to a change in price
13. [K] (b) income elasticity measures the responsiveness of demand to a change in income.
14. [K] (b) Understanding of inelastic - not responsive and elastic - responsive to change in price/promotion/income.
15. [APP] (b) Supermarkets are a new sales outlet for WCP products.
16. [APP] (b) Different supermarkets may target different groups, such as low- or high-income customers.
17. [APP] (b) Current marketing plan focuses on on-line selling and loyal customers, who order in large quantities.
18. [APP] (b) WCP are effective in customer relationship marketing, as evidenced by loyal customer base.
19. [APP] (b) Estimated PED is –1.2. This is price elastic. An increase in price will result in a greater % decrease in demand.
20. [APP] (b) Estimated promotional elasticity of demand is 0.7. Demand is promotion inelastic i.e. relatively unresponsive.
21. [APP] (b) Answer from (a) (allow OFR) a 20 % increase in promotional spending will lead to a 14 % increase in revenue.
22. [APP] (b) Estimated YED is 1.6 so elastic and a normal good
23. [APP] (b) Levels of income and unemployment will vary by sales region. This will impact elasticity measures.
24. [APP] (b) Ethical customers may have an impact on elasticity as willing to pay premium prices.
25. [AN] (b) Knowledge of PED is useful to WCP making decisions about pricing. For example, elastic PED would indicate that an increase in price would decrease revenue and therefore decrease profit.
26. [AN] (b) Supermarkets will sell many substitute products therefore the WCP brand will need to stand out therefore packaging will need to attract customer attention in order to encourage them to try WCP's product.
27. [AN] (b) Selling through supermarkets will mean that some change in packaging is needed, as customers will not want to buy in large quantities, perhaps increasing production costs and therefore decrease profit.
28. [AN] (b) Increase in spending and a PrED of 0.7 will lead to an increase in demand but a lesser % than the increase in spending suggesting that promotion is less effective.
29. [AN] (b) As WCP sell a premium priced product choosing the right supermarkets to distribute through will be important in order to reach the high-income customers and maximise sales.
30. [EVAL] (b) A judgement about the most important element of the marketing plan.
31. [EVAL] (b) In a marketing plan, WCP will also consider other factors e.g. changing products and customers' view towards ethical trading. These changes to the marketing mix can increase sales and impact profit.
32. [EVAL] (b) The customer profile of supermarkets will be different, therefore some of WCP estimates of elasticity may be inaccurate, will very much depend on the supermarket.
33. [EVAL] (b) A judgement about the usefulness of elasticity to marketing planning decisions.
34. [EVAL] (b) A judgement about the limitations of elasticity calculations.
35. [EVAL] (b) Measurement of elasticity is difficult and likely to be inaccurate due to large range of factors that will affect outcomes, for instance competitors entering the market. Other things don't remain equal in markets.
36. [EVAL] (b) The degree of competitive rivalry in the market
37. [EVAL] (b) Other elements of marketing plan are important e.g. integrated marketing mix to ensure consistency in message communicated to potential customers and therefore attract sales.