Analyse the benefits to DLR of the elasticity concept when developing the new marketing plan.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [Knowledge] Definition/understanding of marketing plan: detailed report on a marketing strategy containing research findings, objectives, marketing mix and budget.
2. [Knowledge] Definition of elasticity: measures the responsiveness of demand to a change in one of its determinants e.g. price elasticity of demand, income elasticity of demand.
3. [Knowledge] Knowledge of PED will help make decisions about pricing
4. [Knowledge] Knowledge of promotional elasticity of demand will guide planning of how much to spend on the marketing budget.
5. [Knowledge] Knowledge of income elasticity of demand will help DLR understand the impact of expected changes in income on demand
6. [Knowledge] Use of the elasticity concept will reduce the risk of failure
7. [Knowledge] Knowledge of cross price elasticity of demand
8. [Application] As DLR intends to increase prices for accommodation they will need to consider the impact of PED on demand
9. [Application] Knowledge of PED will also help make decisions about the discounts to be offered in the off-peak season.
10. [Application] Promotional elasticity of demand will influence the design of the marketing plan to achieve the goal of a 10% share of the holiday park market
11. [Application] Forecast GDP growth of 3.5% linked to YED
12. [Application] Minimum wage to increase by 2019 linked to YED
13. [Application] Exchange rate depreciation impact on demand linked to PED
14. [Analysis] If demand price inelastic then an increase in price will, ceteris paribus, result in a less than proportionate reduction in demand and therefore revenue will increase
15. [Analysis] Offering discounts in the off-peak season will increase revenue if demand is price elastic as change in demand will be proportionately more than the change in price.
16. [Analysis] High promotional elasticity of demand would encourage DLR to consider increasing promotion as this would result in proportionately higher increase in sales
17. [Analysis] Positive YED would indicate that sales will increase as GDP rises
18. [Analysis] Analysis of how risk is reduced by making more informed marketing decisions