SC is a large public limited company that sells low-sugar candy (sweets) with natural flavourings. The candy is made using flow production in SC's four large factories in country T. SC uses psychographic market segmentation when planning its marketing mix. SC has completed some secondary market research using published accounts. The data is about one of SC's main competitors, Organic Kandy (OK) and compares the results with data about SC (see Table 2.1). OK is in the same market as SC. Table 2.1: Secondary market research about OK and SC for 2020 | | OK | SC | |---|---|---| | Revenue | $60m | X | | Market share by revenue | 40% | 34% | | Different varieties of candy | 12 | 18 | | Main channels of distribution | Wholesalers Large supermarkets Health food shops | Wholesalers Small retailers E-commerce | | Target market(s) | Mass market | People with interests in: • Nature • Sports • Travel • Health | There have been a number of media reports in country T about the increasing importance of corporate social responsibility (CSR). A large food manufacturing business in country T recently lost many customers due to reports about its use of plastic packaging. The directors of SC are particularly concerned about this trend because of SC's use of plastic in its packaging. The marketing department has been told to conduct some primary market research on this issue. The directors are planning to discuss making CSR a new business objective for SC.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2021). The mark or mark type is shown in brackets.

1. [2] A correct definition.
2. [1] A partial, vague or unfocused definition.
3. [1] The continuous movement of products through the production process.
4. [1] When one task is finished, the next task starts immediately.
5. [1] The creation of a product in a series of stages on a production line.
6. [1] Identical/standardised products are created on an assembly line.
7. [2] Continuous production for non-customised products.
8. [1] Continuous making of products.
9. [1] Continuous line/automated.
10. [1] Understanding of market segmentation.
11. [1] Understanding of psychographic.
12. [1] *Example or some other way of showing good understanding.
13. [1] Selecting the most likely buyers.
14. [1] Select groups of consumers based on similar characteristics.
15. [1] Based on their interests, activities and lifestyle choices.
16. [1] Qualitative method of studying consumers based on psychological characteristics and traits.
17. [1] Such as: beliefs, values, lifestyle, social status, opinions and activities.
18. [1] Beyond general demographic data such as age, gender or race.
19. [1] a business selling holidays to people based on the sports they enjoy such as golf/cycling holidays.
20. [1] any examples from case allowable.
21. [3] Selecting the most likely buyers based on beliefs and values instead of geographic factors.
22. [2] Selecting the most likely buyers based on beliefs and values.
23. [1] Breaking up/separating the market.
24. [3] Correct answer with or without correct working or $ or m.
25. [2] Calculation of total market revenue.
26. [1] Formula* (can be implied through use of figures).
27. [1] Total market = $60m × 2.5 = $150m.
28. [1] 34% of $150m = $51m.
29. [1] SC's sales revenue = $51m.
30. [3] $51m.
31. [1] (OFR - final; mark only) 60m * 0.4 = 20.4m.
32. [0] (Incorrect formula and figures) 60m – (60*0.34) = 39.6.
33. [1] Knowledge of a disadvantage of secondary market research (e.g., may be out of date, may be inaccurate, may not be specific, been compiled by someone else, may be under copyright).
34. [2] Identification of one possible disadvantage of secondary market research in context.
35. [3] Explanation of one possible disadvantage of secondary market research in context.
36. [1] Out of date.
37. [2] Published accounts.
38. [3] Due to window dressing.
39. [1] May be out of date.
40. [2] Two years old.
41. [3] Elements may have changed.
42. [1] Shows knowledge of one primary market research method (e.g., questionnaires/surveys, focus groups, observation, trial/test marketing).
43. [2] Shows knowledge of two primary market research methods.
44. [3] Shows understanding of one primary market research method in context.
45. [4] Shows understanding of two primary market research methods in context.
46. [1] Limited analysis of one primary market research method.
47. [2] Limited analysis of two primary market research methods.
48. [3] Good analysis of one primary market research method in context.
49. [4] Good analysis of two primary market research methods in context.
50. [AO2] Application may include: PLC, low sugar candy, natural flavourings, flow production, psychographic segmentation, Corporate Social Responsibility (CSR), plastic/plastic in packaging, CSR as a new business objective.
51. [AO3] Analysis points: Questionnaires and surveys (depend on people being willing to answer and give honest answers), Focus groups (can ask qualitative opinions on factors and discuss potential solutions), Observation (if some customers prefer products which actively promote the reduction in plastic packaging, can focus on these; however, limited scope), Trial/test marketing (see if the sales/revenue are affected by altering factors, which is more likely to be a response than asking questions).
52. [K] Questionnaires.
53. [APP] Target market, e.g. nature and sports.
54. [AN] Via e-commerce will provide quick results.
55. [DEV] Depends, however, on the honesty of respondents.
56. [K] Focus groups.
57. [APP] Ask specific questions about low sugar candy.
58. [AN] To understand customer opinion.
59. [DEV] And make a decision on whether to change business objectives.
60. [1] Shows knowledge of CSR or business objectives (e.g., triple bottom line, social, environmental and profit objectives; SMART, analysing, assessing and understanding where you are now and where you want to be in the future).
61. [2] Shows knowledge of CSR and business objectives.
62. [3] Shows understanding of CSR in context.
63. [4] Shows understanding of CSR as a business objective in context.
64. [1] Limited analysis of one benefit of CSR as a business objective.
65. [2] Limited analysis of two or more benefits of CSR as a business objective.
66. [3] Argument based on one benefit of CSR as a business objective in context.
67. [4] Argument based on two or more benefits of CSR as a business objective in context.
68. [5] An evaluative statement/recommendation based on argument in context.
69. [6] Developed evaluation based on argument in context.
70. [7] Justified evaluation based on argument in context.
71. [AO2] Application may include: PLC, low sugar candy, natural flavourings, flow production, psychographic segmentation, food manufacturing business lost customers, use of plastic packaging, use of Table 2.1.
72. [AO3] Analysis of benefits may include: increased reputation (customers may choose SC because of its reputation of focusing on CSR, increasing revenue from $51m – increases revenue/profits), long term cost savings (CSR may lead to long term cost savings, especially if the loss of plastic leads to a recyclable alternative – which may reduce unit costs (but may increase short term costs)), could lead to growth (SC may be able to increase their market share (currently 43%) – overtake OK as market leader), increased sales (media reports suggest this is becoming a big issue for customers - SC may align with customers' preferences), decreased price elasticity of demand (customers may be happier to pay higher prices for candy which is more in line with their beliefs, especially parents - increases revenues), better staff retention and employment (may align with employees' beliefs – may improve motivation and/or retention), easier access to capital (may attract investment from ethical sources due to focus on TBL – may reduce cost of investment in new packaging materials and processes).
73. [AO4] Evaluation includes: A recommendation about whether SC should have CSR as a business objective. A judgement over the relative benefits of CSR as a business objective. Elements that the recommendation/judgement could depend upon, including cost, competitor actions, customer requirements and purchasing habits, market research. Weighing up of the relative impacts on SC of CSR as a business objective for SC.
74. [K] Triple bottom line.
75. [APP] Reducing use of plastic.
76. [AN] Improves reputation.
77. [DEV] Increases number of customers.
78. [EVAL] CSR is very beneficial as the reduction of plastic is likely to increase profits overall, even though the cost may be high initially.
79. [K] SMART.
80. [APP] Psychographic segmentation.
81. [AN] Customers may be happier to pay higher prices for candy which is more in line with their beliefs.
82. [DEV] Increases revenues.