Refer to line 29. Calculate the forecast change in sales for pay as you go fitness classes if average incomes decrease by 6%.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2024). The mark or mark type is shown in brackets.

1. [1] YED = % change in quantity demanded / % change in income
2. [1] 2.5 = % change in quantity demanded / -6
3. [1] % change in Qd = −6 × 2.5
4. [2] = -15%
5. [2] If incomes decrease by 6% then demand may decrease by 6 × 2.5 = 15%
6. [1] Answer of 15% without indicating it is a decrease
7. Promotional elasticity of demand = % change in quantity demanded / % change in promotional spending
8. Percentage change in promotional spending = 20%
9. [1] Pr ED = 15% / 20%
10. [2] = 0.75
11. Marketing strategy includes marketing objectives, budget, research and co-ordinated marketing mix.
12. CRM includes a focus on retaining existing customers as this is often easier and cheaper than continually attracting new ones.
13. Market research as part of the marketing strategy, investigating changing needs and wants of customers.
14. Each fitness factory has a group of full members who pay $2500 per year and whose participation in fitness sessions can easily be tracked and who can be easily contacted.
15. The 'pay as you go' customers can also be encouraged to set up accounts.
16. Additional information about customer requirements can be collected when they visit in person or book via the App.
17. The Pr Ed for annual membership customers is relatively inelastic as indicated by the response to higher promotional spending.
18. Marketing objective is to increase number of members of its fitness factories.
19. Changing customer needs, ageing population may need different fitness classes.
20. Keeping existing loyal customers happy by meeting their needs will guarantee regular income from this group and once the yearly fee is paid, they are likely to stay with the business, making revenue more predictable and planning easier.
21. Price will have a significant impact on AFF's ability to attract and retain members as it is a competitive market so if price is not competitive members will go elsewhere as substitutes are available and membership will decline.
22. The product including availability of different classes is important as this can attract members and non-members who follow the latest fitness class trends and if the product doesn't meet changing customer expectations AFF will lose members.
23. It may be possible to convert pay as you go customers to full membership, using effective personalised promotion, such as free sessions with personal trainers.
24. CRM will be important but wider market research will also enable AFF to spot trends in fitness and exercise classes, leading to 'first mover advantage' if they are proactive in new product development.
25. Although demand is promotion inelastic, promotion is important to raise awareness of AFF's changing offer of fitness classes and therefore attract new customers.
26. Overall supported judgement as to the most important element of the marketing strategy and the factors that will influence importance.
27. The degree of competition in the market will impact the price elasticity of demand.
28. The extent to which the product can be differentiated from that of competition.
29. How quickly the market changes – Fitness is a very dynamic market, need to be quick to introduce new products to meet changing trends.
30. The cost of CRM v the cost of attracting new customers.
31. The significance of market research to understanding consumers and the market as a basis for determining the best marketing strategy.
32. Data on existing customers is important, but attracting new customers, such as those who have never thought of consuming this type of service is equally important.