Identify and explain one advantage and one disadvantage to SA of starting to sell new products in a niche market.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [2] Knowledge [2 × 1] Award one mark for each relevant advantage/disadvantage
2. [2] Analysis [2 × 1] Award one mark for a relevant explanation for each advantage/disadvantage
3. [4] Application [2 × 2] Award two application marks for each advantage/disadvantage
4. [0] Advantage: Higher price charged
5. [0] Advantage: Less competition
6. [0] Advantage: Meet specific needs of customers
7. [0] Advantage: Increase sales/market share
8. [0] Advantage: Spreads risk/diversification
9. [0] Advantage: Attracts new/different customers
10. [0] Disadvantage: More expensive to produce the product – uses batch rather than flow production
11. [0] Disadvantage: Increased costs e.g. product development, new marketing strategy needed
12. [0] Disadvantage: Limited size of market/limited potential sales
13. [0] Disadvantage: Smaller market segment
14. [0] Disadvantage: Higher price does not match existing brand image for low priced soap
15. [0] Indicative response for (a): SA can sell specialist products that meets these specific customer needs (k) and SA wants to sell soap aimed at people with older skin. (ap) This means that there are likely to be few competitors in this market as it is smaller and less attractive for larger businesses making it easier to have a higher market share and higher profits. (an). As incomes are increasing in country Z, older people will be able to afford this soap. (ap)
16. [0] Possible application marks for (a): Produces soap; existing soap sold in a mass market; bars or liquid soap; new factory/equipment will cost $15m; 50 workers in the new factory; country Z is a growing economy; older skin; luxury soap; baby soap; medicated soap; low priced soap.
17. [0] Relevant points for (b) Protection: So the soap does not get damaged in transit – however this might increase the costs of packaging
18. [0] Relevant points for (b) Protection: Easier to pack and store the soap in warehouses before sale – however this may take up more storage space
19. [0] Relevant points for (b) Brand image: Makes the soap stand out from other products on the shelves
20. [0] Relevant points for (b) Brand image: Differentiates products from competitors’ products
21. [0] Relevant points for (b) Brand image: Images on package reinforces brand
22. [0] Relevant points for (b) Information about the product: Legal requirement – government protection for consumer
23. [0] Relevant points for (b) Information about the product: Customers need to know what is in the soap – may have a physical reaction e.g. allergies or ethical reaction e.g. animal testing
24. [0] Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below.
25. [0] Level 3 Knowledge/Analysis/ Evaluation: At least 2 x Level 2 + 9–10 marks for well justified conclusion as which is the most important role of packaging to choose to successfully launch new products compared to the other roles. 7–8 marks for some limited judgement shown in conclusion as to which is the most important role of packaging to successfully launch new products.
26. [0] Level 2: 4–6 marks Detailed discussion of the benefits and/or drawbacks of each role of packaging.
27. [0] Level 1: 1–3 marks Outline of the benefits and/or drawbacks of each role of packaging.
28. [0] Level 1 - 1 mark for each L1 statement (max of 3 marks) e.g. Information about the ingredients of the soap is necessary as some people might be allergic to the soap.
29. [0] Level 2 - 1 x L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks) e.g. Information about the ingredients of the soap is necessary as some people might be allergic to the soap. This might result in a poor reputation for the soap if customers put bad comments on social media about the soap giving them problems. If full information is provided then this should be avoided and only good comments about the soap should be posted. (L2 plus application for making reference to soap in the explanation)
30. [0] Level 3 - For L3 to be awarded there needs to be at least two L2 marks awarded and then a conclusion which is the most important role of packaging to successfully launch new products.
31. [2] Award up to 2 additional marks for relevant application for (b).
32. [0] Possible application marks for (b): produces soap; sold in a mass market; soap sold as bars or liquid soap; bottles; niche market soaps; allergies/allergic reaction; medicated soap; baby soap; soap for older skin; luxury soap; retailers; wholesalers.