Identify and explain one benefit and one cost to MF of developing the new product.

Mark scheme

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

1. [2 × 1] Knowledge - award one mark for each relevant benefit/cost
2. [2 × 1] Analysis - award one mark for a relevant explanation for each benefit/cost
3. [2 × 2] Application - award two application marks for each benefit/cost
4. Answers are likely to include:
5. Benefit:
6. Provides a USP
7. Allows diversification/spreads risk
8. Allows the business to expand into new markets/attracts new customers/accommodates changing customer needs
9. Allows the business to expand into existing markets/increases market share/improved competitive advantage
10. Increase revenue/increased sales
11. Cost:
12. Costs of carrying out market research/product trials
13. Increased production costs – new equipment/training/recruitment costs/high cost of raw materials/high cost of waste removal
14. Increased marketing costs – to build customer awareness
15. If target market wrong, the company reputation may be damaged
16. Indicative response:
17. Provides a USP (1) if there are no other sugar-free ice creams in the market (ap). This will allow MF to increase sales revenue of the ice cream (1). This is a new market and MF is taking advantage of the trends for healthier foods (ap).
18. Possible application marks:
19. Sugar free ice-cream; MF has a large market share of the food markets; large variety of food products; objectives are growth and increased market share; new automated production line required; new skilled workers need recruiting; existing workers need to be retrained.
20. There may be other examples in context that have not been included here.
21. Relevant points might include:
22. Price
23. Penetration pricing into existing dessert market
24. Cost-plus pricing as need to recoup development costs
25. Place
26. Distribute through wholesalers or large supermarkets to reach a mass market
27. Distribute through gyms or health food outlets to reach health conscious market
28. Promotion
29. Advertise in health and fitness magazines for the health conscious consumers
30. TV advertising as aimed at large market
31. Free samples to ensure potential consumers try the new dessert
32. Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below.
33. Level 3: At least 2 x Level 2 + 9-10 mark for well justified conclusion of which element of the marketing mix will contribute the most to the success of the new product and why the other elements will contribute less. 7-8 mark for some limited judgement shown in conclusion of which element of the marketing mix will contribute the most to the success of the new product
34. Level 2: 4-6 marks Detailed discussion of how each element of the marketing mix can contribute to the success of the new product. A clear strategy needs to be explained, e.g. pricing method named and explained as to why it would be effective
35. Level 1: 1-3 marks Outline of how each element of the marketing mix can contribute to the success of the new product. Simple statement made, e.g. reduce the price to gain more customers
36. Level 1 – 1 mark for each L1 statement (max of 3 marks), e.g. place can be through wholesalers and supermarkets as they can sell a lot of the products to this large market.
37. 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. Place can be through wholesalers and supermarkets as they can sell a lot of the products to this large market. These outlets are where the most customers will buy desserts and so it will increase the chance of the new ice-cream being seen on the shelves and then purchased (L2 + application for referring to ice-cream in the answer).
38. Level 3 - For L3 to be awarded there needs to be at least two L2 marks awarded and then a justified conclusion of which element of the marketing mix will contribute most to the success of the new product.
39. Award up to 2 additional marks for relevant application.
40. Possible application marks:
41. Sugar free ice-cream; MF has a large market share of the food markets; objectives are growth and increased market share; 10% of adults should not be eating sugary foods; 40% of adults are overweight; other food businesses are planning the introduction of low sugar food products; health conscious consumers.
42. There may be other examples in context that have not been included here.