F&G is a leading fashion retailer. It has 20 shops in country C. The business uses market segmentation. Its target market is men aged between 25 and 40 years old. The Marketing Director has been looking at the marketing data shown in Table 1. She is worried that the amount the business spends on marketing is not cost effective. She would like to close down all F&G shops and just use e-commerce. Table 1 Year | Total value of the men's clothing market | F&G's market share | F&G's marketing budget ---|---|---|--- 2015 | $500m | 15% | $25m 2016 | $700m | 12% | $40m

Mark scheme

Marking points from the official mark scheme (May/June 2016). The mark or mark type is shown in brackets.

1. [2] Clear understanding – e.g. An estimated projection of costs needed to promote a business' products or services,
2. OR amount of money set aside by a business to promote its products and services (for a given period of time),
3. OR a financial plan for the marketing of a product or product range (for a specified period of time).
4. [1] Some understanding – e.g. Money for promoting goods or financial plan for marketing.
5. [2] Good application: $84m or 84m or 84000 000.
6. [1] Some application e.g. 700 × 0.12 OR 700/100 × 12 OR 700 × 12% OR 84.
7. [1] Knowledge [2 × 1] – award 1 mark for each relevant benefit [max 2].
8. [1] Application [2 × 1] – award 1 mark for each explanation in context.
9. [1] Relevant points might include: Able to tailor goods to specific needs of segment/know what to produce [k] which may help increase its market share [app]
10. [1] Identify gaps in the market [k] so can spot new age range to sell to [app]
11. [1] To help decide best place to sell [k] such as e-commerce [app]
12. [1] Research is simpler/help identify customer needs [k] as know which gender/men to ask [app]
13. [1] Help focus spending/make best use of resources [k] so don't waste fabrics [app]
14. [1] Help target promotion/advertising [k] so make better use of (marketing) budget [app]
15. [1] Help set prices [k]
16. [1] Help increase sales/revenue [k].
17. [1] Knowledge [2 × 1] - identification of relevant reason.
18. [1] Application [2 × 1] – award 1 mark for relevant reference made to this business.
19. [1] Analysis [2 × 1] - award 1 mark for each relevant explanation. Relevant points might include: Target wrong people/advertise in wrong place/wrong medium/poor message [k] so men [app] aren't aware of its products [an]
20. [1] People don't want product/not meeting customer demands [k] clothing might be out of fashion [app] so doesn't lead to additional revenue [an]
21. [1] Already well known [k] so customers are not influenced to buy its clothing [app]
22. [1] Brand loyalty to other companies [k] as only have 12% market share [app] so not as competitive [an]
23. [1] Increased competition [k], more substitute products/choice [an]
24. [1] Inaccurate market research [k] (only once) as only asked people from shops not e-commerce [app]
25. [1] Wrong prices set/prices are too high [k]
26. [1] Sell in the wrong locations [k].
27. [1] Knowledge [1] – award 1 mark for identification of relevant issue(s) [max 1].
28. [1] Application [1] – award 1 mark if relevant reference made to this business.
29. [2] Analysis [2] – award up to 2 marks for relevant development of point(s).
30. [2] Evaluation [2] – justified decision made as to whether F&G should close all its shops and just use e-commerce.
31. [1] Relevant points might include: Able to target customers [k] as can advertise directly to men [app]
32. [1] Less rent/fewer employees needed [k] which can help reduce costs [an] so able to spend more on other areas of marketing e.g. Lower prices [an]
33. [1] Widen market [k] can help attract new/more customers [an]
34. [1] Easy to update [k] which is important as fashion always changes [app] so keep customers informed [an]
35. [1] Increased threat of new competition [k] as customers find alternative clothing [app] on line leading to lower sales [an]
36. [1] Not everyone has access to internet [k]
37. [1] No passing trade [k] so fewer sales [an]
38. [1] Increased costs of postage/distribution [k] as need to arrange for delivery/vans [an]
39. [1] Cost of setting up website for e-commerce [k]
40. [1] Lose (existing) customers [k] as people want to try before they buy [an].