AS BUSINESS ASSIGNMENT 04 MARK SCHEME

AS Business Assignment Four

MARK SCHEME

Guidance for Tutors

The mark scheme has been set out in grids to identify where marks can be awarded. Questions range from 2 to 20 marks and will be based on up to four
levels of marking.

These are:

• Level 1 – AO1: Knowledge and understanding

Demonstrate knowledge and understanding of business concepts, terms and theories.

• Level 2 – AO2: Application

Apply knowledge and understanding of business concepts, terms and theories to problems and issues in a variety of familiar and unfamiliar business
situations and contexts.

• Level 3 – AO3: Analysis

Analyse business problems, issues and situations by:

o Using appropriate methods and techniques to make sense of qualitative and quantitative business information;
o Searching for causes, impact and consequences;
o Distinguishing between factual evidence and opinion or value judgement;
o Drawing valid inferences and making valid generalisations.

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• Level 4 – AO4: Evaluation

Evaluate evidence in order to make reasoned judgements, present substantiated conclusions and, where appropriate, make recommendations for action
and implementation.

Tutors need to ensure that students are fully describing the knowledge they have acquired and are applying this in order to show understanding. This
means that the specific point being discussed is considered along with the business scenario set.

Analysis, where required, must be shown. This means that the student should identify any issues that can affect the business’ performance and then state
why these issues may have happened and what their effect will be on the business using business theory where appropriate.

Evaluation should then be used to identify a decision that the student feels the business should make, backed up with a sound justification and again, using
business theory where appropriate.

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1.
a. Define the term ‘adding value’. (2 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)

Exemplar Mark Rationale

Adding value is the idea that the entrepreneur makes their product different in some way 2 Definition and example in the context of Endeavour
that encourages the customer to want to buy it for a higher price than the business paid or any other named business.
to make it. This could mean, in Endeavour’s case, it adds value in the mind of the
customer by creating far better customer service levels, offering cleaner cars, better
locations, and more ways to interact with the business such as an app.
Once this value (in the mind of the customer) has been added, then Endeavour can
charge a higher price and make a profit.
Benefits of adding value might be:
• being able to charge a higher selling price;
• making higher profits;
• customers becoming brand loyal;
• gaining higher profit due to added value because the price that can be charged for
the products goes up.
All of these means the business succeeds and survives.
1 Definition or example.
0 No creditable content.

b. What is meant by ‘brand extension’? Identify where in the case study Endeavour uses brand extension. (3 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)

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Exemplar Mark Rationale

Brand extension is the use of an established brand name in new product categories. This 3 Definition and example in the context of Endeavour.
new category to which the brand is extended can be related or unrelated to the existing
product categories. A renowned/successful brand helps an organisation to launch
products in new categories more easily.
In the case study, Endeavour uses its brand (which can be seen to be strong as it is
number three amongst the biggest six car rental companies in the UK) to launch its car
club.
2 Definition only.
1 Example only.
0 No creditable content.

2.
a. Describe the difference between niche and mass marketing. (2 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)

Exemplar Mark Rationale

Mass marketing = the process of promoting and attempting to sell a product, but not 2 Difference identified and examples.
targeting one particular group of consumers and instead potentially targeting all groups
of consumers, for example, if Endeavour ran a TV advertisement.
Niche marketing = the process of promoting and attempting to sell a product to a
relatively small well-defined segment of a market. For example, if Endeavour used
personal selling to try and promote its car club to one hospital.
1 Difference or examples.
0 No creditable content.

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b. Explain the difference between customer orientation and product orientation. (3 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)

Exemplar Mark Rationale

Customer (or market) orientation is an approach that can be classified as outward looking 3 Definitions and difference identified and example.
in that all decisions about what product a business intends to make are based on
undertaking extensive market research to determine the opinions of potential customers
before the product is developed.
Product orientation is an approach that can be classified as inward looking in that the
business does not seek the opinions of potential customers and instead only focuses on
what they think they can produce and assume customers will want it.
Both definitions = (1 mark).
The difference is that one method, sensibly, seeks the opinion of potential customers to
ascertain what product should be made.
Difference noted = (1 mark). Difference can be within definitions.
For example, in the case study, the product development department operated in a
customer-oriented manner, in that they undertook three months of extensive market
research before putting forward the proposals for the new car club.
Example in context = (1 mark).
Credit any reasonable example from the case study or any reasonable example from a
named business.
2 Two of definitions and difference identified and
example.
1 One of definitions and difference identified and
example.
0 No creditable content.

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3. Assess the factors that influence the demand for car rentals from both Endeavour’s traditional approach and its new proposed car club. (5 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks); AO3 Analysis (2 marks)

Factors that influence both:

• suitable locations picked by Endeavour;

• actions of other car renters;
• levels of customer service;
• cleanliness of cars;
• price elasticity of demand;
• use of CRM system.

Factors that influence demand for traditional car rental:

• short questionnaire;
• number of foreign visitors to UK airports;
• speed of rental;
• helpfulness of staff;
• whether the car club takes customers away from rental locations.

Factors that influence demand for car club:

• number of eco conscious customers;

• families who cannot afford a second car;
• number of university students near a location;
• success in marketing car club to businesses and other organisations;
• ease and reliability of using app;
• whether competitors set up a car club.

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Exemplar Mark Rationale

Demonstrates understanding of demand (1 mark). 4-5 Understanding of demand, analysis of three factors
Analyses at least one factor that influences the demand for traditional car rentals, fully in context.
analyses at least one factor that influences the demand for the car club and analyses at
least one factor that influences demand for both (2 marks), fully in the context of
Endeavour Car Rentals plc and its exact circumstances as described in the case study. (2
marks)
2-3 Understanding of demand, analysis of three factors.
OR
Understanding of demand, analysis of two factors
fully in context.
1 Understanding of demand or analyses one factor.
0 No creditable content.

4.
a. Describe the difference between industrial and consumer markets. (2 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)

Exemplar Mark Rationale

Consumer market = a market that a business promotes and sells to that is made up of 2 Difference identified and examples.
final consumers. For example, the customers of Endeavour are a consumer market.
Industrial market = a market that a business promotes and sells to that is made up of
other businesses that exist further down the supply chain/chain of production. For
example, Endeavour is part of the industrial market of the car leasing firms it leases its
cars from.
1 Difference or examples.
0 No creditable content.

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b. Explain the difference between primary market research and secondary market research. (3 marks)

Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)

Exemplar Mark Rationale

Primary market research = the collection of first-hand data/information that is directly 3 Definitions and difference identified and examples.
related to a business’s needs. For example, Endeavour’s short questionnaire is primary
market research.
Secondary market research = collection of data from second-hand sources. For example,
Endeavour making use of the market share chart is secondary market research.
2 Two of definitions and difference identified and
examples.
1 One of definitions and difference identified and
examples.
0 No creditable content.

5.
a. Assess how Endeavour makes use of the four Ps to maximise its chances of success. (8 marks)

Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (4 marks)

Use of four Ps:

• provision of clean, modern, fuel-efficient cars;

• provision of very high levels of customer service;
• provision of an efficient app for the car club;
• 24-hour access to cars in the car club;
• setting an acceptable price for car rentals and the car club;
• car club pricing potentially allowing savings for customers who switch from traditional car rentals;
• methods of promotion used, such as branding, visibility at key locations such as airports, website and app;

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• use of CRM;
• rental locations at airports, large cities, large railway stations;
• car club locations in 24-hour accessible car parks close to potential car club users.

Exemplar Mark Level Rationale

Analysis of how all four Ps are used to maximise the chances of success fully in the 7-8 4 Good analysis of all four Ps fully in context.
context of Endeavour, its products, its market and its exact circumstances as described in
the case study.
Analysis of how all four Ps are used to maximise the chances of success but not in context. 5-6 3 Good analysis of all four Ps but not in
OR context.
Analysis of how two or three of the four Ps are used to maximise the chances of success OR
fully in the context of Endeavour, its products, its market and its exact circumstances as Good analysis of two or three of the four Ps
described in the case study. fully in context.
Top End 3-4 2 Some application of all four Ps in context.
States how all four Ps are used to maximise the chances of success fully in the context of OR
Endeavour, its products, its market and its exact circumstances as described in the case Some application of two or three of the
study. four Ps but not in context.
Bottom End
States how two or three of the four Ps are used to maximise the chances of success but
not in context.
Demonstrates knowledge of the four Ps. 1-2 1 Knowledge and understanding of the four
Ps.
0 0 No creditable content.

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b. Evaluate the methods available to Endeavour to successfully market the new car club and what marketing objectives it should set in its marketing
plan. (12 marks)

Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (2 marks); AO4 Evaluation (6 marks)

Methods of marketing available:

• promotion by rental location staff;

• leaflets in rental locations;
• displays in rental locations;
• links on rental website;
• billboards near universities and in city centres;
• TV advertisement;
• newspaper advertisement;
• celebrity endorsement;
• online viral marketing;
• use of social media influencers;
• personal selling in businesses, hospitals, and councils;
• CRM system.

Suggested marketing objectives:

• Increase market share by four percentage points as stated in case study.

• Improve EQ from 4.47.
• Attract 20,000 car club members in first year.
• Attain minimum of four hours use of each car in car club each day.

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Evaluation of success:

• may depend upon how successfully Endeavour are able to explain the features and benefits to customers who may never have considered
renting a car, such as families who desire a second car but cannot afford one;
• may depend upon whether all car club customers simply transfer from being car rental customers;
• may depend upon the actions of competitors.

Exemplar Mark Level Rationale

Analyses at least two methods and at least two objectives fully in the context of 9-12 4 Effective evaluation of suitability of
Endeavour, its products, its market and its exact circumstances as described in the case methods and objectives.
study.
Comes to a conclusion of the suitability of methods and objectives that is fully justified,
fully in the context of Endeavour, its products, its market and its exact circumstances as
described in the case study.
Analyses at least two methods and at least two objectives fully in the context of 7-8 3 Limited evaluation and good analysis of
Endeavour, its products, its market and its exact circumstances as described in the case suitability of methods and objectives.
study.
Comes to a conclusion that is assertive rather than backed up by analysis.
Analyses at least two methods and at least two objectives fully in the context of 2-6 2 Application and analysis of suitability of
Endeavour, its products, its market and its exact circumstances as described in the case methods and objectives.
study.
Defines/explains marketing methods and marketing objectives. 1-3 1 Knowledge and understanding of marketing
methods and marketing objectives.
0 0 No creditable content.

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6.
a. Assess the reliability of research data and the cost effectiveness of a short questionnaire issued to all customers. (8 marks)

Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (4 marks)

Research data is cost effective and reliable:

• Most customers complete survey, increasing its validity.

• No sampling bias as all customers are requested to complete the survey.
• Self-completion incurs no cost to Endeavour.
• Printing of standardised short questionnaire is relatively inexpensive.
• Data collected via the app will be accurate and relatively inexpensive.

Research data is not cost effective and reliable:

• Limited questions significantly reduce availability of reliable data.

• Ranges of answers prescribed prevents customer giving alternative views.
• Not every customer responds.
• Endeavour focuses on 4s and 5s rather than trying to convert customers who give a low score.
• Analysing and storing data from 300,000 responses each year is time-consuming and expensive.
• Some respondents may deliberately give a low score in the hope of receiving a free rental.

Exemplar Mark Level Rationale

Analyses at least two factors that data is cost effective and reliable and two factors that it 7-8 4 Good analysis of factors influencing
is not fully in the context of Endeavour, its products, its market and its exact reliability and effectiveness of research
circumstances as described in the case study. data fully in the context of Endeavour.
Analyses one or two factors that data is cost effective and reliable and one or two factors 5-6 3 Some analysis of factors influencing
that it is not fully in the context of Endeavour, its products, its market and its exact reliability and effectiveness of research
circumstances as described in the case study. data fully in the context of Endeavour.

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States one or two factors that data is cost effective and reliable and one or two factors 3-4 2 Some application of factors influencing
that it is not fully in the context of Endeavour, its products, its market and its exact reliability and effectiveness of research
circumstances as described in the case study. data fully in the context of Endeavour.
Demonstrates knowledge of effectiveness and reliability of research data. 1-2 1 Knowledge and understanding of
effectiveness and reliability of research
data.
0 0 No creditable content.

b. To what extent do you believe that the car club will be a success and will lead to Endeavour’s market share rising by four percentage points?
(12 marks)

Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (2 marks); AO4 Evaluation (6 marks)

Possible calculations:

• total annual budgeted costs of car club;

• total annual income from membership fees;
• total annual income from car club rentals;
• total annual budgeted income of car club;
• total annual budgeted profit of car club;
• percentages rise in sales income.

Total annual budgeted costs of car club

= repayment of bank loan and interest + running and wages costs of new offices + leasing of 1,000 cars + fuel (petrol/diesel/electricity)
= 1,220,000 + 1,000,000 + 1,800,000 + 2,920,000 = £6,940,000.
Total annual income from membership fees
= number of anticipated members x annual membership fee
= 20,000 x 60 = £1,200,000.

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Total annual income from car club rentals

= revenue per car per hour x 4 hours per day x 1,000 cars x 365 days per year
= 11 x 4 x 1,000 x 365 = £16,060,000.
Total annual budgeted income from car club
= total annual income from membership fees + total annual income from car club rentals
= 1,200,000 + 16,060,000 = £17,260,000.
Total annual budgeted profit of car club
= total annual budgeted income from car club - total annual budgeted costs of car club
= 17,260,000 – 6,940,000 = £10,320,000.
Percentage rise in sales income
previous sales income stated in case study = £60,410,000.
new sales income = previous sales income stated in case study + total annual budgeted income from car club
= 60,410,000 + 17,260,000 = £77,670,000.
percentage change = 17,260,000 / 60,410,000 x 100 = 28.57%.

Arguments that the car club will be a success:

• first mover advantages;

• budgeted figures suggesting a 28.57% growth in sales revenue which is considerably higher than a four percentage points rise in market share,
indicating rise in market share will be achieved;
• promotion of car club to previously happy car rental customers;
• brand image of Endeavour;
• brand loyalty enjoyed by Endeavour;
• suitable locations picked by Endeavour;
• levels of customer service;
• cleanliness of cars;

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• price elasticity of demand;

• number of eco conscious customers;
• families who cannot afford a second car;
• number of university students near a location;
• success in marketing car club to businesses and other organisations;
• ease and reliability of using app;
• ability to attract car club customers from car renters of other competitors;
• use of CRM.

Arguments that the car club will not be a success:

• whether EQ can be calculated for car club members;

• actions of other car renters;
• whether competitors set up a car club;
• ability to fully utilise the four Cs with little human customer interaction;
• proportion of car club members who simply swap from Endeavour’s car rental business;
• can cleanliness of cars be maintained if they are not returned to a rental location?;
• car leasing firms offer better deals to businesses, hospitals and councils than the car club can;
• ability to lower prices or improve service once competitors enter the market.

Evaluation of chances of meeting objective of market share rising by four percentage points:

• By using brand extension and relying on the strength of Endeavour’s brand image and its high level of customer service, there is a good chance
that they can attain a four percentage points rise in market share as they will have first mover advantage and the data suggested revenues will
rise by 28.57%, at least in the short term. However, this may not be the case in the longer term as competitors set up car clubs too.
• Chances of success may depend upon how successfully Endeavour are able to explain the features and benefits to customers who may never
have considered renting a car, such as families who desire a second car but cannot afford one.
• May depend upon whether all car club customers simply transfer from being car rental customers.
• May depend upon the actions of competitors.

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Exemplar Mark Level Rationale

Analyses at least two arguments for and at least two arguments against Endeavour being 9-12 4 Effective evaluation of whether the four
able to achieve a rise in market share by 4 percentage points fully in the context of percentage points rise is likely to be met.
Endeavour, its products, its market and its exact circumstances as described in the case
study.
Comes to a conclusion that is fully justified, fully in the context of Endeavour, its products,
its market and its exact circumstances as described in the case study.
Analyses at least two arguments for and at least two arguments against Endeavour being 7-8 3 Limited evaluation and good analysis of
able to achieve a rise in market share by four percentage points fully in the context of whether the four percentage points rise is
Endeavour, its products, its market and its exact circumstances as described in the case likely to be met.
study.
Comes to a conclusion that is assertive rather than backed up by analysis.
Analyses at least two arguments for and at least two arguments against Endeavour being 2-6 2 Application and/or analysis of whether the
able to achieve a rise in market share by four percentage points fully in the context of four percentage points rise is likely to be
Endeavour, its products, its market and its exact circumstances as described in the case met.
study.
Gives a definition of market share and/or lists some reasons. 1-3 1 Knowledge and understanding of market
share.
0 0 No creditable content.

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The questions in this assignment have been written to reflect the spread of marks assigned to each
of the assessment objectives for Papers 1 and 2 combined, as set out in the table below. The
allocation of marks per question follows the format in the exam board’s mark schemes. The
difference in the percentage allocation of each assessment objective is a consequence of merging
the mark allocations of Papers 1 and 2 into one assignment.

Component AO1 AO2 AO3 AO4

% % % %

AS Papers 1 and 2
30 30 20 20
combined

Distribution of marks in this assignment:

Question Marks AO1 AO2 AO3 AO4

1(a) 2 1 1

1(b) 3 1 2

2(a) 2 1 1

2(b) 3 1 2

3 5 1 2 2

4(a) 2 1 1

4(b) 3 1 2

5(a) 8 2 2 4

5(b) 12 2 2 2 6

6(a) 8 2 2 4

6(b) 12 2 2 2 6

TOTALS 60 40 12 16 12

25% 32% 23% 20%

TOTAL FOR ASSIGNMENT 60 MARKS

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