Principles of Business for CSEC®

2nd edition

Answers to Chapter 6: Marketing

“Setting the scene” answers
1. Market research reports provide a business with lots of useful detail about the market they
wish to enter, e.g. the number of customers, how often they make purchases and where,
what sorts of prices they are prepared to pay, who the main competitors are etc. These
reports would furnish the fashion retailer with a greater insight into the market in which they
hope to operate.
2. Questions that a small fashion retailer might want to ask include:
(a) Are customers satisfied with the current range of shops supplying the fashion trade?
(b) What do shoppers feel is missing in terms of fashion clothes provision in the local market?
(c) How often do they make purchases, and how much do they spend on fashion items in a
typical week?
(d) How much do they currently spend on specific fashion items?
(e) Would they be prepared to pay more for higher quality products?
These are examples of some of the questions that the retailer might want answering through
market research. Asking a sample of the relevant population that the retailer is targeting will help
the retailer to know whether it is worth entering the market, what section of the market to target,
and how to adjust their business.

“Now try these” answers

6.1 Explain the concepts of markets and marketing
1. This will be unique for each student. An example might include: an electronics store, the
local fruit and vegetable market, the market for train travel, the market for specialist foods,
a souvenir shop, and the market for music lessons.
2. This will be unique for each student. Two products targeted at a mass market could be bananas
and rice, as these are staple items that are often bought by the majority of the population. Two
products targeted at a niche market could be certain video games and a certain style of shoe,
as these are only bought by a small and specific section of the population.
3. This will be unique for each student.

6.2 Explain marketing activities

1. Answers will vary, but one example is to ask customers who have purchased the product
from a local store to fill out a questionnaire.
2. This will be unique for each student.
3. This will be unique for each student.
4. Business in action: This will be unique for each student.

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6.3 Describe the “marketing mix”

1. This will be unique for each student.
2. This will be unique for each student.

6.4 Describe the factors that influence consumer behaviour

1. Answers will vary, but one example is toys for babies, computer games for younger people,
and mobility products for older people. Three markets where segmentation is likely to be
based on consumer behaviour are cellphones (depending on how the customer wants to
use the phone), fashion (depending on the customer’s taste in clothes), and automobiles
(depending on what customers would like and how much they are willing to pay).
2. Answers will vary, but may include consumers getting older, consumers having their own
children and therefore needing different products, or consumers getting a pay rise so they
can afford different products.
3. There may have been an upturn in the economy, therefore people have more disposable
income to spend on hotel stays. The weather may have improved, contributing to more
tourists wanting to visit. An advertisement for the hotel may have gone viral on social media,
attracting more customers.
4. Consumers may feel that a more expensive product is of better quality, will last longer and
will have more prestige than a lower-priced product. Examples might be cars, watches,
shoes, etc. Alternatively, consumers may be attracted to cheap goods and services as they
provide value for money.

6.5 Identify factors affecting packaging and presentation

of goods
1. Goods such as white goods require lots of packaging. The cost could be reduced by asking
customers to return packaging to be reused, by limiting packaging to the bare essentials, and
by choosing cheaper packaging.
2. The packaging would have a high-quality finish and possibly be embossed, with fashionable
colours and images. The bottle shape would be unique. The packaging would clearly show
the designer label.
3. This will be unique for each student.
4. Answers will vary. One example is that packaging often leads to litter. Reducing the amount
of packaging would mean less is dropped in the local environment.

6.6 Describe methods of promoting sales

1. This will be unique for each student.
2. This will be unique for each student.
3. Business in action: This will be unique for each student.

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6.7 Identify the techniques of selling

1. This will be unique for each student.
2. This will be unique for each student.
3. Answers will vary. One example is that quick selling may not be good because the customers
may not understand everything about the product they are buying. However, it may be good
because it saves the customers time if they are busy.
4. Business in action: This will be unique for each student.

6.8 Explain the various terms of sales

1. Buying in cash is good because you pay for the presents straight away without having to
think about future payments. However, you need to have the cash now in order to pay. Hire
purchase is good because it spreads the cost out over a period of time, but you will be paying
for the presents into the future, instead of paying for them all in one go now. Layaway means
you do not need all of the money at once and can pay for the presents over time; however,
you only get the presents once they have been paid for in full.
2. As Nelson is only likely to be a one-time customer, the wholesaler does not think that he
will be able to win Nelson as a loyal customer. There is therefore no real incentive for the
wholesaler to provide a discount.
3. Business in action: Irene owns her car outright from the beginning, whereas Naveed will
only own his car once he has paid his final payment. Irene will not have a payment schedule
as she has bought the car outright. Naveed will have payments at set times in the future, and
will probably end up spending more due to interest. Irene benefits from paying less; however,
Naveed benefits from not having to have all of the money for the car available upfront.

6.9 List the functions of consumer organisations

1. Consumers need organisations to protect them against unsafe products, false advertising,
pollution, inaccurate labelling, etc. As businesses are often very interested in making profits,
some are less aware of what would be best for their customers, therefore organisations are
there to focus on what is best for the customers.
2. The government gets involved because it wants to ensure its population is protected. The
government can bring in laws to force companies to take customer care into account.
3. A Bureau of Standards oversees the work of creating standards, and ensures that companies
operating in a particular field meet these standards. The International Organization for
Standardization establishes standards in quality and methods of production, therefore
companies can follow these standards to ensure they are following the law.
4. Business in action: This will be unique for each student.

6.10 Outline the role of customer service

1. This will be unique for each student.
2. Answers will vary, but may include friendly staff who are knowledgeable of the services
provided, are willing to answer questions, and are willing to help if problems arise.
3. Business in action: This will be unique for each student.

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Chapter 6: Marketing

6.11 Describe forms of customer service

1. This will be unique for each student.
2. Answers will vary. One good way of gaining feedback could be a very short questionnaire
containing just a couple of questions, such as: (a) Were you pleased with the service you
received? (b) Would you recommend us to a friend? A short survey is a good way of gaining a
high response rate from busy people. The questionnaire could be sent by post with a prepaid
return slip, or it could be carried out by sending a brief text to the client, or through a quick
phone call. A reward could be offered to customers completing the survey, e.g. a reduction in
the price of their next hire, or entry into a competition with a small prize.
3. Business in action: This will be unique for each student.

6.12 Explain the concept of intellectual property rights

1. Intellectual property rights are rights that protect original ideas, which are then turned into
products, brands and works.
2. This will be unique for each student.
3. Business in action: This will be unique for each student.

“Develop your exam skills” answers

Paper 1
1. The correct answer is B. The role of marketing is to identify and anticipate customer
requirements and then to satisfy them.
2. The correct answer is B. The brand image is the image that the consumers create in their
perception of the brand. If they have a positive perception then there will be a positive brand
image.
3. The correct answer is D. M-commerce is concerned with recent developments involving
cellphones, such as using them to view e-commerce sites and to pay for products using
phone applications.
4. The correct answer is B. Moving upmarket involves raising your prices and/or the quality of
your products. The two usually go hand in hand.
5. The correct answer is C. Penetration pricing is the strategy involved in winning a place in the
market by offering goods at a price that will tempt first-time buyers.
6. The correct answer is C. Demography is concerned with the study of populations. Targeting
an age-group category is thus an example of demographic segmentation.
7. The correct answer is A. The correct flow of distribution is from a producer, through some
form of distribution pattern, ending up in the hands of final consumers.
8. The correct answer is D. The Office of the Ombudsman is concerned with investigating
complaints against government departments and officials.
9. The correct answer is A. Bundling involves offering and selling a collection of goods and/or
services together in order to offer multiple benefits to customers.
10. The correct answer is B. Primary research is research that a business carries out itself for its
own purposes.

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Chapter 6: Marketing

Paper 2
1. (a) Answers could include any three of the following:
• Price
• Price of substitutes
• Quality
• Taste
• Tradition
• Income (affordability)
• Spending pattern
• Brand loyalty
(b) Answers could identify and describe any two of the following methods of promoting
sales:
• Advertising
• Public relations
• Sales promotion
• Personal selling
(c) Answers could include an explanation of any two of the following techniques:
• Salesmen and their approaches
• Merchandising
• Retailing
2. (a) Answers could include any two of the following:
• To protect the interests and rights of consumers
• To provide a voice for consumers, particularly where there are consumer issues and
complaints
• To provide information to consumers about their rights
• To inform consumers about products so they can make comparisons and informed
choices
(b) Answers could include an explanation of any two of the following:
• Providing goods and services in the manner expected by customers
• Providing service aspects to customers before, during and after a sale is made
• Enhancing the reputation of products/businesses and brands
• Coordinating flow of goods, services and information
(c) Answers could describe any two of the following, explaining how each one works:
• Warranty
• After sales service
• Feedback
• Online chat
• Toll free numbers/call centre
• Suggestions box
• Surveys

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Chapter 6: Marketing

3. (a) Answers could include any two of the following:

• Modify the product
• Alter distribution patterns
• Change prices
• Promotional campaigns
(b) Answers should include an explanation of the following four phases:
• The life of a product is the period over which a product appeals to customers. In the
introduction phase, sales growth is slow as only a small number of people know
about the product or understand its benefits.
• Growth phase: profits start to rise when more and more people find out about the
product and want to purchase it.
• Maturity phase: most of the potential customers have been reached and there may
be lots of repeat purchases.
• Decline phase: the product becomes “old” and sales start to fall. An updated or
replacement product may have entered the market.
(c) Answers could include an explanation of how two of the following strategies affect
product demand:
• Cost-plus pricing
• Competitive pricing
• Penetration pricing
• Skimming
• Promotional pricing
4. (a) Definitions could include the following:
• identifying and anticipating customer requirements
• meeting customer requirements to make a profit.
(b) Answers could identify at least two functions of advertising (2 marks) and at least two
forms of advertising (2 marks), and make a distinction between functions and forms of
advertising (2 marks).
Functions of advertising:
• Providing information
• Persuading customers to buy the product
• Communicating brand identity
• Generating demand
• Maintaining customer loyalty
• Enabling price comparisons
• Illustrating new trends
Forms of advertising:
• Television commercial
• Radio commercial
• Website/online advertising
• Newspaper and magazine advertising
• Bus shelter advertising and posters
• Flyers
• Direct mail
6 Principles of Business for CSEC®, 2nd edition © Oxford University Press 2019