Business catalogue web ready 2025 - Flipbook - Page 45
PEARSON EDEXCEL A LEVEL
Look inside
Revision questions to consolidate
students’ understanding
15.8 Workbook
5 Why is it important for a firm to examine its
internal resources before deciding on a strategy?
(3)
Revision questions
6 How does marketing strategy relate to the
objectives of a business?
(4)
(35 marks; 35 minutes)
1 What is marketing strategy?
(2)
7 Outline two advantages of niche marketing
over mass marketing.
(4)
2 What is a unique selling point? Give two
examples.
(4)
8 Give three reasons why a large firm may wish
to enter a niche market.
(3)
9 Explain why small firms may be better at
spotting and reacting to new niche-market
opportunities?
(3)
10 Outline two reasons why average prices in
niche markets tend to be higher than those
charged in most mass markets.
(4)
3 Explain how one of the following products
is differentiated from its rivals:
a) Snickers chocolate bar
b) Microsoft Xbox One
c) Heinz Tomato Ketchup.
4 Outline two pieces of quantitative data that might
help a business develop its marketing strategy.
(4)
Exam-style questions to
help students prepare
for assessment. Answers
can be found in the
accompanying guide
(4)
Data response 1
Halo Top
It has 706,000 Facebook friends and 593,000
Instagram followers; but Unilever hates it. It’s Halo
Top, an American dairy free ‘ice cream’ that comes
in 25 flavours and contains between 240 and 360
calories per pint. Unilever’s Ben & Jerry’s Phish Food,
by comparison, contains 1350 calories. No wonder Halo
Top has grown from nothing to a 5 per cent share of the
enormous US market for ice cream. And it arrived in the
UK in January 2018.
Halo Top achieved its dynamic growth in America based on
a social media strategy. It used a David & Goliath story to
sell the product – exactly as Ben & Jerry once did (before
ice cream multinational Unilever bought up the business).
In other words, Halo Top was presented as the small,
brave newcomer to a market dominated by giant brands.
According to secondary research company Mintel: ‘The
combination of added protein, calorie count prominently
displayed and shrewd use of social media struck a chord
with young Americans, overturning the assumption that
health and nutrition had no place in the ice cream chiller’.
In the UK, sales of ice cream have been quite static
in recent years, with little change in a market size of
around £920 million. Yet ‘Free-from’ foods have been
Figure 15.2 Halo products
the grocery market’s stars, with growth rates of
20–25 per cent a year. Now Halo Top may bring the
same dynamism to the UK ice cream market.
For Unilever, which has a 50 per cent share of the UK
ice cream market with brands such as Walls and Ben
& Jerry’s, Halo Top will have to be taken seriously. In
growing from zero to $50 million of sales in America,
Halo Top has proven that it could be very serious
competition in the UK. A multi-billion pound business
such as Unilever does not sit back and allow newcomers
an easy ride; it wants to dominate the competitive
environment.
Questions (40 marks; 45 minutes)
1 Assess two ways in which Unilever may try to
weaken its new competitor, Halo Top.
(8)
2 Assess the marketing strategy being used for
Halo Top’s launch into the UK.
(12)
Data response 2
Oyo Hotels – aiming high
At just 19 years’ old, Ritesh Agarwal had an amazing
insight. None of the world’s major hotel chains run
properties with fewer than 100 rooms, but more than
90 per cent of the world’s hotels fall into that category.
So, in 2013 he formed Oyo Hotels to seize this
market gap.
82
Section 1.3 Marketing mix and strategy
3 Evaluate whether Halo Top is likely to be a
success. Use the information provided as well
as your knowledge of business.
(20)
In September 2018, Oyo Hotels secured $1 billion
in venture capital funding – valuing the business at
$5 billion. Agarwal, now 24 and still owner of
10 per cent of the company’s shares, became a multimillionaire. The reason for this huge valuation on the
business was its dramatic growth. The number of Indian
hotel rooms under management leapt from 1000 to
100,000 in the two years to June 2018. And in the year
to September 2018, Oyo went from zero to 129,000
rooms in China. This scale of growth is unprecedented.
And the business model is a dream. Oyo owns and
manages no hotels at all. It simply takes a royalty
percentage from the hotel’s revenue in exchange for
top-grade booking software, a great website and hotel
room badging (Oyo-logo quilt covers and pillowcases,
for example).
Case studies
with questions to
help students apply
their knowledge
Key concepts
summarised visually
Short answer
questions, data
response questions
and essay questions
to prepare students
for writing answers
in exams
Figure 15.3 Independent hotels join Oyo in the same way a small
grocer might join the Spar franchaise
Key terms defined
throughout and
recapped at the end
of each chapter
Starting up in India, he invited independent hotels to
join Oyo in the same way that a small grocer might
join the Spar franchise network. To sign up with
Oyo a hotel promises to meet certain standards of
comfort and hygiene, and in return gets nationwide
marketing support, a recognised brand name – and
regular business at a room price of £25–£40 a night.
That may sound low, but not long ago backpackers
in India expected to pay no more than $1 a night for
accommodation. And Agarwal suggests that hotel
occupancy rate typically rises from 25 per cent to
65 per cent within a month of joining the Oyo network.
Even while the business is growing rapidly Oyo
is launching a new, upmarket niche brand: Oyo
Townhouses. This will be more expensive for customers,
but potentially offer them a good deal in superexpensive areas such as London or Hong Kong. Agarwal
has said that he hopes to sign up 300 hotels in the
UK by the end of 2019. Airbnb is the more famous
‘disrupter’ of the global hotel industry – but Oyo may
prove the most dynamic.
Questions (30 marks; 35 minutes)
1 Explain the term ‘market gap’ in the context
of Oyo Hotels.
(4)
2 Assess two elements of the marketing mix
that may have helped Oyo grow so dramatically
in India and China.
(8)
3 Assess two ways in which Oyo has made the
hotel business more dynamic.
(8)
4 Assess the key factors in successfully
marketing Oyo Townhouses in the UK.
(10)
Key terms
Homogenous goods: these have no points of differentiation
and therefore each one is the same as every other (making
competition focus on price).
Product differentiation: the extent to which consumers perceive
your brand as being different from others.
15 Marketing strategy
83
Sample pages from Pearson Edexcel A level
Business Student Book
View pricing at hachettelearning.com/catalogues
Return to the contents page
42
