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1 After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $5 000
from family and friends to start-up a business and to provide working capital. Jerome operates as a sole trader.
To promote his product, Jerome handed out free samples in the town centre. In the first year, Jerome’s business
sold 10 000 units. This is 200 units more than his break-even output. Jerome is considering ways to increase
added value.

Do you think giving out free samples is the best method of sales promotion for a business to use when
promoting a new food product? Justify your answer.

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[Total: 6]
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2 NWA is a large and profitable airline business. It has grown quickly over the past 10 years and new aeroplanes
have helped to improve its brand image. NWA offers low priced flights for tourists to 50 countries. Sales
promotion is an important part of NWA’s marketing mix. The Finance Director is worried that NWA has a
high level of debt as its main source of finance is bank loans. The organisational chart of NWA has many
levels of hierarchy with narrow spans of control.

Explain how two methods of sales promotion could increase sales for NWA.

Method 1:.................................................................................................................................................

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Explanation:.............................................................................................................................................

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Method 2:.................................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 6]

3 Identify four aims of promotion.

Aim 1:.......................................................................................................................................................

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Aim 2:.......................................................................................................................................................

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Aim 3:.......................................................................................................................................................

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Aim 4:.......................................................................................................................................................

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[Total: 4]
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4 Keila owns a successful small bakery shop. Keila would like to expand her business. She could open a café
selling cakes and drinks in a popular tourist location. Keila plans to give out free samples as her main method
of promotion. She has prepared some customer and cost information as shown in the table below. Keila used
primary market research to find out some of the information.

Forecast customer and cost information for the new café

Identify and explain two advantages to Keila’s business of using free samples as a method of promotion.

Advantage 1:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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Advantage 2:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 4]
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5 Kate is an entrepreneur. Two years ago she left her job as a fashion designer at a multinational company.
She started up BBB, a women’s sportswear clothing business. BBB targets a market segment of high income
consumers. BBB’s products are sold in 3 retail shops and also through its website. Kate said: ‘I saw a gap in
the market and took the risk. Obtaining the finance I needed from the bank was not easy. I enjoy making
decisions such as using leaflets to promote the clothes.’ BBB’s revenue target for next year is $500 000.

Do you think that using leaflets is the best way for Kate to promote her products? Justify your answer.

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[Total: 6]

6 Identify two aims of promotion.

Aim 1:.......................................................................................................................................................

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Aim 2:.......................................................................................................................................................

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[Total: 2]
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7 Ella has just left college and wants to start up her own business. She has designed a new bicycle light with
a safety feature not found in any rival products. Ella knows obtaining finance will be difficult. She plans to
have the lights produced in another country. Each light will cost $8 to produce. Ella cannot decide whether
to use price skimming. She said: ‘I have received orders for 300 lights and I have not even started promoting
them’. Ella wants to be a successful entrepreneur.

Information on possible promotion options for Ella’s bicycle light.

Option 2: Advertise in specialist

Option 1: Set up her own website
magazine

$500 for web page to show product

Cost information $300 for full page colour advertisement.
specifications and contact details.

For extra $750 website would allow One of the most popular cycling
Other information
customers to order online. magazines in the country.

Recommend which promotion option Ella should choose. Justify your answer using the information in the
table above.

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[Total: 6]
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8 Wilde Soup Stop (WSS) makes a range of soups and hot drinks. It owns 30 shops and has sold its franchise
to 10 other shops in country Z. The Marketing Director said: ‘Results from our focus group show that being
an ethical business is important’. WSS plans to extend its product range to include curries and cakes. WSS
will need to change its brand image. The Marketing Director cannot decide whether to use sponsorship or
newspaper advertising as the main method of promotion.

Do you think WSS should use sponsorship or newspaper advertising as the main method of promotion?
Justify your answer.

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[Total: 6]
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9 TXE is a large food retailer. The Finance Director is worried as last year profit fell by 10%. ‘I blame
competition and increased taxes. We have spent more on sales promotions, but these have not been successful.
We have to find ways to increase profits.’ TXE has 200 shops and plans to close 50 to lower costs. TXE may
decide to sell a wider range of products, such as clothes, to help increase its profits.

Identify and explain two possible reasons why sales promotions might not have been successful for TXE.

Reason 1: .................................................................................................................................................

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Explanation: ............................................................................................................................................

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Reason 2:..................................................................................................................................................

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Explanation: ............................................................................................................................................

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[Total: 4]

10 $LAND sells a wide range of products from food to toys. It has 400 shops in country B. $LAND's marketing
strategy is based on penetration pricing. $LAND does no advertising and buys all its products directly from
manufacturers. Revenue and profit have increased despite the country being in recession. The Marketing
Director wants to expand the business by opening shops in other countries. He believes $LAND will be
successful in other countries

Identify and explain two possible advantages to $LAND of advertising.

Advantage 1:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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Advantage 2:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 4]
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11 $LAND sells a wide range of products from food to toys. It has 400 shops in country B. $LAND's marketing
strategy is based on penetration pricing. $LAND does no advertising and buys all its products directly from
manufacturers. Revenue and profit have increased despite the country being in recession. The Marketing
Director wants to expand the business by opening shops in other countries. He believes $LAND will be
successful in other countries

Identify and explain two possible advantages to $LAND of advertising.

Advantage 1:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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Advantage 2:.............................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 4]
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12 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 the Table . 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:

Identify and explain two possible reasons why the amount F&G spends on marketing might not be cost
effective.

Reason 1:..................................................................................................................................................

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Explanation:.............................................................................................................................................

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Reason 2:..................................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 6]
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13 AirGo is a market-orientated business. It provides flights to 10 airports across Asia. 90% of its customers
are people going on holiday. AirGo only advertises in national newspapers. The Marketing Director is worried
that demand for AirGo’s flights is price elastic. Last year revenue fell due to increased competition. She
wants to target a different market segment such as business customers. She does not know how new legal
controls to protect the environment might affect AirGo.

Identify and explain two disadvantages to AirGo of using newspapers for advertising.

Disadvantage 1:........................................................................................................................................

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Explanation: ............................................................................................................................................

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Disadvantage 2:........................................................................................................................................

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Explanation: ............................................................................................................................................

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[Total: 6]
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14 Walt owns a company which has developed a new computer game for adults. A focus group report shows
customers like it. Walt has been considering the marketing mix, including the packaging for this product
which is likely to be sold in many countries. ‘I don’t want to use a wholesaler as it would affect my profit
margin’ he said.

Consider two possible methods of promotion that Walt could use for the new game. Recommend which
method he should use. Justify your answer.

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[Total: 6]
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15 Mabel wants to set up her own hairdressing business. She will need to build good customer relationships.
She has done some secondary market research to find out possible demand and what methods of promotion
to use. She has decided to buy her inventory (stock) from a wholesaler. Mabel is now looking for the right
location for her business. She thinks that location will be more important than price charged to the success
of her business.

Identify and explain two methods of promotion (other than promotional pricing) that Mabel might use.

Method 1: ................................................................................................................................................

Explanation:.............................................................................................................................................

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Method 2:.................................................................................................................................................

Explanation:.............................................................................................................................................

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[Total: 4]
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16 Si and Ramon are friends. They want to set up a photography business. They would take pictures at weddings,
birthdays and other special events. The business will be a partnership. Based on their primary market research,
Si believes there is enough demand. Ramon has produced a business plan which shows they need $8000 for
a shop and $4000 for equipment. They plan to spend $500 on promotion, but cannot agree on the best method
to use.

Consider two methods of promotion that would be suitable for Si and Ramon to use. Which of these two
methods would be the most appropriate? Justify your answer.

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[Total: 6]
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17 Gowri has always wanted to start up her own business making leather goods such as bags and belts. She has
already asked about micro-finance and what help the Government will offer new business start-ups. ‘There
is still a lot to do!’ said Gowri. ‘I need to plan my sales promotion and find out about how legal controls
could affect my business.’ Gowri is not sure if she needs a business partner.

Identify and explain two factors (other than legal controls) that Gowri needs to consider when deciding on
which method of promotion to use for her products.

Factor 1:....................................................................................................................................................

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Explanation:.............................................................................................................................................

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Factor 2:....................................................................................................................................................

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Explanation:.............................................................................................................................................

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[Total: 6]
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18 Anouk is a sole trader. She designs and makes jewellery at home, using hired (rented) equipment. Anouk
enjoys selling the jewellery at local markets. Last year her sales revenue increased by $500 to $3000. She
plans to use $50 for a marketing budget. Anouk would like to do some primary market research when she
has time. Anouk thinks she should have a business partner.

Anouk could use either leaflets or local newspaper advertising as methods of promoting her jewellery.
Recommend which method you think Anouk should use. Justify your answer.

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[Total: 6]

19 What is meant by a ‘marketing budget’?

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[Total: 2]