Market research & segmentation

The marketing department of a business wishes to increase its market share in a growing market.

To what extent is market research the most important activity of the marketing department in order to achieve this objective?

Read the information below and then answer the questions that follow.

Seebus plc

Seebus plc is a food retailer that has used organic growth to expand. It now has 110 stores spread across the UK. The company competes with larger supermarkets by positioning itself as offering higher quality products and better customer service.

To differentiate itself, Seebus plc offers:

• a luxury range of ‘own-brand’ goods

• some branded goods which are market leaders in their particular categories.

The company focuses on a smaller range of products than its largest rivals and relies on being able to achieve higher gross profit margins. Seebus plc is aware that it cannot compete purely on price with much larger rivals in the mass market. Seebus plc operates a ‘Just in Time’ system of inventory management, as do all major competitors in the market. It recently introduced software which integrates inventory management with marketing, production, transport logistics and the supply chain.

Recently, the results of employee satisfaction surveys have shown rising levels of unhappiness with pay and working conditions. Labour turnover has also increased dramatically. In 2023, Seebus plc employed an average of 6000 employees. During 2023, 960 employees left Seebus plc, whilst only 720 new employees joined the company. Seebus plc had always taken pride in its excellent relationships with employees, paying wages well above those of its main rivals. Recently, competitors have significantly increased employee pay rates. Employees are also unhappy about changes to shift patterns and the way they are supervised. Ajinder, the Chief Executive, plans to address the findings of the employee surveys. The plans include implementing a new package including:

• personalised career development plans

• improved training.

Calculate the rate of labour turnover for Seebus plc in 2023.

Explain one reason why Seebus plc uses a ‘Just in Time’ system of inventory management.

Use Herzberg’s theory to analyse why Ajinder’s plan may not improve motivation levels at Seebus plc.

Seebus plc targets its marketing towards higher income customers.

Should all businesses segment their markets based on income?

Justify your view.

Read the information below and then answer the questions that follow.

Simply Bake plc

Palm oil is a cheap oil ingredient used in the manufacture of many everyday items. Production of palm oil often involves farmers clearing rainforests. The destruction of this habitat has led to the loss of many animal species, including half of the world’s orangutans.

Powerful campaign groups with many members, such as Greenpeace and the World Wildlife Foundation, have highlighted the issue. As a result, consumers are increasingly aware of the environmental impact of using palm oil.

Simply Bake plc is a supplier of cakes to supermarkets, who then retail them as their ‘own brand’ products. For many years, palm oil has been an important ingredient in Simply Bake plc’s products, allowing it to meet the demand for cheap food.

In 2018, a small campaign group, Action against Palm Oil (APO), criticised Simply Bake plc. APO had carried out a survey using a sample of 100 of its 400 members to represent the views of UK consumers. The survey found that 67% of respondents wanted the government to ban the use of palm oil.

High-profile media campaigns have increasingly drawn attention to the issue of palm oil production. By 2019, supermarkets had noticed increasing numbers of enquiries from their customers about palm oil and environmental damage.

Finding alternative ingredients is difficult and expensive, but in 2020 Simply Bake plc announced that it will have changed all its recipes to remove palm oil by 2025.

Explain why APO’s survey findings may not represent the views of UK consumers.

Explain how stakeholder mapping would help Simply Bake plc decide how it responds to criticism from APO.

Simply Bake plc decided to remove palm oil from its products.

With reference to Lewin’s force field analysis, analyse why this decision was made.

‘Businesses will never act in a socially responsible way unless they are forced to do so by governments.’

To what extent is this true for all businesses?

The owner of a business which sells hot drinks asks a focus group of customers for their views. This market research reveals that customers prefer to have cakes with their drinks. In terms of Ansoff’s matrix, the subsequent decision to introduce cakes is an example of:

Which one of the following is least likely to be an advantage of operating in a niche market for a small business?

What is meant by the term extrapolation?

Using Appendix B, calculate the combined market share of the top four tea brands in 2019.

Using the data in Appendix D, explain one benefit of the use of market segmentation to a business selling tea.

A business sells two types of tea: black tea and health tea.

Analyse how the data in Appendix C will affect how this business might change the price it charges for each type of tea to increase its sales revenue.

To what extent does the information provided suggest that now is a good time to launch a new brand of tea?