EDGE produces mobile (cell) phones and sells in a highly competitive market. The Marketing manager thinks that EDGE is strong at keeping customer loyalty, so demand for its phones is price inelastic. Its most successful product, Z, is close to the end of its product life cycle. The Marketing manager must choose whether to invest in developing new products or to use extension strategies for product Z.
Fig. 1: EDGE - quantity sold by product type in 2015.
The pie chart presents product types with these labels and percentages: X 20%, Y 25%, Z 40%, T 15%.
Overall quantity sold: 800 000.
(a)[2]
What does the term ‘customer loyalty’ mean?
(b)[2]
Calculate the quantity of product Z sold in 2015.
(c)[4]
Explain the possible effect on EDGE if its products are sold at lower prices.
(d)[6]
Identify and explain two advantages for EDGE of developing new products.
(e)[6]
Explain two extension strategies that EDGE could use for product Z. Recommend which one of the two strategies it should choose. Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A customer who comes back and makes repeat purchases” …