GKA operates as a food retailer. It runs 300 shops in locations where average consumer incomes are low. Its product line is narrow and includes own-label items such as breakfast cereal and toothpaste. GKA carries out neither promotion nor market research. The Managing Director stated: ‘Last year our market share rose to 5%. Profit grew by 40%. By keeping costs low, we are able to supply customers with quality products at low prices.’ GKA plans to launch 100 more shops in places where average consumer incomes are high. The Managing Director has to decide if GKA ought to alter its pricing strategy (method) as the business grows.
(a)[2]
What does ‘market share’ mean?
(b)[2]
Name two aims of promotion.
(c)[4]
Identify and explain two market research methods that GKA could use.
(d)[6]
Identify and explain two ways GKA could maintain low costs.
(e)[6]
Do you believe GKA ought to change its pricing strategy as the business grows? Justify your view.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The percentage or proportion of total market sales controlled by one brand or business” …