EDGE manufactures mobile (cell) phones. It sells in a highly competitive market. The Marketing manager thinks that, because EDGE is successful at keeping customers loyal, demand for its phones is price inelastic. Its top-selling product, Z, is close to the final stage of its product life cycle. The Marketing manager must decide whether to invest in new product development or to apply extension strategies to product Z.
Fig. 1: EDGE - units sold by product category in 2015
Total quantity sold: 800 000
(a)[2]
What does the term ‘customer loyalty’ mean?
(b)[2]
Calculate the number of product Z units sold in 2015.
(c)[4]
Explain the likely impact on EDGE if it cuts the prices of its products.
(d)[6]
Identify and explain two benefits to EDGE of creating new products.
(e)[6]
Explain two extension strategies that EDGE could use for product Z. Recommend which one of the two strategies it should select. 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 buyer who comes back and purchases again and again.” …