GKA is a food retailer with 300 shops in places where average consumer incomes are low. It sells a narrow selection of own-label products, including breakfast cereal and toothpaste. GKA carries out no promotion or market research. The Managing Director stated: ‘Last year our market share rose to 5%. Profit went up by 40%. By keeping costs low, we can provide customers with quality products at low prices.’ GKA plans to open 100 shops in areas where average consumer incomes are high. The Managing Director has to decide whether GKA should alter its pricing strategy (method) as the business grows.
(a)[2]
What does the term ‘market share’ mean?
(b)[2]
Identify 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 keep costs low.
(e)[6]
Do you think GKA should alter its pricing strategy as the business expands? 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: “the percentage or fraction of total market sales controlled by one brand or business” …