Edexcel GCSE Business: The marketing mix and the business plan (1BS0) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

This set follows Pearson Edexcel Level 1/Level 2 GCSE (9-1) Business (1BS0), Issue 2, July 2022, Theme 1 topic 1.4 Making the business effective, content items 1.4.3 The marketing mix and 1.4.4 Business plans. Calculators may be used and workings should be shown. The formulae are not provided in the examinations, so learn them. All businesses and figures are invented. The model answers use general descriptions of the mix elements and plan sections, not specification wording.

Links: the Edexcel GCSE Business hub, the printable checklist, the study guide and the revision notes. Try the free diagnostics as well.

Questions

1. Define the term “marketing mix”. [2]

2. A café adds an online page where customers order food for collection or delivery. State which element of the marketing mix this mainly changes. [1]

3. Explain one reason why promotion is important to a new business. [3]

4. Brindle & Oak makes candles. It expects to sell 500 candles at £14 each. Total fixed costs are £2,100 and variable cost is £5 per candle. Calculate the forecast revenue, total cost and profit. [4]

5. Brindle & Oak starts with £1,200 in the bank. Month 1: cash inflows £6,300, cash outflows £7,150. Month 2: cash inflows £7,400, cash outflows £6,100.

(a) Calculate the closing balance for each month. [4] (b) State which month has the lower closing balance. [1]

6. Marrow Street Kitchen is a street-food stall that has opened beside two stalls selling similar meals at lower prices. The owner thinks the target market is office workers who want a quick, good-quality lunch. Analyse how the competitive environment could affect Marrow Street Kitchen’s marketing mix. [4]

7. Explain one way in which changing consumer needs could lead a business to change its product. [3]

8. Hollin Books is a small bookshop in a market town. Its owner is considering selling through a website as well as the shop. Analyse the impact of e-commerce on Hollin Books’ marketing mix. [6]

9. Give two sections of a business plan that a bank would find useful when deciding whether to lend. [2]

10. Outline two ways in which writing a business plan can help to minimise risk. [4]

11. Northgate Fitness plans a small studio offering classes. Total fixed costs are £2,400 a month and variable cost is £4 per customer visit. The owner is choosing between a price of £18, expecting 260 visits a month, and a price of £22, expecting 200 visits a month.

(a) Calculate the forecast profit at each price. [4] (b) Justify which price the owner should choose. [6]

12. Rowan Print Studio needs £4,800 for equipment, £2,200 for a deposit on premises and £1,500 for opening stock. The owner has £5,000 of savings.

(a) Calculate how much extra finance is needed. [2] (b) Evaluate the importance of a business plan in helping the owner obtain this finance. [6]

Answers

1. A set of choices a business makes [1] about product, price, promotion and place [1]. [2] Examiner insight: A definition tends to gain credit when it names all four elements. A statement such as “how a business sells” is too vague to show the elements.

2. Place [1]. [1] Examiner insight: A one-word answer is enough for an identify question. Naming two elements risks giving the wrong one alongside the right one.

3. Promotion makes customers aware that the business exists [1]. A new business has no reputation, so people will not buy from it if they do not know about it [1]. Without sales the business earns no revenue and may not survive its first months [1]. [3] Examiner insight: Explain answers tend to gain credit when a statement is followed by two linked developments. A repeated statement with no development stays at one point.

4. Revenue = 14 × 500 = £7,000 [1]. Total variable cost = 5 × 500 = £2,500 [1]. Total cost = 2,100 + 2,500 = £4,600 [1]. Profit = 7,000 − 4,600 = £2,400 [1]. [4] Examiner insight: Showing each step lets a slip in one line be seen without losing the later working. Stating the formula before using it makes the method clear.

5. (a) Month 1 net cash-flow = 6,300 − 7,150 = −£850 [1]. Closing balance = 1,200 − 850 = £350 [1]. Month 2 net cash-flow = 7,400 − 6,100 = £1,300 [1]. Month 2 opening balance is £350, so closing balance = 350 + 1,300 = £1,650 [1]. [4] (b) Month 1 [1]. [1] Examiner insight: The second month’s opening balance must be the first month’s closing balance. Using the original £1,200 again is a common reason for losing the later marks.

6. The two rivals sell similar meals at lower prices, so the stall cannot easily win on price alone [1]. Kestrel could stress product quality, such as fresh ingredients and speed, which suits office workers with little time [1]. It could use promotion to tell its target market about this, for example social media posts near the offices at lunchtime [1]. Keeping a higher price fits the quality message but risks losing buyers who compare, so the mix must stay consistent [1]. [4] Examiner insight: Analyse answers tend to gain credit when each point uses the stem, here the lower-priced rivals and the office workers. A general list of mix elements with no link to the stall stays generic.

7. Consumer needs can change, for example more customers wanting healthier food [1]. A business that keeps selling the same product would lose sales to rivals who respond [1]. So it might add healthier options or change ingredients to keep its target market buying [1]. [3] Examiner insight: A strong answer links the change in need to the change in the product and then to the effect on sales. Naming a change in need without saying what the business alters misses the question.

8. Place: a website lets the shop sell to customers outside the town without opening more premises [1]. The business must arrange delivery and returns, which adds cost [1]. Price: customers can compare online prices easily, so the shop may need to review its prices or offer something extra [1]. Product: the website can show a wider range than the shelves hold [1]. Promotion: the shop can use email and social media to reach readers at low cost [1]. Overall, the changes must fit together: if the website stresses low prices, the shop’s service-based positioning may not match [1]. [6] Examiner insight: Analyse answers tend to gain credit when each element named is tied to the bookshop and developed. Writing only “reach more customers” without saying which element it affects is a narrower answer.

9. Any two from: forecast revenue, cost and profit; cash-flow forecast; target market (market research); sources of finance. One for each correct section [1] [1]. [2] Examiner insight: Two distinct sections are needed. Two different names for the same section, such as “profit forecast” and “forecast profit”, stay at one point.

10. Market research in the plan tests whether customers want the product before money is spent [1], so the owner avoids committing to an idea with no demand [1]. The cash-flow forecast shows months when cash could run out [1], so the owner can arrange extra finance or reduce spending before a shortage occurs [1]. [4] Examiner insight: Each way needs an explained link to risk. Naming a section without saying how it lowers risk gains little.

11. (a) At £18: revenue = 18 × 260 = £4,680 [1]. Total cost = 2,400 + (4 × 260) = 2,400 + 1,040 = £3,440, so profit = £1,240 [1]. At £22: revenue = 22 × 200 = £4,400 [1]. Total cost = 2,400 + 800 = £3,200, so profit = £1,200 [1]. [4] (b) The £18 price gives £40 more profit a month than £22 [1]. It also brings 60 more visits, which builds awareness and word of mouth for a new studio [1]. The £22 price gives almost the same profit with fewer customers to handle, and may suggest higher quality [1]. However, the demand figures are forecasts, and a higher price could lose more customers than expected [1]. The difference in profit is small, so the decision depends on the aim: building a customer base or keeping a premium image [1]. I would choose £18, because the studio is new and the profit is not lower, though the owner should review it once real attendance is known [1]. [6] Examiner insight: Justify answers tend to gain credit when they use the figures provided and end with a clear recommendation. Calculating profit but not using it in the decision leaves the justification unsupported.

12. (a) Total needed = 4,800 + 2,200 + 1,500 = £8,500 [1]. Extra finance = 8,500 − 5,000 = £3,500 [1]. [2] (b) The plan shows a lender the idea, the target market and research evidence, which suggests demand exists [1]. Forecast revenue, cost and profit show whether the business could repay a loan [1]. A cash-flow forecast shows whether there is enough cash each month to meet repayments [1]. Stating exactly what the £3,500 is for shows the lender how it will be used [1]. However, a plan is only as good as its forecasts, and a lender may still refuse if the figures look over-optimistic or the owner has little experience [1]. Overall, the plan is very important because most lenders expect evidence, but it supports the request and does not guarantee finance [1]. [6] Examiner insight: Evaluate answers tend to gain credit when they weigh the plan’s usefulness against its limits and reach a judgement. Listing sections of the plan with no judgement stays descriptive.

Where marks are usually lost

• Defining the marketing mix without naming all four elements.
• Giving a one-word reason in an explain question, with no development.
• Writing about the mix in general instead of using the business in the stem.
• Treating price, product, promotion and place as separate lists instead of showing how they fit together.
• Using the starting balance again in month 2 of a cash-flow forecast.
• Showing only a final figure in a calculation.
• Mixing up revenue, total cost and profit.
• Making a recommendation with no reason, or no weighing of both sides, in a justify or evaluate question.
• Claiming that a business plan guarantees success.

Next steps

• Recap with the revision notes and the study guide.
• Course hub: Edexcel GCSE Business and the printable checklist.
• Take the free diagnostics to see where to focus.
• Book a free trial class.

Frequently asked questions

What do these marketing mix and business plan questions cover? They follow Pearson Edexcel GCSE Business (1BS0) Theme 1 items 1.4.3 and 1.4.4: the four elements of the marketing mix, how they work together, and the role and purpose of a business plan.

What is a common mistake in cash-flow questions on a business plan? Using the starting balance again in month 2. Each opening balance should equal the previous month’s closing balance.

Why should you show working in calculations? Showing only a final figure gives no working to credit if the answer contains a slip. Write the formula, the substitution and the answer with its unit.

Does a business plan guarantee success? No. A plan reduces risk and helps a business obtain finance, but forecasts are estimates, so it cannot remove risk.

Official syllabus

Pearson Edexcel Level 1/Level 2 GCSE (9-1) in Business (1BS0), Specification, Issue 2, July 2022, published by Pearson Education Limited. Theme 1: Investigating small business, topic 1.4 Making the business effective, content items 1.4.3 The marketing mix and 1.4.4 Business plans.