Edexcel International A Level Business: Meeting customer needs and The market (YBS11) – 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.

These questions cover sections 1.3.1 (Meeting customer needs) and 1.3.2 (The market) of Unit 1, Marketing and people, in the Pearson Edexcel International Advanced Subsidiary/Advanced Level in Business specification, Issue 1, September 2017. All businesses and figures are invented. Calculators may be used.

Links: study guide, revision notes, Unit 1 practice questions, Edexcel A Level Business hub, printable checklist and free diagnostics.

Questions

1. Define the term “niche market”. [2]

2. Norcombe Footwear sells £2.88m of shoes a year in a market worth £36.0m. Next year the market is forecast to be worth £39.6m. Calculate Norcombe’s current market share and the forecast percentage growth of the market. [4]

3. Explain the difference between risk and uncertainty for a firm launching a new product. [4]

4. Pallister Coffee has 5,000 loyalty-card members: 1,750 aged under 25, 2,000 aged 25-44 and 1,250 aged 45 or over. It plans a stratified sample of 200 members. Calculate how many members should be chosen from each age group. [4]

5. Pallister Coffee wants to know why some members have stopped visiting. It is choosing between a postal questionnaire to all lapsed members and two focus groups. Analyse which method is likely to give the more useful information. [6]

6. Brantwood Bakery’s owner develops a sourdough range because she enjoys baking it, then looks for customers. Her rival interviews local households first, then designs products. Explain the difference between product orientation and market orientation, using the two bakeries. [4]

7. In the local market for bread rolls, demand is Qd = 1,000 - 50P and supply is Qs = 200 + 50P, where P is price in £ and Q is rolls per day. New ovens lower costs and supply becomes Qs = 400 + 50P. Analyse the effect on equilibrium price and quantity. [6]

8. Norcombe cuts the price of a trainer from £60 to £54 and annual sales rise from 4,000 to 4,600 pairs. Calculate Norcombe’s PED for this change and how much its total revenue changes. [4]

9. Average household income rises by 4%. Sales of Norcombe’s budget range fall by 6%. Calculate the income elasticity of demand and interpret your answer. [4]

10. Pallister Coffee sells 25,000 packs of speciality beans a year at £12.00. Test marketing suggests a PED of -0.6. The owner proposes an 8% price rise. Other roasters sell similar beans at £11.00 to £12.50. Assess whether the owner should raise the price. [10]

11. Norcombe sells mainly through high-street shops. Online retailers are taking customers, and a new rival offers cheaper trainers with similar designs. Discuss how Norcombe could use competitive advantage and adding value to adapt to this dynamic market. [8]

Answers

1. A market that serves a small, specialised group of customers [1] with needs not met by the mass market (so volumes are low but price may be higher) [1]. [2] Examiner insight: Most definition credit comes from saying both what the market is and what makes it distinct; “a small market” alone is thin.

2. Share = 2.88 / 36.0 [1] x 100 = 8% [1]. Growth = (39.6 - 36.0) / 36.0 [1] x 100 = 10% [1]. [4] Examiner insight: Showing the substitution as well as the answer lets a slip in arithmetic still show the method; use the original market size as the base for growth.

3. Risk is where the outcome can be estimated from data [1], for example forecasting sales from research or past launches [1]. Uncertainty is where no reliable basis exists to estimate the outcome [1], for example a rival’s unforeseen breakthrough or an abrupt change in tastes [1]. [4] Examiner insight: “Explain” answers are strongest when each side of the distinction comes with a short example in the launch context, not just a definition.

4. Under 25: 1,750 / 5,000 x 200 = 70 [1]. 25-44: 2,000 / 5,000 x 200 = 80 [1]. 45 and over: 1,250 / 5,000 x 200 = 50 [1]. Total 70 + 80 + 50 = 200, so each group is in proportion to its share of the members [1]. [4] Examiner insight: Writing the formula (group / population x sample size) once makes the three results easy to follow and lets you spot an error when the total is not 200.

5. Focus groups give qualitative data [1], so the owner can probe the reasons for lapsing and follow up unexpected answers [1]. A postal questionnaire to all lapsed members reaches many people cheaply [1] and gives quantifiable results, but the response is often low and closed questions may miss the real reason [1]. Because the question is “why”, depth matters more than numbers [1], though two small groups may not represent all lapsed members, so the owner could use the groups first and then test findings with a short survey [1]. [6] Examiner insight: Analysis answers gain credit when they link the method to the research purpose stated in the case (here, reasons), not when they list general pros and cons.

6. Product orientation starts with what the firm can make or enjoys making [1]; Brantwood’s owner designs sourdough first and then seeks buyers, so risks making what customers do not want [1]. Market orientation starts by finding customer needs through research [1]; the rival interviews households first, so its products are more likely to match demand, though research costs money [1]. [4] Examiner insight: The question asks you to use both bakeries, so each definition should be tied to what that owner actually did.

7. Original equilibrium: 1,000 - 50P = 200 + 50P, so 800 = 100P, P = £8, Q = 600 [1][1]. New: 1,000 - 50P = 400 + 50P, so 600 = 100P, P = £6, Q = 700 [1][1]. Supply shifts right as new technology lowers costs [1], so price falls by £2 (25%) and quantity rises by 100 rolls a day, which benefits consumers and lets the bakery sell more if it can sell at £6 [1]. [6] Examiner insight: Naming the curve that shifts and the direction, then giving the new price and quantity, is the structure that links the numbers to the diagram.

8. % change in price = (54 - 60) / 60 x 100 = -10% [1]. % change in quantity = (4,600 - 4,000) / 4,000 x 100 = +15% [1]. PED = 15 / -10 = -1.5 (elastic) [1]. Revenue rises from 60 x 4,000 = £240,000 to 54 x 4,600 = £248,400, an increase of £8,400 [1]. [4] Examiner insight: Giving the units and the direction (“increase of £8,400”) helps because a bare number does not show the interpretation.

9. YED = -6 / 4 [1] = -1.5 [1]. A negative value means demand falls as income rises, so the budget range is an inferior good [1]. The size, above 1 in magnitude, means demand is sensitive to income, so Norcombe may lose sales in this range as incomes rise [1]. [4] Examiner insight: Keep the minus sign; it carries the meaning, and the classification is usually where the interpretation credit is gained.

10. Calculation: price rises to 12 x 1.08 = £12.96 [1]; quantity falls 0.6 x 8 = 4.8%, to 23,800 packs [1]; revenue rises from £300,000 to £308,448 [1]. For: demand is inelastic, so revenue rises [1]; fewer packs mean lower variable costs, so profit may rise more than revenue [1]; speciality buyers may be loyal [1]. Against: the rise puts the price at £12.96, above the range of £11.00 to £12.50 charged by rivals, so demand may be more elastic than test marketing implied [1]; the PED comes from a trial and may not hold [1]; loyalty may weaken over time as customers find substitutes [1]. Judgement: a smaller rise, such as to £12.50, is likely better, because it keeps revenue gains while staying inside the rival range; this depends on how reliable the test result is [1]. [10] Examiner insight: Assess questions are usually rewarded for using the given numbers on both sides and then reaching a judgement that says what it depends on, not only for the calculation.

11. Competitive advantage: Norcombe could differentiate on design, comfort or brand story [1] so that customers do not choose purely on the rival’s lower price [1]. It could build its own website to sell online [1], matching the online threat while keeping more of the margin than selling through third parties [1]. Adding value: services such as free fitting, personalisation or repairs raise the selling price relative to the cost of the shoes [1] and make Norcombe harder to copy than a price cut [1]. Limits: online selling needs investment and delivery costs, and a cheaper rival may still win price-sensitive buyers [1]. A combination of differentiation, online presence and added value is likely to work best, because the market is changing on several fronts at once [1]. [8] Examiner insight: Discuss answers are strongest when each suggestion is linked to a feature of the case (online rivals, cheaper copy) and followed by a brief counterpoint.

Where marks are usually lost

• Using the new figure rather than the original as the base for percentage change.
• Dropping the minus sign when interpreting YED.
• Saying “sales” when the question asks about total revenue, or concluding on revenue when profit is asked.
• Treating a change in the product’s own price as a shift of its demand curve.
• Defining a term but giving no example from the case.
• Recommending a research method without linking it to the purpose of the research.
• Ending an “assess” answer without a judgement or without saying what the judgement depends on.
• Writing generic points that could apply to any business.

Next steps

• Revise with the revision notes.
• Reread the study guide.
• Visit the Edexcel A Level Business hub and tick items off the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What do these meeting customer needs practice questions cover? They cover Unit 1 sections 1.3.1 Meeting customer needs and 1.3.2 The market of Pearson Edexcel International A Level Business (YBS11): markets, market research, positioning, demand and supply, and price and income elasticity of demand.

What is a common mistake when interpreting income elasticity of demand? Dropping the minus sign. For YED the sign matters: a positive value shows a normal good and a negative value shows an inferior good.

Does a change in a product’s own price shift its demand curve? No. A change in the product’s own price causes a movement along the demand curve; other factors, such as incomes or substitutes’ prices, shift the whole curve.

How should you recommend a market research method? Link the method to the purpose of the research in the case, such as quantifying demand or understanding attitudes, rather than recommending it in general terms.

Official syllabus

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Business, specification Issue 1, September 2017 (Pearson Education Limited), Unit 1, sections 1.3.1 and 1.3.2.