IB DP Business Management: The seven Ps of the marketing mix – 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 – the IB holds copyright in its own papers. Use these alongside the official past papers available through your school or the IB store.

These questions cover section 4.5, The seven Ps of the marketing mix, from the IB Business management guide, first assessment 2024. Questions labelled HL only draw on content the guide marks as HL only. Read the study guide and revision notes first. Related pages: Unit 4 practice questions, the IB DP Business Management hub and the syllabus checklist. All businesses are invented.

Questions

1. State two extension strategies that a business could use for a product in maturity. [2]

2. Define the term loss leader. [2]

3. Lumeo Lamps makes a desk lamp with a unit cost of 24 dollars. It uses cost-plus (mark-up) pricing with a mark-up of 50%.

(a) Calculate the selling price of one lamp. [2] (b) Lumeo sells 1,200 lamps at this price. Calculate the total mark-up earned. [2]

4. Distinguish between above the line, below the line and through the line promotion. [3]

5. Explain why brand loyalty and brand value are each important to a business. [4]

6. (HL only) Strand & Sparrow Tea raises the price of a tin from 8.00 dollars to 9.20 dollars. Monthly sales fall from 3,000 tins to 2,520 tins.

(a) Calculate the price elasticity of demand. [3] (b) Calculate the change in monthly sales revenue. [2] (c) Explain what these results suggest about a further price rise. [2]

7. (HL only) Birchlow Bakery has spare capacity. Its variable cost is 2.40 dollars per loaf and its usual price is 4.50 dollars. A cafe chain offers to buy 800 loaves at 3.20 dollars each as a one-off order.

(a) Calculate the total contribution from the order. [3] (b) Evaluate whether Birchlow should accept the order. [5]

8. Portaro Skate Co sells boards and clothing to customers aged 14 to 24. It is thinking of moving most of its promotion to social media. Evaluate this strategy. [6]

9. Teslin Fitness is a gym in a city where members expect friendly, informal contact with staff. Explain the importance of people, processes and physical evidence in marketing the gym. [6]

10. Gorsebrook Games launched a board game. The table shows its first five years (all money in thousand dollars).

Year	Sales (thousand units)	Investment	Profit	Net cash flow
1	5	400	-120	-520
2	18	250	40	-210
3	40	120	210	90
4	52	30	380	350
5	49	20	330	310

(a) Identify the likely product life cycle stage in year 1 and in year 5. [2] (b) Explain the relationship between the life cycle, investment, profit and cash flow shown in the table. [3] (c) Recommend one extension strategy for the game, justifying your choice. [4]

11. A furniture maker sells only through independent shops. Explain one advantage and one disadvantage for the maker of starting to sell directly to customers online. [4]

12. Kinnear Cooking School plans to open in a mid-sized city, offering small evening classes taught by trained chefs to adults with high incomes. Recommend an appropriate marketing mix for Kinnear, covering all seven Ps. [10]

Answers

1. Any two: enter a new market [1]; add a new feature or variant [1]; reposition the product; change packaging; find a new use; cut price. [2] Examiner insight: Naming two different strategies earns credit; repeating the same idea in different words usually earns it once.

2. A product sold at or below its cost [1] to attract customers who will also buy other, profitable items [1]. [2] Examiner insight: A definition needs both the below-cost price and the purpose; the first alone is incomplete.

3. (a) Mark-up = 24 × 0.50 = 12 dollars [1]. Price = 24 + 12 = 36 dollars [1]. (b) Total mark-up = 1,200 × 12 [1] = 14,400 dollars [1]. [4] Examiner insight: Showing the mark-up as a separate step helps because a slip in the later step still shows correct method.

4. Above the line is paid mass media aimed at a wide audience, such as television or press [1]. Below the line is targeted promotion where the business controls the contact, such as samples or discounts [1]. Through the line combines both in one integrated campaign [1]. [3] Examiner insight: A distinction needs each term explained, not just examples listed.

5. Brand loyalty: customers repeatedly choose the brand over rivals [1], which lowers the cost of winning sales and protects revenue when rivals cut prices [1]. Brand value: the extra worth the brand carries [1], which supports a higher price and adds to the worth of the business if it is sold [1]. [4] Examiner insight: “Explain” calls for a reason each time, so define the aspect and then say why it benefits the business.

6. (a) Price change = (9.20 − 8.00) ÷ 8.00 × 100 = +15% [1]. Quantity change = (2,520 − 3,000) ÷ 3,000 × 100 = −16% [1]. PED = −16 ÷ 15 = −1.07 (3 s.f.) [1]. (b) Revenue before = 8.00 × 3,000 = 24,000; after = 9.20 × 2,520 = 23,184 [1]. Change = −816 dollars [1]. (c) Demand is slightly elastic because the size of PED is above 1 [1], so a further rise would probably reduce revenue again, so the business should avoid it unless costs have risen [1]. [7] Examiner insight: State the sign and interpret the result, because a number on its own does not show you can apply it.

7. (a) Contribution per loaf = 3.20 − 2.40 = 0.80 dollars [1]. Total = 800 × 0.80 [1] = 640 dollars [1]. (b) For: spare capacity, fixed costs are paid anyway, so the order adds 640 dollars to profit [1]; it builds a relationship with a new customer [1]. Against: the price is below the usual 4.50, so regular customers may demand lower prices [1]; the order may use capacity needed by full-price sales [1]. Judgement: accept if capacity is truly spare and the offer is not made public, since it adds profit without extra fixed cost [1]. [8] Examiner insight: An evaluation scores best when it reaches a decision and names the condition on which it rests.

8. For: low cost to start [1]; precise targeting of 14 to 24 year olds [1]; two-way contact and shareable content build awareness [1]. Against: negative comments spread quickly [1]; staff time is needed to manage accounts, and little reaches customers who do not use these platforms [1]. Judgement: a mostly social strategy fits this young target market, but some below the line offers or events should be kept to reach shops and parents [1]. [6] Examiner insight: Tie each point to the age group in the stem; generic points about social media earn less.

9. People: staff match the informal style members expect [1], so training and recruitment should reflect this local expectation of friendly contact [1]. Processes: simple joining, booking of classes and payment reduce frustration, and changes such as an app need staff support [1][1]. Physical evidence: equipment, cleanliness and branded kit signal quality because a gym cannot be inspected like a product [1][1]. [6] Examiner insight: Cover all three Ps named in the question, and link each to this gym rather than gyms in general.

10. (a) Year 1: introduction [1]. Year 5: maturity [1]. (b) Investment is highest at the start [1] when profit is negative and cash flow is most negative [1]; as sales grow, investment falls, profit and cash flow turn positive, and cash flow is strongest at maturity when little new spending is needed [1]. (c) Recommendation, for example a travel or junior edition [1], justified by the new segment it reaches [1], by the strong positive cash flow in year 4 that can pay for it [1], and by lower risk than a new game launch, though sales in year 5 slipped from 52 to 49 [1]. [9] Examiner insight: Use figures from the table to support the life cycle link; assertions without data are weaker.

11. Advantage: the maker keeps the full margin instead of sharing it with shops [1], and gains customer data [1]. Disadvantage: it must pay for delivery, returns and marketing itself [1], and may upset the shops that currently stock its products [1]. [4] Examiner insight: Each point needs a reason, such as why the margin or the cost matters, to earn the second mark.

12. Award up to 10 for a consistent mix applied to Kinnear.

• Product: small classes, trained chefs, a defined brand and a clear USP [1].
• Price: premium pricing to match the high-income, quality-led target [1], supported by quality in the other Ps [1].
• Promotion: social media aimed at adults plus below the line offers such as taster evenings [1].
• Place: central location with easy transport, and online booking [1].
• People: chefs who teach well and treat customers courteously [1].
• Processes: easy booking, payment, ingredient preparation and class timetable [1].
• Physical evidence: attractive kitchens, branded aprons, a clear website [1].
• Consistency: all Ps point to a premium, personal experience [1].
• Judgement: a premium mix suits this target, but it depends on enough such customers in the city, so research first [1]. [10] Examiner insight: A mix that is applied to the case and consistent across the Ps is stronger than seven separate definitions.

Where marks are usually lost

• Writing about the seven Ps in general rather than for the named business.
• Calculating percentage change from the new figure instead of the old figure.
• Giving a PED value without its sign or without saying elastic or inelastic (HL only).
• Treating contribution as profit: it still has to cover fixed costs (HL only).
• Defining a term and not explaining why it matters when “explain” is the command word.
• Judging a method as good or bad without stating the conditions.
• Ignoring the data in a table when recommending a strategy.
• Missing cultural variation when discussing people in a service.

Next steps

• Review the revision notes and study guide.
• Visit the IB DP Business Management hub and the syllabus checklist.
• Take one of our free 10-minute diagnostics.
• Book a free trial class: trial.

Frequently asked questions

What are common mistakes on seven Ps practice questions? Students often write about the seven Ps in general rather than for the named business, calculate percentage change from the new figure instead of the old one, and give a PED value without its sign or without saying whether demand is elastic or inelastic. Ignoring the data in a table when recommending a strategy also loses marks.

Is contribution the same as profit? No. Contribution per unit is the selling price minus the variable cost per unit, and total contribution still has to cover fixed costs before any profit is made. Contribution pricing is an HL only part of section 4.5.

Which parts of the seven Ps are HL only in IB Business Management? In section 4.5 of the IB Business management guide, dynamic pricing, competitive pricing, contribution pricing and price elasticity of demand are HL only.

How should you judge a pricing or promotion method in an exam answer? State the conditions under which the method works for the business in the case, rather than calling it simply good or bad. Most of section 4.5 is assessed with “evaluate”, so a reasoned judgement matters.

Official syllabus

International Baccalaureate Organization, Diploma Programme Business management guide, first assessment 2024, section 4.5, published February 2022 and updated May 2022.