OxfordAQA A-Level Business: Segmentation, targeting and positioning (9625/9725) – 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 section 3.1.2.3, Segmentation, targeting and positioning, in the OxfordAQA International AS and A-level Business specification (9625, with the 9725 successor for International AS exams from May/June 2027 and A-level exams from May/June 2028). All businesses are invented, and all money figures are in dollars. The study guide and revision notes cover the content; the Marketing practice set covers the rest of the topic. Questions 3, 9 and 10 use points that appear only in the 9725 text (premium, budget and changing positioning); question 1(d) and question 12 use 9625 points (income and international markets). Links: course hub, checklist and diagnostics.

Questions

1. Identify the segmentation method (demographic, geographic, income, psychographic or behavioural) used in each case.

(a) A coffee seller offers a loyalty card to customers who buy more than four times a month. [1] (b) A furniture maker prices differently in coastal and inland regions. [1] (c) A clothing brand aims at people who see themselves as adventurous and environmentally aware. [1] (d) A watch maker sells only to households in the top income band. [1]

2. Define niche marketing. [2]

3. Explain what is meant by budget positioning. [3]

4. Crestfall Outdoors, an invented jacket maker, studies a market of 900,000 adults. Of these, 35% are aged 25 to 40, the group it wants to target. It expects 6% of this group to buy one jacket each at a price of 140. Calculate the expected revenue from this group. [4]

5. Eskerby Mobile, an invented phone network, finds its market contains three groups: heavy data users, light users who want the lowest bill, and small businesses. Explain one value to Eskerby of segmenting its market in this way. [4]

6. Eskerby Mobile has 2,400,000 potential subscribers. It finds that 25% are budget-conscious light users. It expects to win 9% of that segment, each paying 12 a month.

(a) Calculate the annual revenue Eskerby expects from this segment. [3] (b) Analyse one reason why Eskerby might choose a budget positioning for this segment. [4]

7. Brisk Lantern, an invented drinks firm, plans to launch a sparkling tea. It has two options.

Niche option: sell 18,000 bottles a year at a price of 6.50, variable cost 3.90 per bottle, fixed costs 21,000. Mass option: sell 120,000 bottles a year at a price of 2.40, variable cost 1.95 per bottle, fixed costs 95,000.

(a) Calculate the annual profit or loss under each option. [4] (b) Evaluate which option Brisk Lantern should choose. [8]

8. Zorvath Foods, an invented firm with 15 employees, wants to sell frozen ready meals. It could target students (a large group, with five big rivals already selling cheap meals) or people over 60 who live alone (a smaller, growing group with little competition, wanting small portions). Analyse two influences on Zorvath Foods’ choice of target market. [6]

9. Ludlow Kettle, an invented restaurant chain, serves cheap family meals. It plans to change to an adult dining image with higher prices. Explain two challenges Ludlow Kettle may face in changing its positioning. [4]

10. Vesperline Bags, an invented luggage firm, currently has a budget positioning. It sells 24,000 cases a year at a price of 85, variable cost 62. It plans to reposition as premium, with a one-off relaunch cost of 380,000. It forecasts sales of 11,000 cases a year at a price of 160, variable cost 98.

(a) Calculate the annual contribution under the current and the planned position, ignoring the relaunch cost. [3] (b) Justify whether Vesperline should reposition. [6]

11. Oakwen Studios, an invented online language school, targets working adults who need a language for their jobs. Explain two ways in which targeting this group adds value to Oakwen. [4]

12. Pellarin Tools, an invented hand-tool maker, sells only in its home country. It plans to target customers in a neighbouring country that has a different language and currency. Explain one benefit and one potential difficulty of this plan. [4]

Answers

1. (a) Behavioural, because it uses how often customers buy. [1] (b) Geographic, because it uses location. [1] (c) Psychographic, because it uses attitudes and lifestyle. [1] (d) Income, because it uses spending power (9725 treats this as a demographic variable). [1] Examiner insight: If the question asks why, link the method to the variable, as above.

2. Aiming marketing at a small, specialised segment of a wider market [1], with a product designed to meet the particular needs of that group [1]. Examiner insight: A definition needs the idea of a small, specialised group, so use the word segment.

3. Budget positioning means the product holds a place in customers’ minds as low priced [1], where they see it as good value even if features are basic [1]. It usually relies on tight cost control and high volumes [1]. Examiner insight: Budget is not the same as poor quality; positioning is about perception of value.

4. Number in target group = 900,000 x 35% = 315,000 [1]. Expected buyers = 315,000 x 6% = 18,900 [1]. Revenue = 18,900 x 140 [1] = 2,646,000 [1]. Examiner insight: Set out each stage of a multi-step calculation, so that a slip early on does not hide sound later working.

5. One value: it lets Eskerby match its offer to each group [1]. For example, it could sell a large data allowance to heavy users and a low-price basic plan to light users [1], so each group sees a plan that fits [1], which is more likely to win and keep customers than a single plan for everyone [1]. Examiner insight: A four-mark explanation needs a chain: name the value, use the groups in the stem, then give the result.

6. (a) Segment = 2,400,000 x 25% = 600,000 [1]. Subscribers = 600,000 x 9% = 54,000 [1]. Revenue = 54,000 x 12 x 12 = 7,776,000 a year [1]. (b) One reason, such as: the segment’s main need is the lowest bill [1], so a low-price offer matches what it values [1]. A budget position would help Eskerby win a large share of a 600,000-subscriber group, since price is the reason these customers choose [1], but it would need low costs to keep margins on a monthly price of only 12 [1]. Examiner insight: In analysis, use the figures in the case, such as 600,000 and 12.

7. (a) Niche: contribution per bottle = 6.50 - 3.90 = 2.60 [1]; 18,000 x 2.60 = 46,800; less fixed costs 21,000 gives profit 25,800 [1]. Mass: contribution per bottle = 2.40 - 1.95 = 0.45 [1]; 120,000 x 0.45 = 54,000; less fixed costs 95,000 gives loss of 41,000 [1]. (b) Niche is forecast to make a profit of 25,800 and avoids heavy promotion against big drinks firms [1]. A premium price of 6.50 can build loyalty among customers who value the product [1]. But the niche is small at 18,000 bottles, so growth is limited, and a larger firm could copy the product if it proves popular [1]. The forecast depends on the 6.50 price being accepted [1]. Mass reaches many more customers and could create wide brand awareness [1]. Yet on these figures it loses 41,000 because the margin per bottle is only 0.45 and fixed costs are 95,000 [1]. It would only pay if volume were high enough to cover those costs, and a break-even level above 120,000 bottles looks hard to reach (95,000 / 0.45 is about 211,000) [1]. Judgement: Brisk Lantern should choose the niche option for now [1], since it is the only one that is profitable, though the answer could change if research showed the mass market would buy far more than 120,000 bottles. Examiner insight: Evaluation answers are strongest when the final judgement follows from the figures and names the condition that would alter it.

8. Influence 1: competition. Students face five big rivals selling cheap meals [1], which would make it hard for a firm of 15 employees to win share or hold prices [1], whereas the over-60s group has little competition, so Zorvath Foods could stand out [1]. Influence 2: the firm’s resources, because with only 15 employees it cannot fund wide advertising across a large student market [1]. A smaller, easy-to-reach group suits its limited resources [1], and its growth gives room to expand later [1]. Examiner insight: Pick two influences and develop each, tying it to a fact in the case.

9. Challenge 1: existing family customers may feel left behind and stop visiting [1], so sales could fall before new adult customers arrive [1]. Challenge 2: cost and credibility. Refurbishment, menu changes and advertising all cost money [1], and adult diners may not believe a chain known for cheap family meals offers a higher-quality experience [1]. Examiner insight: Two challenges need to differ in kind; “cost” twice is one point.

10. (a) Current: 24,000 x (85 - 62) = 24,000 x 23 = 552,000 [1]. Planned: 11,000 x (160 - 98) = 11,000 x 62 = 682,000 [1]. Difference: 682,000 - 552,000 = 130,000 more a year [1]. (b) For repositioning: contribution rises by 130,000 a year from year two, and the premium line suits a market where customers pay for quality [1]. Premium buyers may also be less price sensitive [1]. Against: in year one, 682,000 - 380,000 = 302,000, which is below the current 552,000 [1]. It takes 380,000 / 130,000, about 2.9 years, to recover the relaunch cost from the extra contribution [1]. Budget customers may leave, and the forecast of 11,000 sales at 160 is uncertain [1]. Judgement: reposition only if the firm can fund a weak first year and has evidence buyers will pay 160 [1]. Examiner insight: A justify answer needs a decision that follows from part (a); quoting the payback and first-year shortfall shows you used the data.

11. Way 1: spending can be concentrated on working adults, for example through job-related channels [1], so less money is wasted reaching people who will not buy [1]. Way 2: courses and messages can be built around job needs, such as business vocabulary [1], which can raise loyalty among this group [1]. Examiner insight: Targeting answers should be about focus and fit, not segmentation.

12. Benefit: the neighbouring country gives Pellarin a larger customer base [1], so sales could grow beyond what the home market allows [1]. Difficulty: the different language and currency mean packaging and advertising must change [1], and exchange rate movements could alter prices and profit [1]. Examiner insight: The question asks for one of each, so a pair of benefits scores less. Link both points to facts in the stem.

Where marks are usually lost

• Naming a segmentation method without saying which variable the case uses.
• Leaving out intermediate steps in a multi-stage calculation.
• Quoting revenue when the question asks about profit.
• Writing only advantages of niche or mass marketing, with no disadvantages or judgement.
• Giving two challenges of repositioning that are the same point.

Frequently asked questions

How should you evaluate niche against mass marketing? Weigh the advantages and disadvantages of each for the business in the case, using any figures given, and finish with a judgement about which suits it better. Writing only advantages, with no disadvantages or judgement, limits the marks.

Which OxfordAQA specifications do these questions cover? They cover section 3.1.2.3, Segmentation, targeting and positioning, in OxfordAQA International AS and A-level Business, written for both 9625 and its successor 9725.

Why is revenue not enough to compare two target markets? A larger segment may bring more revenue but also higher costs per unit or of reaching customers, so the option with more revenue may leave less profit. Compare contribution or profit where the case gives cost data.

Next steps

• Recap the content in the revision notes.
• Return to the OxfordAQA A-level Business hub and tick off topics on the checklist.
• Take any of the free 10-minute diagnostics to find weak areas.
• Book a free trial class if you want help from a teacher.

Official syllabus

OxfordAQA International AS and A-level Business specification, section 3.1.2.3 (9625 and the 9725 successor; International AS from May/June 2027 and A-level from May/June 2028 for 9725).