Year 10 Paper 2: Planning and Marketing
Spotting a business opportunity, business aims and objectives, cash flow, the marketing mix and external influences on business.
Year 10 here means a typical teaching order, not a syllabus rule. No exam board defines what belongs to Year 10, and schools sequence the course differently. Check it against your own scheme of work before using it to decide what a class has covered.
Questions
Question 1 [2 marks]
Cash Flow
State two examples of a cash outflow for a small business.
Question 2 [2 marks]
The Marketing Mix
State two elements of the marketing mix, other than price.
Question 3 [3 marks]
External Influences on Business
Explain one way a rise in interest rates could affect a small business that has a bank loan.
Question 4 [3 marks]
Business Aims and Objectives
Explain one reason why a social enterprise might set a social objective alongside making a profit.
Question 5 [3 marks]
Spotting a Business Opportunity
A new hairdressing salon wants information specific to its own local area rather than relying only on published national reports.
Explain one advantage to the salon of using primary market research rather than secondary market research.
Question 6 [3 marks]
The Marketing Mix
Explain one reason why a new skincare brand might use social media influencers to promote its product rather than television advertising.
Question 7 [5 marks]
External Influences on Business
A well-established local gym has operated without direct competition for ten years. A large national gym chain has just opened a new branch nearby, offering lower membership prices.
Explain two effects this new competition could have on the local gym.
Question 8 [4 marks]
Spotting a Business Opportunity
A new gym is deciding how to segment its target market.
Explain two ways the gym could segment its customers to help target its marketing.
Question 9 [5 marks]
External Influences on Business
A small local hardware shop has operated alongside a similar-sized rival hardware shop in the same town for years.
The rival shop has just announced it is closing down permanently.
Explain two effects this could have on the surviving hardware shop.
Question 10 [5 marks]
The Marketing Mix
A small snack food producer currently sells directly to customers only through its own website and delivery van.
Explain two advantages to the producer of instead selling through supermarkets as well as directly to customers.
Question 11 [5 marks]
Cash Flow
A market stall's cash flow forecast is shown below.
July: inflows of 5200 pounds, outflows of 4700 pounds, opening balance of 300 pounds. August: inflows of 4100 pounds, outflows of 5900 pounds, with an opening balance equal to July's closing balance.
Calculate the closing balance for July, and the closing balance for August, and state one action the stallholder could take in July to prepare for the August shortfall.
Question 12 [5 marks]
Business Aims and Objectives
A cafe currently serves an average of 80 customers a day. Its owner sets the objective: to increase the number of customers we serve.
Rewrite this as a SMART objective that increases average daily customers from 80 to 100 within one year, then calculate the percentage increase this target represents.
Question 13 [5 marks]
External Influences on Business
A UK furniture importer buys a batch of chairs priced at 5000 US dollars. When the pound is worth 1.25 dollars, this costs the importer 4000 pounds.
Calculate what the same 5000-dollar batch would cost in pounds if the pound weakens to 1.00 dollars, and explain what this means for the importer's costs.
Question 14 [6 marks]
Business Aims and Objectives
A small brewery's objective has been survival, and it broke even in year 2, with revenue of 180000 pounds and total costs of 178000 pounds.
For year 3, the owner sets a new objective: a net profit margin of at least 10 percent, on forecast revenue of 220000 pounds and forecast total costs of 198000 pounds.
Calculate whether the year 3 forecast would meet the 10 percent net profit margin objective, and evaluate whether setting this objective now is realistic for the brewery.
Question 15 [6 marks]
External Influences on Business
New data protection legislation requires businesses to gain explicit customer consent before using their data for marketing, and to delete data on request.
A subscription box company has built its marketing entirely around emailing its full customer database with new offers each week, without ever explicitly asking for consent.
Evaluate the likely impact of this legislation on the subscription box company.
Question 16 [6 marks]
Spotting a Business Opportunity
A market map for furniture shows most brands clustered in either low price and low quality, or high price and high quality, leaving a gap in low price and high quality.
A new furniture brand is deciding whether to launch into this low price, high quality gap.
Evaluate whether launching into this gap is likely to be a good strategy for the new brand.
Question 17 [6 marks]
Cash Flow
A small printing business holds large amounts of paper and ink stock just in case, which ties up a significant amount of cash, and has recently struggled to pay its own suppliers on time.
Evaluate two ways the printing business could improve its cash flow position.
Question 18 [6 marks]
Spotting a Business Opportunity
A regional ice cream brand had annual sales of 240000 pounds last year, in a market worth 1200000 pounds a year.
This year, a new rival launched, the market grew to 1400000 pounds, and the brand's own sales grew to 252000 pounds.
Calculate the brand's market share last year and this year, and evaluate whether this year's performance should be considered a success.
Model solutions
| Question 1[2 marks] | |
|---|---|
| Answer or working | Marks |
| a valid example, such as rent or wages | B1 |
| a second valid example, such as paying suppliers, loan repayments, or tax | B1 |
| Final answer: Any two of: rent, wages, paying suppliers, loan repayments, tax | |
| Question 2[2 marks] | |
|---|---|
| Answer or working | Marks |
| a valid element, such as product | B1 |
| a second valid element, such as promotion or place | B1 |
| Final answer: Any two of: product, promotion, place | |
| Question 3[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that the cost of borrowing increases, so monthly loan repayments rise | B1 |
| developing this, such as leaving the business with less cash available for other costs such as wages or stock | B1 |
| concluding that this could reduce the business's profit or force it to raise its own prices | B1 |
| Final answer: Higher interest rates increase loan repayments, leaving less cash for other costs and potentially reducing profit or forcing higher prices | |
| Question 4[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that part of the business's purpose is a social or environmental cause, not just profit | B1 |
| developing this, such as profit being reinvested to fund the cause, for example providing training to disadvantaged people | B1 |
| concluding that pursuing the social objective can also attract customers who want to support that cause, helping sales | B1 |
| Final answer: A social enterprise sets a social objective because part of its purpose is a cause, not just profit; achieving it can also attract customers who want to support that cause | |
| Question 5[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying an advantage, such as the data being collected specifically for the salon's own purpose | B1 |
| developing it, such as it directly answering questions about the salon's own local customers, which a national report cannot | B1 |
| concluding that this makes the findings more relevant and useful for the salon's own decisions | B1 |
| Final answer: Primary research is collected specifically for the salon's own purpose, giving relevant, up-to-date information about its own local customers that a national report cannot | |
| Question 6[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that influencer marketing costs far less than television advertising | B1 |
| developing this, such as reaching a targeted audience who already follow and trust that influencer, suiting the brand's likely younger target market | B1 |
| concluding that this gives good value for a new business's likely limited marketing budget | B1 |
| Final answer: Influencer marketing costs far less than television advertising and reaches a targeted, already-engaged audience, giving good value for a new business's limited marketing budget | |
| Question 7[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying an effect, such as some existing members leaving for the cheaper national chain | B1 |
| developing it, such as this directly reducing the local gym's membership revenue | B1 |
| identifying a second effect, such as the local gym feeling pressure to lower its own prices or improve its facilities to compete | B1 |
| developing it, such as this potentially reducing its profit margin even if it keeps most of its members | B1 |
| a concluding link, such as both effects together threatening the gym's previously stable position now that it faces direct competition for the first time | B1 |
| Final answer: Two developed effects, such as losing members to the cheaper chain and feeling pressure to cut prices or improve facilities, both threatening the gym's previously stable position now that it faces direct competition | |
| Question 8[4 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a segmentation method, such as age | B1 |
| developing it, such as offering different class types or pricing for younger adults compared with older members | B1 |
| identifying a second method, such as income or socio-economic group | B1 |
| developing it, such as setting membership prices and payment plans that suit that group's disposable income | B1 |
| Final answer: Two developed methods, such as segmenting by age to vary class types and pricing, and by income to set membership prices and payment plans | |
| Question 9[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying an effect, such as customers who used to shop at the rival switching to the surviving shop | B1 |
| developing it, such as increasing the surviving shop's sales revenue and market share, since there is now less choice in the town | B1 |
| identifying a second effect, such as feeling less pressure to keep prices low or invest as heavily in customer service with less local competition | B1 |
| developing it, such as this potentially allowing prices to rise somewhat, though risking attracting a new competitor drawn by the reduced competition | B1 |
| a concluding link, such as both effects generally strengthening the surviving shop's position in the short to medium term | B1 |
| Final answer: Two developed effects, such as former rival customers switching to the surviving shop, increasing sales and market share, and reduced pressure to keep prices low, though this risks attracting a new competitor later | |
| Question 10[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying an advantage, such as reaching a far larger number of potential customers through supermarket shelves | B1 |
| developing it, such as customers who would never find the small producer's own website discovering the product while shopping | B1 |
| identifying a second advantage, such as supermarkets often handling storage, shelving and some promotion themselves | B1 |
| developing it, such as this reducing the producer's own delivery and storage costs compared with running the van service alone | B1 |
| a concluding link, such as this combination of channels growing sales beyond what the direct website and van alone could achieve | B1 |
| Final answer: Two developed advantages, such as reaching far more customers through supermarket shelves, and supermarkets handling storage and shelving, reducing the producer's own costs, together growing sales beyond the direct channel alone | |
| Question 11[5 marks] | |
|---|---|
| Answer or working | Marks |
| July's net cash flow = 5200 minus 4700 | M1 |
| a July closing balance of 800 pounds | A1 |
| August's net cash flow = 4100 minus 5900 | M1 |
| an August closing balance of negative 1000 pounds | A1 |
| a valid preparatory action, such as arranging an overdraft or short-term loan in July before the shortfall occurs, or delaying a non-essential August outflow | B1 |
| Final answer: July closing balance = 800 pounds; August closing balance = negative 1000 pounds; the stallholder could arrange an overdraft or delay a non-essential payment in July to prepare for the shortfall | |
| Question 12[5 marks] | |
|---|---|
| Answer or working | Marks |
| a rewritten objective stating the specific target of 100 average daily customers within a one-year timeframe | B1 |
| calculating the increase = 100 minus 80 | M1 |
| dividing the increase by the original 80 and multiplying by 100 | M1 |
| a percentage increase of 25 percent | A1 |
| correctly identifying which SMART letters the rewritten objective satisfies, such as Specific, Measurable and Time-related | B1 |
| Final answer: Increase average daily customers from 80 to 100 within one year, a 25 percent increase; this is Specific, Measurable and Time-related | |
| Question 13[5 marks] | |
|---|---|
| Answer or working | Marks |
| dividing 5000 by 1.00 | M1 |
| 5000 pounds | A1 |
| correctly identifying that this is more pounds than the 4000 pounds paid before the pound weakened | B1 |
| explaining that a weaker pound means each dollar of imports costs more pounds, increasing the importer's costs for the same order | B1 |
| concluding that this squeezes the importer's profit margin unless it raises its own selling prices | B1 |
| Final answer: 5000 dollars converts to 5000 pounds when the pound is worth 1.00 dollars, more than the 4000 pounds paid before; this squeezes the importer's margin unless it raises its own prices | |
| Question 14[6 marks] | |
|---|---|
| Answer or working | Marks |
| net profit = 220000 minus 198000 | M1 |
| 22000 pounds | A1 |
| dividing 22000 by 220000 and multiplying by 100 | M1 |
| a net profit margin of 10.0 percent, exactly meeting the objective | A1 |
| identifying that this relies on the revenue and cost forecasts being accurate, and forecasts often differ from actual results, particularly for a business with only two years of trading history | B1 |
| a justified conclusion recommending caution, since the forecast only just meets the target and the brewery has limited trading history to base it on | B1 |
| Final answer: Net profit = 22000 pounds; net profit margin = 10.0 percent, which exactly meets the objective; a justified judgement recommending caution given the brewery's limited trading history and how narrowly the forecast meets the target | |
| Question 15[6 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a negative impact, such as having to stop emailing a large part of its existing database until it gains explicit consent, shrinking its marketing reach | B1 |
| developing it, such as this significantly reducing sales generated by these weekly marketing emails in the short term | B1 |
| identifying a positive or adaptive impact, such as complying properly improving trust with customers who feel their data is respected | B1 |
| developing it, such as an engaged, opted-in list potentially responding better to marketing than a large, uninterested one | B1 |
| a further point, such as the cost and time needed to set up compliant consent systems and the risk of fines for continued non-compliance | B1 |
| a justified overall conclusion on whether the impact is likely to be more positive or negative for this company, given how central bulk emailing has been to its marketing | B1 |
| Final answer: A justified judgement weighing the short-term loss of marketing reach and sales against the longer-term benefit of a smaller, more engaged, genuinely opted-in customer list, considering the cost of becoming compliant | |
| Question 16[6 marks] | |
|---|---|
| Answer or working | Marks |
| a point in favour, such as the gap having few direct competitors offering both low price and good quality together | B1 |
| developing it, such as this potentially building strong customer loyalty and word of mouth for offering a combination rivals do not | B1 |
| a point against, such as the gap possibly being empty because it is difficult or costly to make good quality furniture cheaply | B1 |
| developing it, such as attempting this risking very low profit margins if materials or labour cost more than a low price can support | B1 |
| a further factor, such as whether the brand has manufacturing or sourcing efficiencies, for example bulk buying or simple designs, that let it achieve both a low price and decent quality | B1 |
| a justified conclusion weighing the opportunity of an under-served gap against the risk that it exists because it is hard to deliver profitably | B1 |
| Final answer: A justified judgement weighing the appeal of an under-served low price, high quality gap against the risk that it exists because it is hard to deliver profitably, depending on the brand's manufacturing and sourcing efficiency | |
| Question 17[6 marks] | |
|---|---|
| Answer or working | Marks |
| a first method, such as reducing the amount of stock held and ordering paper and ink more frequently in smaller amounts | B1 |
| developing it, such as freeing up cash that was tied up in stock, which can then be used to pay suppliers on time | B1 |
| a second method, such as asking its own customers for a deposit or faster payment on large printing orders | B1 |
| developing it, such as bringing cash in sooner rather than waiting for the full amount after the job is finished | B1 |
| a further evaluative point, such as reducing stock risking running out of paper or ink during a busy period | B1 |
| a justified conclusion recommending one method, or a combination, with a reason tied to the business's situation | B1 |
| Final answer: A justified recommendation such as combining lower stock levels with deposits from customers, weighing the risk of running short of materials against the need to free up cash and pay suppliers on time | |
| Question 18[6 marks] | |
|---|---|
| Answer or working | Marks |
| last year's share = 240000 divided by 1200000, multiplied by 100 | M1 |
| 20 percent | A1 |
| this year's share = 252000 divided by 1400000, multiplied by 100 | M1 |
| 18 percent | A1 |
| identifying that sales revenue itself grew, from 240000 to 252000 pounds, which looks like success in absolute terms | B1 |
| a justified conclusion that market share actually fell, from 20 to 18 percent, because the market and the new rival grew faster than the brand's own sales, so this is not straightforwardly a success | B1 |
| Final answer: Market share last year = 20 percent; market share this year = 18 percent; a justified judgement that this is not a full success, since market share fell even though revenue grew | |