Marketing strategy — Edexcel A-Level Business
Test yourself on Marketing strategy with PEARSON EDEXCEL A-Level practice questions.
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Marketing strategy explained
Plotting sales against time gives a firm a language for where a product sits and what the mix should do next, from heavy promotion and a skimming or penetration price at launch, through wider distribution and brand building as sales climb, to cost control and extension work once volumes flatten. Its real value is in planning cash, because development and launch absorb cash while a mature line generates it, so a business needs products at different points at once. The model is descriptive rather than predictive, the position is clear only with hindsight, fads never follow the curve at all, and staples such as Cadbury Dairy Milk have stayed mature for decades because marketing decisions shape the curve rather than merely follow it.
b) Extension strategies: product; promotion
When sales growth flattens, a firm can spend to lengthen the profitable phase rather than accept decline, and the specification splits the tactics by which part of the mix does the work. Changing the offer itself means new variants, flavours, packaging, features or a reformulation, while the promotional route means fresh advertising, a new use, a new segment or a sales promotion that buys back shelf space. Lucozade is the standard case, repositioned from a drink for the sick to a sports drink and then to energy gels. The approach is cheaper and less risky than developing a replacement, which is why finance directors like it, but returns diminish, a stretched brand can be diluted, and new variants often cannibalise the original rather than adding sales.
c) Boston Matrix and the product portfolio
The grid sets relative market share against market growth and sorts a range into four cells so that cash can be moved deliberately, with a strong share in a slow market funding the investment a high growth but low share line needs, and a weak share in a flat market becoming a candidate for withdrawal. Used well it forces a business to check that it owns tomorrow's earners as well as today's, which is the same balance point the life cycle makes. The blind spots carry the evaluation marks: share is not profit, the boundary between high and low growth is arbitrary, redefining the market moves a product between cells, and the grid cannot see synergy, so a weak line kept to complete a range may be earning its place.
d) Marketing strategies appropriate for different types of market: mass markets; niche markets; business to business (B2B) and business to consumer (B2C) marketing
Who a firm sells to decides how it sells. Serving everybody means high volume at a thin margin, so scale economies, availability and price do the competing while spending goes into broadcast advertising and intensive distribution. Serving a specialist segment reverses that, because volume is small, the customer will pay more, demand is less price sensitive and loyalty is stronger, but one large entrant or a downturn can remove the whole market. Selling to other organisations changes the process again, since demand is derived from the buyer's own sales, orders are few and large, buyer power is high in Porter's terms, and personal selling, credit terms and long relationships matter more than any advertisement. Selling to households deals in many small emotional purchases and leans on brand.
e) Consumer behaviour – how businesses develop customer loyalty
Keeping a buyer costs far less than winning one, so firms invest in retention through reward schemes and tailored offers, reliable quality, quick service recovery when something goes wrong, brands people want to be associated with, and subscriptions that quietly build switching costs. The payoff is measurable, since a retained buyer has a higher lifetime value, tolerates a price rise more readily and recommends the firm at no cost. Tesco built the Clubcard mainly to collect purchase data rather than to hand out points. The weakness of discount driven schemes is that they surrender margin on every transaction and may only buy habit, so a rival offering a lower price can take that shopper back immediately.
Your focus
- a) The product life cycle
- b) Extension strategies: product; promotion
- c) Boston Matrix and the product portfolio
Show all 5 objectives
- d) Marketing strategies appropriate for different types of market: mass markets; niche markets; business to business (B2B) and business to consumer (B2C) marketing
- e) Consumer behaviour – how businesses develop customer loyalty
Marketing strategy exam tips
Marking Points
- Name the stages in order and attach a marketing mix decision to each, for example skimming or penetration pricing at launch and price competition once the market matures.
- Link the stage to cash flow, with outflows during development and introduction and peak cash generation in maturity, which is why the portfolio must be balanced.
- Apply the stage to the named product using case evidence such as slowing sales growth, falling prices or new competitor entry.
- Evaluate by noting that the model is descriptive, that stage length varies enormously between products, and that a firm's own actions can lengthen or shorten the curve.
- Separate the two routes clearly, a change to the product itself against a change to how it is promoted or positioned.
- Give a concrete tactic for the named business, such as a reduced sugar recipe, a limited edition pack or a campaign aimed at a different age group.
- Explain the motive, which is to protect the cash a mature product generates at a fraction of the cost of new product development.
- Evaluate by weighing the cost of the tactic against the additional revenue it is likely to earn, and by asking whether it only delays an inevitable withdrawal.
- Label the axes correctly, with relative market share on one and the growth rate of the market on the other, rather than sales value.
- Name the four categories, stars, cash cows, question marks and dogs, and give the cash implication of each, so a cash cow funds a star and a question mark demands a build or drop decision.
- Place the case products in cells using the data given, quoting share or growth figures rather than asserting a position.
- Recommend a portfolio action, such as directing the cash from the mature line into the growing one, and justify it against the firm's objectives.
- Evaluate the tool itself, since it ignores profitability, synergy between products and the way the market has been defined.
- Contrast market types on the measures that matter, namely unit margin, volume, price elasticity of demand and the cost of reaching each customer.
- Explain that organisational demand is derived, so a supplier's sales rise and fall with its customers' sales rather than with consumer advertising.
- Match the mix to the market, for instance intensive distribution and broadcast promotion for a mass product against selective distribution and trade media for a specialist one.
- Use Porter's five forces to show why a small number of large industrial buyers hold bargaining power over their supplier, then note what the model omits.
- Justify the strategy for the named firm using its capacity, brand and finance, not by claiming that specialist markets are simply more profitable.
- Name a specific retention method used by the case business, such as a rewards app, a subscription tier, a service guarantee or personalised offers driven by purchase data.
- Explain the financial benefit in recognisable terms, namely lower acquisition cost, higher customer lifetime value, steadier revenue and less elastic demand.
- Show the cost side, because points, discounts and free delivery reduce contribution per sale and the scheme itself must be run and analysed.
- Distinguish genuine loyalty from repeat purchase caused by convenience or a lack of alternatives, and judge which one the business actually has.
Examiner Tips
- 💡The life cycle is rarely asked about alone, so connect it to extension strategies, the product portfolio or cash flow, which is where the marks actually sit.
- 💡For the top band, say what the model cannot see, since comments on its descriptive nature and its blindness to competitor action carry the evaluation marks.
- 💡If a sales table is provided, calculate the percentage change in sales before naming the stage, so the judgement rests on evidence rather than assertion.
- 💡These questions usually carry an assess or evaluate command, so finish with a supported judgement on whether the money would be better spent on a replacement product.
- 💡Name the stage first, because these tactics only make sense at the end of growth or in maturity and saying so shows the link the examiner wants.
- 💡Use case evidence on sales trends and marketing spend to compare the cost of the tactic with the revenue it protects.
- 💡Calculations appear here, with market growth as a percentage change in market size and market share as the firm's sales divided by total market sales, shown as a percentage.
- 💡In an evaluate question spend a full paragraph on what the matrix cannot see, because that is where the top band is written.
- 💡Connect the matrix to the life cycle and to cash flow, since examiners reward answers that tie portfolio position to the funding of new products.
- 💡A common question asks whether a firm should move from a specialist position into the mass market, so plan around capacity, brand dilution and the loss of premium pricing.
- 💡Price elasticity of demand belongs in this answer, because a distinctive product faces less elastic demand and that supports a higher price.
- 💡Where the case gives revenue and customer numbers, calculate sales per customer, since a handful of large accounts and thousands of small ones demand different strategies.
- 💡Retention data such as repeat purchase rate or churn is often in the appendix, so quote it and calculate the change rather than describing the scheme in words.
- 💡Evaluation turns on whether loyalty is worth buying in this market, so compare the margin sacrificed with the value of the extra years of custom it secures.
- 💡Tie the answer to price elasticity of demand and to branding, since loyal buyers allow a firm to raise price without losing much volume.
Common Mistakes
- Confusing falling growth with falling sales, so a product whose sales are still rising more slowly is wrongly labelled as being in decline.
- Drawing and labelling the curve without saying what the business should do differently at that stage, which earns knowledge marks only.
- Assuming every product passes through all the stages at the same speed, when a fashion item can complete the whole cycle within one season.
- Suggesting a price cut without considering the effect on contribution per unit and on a premium brand's positioning.
- Confusing this with diversification, when moving a genuinely new product into a new market is Ansoff diversification rather than lengthening an existing line.
- Listing tactics with no cost or revenue consequence attached, so the answer never reaches analysis.
- Plotting sales revenue instead of relative market share, which moves the position of every product on the grid and invalidates the conclusion.
- Assuming a low share product in a slow market should always be dropped, when it may absorb overheads, complete a range or serve a loyal niche.
- Treating the matrix as a decision in itself rather than a way of organising evidence, so no recommendation ever follows.
- Claiming a niche always earns higher profit, when low volume can leave total contribution below the fixed costs it has to cover.
- Treating selling to businesses as consumer selling with bigger orders, and so ignoring tendering, negotiated credit terms and account management.
- Describing the categories as fixed, when a craft brewer can serve a specialist following and supply a supermarket chain at the same time.
- Asserting that a loyalty card raises profit without mentioning the margin given away or the cost of operating and analysing the scheme.
- Confusing satisfaction with loyalty, when a satisfied customer will still switch for a small price difference.
- Drifting into how the firm attracts new customers when the question asks how it keeps the ones it has.