How to Answer the Outline a Possible Marketing Mix for Question

Organix q’s sample answers

Define the term ‘niche market’ A niche market is a small, specialised part of a larger market, for example, organic food makes up a small part of the total food market.

Examine the advantages of a niche market compared to a mass market. A niche market allows a company to specialise in one particular area. This allows them to build up expertise or a strong brand image in that area, which should allow them to compete successfully. As it is a small market, bigger firms may overlook it, or think it not worth their while competing in. This means the small firm can avoid competing directly with bigger firms who may gain economies of scale, and so be able to produce more cheaply. Most of you knew this, but failed either to say why it was an advantage or how that advantage came about. Furthermore, as the company specialises in one particular area it can focus its marketing on that area, give a message that is focused on this area, and so get better value for its marketing budget. However, it may mean that the niche firm is sacrificing many potential customers by not competing against the more mainstream brands. Some of the customers may not see them, or think that it is ‘not for them’. Also the small, specialised nature of their market may make it hard to gain economies of scale. Specialisation can also be a problem if, for example, tastes change. Whereas, a more mainstream company has other areas it can fall back upon to compensate. For example, if organic food falls in popularity then the whole Organix business is in trouble, rather than just a section of it. Finally, if the niche is successful, then bigger companies may see it as being worthwhile competing in, and drive out the smaller original firm. Witness the drive to make ‘organic status’ easier to come by. Due to the absence of economies of scale, niche products are usually more expensive. Thus when economic conditions worsen, people may switch to cheaper substitutes. Through out this paragraph, I have tried to link back to the case study.

Evaluate the decision to extend the Organix brand across all areas of the business. The main advantage of family branding is that it is cheaper. When one product is promoted, then part of that rubs off on the other products with the same brand name. This saves the firm time and money building up a separate identity for each product it produces. This can be particularly useful for new products. Consumers will already have a preconceived idea about the new product based upon their experiences of the other brands in the family. For example, if they liked the produce from the Organix shops then they may be more likely to try the restaurant. This will only really work if the products have a strong link, and are aimed at the market segments. If not, consumers will have the wrong perception of the product. For example, Mercedes used a different brand name when they launched the Smart car, as they felt it did not sit with the Mercedes brand. Correct, but the example should really come from the case study. However, if there is a problem with one of the brands, then this will rub off on the others too. For example, the restaurant is suffering from quality problems, customers might well assume that these will be the same in the food shops too, and stop using those too. It may also mean a lack of flexibility in other parts of the marketing mix, and it may be hard to give individual products their own identity. IB Business & Management Organix sample answers As the various parts of the business are aimed at similar customers then it would appear to be a good strategy to adopt, especially seeing as the business is not that large, and so will not have lots of cash to spend upon developing a strong brand image for the different aspects of the firm.

Next questions… In order for Organix to fulfil its goal of opening up holiday cottages, then more finance will be required. Evaluate the different sources of finance available to them (10 marks)

Compare the effectiveness of different leadership styles shown in Organix. (8 marks) Evaluate non-financial methods by which the motivation of the workers at Organix could be increased. (10 marks)

Apply Porters 5 forces model to Organix. (6 marks)

Outline a suitable marketing mix for the holiday cottages. (8 marks)

To be continued…

IB Business & Management Organix sample answers