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Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Question 1
Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim. Mumtaz aims to be the UK’s market leader in Asian ready meals. To ach... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Step 1
Arguments for producing own label ready meals for supermarkets
Answer
The ready meals market grew by 2% in volume and value in 2016, showing potential for growth. Supermarkets’ own label ready meals have a substantial market share of 68%, with Tesco alone accounting for 18%. Mumtaz already supplies major retailers like Tesco, Asda, and Morrisons, which provides a competitive advantage. Producing own label meals can lead to economies of scale, thereby reducing costs and increasing profitability, as production costs can be lowered by increased capacity utilization.
Step 2
Arguments for selling more Mumtaz premium brand name products
Answer
There is a growing trend among consumers to prefer premium ready meals, which provides an opportunity for the Mumtaz brand. It is predicted that premium products can achieve success through the innovative Halal baby food range. Focusing on the premium segment can differentiate Mumtaz in the market. However, this may be riskier as it relies on building a strong brand reputation and awareness among consumers.
Step 3
Recommendation
Answer
Mumtaz should consider producing own label ready meals due to the larger potential market access and reduced risk compared to focusing solely on premium products. This strategy would allow Mumtaz to expand its distribution through existing supermarket partners while aiming toward its goal of becoming the market leader.