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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. The ready meals market grew by 2% in volume and value in 2016. Sales ... 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 is growing, with supermarkets dominating the market share. Mumtaz would benefit from economies of scale through increased production, lowering costs and increasing profitability. Given that Mumtaz already supplies leading supermarkets, producing own label meals could solidify its standing, meet the demand of supermarkets for diverse recipes, and capture a larger market share.
Step 2
Arguments for selling more Mumtaz premium brand products
Answer
Mumtaz has an existing reputation for quality with its premium products. This option caters to a trend among consumers preferring premium ready meals. Focusing on the Mumtaz brand could differentiate it from supermarket offerings, allowing for higher price points and the potential for greater margins. Additionally, this approach would enhance brand loyalty and visibility in the market.
Step 3
Recommendation
Answer
Mumtaz should consider producing own label ready meals for supermarkets, given the significant market share these products hold, which offers a lower risk strategy. This option aligns with Mumtaz's current capabilities and aims to broaden its market presence effectively. However, they should balance this with ongoing promotion of their premium brand to establish a strong product portfolio.