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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question A - 2014
Question A
Read the information supplied and answer the questions which follow. Maria Noone is the entrepreneur who owns Sensible Foods Ltd. This new company intends to manufa... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question A - 2014
Step 1
Evaluate the role of advertising and sales promotion as elements of the promotional mix at Sensible Foods Ltd.
Answer
Advertising plays a critical role in introducing Sensible Foods Ltd’s products to potential customers. Its primary purpose is to inform the market that the business has something new, aiming to convince consumers to try the products. Sensible Foods Ltd will employ advertising strategies that highlight the product's unique features such as being low calorie, appealing to health-conscious customers. By utilizing national and local radio, the company can enhance brand visibility and establish a connection with its target audience, potentially leading to increased market awareness.
Sales promotion, on the other hand, involves short-term incentives to stimulate interest and encourage purchases. Techniques such as ‘special offers’ and discounts create urgency and can attract new customers. By incentivizing trial purchases through promotions, the company can effectively increase sales volumes while also rewarding existing customers, thereby fostering loyalty. These promotional strategies can have immediate effects on demand, making them essential for the launch phase of Sensible Foods Ltd’s products.
Step 2
Describe two factors Sensible Foods Ltd should consider when choosing a suitable channel of distribution for its products.
Answer
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Market Reach: Sensible Foods Ltd should evaluate how effectively a distribution channel allows them to reach their target market. Partnering with established supermarket chains like Goodhays provides immediate access to a broad customer base, enhancing visibility and potential sales.
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Channel Costs: The costs associated with different distribution channels must be considered. Factors such as transportation, storage, and retailer margins can significantly affect overall profitability. Selecting a cost-efficient channel that aligns with the company’s pricing strategy is essential for maintaining competitiveness.
Step 3
Outline one positive and one negative implication for Sensible Foods Ltd of using a leading supermarket chain such as Goodhays to sell its products.
Answer
Positive Implication: Increased Exposure - Partnering with a leading supermarket chain allows Sensible Foods Ltd to leverage the store's established customer footfall, enhancing brand visibility and increasing the likelihood of sales.
Negative Implication: Channel Dependency - Relying on a large retailer can limit Sensible Foods Ltd’s control over pricing and product placement. If Goodhays decides to prioritize other brands or introduce competing products, Sensible Foods Ltd may face challenges in maintaining market presence.