11 mark
Which one of the following is least likely to be an advantage of operating in a niche market for a small business?
Economies of scope
Focused marketing
Less competition
Opportunity for tailor-made products
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Making Marketing Decisions (AQA A Level Business): Exam Questions
Exam code: 7132
Syllabus Edition
First teaching 2023
Last exams 2027
33 mins7 questions
14 marks
Case Study
The UK tea market
Tea drinking in the UK is declining as younger customers choose alternatives such as coffee. Extrapolation of the annual sales suggests that coffee will outsell tea in the UK by 2025.
Within the overall tea market traditional black tea still dominates sales. However, a ‘health tea’ niche made up of fruit, herbal and green teas is growing. This niche has benefitted from its association with wellbeing.
Appendix A Annual sales volume of black tea and coffee (million kg), UK (actual sales 2012–2020; estimated sales 2021–2025)
Appendix B UK tea brands 2019
Rank | Brand | Annual Sales (£m) | % change | Type of tea in range |
1 | Twinings | 108 | +3.8 | Black and health tea |
2 | PG Tips | 99 | −7.2 | Mainly black, with small new health tea range |
3 | Taylors (including Yorkshire Tea) | 98 | +5.0 | Black and health tea |
4 | Tetley | 90 | +0.4 | Mainly black but some health tea |
5 | Pukka | 23 | +15.4 | Organic and ethical black and health teas |
Other tea brands | 144 |
Appendix C Price elasticity of demand data
Type of tea | Price elasticity of demand |
Black tea | −1.2 |
Health teas | −0.5 |
Appendix D Selected data from recent market research survey
How often do you drink black tea? (% of respondents) | |||
Overall | Age 18–24 | Age over 65 | |
Several times a day | 42 | 25 | 56 |
Once a day | 15 | 16 | 16 |
2–3 times per week | 10 | 14 | 5 |
Occasionally | 12 | 17 | 7 |
Never | 21 | 28 | 16 |
Do you drink health tea? (% of respondents) | |
Yes | |
Female | 32 |
Male | 19 |
How important is it that the tea you buy is ethically sourced, eg fair trade? (% of respondents) | |
Important | 62 |
Not very important | 26 |
Not at all important | 12 |
Using the data in Appendix D, explain one benefit of the use of market segmentation to a business selling tea.
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24 marks
Halliwell Snacks sells a single range of crisps, marketed in the same way to every customer.
Explain one benefit to Halliwell Snacks of segmenting its market.
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34 marks
Trescow Motors sells vehicles to customers in both city centres and remote rural areas.
Explain why geographic segmentation would be appropriate for Trescow Motors.
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45 marks
Ridgeway Audio is a small business with limited funds and a strong reputation for engineering quality. It is deciding whether to target the mass headphone market or specialist audio enthusiasts.
Explain the factors Ridgeway Audio should consider when choosing its target market.
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56 marks
Calder Foods makes gluten-free bakery products for customers with coeliac disease. A large national bakery has announced that it will launch its own gluten-free range.
Analyse how this development is likely to affect Calder Foods.
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19 marks
Analyse why a large business might choose to introduce a product into a niche market.
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