11 mark
Figure 2 shows Bowman’s strategic clock.
Which positions did Bowman consider to be undesirable strategies?
1, 2 and 3
1, 7 and 8
4, 5 and 6
6, 7 and 8
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Strategic Positioning (AQA A Level Business): Exam Questions
Exam code: 7132
Syllabus Edition
First teaching 2023
Last exams 2027
1 hour7 questions
21 mark
Which one of these strategies from Bowman’s strategic clock is most likely to be a successful long-term strategy?
High price and low added value
High price and standard added value
Low price and low added value
Standard price and low added value
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11 mark
The grid below shows a market map for television sets.
High quality | Low quality | |
High price | A | B |
Low price | C | D |
Based on Bowman’s strategic clock, the manufacturer of a television uses a strategy of focused differentiation.
In which segment of the market map is this television most likely to be placed?
A
B
C
D
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19 marks
Case Study
Soundcheck plc
Soundcheck plc offers a streaming service enabling users in more than 160 countries to play a variety of content, such as music and podcasts, on electronic devices. The company initially offered its services free to consumers and earned revenue from advertisers. An additional, paid service was introduced in 2022. Paying subscribers benefit from better quality audio, no adverts, and playlists made by celebrities. Exclusive podcast content also provides paying subscribers with an enhanced experience which justifies a paid subscription model.
Since its launch in 2006, Soundcheck plc has grown to become the market leader. It now employs nearly 4000 staff globally. A stock market flotation has funded huge investment in building a high-quality technology platform, strong brand and a skilled workforce. However, Soundcheck plc has not regularly made an operating profit. Its costs have been rising significantly in recent years and in 2023 it lost £26 million as a global economic slowdown began.
In 2023, Soundcheck plc reached an agreement with trade unions about pay rates and ways of working. The agreement guaranteed starting salaries of at least £36 000 to many staff. This is significantly higher than the industry average. However, there is a global shortage of skilled software engineers and marketing staff so labour turnover rates remain high. In addition to competition for staff, new competitors are attracted to the growing market, including large rivals who are well established in other streaming markets. Other new entrants have also targeted the ‘free’ sector of the market. Some of these rivals have a competitive advantage because they own the rights to music or other content and so have lower costs than Soundcheck plc.
When introducing its paid service, Soundcheck plc changed its positioning strategy from position 1 to position 4 on Bowman’s strategic clock.
Analyse why Soundcheck plc decided to change its positioning strategy.
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225 marks
A business is changing from a strategic position of low cost to one of differentiation.
Will this lead to the business spending more on marketing and less on the operations function? Justify your view.
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325 marks
A competitive advantage can be achieved through low-cost or through differentiation.
Which of these types of competitive advantage is it easier for a UK business to maintain? Justify your view.
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420 marks
Case Study
The rise of the discount food retailers
For many years four companies have dominated food retailing sales in the UK: Asda, Morrisons, Sainsbury’s and Tesco. However, these ‘big four’ retailers have faced growing competition from discount retailers such as Aldi and Lidl.
Figure 1: Total UK food retail sales
Figure 2: UK food retail sales of discount food retailers
Figure 3: A comparison of the ‘big four’ model with the discounter model
The typical discounter model (eg Aldi, Lidl) | ‘Big four’ model (eg Tesco, Sainsbury’s) | |
Product range in stores | Relatively smalleg 800 items | Largeeg 50 000 items |
Brands | Large proportion of own label products traditionally targeting low to medium income earners | Large proportion of well-known brands traditionally targeting high to medium income earners |
Sales of food compared to non-food items (eg clothing and health and beauty products) | 80%:20% | 60%:40% |
Administration costs and overheads as percentage of turnover | 15% | 20% |
Typical profit margin | 3% | 2% |
Figure 4: Market map of the UK food retail sector
Figure 5: Extract from consumer survey:
“What benefit is most important in determining where you shop?”
Benefit | % of replies |
I can rely on what I need being in stock | 16 |
It has a good range of non-food products | 17 |
It has well trained, helpful staff readily available | 18 |
The stores are well designed and maintained | 14 |
Figure 6: Company and Human Resource Data
Aldi Stores Ltd (discount retailer) 2014 | Tesco (one of the ‘big four’) 2014 | |
Turnover | £6 893 million | £54 443 million |
Profit for the year | £250 million | £162 million |
Average salary per employee | £21 272 | £14 452 |
Total employee costs | £507 million | £6 968 million |
Number of employees | 23 858 | 482 152 |
To what extent do you think the ‘big four’ supermarkets should change their strategies and adopt the discounter model?
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