Marketing case study

Question 1a Explain two benefits to Teen Fashions of having a ‘strong brand image’.

Possible answers could

Benefits
include
• increases sales
• more control over pricing
• easier to introduce new products

Sample explanation
A strong brand image may help to introduce new products, which is important for fashion products
entering the market for older women, and would increase Teen Fashions’ profits.

Question 1b Consider how the following three factors influence the demand for Teen Fashions products.
Which factor do you think is the most important? Justify your answer.

Possible answers could

Price of Teen Fashion products • the higher the price, the lower TF’s sales will be
include
– opposite is also true – price is the most important factor
influencing the demand for most products
• the price of fashion products is relatively price elastic
– a small change in price will cause a bigger change in
sales/quantity demanded
• consumers will compare the price of their products with
competitor fashion products – if TF’s products are more
expensive, then consumers will not buy from TF

Consumer income • the higher consumer income, the more likely they will buy
fashion clothing from TF – fashion clothing is more of a
luxury good than a necessity

Quality of Teen Fashion products • consumers will look for value for money – if TF’s products
are similar to competitors, then they will consider other
factors, such as the quality of the clothing

© Cambridge University Press 2018 Exam-style case study answers – Section 3

 Marketing case study

Conclusion • price – most important factor as the level of sales will be higher
the lower the price, especially when compared to competitor
products
• consumer income – will only buy luxury items, such as
fashion clothing, if they have money left after buying
necessity goods and services, such as food and rent
• quality – fashion items have short life cycle, so quality
might not be so important – however, if the price is similar
for other fashion clothing, then quality might become a
more important factor

Question 2a Explain one advantage and one disadvantage to Teen Fashions of its current channel of
distribution shown in Appendix 1.

Possible answers could

Advantages
include
• distribution to wider market
• wholesalers break down bulk
• middlemen may promote products

Disadvantages
• lower profit margins for Teen Fashions
• Teen Fashions has less control over product marketing

Sample explanation
An advantage of the current channel of distribution is that it helps Teen Fashions to sell to a wide geographical
market / a competitive market / a national market, increases sales and profits.

Question 2b The marketing director and the operations director disagree about the benefits to Teen Fashions of e-
commerce. Consider their views and recommend whether or not Teen Fashions should develop e-
commerce activities. Justify your answer.

Possible answers could

Marketing director’s view Supports introduction of e-commerce.
include
• wider access to market – potential to increase sales and
profits
• need to keep up with the competitors who are using e-
commerce – many young people use the internet to buy
goods
• more convenient for consumers who can buy from home
instead of visiting shops – consumers with busy lives might
only buy fashion clothing using e-commerce

© Cambridge University Press 2018 Exam-style case study answers – Section 3

 Marketing case study

Operations director’s view Against introduction of e-commerce.

• need to invest in design and maintenance of a website
– this increases TF’s costs and the level of investment might
not be worth it
• need to set up a department to handle e-commerce orders
– which increases costs
• higher inventory costs – need to make sure that they always
have enough items in stock to meet demand, otherwise TF
could get a reputation for not being able to supply goods when
requested by consumers

Conclusion • marketing director’s view – potential to increase sales and

profits by increasing potential market – competitors are likely
to be using e-commerce, so TF must too in order to maintain
and increase market share
• operation director’s view – increases costs – money could
be spent on other, more profitable investments
• opposing views might be considered as short term costs
(operations director’s view) versus long-term benefits
(marketing director’s view)

Question 3a Explain two benefits to Teen Fashions of the marketing manager carrying out market research for
Option 1.

Possible answers could

Benefits
include
• can identify the needs of consumers
• can identify gaps in the market
• reduces risk when developing and launching products
• can help with decisions about other elements of the marketing mix, e.g. pricing, identifying
competitor strengths and weaknesses

Sample explanation
Market research will help identify the needs and wants of consumers. This is important for fashion clothing,
as trends change often and quickly and there is a need to remain competitive (the market is highly
competitive). Market research can increase sales and profits, and strengthen brand image.

© Cambridge University Press 2018 Exam-style case study answers – Section 3

 Marketing case study

Question 3b The Board of Directors has agreed that Teen Fashions needs to expand the business. Consider Option 1
and Option 2. Which option do you think it should choose? Justify your answer.

Possible answers could

Option 1 For
include
• TF’s brand already familiar to this market – makes the
introduction of new products easier
• expansion into another segment of the market –
potential for increased sales, revenue and profits
• less risk as brand is known to the potential market – Teen
Fashions has some idea of the wants of the market

Against
• cost of market research – how will this be financed?
• cost of developing new products – will the costs be
recovered from sales?
• high inventory costs – will need to have more items held to
meet demand
• how younger consumers might see expansion of products to
an older consumer – could damage brand image and reduce
sales to younger consumers

Option 2 For
• no need to change products as aimed at same age group
– less risk
• large potential market – could lead to increased revenue and
profits
• spreads risk – if the market in Country X falls, TF might still
have good demand in Country Y
• consumers in Country Y have high disposable income to
spend on fashion clothing – consumer income is an important
factor influencing the demand for more luxury items, such as
fashion clothing

Against
• TF’s brand is not known in Country Y – consumers in
Country Y might not buy foreign-made clothing
• high promotion costs – needed to create brand
awareness
• there might be language and cultural issues – will products
meet the needs of consumers in Country Y?
• there might be competition in Country Y – which is already
well-established and this could make it difficult for TF to
enter this market

© Cambridge University Press 2018 Exam-style case study answers – Section 3

 Marketing case study

Conclusion • Option 1 – less risky option – TF brand already known in the

market – however, could damage image in current segment
and sales might fall – will any sales in new segment
compensate for potential loss of sales in the current segment?
• Option 2 – potential to increase market size and spread risk –
could increase revenue and profits – however, high entry costs
e.g. product design and promotion costs
– however, TF unknown in the market and not easy to
predict how consumers in Country Y will react to their entry
into the market

Question 4a Explain two methods of promotion Teen Fashions might use if it chooses Option 1 to expand the
business.

Possible answers could

Methods
include
• advertising
• celebrity endorsement
• event sponsorship
• money-off vouchers

Sample explanation
Teen Fashions might advertise in magazines read by 25–40-year-old females to create awareness, help Teen
Fashions to enter the market more easily.

Question 4b Explain how each of the following three factors might influence the success of Teen Fashions entering
Country Y. Which of these factors do you think is likely to be the most important? Justify your answer.

Possible answers could

Social differences • demographic factors such as age and gender profile of
include
Country Y are important – what is the size of the potential
market?
• is there a demand for fashion clothing in Country Y?

Differences in language • how might different language affect TF’s entry into this
market e.g. the effect on product name, promotional
activities?

Differences in legal controls to

• are consumer laws in Country Y different and stricter than
protect consumers
in country X? – how will this impact on costs of
production of goods for Country Y?

Conclusion • social differences – fashion clothing is mainly aimed at younger

consumers – what is the size of the market in Country Y? – do
younger consumers have high incomes?
• different language – less of a problem as it is relatively easy
and not too costly to translate promotional materials into
other languages
• difference in legal controls – this could be the most
important factor, because TF must obey the laws in Country
Y if they want to sell their goods there – if this increases
production costs, then TF might have to charge a price above
that of local producers

© Cambridge University Press 2018 Exam-style case study answers – Section 3