Supermarkets

UK supermarkets sell food and household goods through large stores, convenience stores and online delivery. The market is mature and slow-growing, so the main chains compete hard for market share, mostly on price, range and convenience. Margins are thin, so small changes in cost or price have a large effect on profit.

Supermarkets across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Groceries are a mass market: almost every household buys them weekly. Niches exist within it, such as organic, free-from and premium ranges, which some chains use to win higher-income customers.
1.1.3Market positioning and differentiation	Chains position on a price and quality map. The discounters sit at low price; others differentiate through range, store locations, online delivery and loyalty schemes rather than price alone.
1.2.4Price elasticity of demand	Demand for a single supermarket is fairly price elastic because shoppers can switch chains easily and compare prices online. Demand for groceries as a whole is price inelastic, because people still need to eat.
1.2.5Income elasticity of demand	Food overall is a necessity (YED between 0 and 1). Within a store, value ranges can behave like inferior goods, and premium ranges like luxuries, so the mix of sales shifts as incomes change.
1.3.3Pricing strategies	Competitive pricing and price matching against rivals are common, with psychological pricing (for example £1.99) on shelves. Loss leaders on staples bring customers in.
1.3.5Product life cycle and customer loyalty	Loyalty schemes (such as member prices) are used to build customer loyalty and collect data on what customers buy. Own-label products are relaunched and repackaged as extension strategies.
1.4.1Flexible workforce	Stores open long hours and are busiest at evenings, weekends and Christmas, so chains rely on part-time staff and flexible hours to match labour to demand.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	Stores carry high fixed costs (rent, staff, refrigeration), while the goods themselves are the main variable cost. With thin margins, contribution per item is small, so a store needs high sales volume to pass break-even.
2.4.2Capacity utilisation	Capacity is floor space, checkouts and delivery slots. Under-used stores spread fixed costs over fewer sales; in peak weeks, full delivery slots mean lost online sales.
2.4.3Stock control and lean production	Fresh food is perishable, so poor stock control means waste. Chains use just-in-time deliveries from central warehouses several times a day, which keeps stock low but depends on a reliable supply chain.
2.5.1Economic influences	Inflation in food and energy prices raises costs and pushes customers to cheaper chains and value ranges. Imported food becomes dearer when the pound depreciates.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	Rivalry is intense and buyer power is high, because switching costs are almost zero. Large chains have strong buyer power over suppliers. Barriers to entry are high for new store chains because of the cost of property and distribution.
3.2.1Growth and economies of scale	Size gives purchasing economies of scale: large chains buy in huge volumes at lower unit cost. Growth into convenience stores and online increases market share but can bring diseconomies, such as harder communication across thousands of sites.
3.4.4Business ethics and CSR	Ethical issues include food waste, plastic packaging, fair treatment of suppliers and paying staff fairly. CSR activity, such as donating surplus food, can protect the brand but adds cost.
Theme 4: Global business
4.3.1Global marketing and glocalisation	UK grocery is mainly a domestic market, but the German discounters show international expansion: they adapt ranges to UK tastes while keeping the same low-cost model, an example of glocalisation.
4.4.2Supply chain ethics	Supermarkets source from global supply chains (for example fruit, tea and clothing), so they face pressure over labour conditions at suppliers and misleading labelling.

Words to use for supermarkets

Using the industry's own words in a point shows the examiner you are applying it to this context.

Own-label: Products sold under the supermarket's own brand, often in value, standard and premium tiers.
Discounter: A supermarket that keeps prices low by stocking a narrow range, mostly own-label, in simple stores.
Footfall: The number of customers coming into a store.
Basket spend: The average amount a customer spends per shopping trip.
Like-for-like sales: Sales growth from stores open a year or more, so new stores do not inflate the figure.
Loss leader: A product sold at or below cost to bring customers in, who then buy other items.
Shrinkage: Stock lost to theft, damage or waste, including food that passes its date.
Click and collect: Customers order online and pick up from a store.

Example businesses in supermarkets

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Tesco: Public limited company. The largest UK grocer, with large stores, convenience stores (Tesco Express) and online delivery.
Sainsbury's: Public limited company (J Sainsbury plc). Positions slightly above the discounters on quality and range.
Aldi and Lidl: German-owned discounters, both privately owned. A narrow range, mostly own-label, at low prices.
Ocado: Online-only grocer, run as a joint venture between Ocado Group plc and Marks & Spencer. Delivers from automated warehouses instead of stores.

Practice questions on supermarkets

4 marksExplain one reason why demand for a supermarket's value range may rise during a recession. Spec 1.2.5

Your answer

Model answer

One full MOPS chain.

MMake your pointA value range is likely to have negative income elasticity of demand, so it behaves like an inferior good.
OOffer an explanationWhen incomes fall in a recession, customers trade down from branded and premium products to cheaper alternatives to keep their weekly food bill down.
PProvide evidenceSupermarket chains sell own-label ranges in tiers, so a shopper can move from the premium or standard range to the value range without changing store.
SState significanceThis means sales of the value range may rise even while total spending falls, which helps the chain keep customers who might otherwise switch to a discounter, although at a lower margin per item.

4 marksExplain one benefit to a supermarket chain of using just-in-time (JIT) stock control. Spec 2.4.3

Your answer

Model answer

One full MOPS chain.

MMake your pointJust-in-time means stock arrives only when it is needed, so the supermarket holds very little in each store.
OOffer an explanationBecause fresh food is perishable, holding less of it reduces the amount that passes its date before it is sold.
PProvide evidenceSupermarkets restock stores from central warehouses several times a day, so shelves can be refilled with fresh products based on what has sold.
SState significanceThis cuts waste and storage costs, which matters in a market with thin profit margins, where every saving in cost has a large effect on profit.

10 marksAssess the benefits to a large supermarket chain of matching the prices of discount supermarkets on its most popular products. Spec 1.3.3

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointPrice matching is a form of competitive pricing that could stop customers switching to the discounters.
OOffer an explanationDemand for a single supermarket is fairly price elastic, because shoppers can compare prices online and switching costs are almost zero. Matching on the products customers buy most often removes the main reason to leave.
PProvide evidenceDiscounters such as Aldi and Lidl compete mainly on price, so a large chain that matches them on staples can still offer its wider range, its online delivery and its loyalty scheme.
SState significanceAs a result, the chain may protect its footfall and market share, and customers who come in for matched items are likely to buy other, higher-margin products in the same basket.

Argument against

MMake your pointHowever, price matching reduces the profit margin on the matched products.
OOffer an explanationA large chain has higher costs than a discounter, such as bigger stores and a wider range, so selling at the discounter's price may mean selling some items at close to cost or below it.
PProvide evidenceSupermarket margins are already thin, so a fall in margin on high-volume products could cut total profit significantly.
SState significanceThis means the strategy only works if it raises basket spend enough to make up for the lost margin, and the discounters could respond by cutting prices further.

Conclusion

EEvaluateOn balance, price matching is likely to benefit a large chain in the short term by holding on to price-sensitive customers. However, in the long term this depends on whether those customers also buy higher-margin products in the same trip. If they only buy the matched items, the chain is fighting the discounters on their strongest ground, cost, which it is unlikely to win. The most significant factor is therefore the effect on total basket spend, not the price of the matched items alone.

Airlines

Airlines sell seats on flights, from short-haul holiday routes to long-haul business travel. Most costs are fixed once a flight is scheduled, so filling seats is what decides profit. Low-cost carriers compete on price; full-service carriers compete on service, networks and loyalty schemes.

Airlines across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Budget leisure travel is a mass market. Business class, private jets and routes to small destinations serve niche markets at much higher prices.
1.1.3Market positioning and differentiation	Low-cost carriers position on price; full-service carriers differentiate through comfort, networks, lounges and loyalty schemes, which justify higher fares.
1.2.4Price elasticity of demand	Leisure travellers compare fares on comparison sites, so their demand is price elastic. Business travellers often have to travel at set times, so their demand is more price inelastic.
1.2.5Income elasticity of demand	Foreign holidays and air travel are luxuries with YED above 1: bookings rise faster than income when the economy grows and fall sharply in a recession.
1.3.3Pricing strategies	Fares change as a flight fills up and as departure gets closer. Low headline fares on busy routes are competitive pricing, fares such as £19.99 use psychological pricing, and low-cost carriers earn ancillary revenue from extras.
1.3.5Product life cycle and customer loyalty	Frequent flyer schemes build customer loyalty, mainly among business travellers. New routes go through a product life cycle: launch, growth, then maturity or withdrawal.
1.4.1Flexible workforce	Demand peaks in summer and school holidays, so airlines use seasonal and temporary cabin crew and may outsource ground handling.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	Most costs, such as aircraft leases, crew and airport charges, are fixed once a flight is scheduled. Each extra passenger adds little cost, so contribution per extra seat is high and the break-even load factor is the key figure.
2.4.2Capacity utilisation	Capacity utilisation is measured as load factor. An empty seat earns nothing once the aircraft leaves, so airlines cut fares to fill flights and keep turnaround times short to fly each aircraft more often.
2.4.3Stock control and lean production	Seats cannot be stored, so stock control applies to spare parts and fuel. Lean production shows in fast turnarounds and using one aircraft type to cut maintenance and training costs.
2.5.1Economic influences	Jet fuel is priced in US dollars, so a depreciation of the pound raises a UK airline's costs. Higher interest rates raise the cost of financing aircraft, and a recession cuts leisure travel.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	Rivalry on popular routes is intense and buyer power is high because of comparison sites. Supplier power is high: only a few manufacturers make large passenger aircraft. Barriers to entry include aircraft costs and scarce airport slots.
3.2.1Growth and economies of scale	Larger airlines gain purchasing economies of scale by ordering aircraft in bulk, and technical economies by spreading maintenance and IT over a bigger fleet.
3.4.4Business ethics and CSR	Aviation produces large carbon emissions, so airlines face pressure over climate change. Ethical issues also include treatment of staff and hidden charges that make the headline fare misleading.
Theme 4: Global business
4.3.1Global marketing and glocalisation	Airlines sell the same core product worldwide but adapt promotion, language and in-flight food to each market, a form of glocalisation.
4.4.2Supply chain ethics	Supply chain issues include working conditions at outsourced ground handling and catering firms, and the environmental impact of fuel use.

Words to use for airlines

Using the industry's own words in a point shows the examiner you are applying it to this context.

Load factor: The percentage of available seats that are sold. The airline version of capacity utilisation.
Yield: The average revenue earned per passenger for each kilometre flown.
Low-cost carrier: An airline that keeps fares low by cutting costs: one aircraft type, no free extras, fast turnarounds.
Full-service carrier: An airline that includes extras such as checked bags and meals in the fare, with a network of connecting routes.
Ancillary revenue: Income from extras sold on top of the fare, such as bags, seat selection and priority boarding.
Turnaround time: The time an aircraft spends on the ground between landing and taking off again.
Slots: Permission to take off or land at a busy airport at a set time. Slots at major airports are scarce.
Short-haul and long-haul: Short-haul flights are a few hours, mostly within Europe; long-haul flights are intercontinental.

Example businesses in airlines

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Ryanair: Irish public limited company. A low-cost carrier that flies mainly one aircraft type, with fast turnarounds and charges for extras.
easyJet: UK public limited company. A low-cost carrier flying mainly from major airports across Europe.
British Airways: Full-service carrier, owned by International Airlines Group. Serves business and long-haul travellers through London Heathrow.
Jet2: UK public limited company. Sells flights and package holidays to leisure travellers.

Practice questions on airlines

4 marksExplain one reason why load factor is important to a low-cost airline. Spec 2.4.2

Your answer

Model answer

One full MOPS chain.

MMake your pointLoad factor is the airline's capacity utilisation: the percentage of seats sold on each flight.
OOffer an explanationMost of the cost of a flight, such as the aircraft lease, crew and airport charges, is fixed once it is scheduled, so each extra passenger adds revenue for very little extra cost.
PProvide evidenceA low-cost carrier charges low fares, so it earns little per seat and relies on filling almost every seat, plus ancillary revenue from extras, to cover its fixed costs.
SState significanceTherefore a small fall in load factor could take a flight below its break-even point, turning a profitable route into a loss-making one.

4 marksExplain one effect of a depreciation of the pound on a UK airline. Spec 2.5.1

Your answer

Model answer

One full MOPS chain.

MMake your pointA depreciation of the pound is likely to raise the airline's costs.
OOffer an explanationWhen the pound falls in value, the airline needs more pounds to buy anything priced in another currency.
PProvide evidenceJet fuel is priced in US dollars and is one of an airline's largest costs, so the same amount of fuel costs more in pounds.
SState significanceThis squeezes the profit margin on each flight, unless the airline can raise fares, which is difficult because leisure passengers are price sensitive.

10 marksAssess the importance of price elasticity of demand to a budget airline when setting its fares. Spec 1.2.4

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointPrice elasticity of demand is important because most of a budget airline's customers are price sensitive.
OOffer an explanationIf demand is price elastic, a fare rise causes a larger percentage fall in bookings, so total revenue falls. Knowing PED tells the airline how far it can raise fares before losing revenue.
PProvide evidenceBudget airlines sell mainly to leisure travellers who compare fares on comparison sites, where a rival's cheaper fare is one click away.
SState significanceThis is significant because empty seats earn nothing once the aircraft leaves, so pricing too high could lower the load factor and push flights below break-even.

Argument against

MMake your pointHowever, PED is not the same on every flight, so one figure is of limited use.
OOffer an explanationDemand is much less elastic at peak times, because families who must travel in school holidays have fewer alternatives.
PProvide evidenceBudget airlines already charge more for flights in school holidays and closer to departure, and earn ancillary revenue from bags and seat choice whatever the fare.
SState significanceThis means other factors, such as the date, how full the flight is and rivals' fares on the same route, may matter more than a single estimate of PED.

Conclusion

EEvaluateOn balance, PED is very important to a budget airline, because its whole model depends on filling seats with price-sensitive passengers. However, the extent to which this is true depends on the route and the date: off-peak, demand is highly elastic and low fares are essential, while at peak times the airline can raise fares with little loss of bookings. The most significant point is that the airline needs to know how PED changes across the year, not one average figure.

Cars

The UK car market covers manufacturers, most of them foreign-owned multinationals, and the dealers that sell new and used cars. The industry is moving from petrol and diesel to electric vehicles, pushed by government rules that require a rising share of new car sales to be zero-emission. Cars are expensive purchases, so sales depend heavily on consumer confidence and the cost of finance.

Cars across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Mainstream family cars are a mass market. Niche markets include luxury, sports and off-road cars, which sell in small volumes at high prices and margins.
1.1.3Market positioning and differentiation	Brands position on price, reliability, prestige and technology. Premium brands differentiate through design and brand image; mass brands through value and reliability. Electric range and charging speed are new ways to differentiate.
1.2.4Price elasticity of demand	Demand for one model is fairly price elastic because many rival models compete in each size class. Demand for premium brands is less elastic, as buyers pay for the badge.
1.2.5Income elasticity of demand	New cars are luxuries with YED above 1: when incomes fall, people keep their cars longer or buy used. Used cars and cheaper models are less affected.
1.3.3Pricing strategies	Manufacturers use competitive pricing within each size class and psychological pricing on monthly finance offers. New technology is sometimes launched with price skimming.
1.3.5Product life cycle and customer loyalty	Each model goes through a product life cycle, and manufacturers use extension strategies such as facelifts and new trim levels. Dealers build customer loyalty through servicing and finance renewals.
1.4.1Flexible workforce	Factories use temporary workers to meet peaks and may cut shifts when demand falls. Many workers are in trade unions, so pay is often set by collective bargaining.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	Car factories have very high fixed costs (plant, robots, design and testing), so a model must sell in large volumes to break even. Parts and batteries are the main variable costs.
2.4.2Capacity utilisation	Factories need high capacity utilisation to spread their fixed costs. When demand falls, plants run below capacity, raising the cost of each car.
2.4.3Stock control and lean production	Car makers use just-in-time deliveries of parts from many suppliers, so a shortage of one part, such as computer chips, can stop a whole production line. Toyota is known as the origin of lean production.
2.5.1Economic influences	Cars are often bought on finance, so higher interest rates cut demand. Exchange rates matter because many parts and cars are imported and many UK-built cars are exported.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	Barriers to entry are very high because of the cost of design, factories and safety testing, but new electric car makers have entered. Rivalry is intense and buyer power is high because buyers can compare models and prices online.
3.2.1Growth and economies of scale	Manufacturers gain technical and purchasing economies of scale through platform sharing and bulk buying of parts. Many brands sit inside large groups formed through mergers and takeovers.
3.4.4Business ethics and CSR	Ethical issues include emissions and air quality, the honesty of emissions testing, and the sourcing of battery materials. Electric vehicles are part of many firms' CSR and sustainability plans.
Theme 4: Global business
4.3.1Global marketing and glocalisation	Car makers sell global models but adapt them to each market, for example right-hand drive for the UK, local safety rules and local tastes in size and features: glocalisation.
4.4.2Supply chain ethics	Batteries need materials such as lithium and cobalt, so manufacturers face scrutiny over labour conditions and child labour in mining in their supply chains.

Words to use for cars

Using the industry's own words in a point shows the examiner you are applying it to this context.

Electric vehicle (EV): A car powered only by a battery and electric motor, with no petrol or diesel engine.
Hybrid: A car with both a petrol engine and an electric motor.
ZEV mandate: UK rules that require each manufacturer to make a rising share of its new car sales zero-emission.
Franchised dealer: A dealership licensed to sell and service one manufacturer's new cars.
PCP: Personal contract purchase: a common way to buy a car with monthly payments and an optional final payment.
Platform sharing: Using the same underlying design and parts across several models to cut costs.
Gigafactory: A very large factory that makes batteries for electric vehicles.
Range anxiety: Customers' worry that an electric car will run out of charge before reaching a charger.

Example businesses in cars

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Jaguar Land Rover: UK-based manufacturer of premium cars, owned by Tata Motors of India.
Nissan: Japanese manufacturer with a large factory in Sunderland that also makes electric cars.
Toyota: Japanese manufacturer with a car factory in Derbyshire, known for lean production.
Tesla: US public company that makes only electric cars and sells directly online rather than through dealers.

Practice questions on cars

4 marksExplain one reason why sales of new cars may fall in a recession. Spec 1.2.5

Your answer

Model answer

One full MOPS chain.

MMake your pointNew cars are likely to be luxuries, with income elasticity of demand above 1.
OOffer an explanationWhen incomes fall in a recession, demand for new cars falls by a larger percentage than income, because buying a new car can be put off.
PProvide evidenceA car is an expensive purchase that customers can delay by keeping their current car longer or buying a used one instead.
SState significanceThis means manufacturers and dealers could see a sharp fall in revenue, and factories with high fixed costs may run below capacity, raising the cost of each car made.

4 marksExplain one risk to a car manufacturer of using just-in-time (JIT) stock control. Spec 2.4.3

Your answer

Model answer

One full MOPS chain.

MMake your pointWith just-in-time, the manufacturer holds very little stock of parts, so a supply problem can stop production.
OOffer an explanationParts arrive only when they are needed on the production line, so there is no buffer stock to use if a delivery is late.
PProvide evidenceA car is built from thousands of parts from many suppliers, and shortages of a single part, such as computer chips, have stopped car production lines.
SState significanceThis could leave the factory unable to build cars while its fixed costs continue, cutting output and profit and delaying deliveries to customers.

10 marksAssess whether a car manufacturer should switch its UK factory to making only electric cars. Spec 3.1.2

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointSwitching to electric cars would help the manufacturer meet government rules and future demand.
OOffer an explanationUK rules require a rising share of each manufacturer's new car sales to be zero-emission, so a manufacturer that falls behind may face penalties and lose sales.
PProvide evidenceRivals that make only electric cars, such as Tesla, already compete for the same customers, and manufacturers such as Nissan already build electric cars in the UK.
SState significanceThis means switching now could protect the factory's long-term future and its market share, rather than leaving it making cars that fewer customers will be allowed to buy new.

Argument against

MMake your pointHowever, switching requires very large investment with an uncertain return.
OOffer an explanationThe factory would need new equipment and a secure supply of batteries, which raises fixed costs and the number of cars needed to break even.
PProvide evidenceSome customers are put off by electric car prices and range anxiety, so demand may grow more slowly than the factory's capacity.
SState significanceAs a result, the factory could run below capacity for several years, raising unit costs and reducing profit while rivals with lower costs compete on price.

Conclusion

EEvaluateOn balance, the manufacturer should switch, because government rules mean the market for new petrol and diesel cars will keep shrinking. However, this depends on the speed of the switch and whether it can secure a reliable, affordable battery supply. In the short term, keeping some hybrid or petrol production would protect cash flow and capacity utilisation, but in the long term a factory that cannot build electric cars is unlikely to survive.

Confectionery

Confectionery covers chocolate, sweets and biscuits, sold through supermarkets, convenience stores and online. A few large multinationals own most of the big brands, alongside small premium and artisan makers. Many purchases are on impulse, and sales peak around Easter, Halloween and Christmas.

Confectionery across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Everyday chocolate bars are a mass market dominated by big brands. Niche markets include premium, vegan, sugar-free and artisan chocolate, sold at much higher prices.
1.1.3Market positioning and differentiation	Brands differentiate through taste, heritage and branding. Premium makers position on quality and ethical sourcing; mass brands on familiarity and price.
1.2.4Price elasticity of demand	Demand for confectionery overall is fairly price inelastic, as it is a cheap treat. Demand for one brand is more elastic, because rival bars are close substitutes on the same shelf.
1.2.5Income elasticity of demand	Everyday treats have low YED. Premium chocolate and gift boxes are closer to luxuries, so their sales fall more in a recession as customers trade down.
1.3.3Pricing strategies	Psychological pricing and multipack deals are common. Rather than raise prices, some firms use shrinkflation, which can damage trust if customers notice.
1.3.5Product life cycle and customer loyalty	Long-established bars are in maturity. Firms use extension strategies such as new flavours, sizes and limited editions, and brand extensions into biscuits, spreads and ice cream.
1.4.1Flexible workforce	Production peaks before Easter and Christmas, so factories use temporary staff and overtime to meet seasonal demand.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	Factories have high fixed costs (machinery, buildings), while cocoa, sugar, milk and packaging are variable costs. A rise in commodity prices raises variable cost per unit and so raises the break-even output.
2.4.2Capacity utilisation	Seasonal demand means factories run near full capacity before Easter and Christmas and below it at other times. Firms may build stock ahead of peaks to smooth production.
2.4.3Stock control and lean production	Chocolate has a long shelf life compared with fresh food, so firms can hold buffer stocks of finished goods before seasonal peaks. Raw cocoa supply is less certain, so firms may hold buffer stock of ingredients too.
2.5.1Economic influences	Cocoa is bought on world markets in US dollars, so exchange rates and commodity prices have a large effect on costs. In a recession customers cut back on premium products first.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	Rivalry between the large brands is strong. Supermarkets have high buyer power over manufacturers. Supplier power can rise when poor harvests make cocoa scarce. Barriers to entry for mass brands are high because of advertising costs and brand loyalty.
3.2.1Growth and economies of scale	The large firms grew partly by takeovers of established brands, gaining marketing economies of scale by spreading advertising across many products.
3.4.4Business ethics and CSR	Ethical issues include child labour in cocoa farming, fair prices for farmers and the health effects of sugar. Fairtrade and other certification schemes are part of many firms' CSR.
Theme 4: Global business
4.3.1Global marketing and glocalisation	Global brands adapt recipes, sizes and flavours to local tastes, for example different flavours of the same bar in different countries, which is glocalisation.
4.4.2Supply chain ethics	Cocoa comes mostly from a small number of countries in West Africa, so multinationals face scrutiny over exploitation of labour and child labour in their supply chains.

Words to use for confectionery

Using the industry's own words in a point shows the examiner you are applying it to this context.

Impulse purchase: A purchase made without planning, often at the till or near the store entrance.
Shrinkflation: Reducing the size of a product while keeping the price the same, so the price per gram rises.
Seasonal lines: Products made for one occasion, such as Easter eggs and Christmas selection boxes.
Commodity prices: The world prices of raw materials such as cocoa and sugar, which can change sharply.
Limited edition: A product sold for a short time to create interest and boost sales of a brand.
Multipack: Several bars or packs sold together at a lower price per unit.
HFSS: Foods high in fat, sugar or salt. UK rules restrict where these can be promoted in stores and how they can be advertised.
Premiumisation: Moving a range towards higher-quality, higher-priced products.

Example businesses in confectionery

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Mondelez International: US public company. Owns Cadbury, among many other brands.
Mars: US company, privately owned by the Mars family. Bought the UK premium chocolatier Hotel Chocolat in 2024.
Nestlé: Swiss public company. Makes KitKat, among many other food brands.
Ferrero: Italian company, privately owned by the Ferrero family. Makes Nutella and Ferrero Rocher.

Practice questions on confectionery

4 marksExplain one way a confectionery business could extend the product life cycle of a long-established chocolate bar. Spec 1.3.5

Your answer

Model answer

One full MOPS chain.

MMake your pointThe business could use a product extension strategy, such as launching new flavours or formats of the bar.
OOffer an explanationA long-established bar is likely to be in the maturity stage, where sales are flat. A new version gives existing customers a reason to buy again and can attract new ones.
PProvide evidenceConfectionery brands regularly release limited editions and new formats, such as bite-sized pieces and sharing bags, under the same brand name.
SState significanceThis means the business can lift sales of a brand customers already trust, at a lower cost and risk than launching a completely new product.

4 marksExplain one effect of a rise in the world price of cocoa on a chocolate manufacturer. Spec 1.2.2

Your answer

Model answer

One full MOPS chain.

MMake your pointA rise in the price of cocoa increases the manufacturer's costs of production.
OOffer an explanationCocoa is a variable cost, so each bar costs more to make and the contribution per unit falls unless the selling price rises.
PProvide evidenceDemand for one brand is fairly price elastic because rival bars sit on the same shelf, so the manufacturer may choose shrinkflation, reducing bar size instead of raising the price.
SState significanceThis protects sales volume in the short term, but if customers notice the smaller bar it could damage trust in the brand.

10 marksAssess the benefits to a multinational confectionery business of adapting its products to local tastes in different countries. Spec 4.3.1

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointAdapting products to local tastes, known as glocalisation, could increase sales in each country.
OOffer an explanationTastes differ between countries, for example in how sweet people like chocolate and which flavours are popular, so a product designed for one market may not sell well in another.
PProvide evidenceGlobal confectionery brands already sell different flavours of the same bar in different countries, while keeping the brand name and packaging style.
SState significanceThis means the business can win market share against local brands while still benefiting from one global brand, which supports long-term growth in new markets.

Argument against

MMake your pointHowever, adapting products raises costs.
OOffer an explanationEach local version needs its own research, recipes and production runs, which reduces the economies of scale the business gains from making one standard product in huge volumes.
PProvide evidenceConfectionery multinationals make many brands in large factories, and longer runs of a single recipe are cheaper per unit than many short runs.
SState significanceAs a result, profit margins may be lower, especially in smaller markets where the extra sales do not cover the extra costs.

Conclusion

EEvaluateOn balance, adapting products is likely to benefit a multinational in large markets where tastes differ strongly from its home market, because the extra sales outweigh the extra cost. This depends on the size of each market: in small markets, selling the standard product may be more profitable. In the short term adaptation adds cost, but in the long term it can build loyalty that a standard product would not.

Clothing

Clothing businesses design, make and sell clothes, from low-price fast fashion to premium brands, through stores and online. Trends change quickly, so getting the right stock at the right time decides profit. Most manufacturing is outsourced to suppliers in lower-cost countries, which raises questions about ethics and supply chains.

Clothing across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Everyday clothing is a mass market. Niches include sportswear, sustainable fashion, plus-size and luxury, each with different customers and prices.
1.1.3Market positioning and differentiation	Retailers position on price, speed and style: fast fashion on low price and the latest trends, premium brands on quality and design. Differentiation comes from design, brand image and customer experience.
1.2.4Price elasticity of demand	Demand for low-price fashion from one retailer is price elastic, as similar items are sold by many rivals. Strong brands face more inelastic demand because customers pay for the brand.
1.2.5Income elasticity of demand	Clothing is partly a necessity, but fashion purchases are more like luxuries: customers buy fewer new items in a recession and switch to cheaper retailers.
1.3.3Pricing strategies	Psychological pricing and competitive pricing are common. Unsold stock is cleared with markdowns, which cut the margin on those items.
1.3.5Product life cycle and customer loyalty	Trends have very short product life cycles, so ranges change often. Social media and influencers build brand awareness, and loyalty schemes and apps encourage repeat purchase.
1.4.1Flexible workforce	Stores use part-time and temporary staff for weekends, sales and Christmas. Warehouses add temporary staff when online orders peak.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	Stores have high fixed costs such as rent; the clothing itself is a variable cost. Markdowns reduce the selling price, and so the contribution per item, raising the number of items needed to break even.
2.4.2Capacity utilisation	Retail capacity is store space and warehouse capacity. Many retailers have closed under-used stores as sales moved online, to improve capacity utilisation.
2.4.3Stock control and lean production	Fashion stock goes out of date quickly, so poor stock control leads to markdowns and waste. Fast fashion retailers order small batches and reorder what sells, a form of lean production.
2.5.1Economic influences	Most clothing is made abroad and paid for in foreign currency, so a depreciation of the pound raises costs. Rising inflation squeezes customers' disposable income, cutting spending on non-essentials.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	Rivalry is intense and buyer power is high, as customers can compare online. Barriers to entry are low for online-only brands, and substitutes include second-hand and resale.
3.2.1Growth and economies of scale	Large retailers gain purchasing economies of scale by ordering huge volumes from suppliers. Rapid growth can bring overtrading if stock is bought faster than cash comes in.
3.4.4Business ethics and CSR	Ethical issues include pay and working conditions at suppliers, textile waste and the environmental impact of fast fashion. Retailers publish CSR reports and sustainability targets in response.
Theme 4: Global business
4.3.1Global marketing and glocalisation	Global fashion chains keep one brand worldwide but adapt ranges to local climate, sizes and culture, which is glocalisation.
4.4.2Supply chain ethics	Outsourcing production to lower-cost countries raises concerns about exploitation of labour, unsafe factories and child labour in the supply chain, and about misleading sustainability claims.

Words to use for clothing

Using the industry's own words in a point shows the examiner you are applying it to this context.

Fast fashion: Producing new styles quickly and cheaply to follow current trends.
Markdown: A price cut on stock that has not sold, usually at the end of a season.
Sell-through rate: The percentage of stock received that is sold, usually measured over a season.
Returns rate: The percentage of items, especially online orders, that customers send back.
Sourcing: Choosing where and from whom to buy the finished clothing.
Nearshoring: Moving production to a country closer to the main market to shorten delivery times.
Collaboration: A range designed with a celebrity, designer or another brand for a limited time.
Resale: Selling second-hand clothing, which some retailers now offer themselves.

Example businesses in clothing

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Inditex: Spanish public company. Owns Zara, known for moving new designs into stores within weeks.
H&M: Swedish public company. Sells low-price fashion in many countries.
Primark: Owned by Associated British Foods plc. Low prices, sold only in stores for most of its history.
Next: UK public limited company. Sells through stores and a large online business.

Practice questions on clothing

4 marksExplain one risk to a fashion retailer of poor stock control. Spec 2.4.3

Your answer

Model answer

One full MOPS chain.

MMake your pointPoor stock control could leave the retailer with too much stock that customers no longer want.
OOffer an explanationFashion trends change quickly, so items that do not sell within the season lose value and become hard to sell at full price.
PProvide evidenceFashion retailers clear unsold stock with end-of-season markdowns, selling items well below their original price.
SState significanceThis reduces the contribution on each marked-down item and ties up cash in stock, which lowers profit and can cause cash flow problems.

4 marksExplain one way a fashion retailer could use social media to promote its brand. Spec 1.3.2

Your answer

Model answer

One full MOPS chain.

MMake your pointThe retailer could pay influencers to wear and recommend its clothing on social media.
OOffer an explanationFollowers trust influencers they choose to follow, so a recommendation can feel more personal and believable than a traditional advert.
PProvide evidenceFashion is highly visual and trend-driven, and many younger customers discover new styles through social media rather than in stores.
SState significanceThis could build brand awareness quickly and drive online sales, often at a lower cost per customer reached than television advertising.

10 marksAssess the impact on a fashion retailer of outsourcing its production to suppliers in lower-cost countries. Spec 4.2.1

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointOutsourcing production to lower-cost countries reduces the retailer's costs.
OOffer an explanationWages and other production costs are lower in these countries, so each item costs less to make and the retailer earns a higher margin or can charge lower prices.
PProvide evidenceMost clothing sold by large UK fashion retailers is made by suppliers abroad, and fast fashion depends on low prices to attract price-sensitive customers.
SState significanceAs a result, the retailer can compete on price in a market where demand is price elastic, which supports its market share.

Argument against

MMake your pointHowever, outsourcing reduces the retailer's control over working conditions and quality.
OOffer an explanationIf a supplier underpays staff or runs an unsafe factory, the retailer is still blamed by customers, pressure groups and the media.
PProvide evidenceFashion retailers face strong scrutiny over supply chain ethics, and social media can spread a story about a supplier's factory very quickly.
SState significanceThis could damage the brand and lose customers, especially younger customers who care about ethics, cancelling out the cost savings.

Conclusion

EEvaluateOn balance, outsourcing is likely to have a positive impact on profit in the short term, because lower costs are essential in low-price fashion. However, in the long term the impact depends on how well the retailer monitors its suppliers. If it audits factories and is open about its supply chain, it can keep most of the cost savings while limiting the risk to its brand. The most significant factor is therefore the strength of its supply chain checks, not the decision to outsource itself.

Music

The music industry covers recording (record labels and artists), distribution (mostly streaming services) and live performance (promoters, venues, festivals and ticketing). Streaming has replaced CDs and downloads as the main way people pay for recorded music, while live events earn money from tickets, drinks and merchandise. Three large label groups sit alongside thousands of small independent labels and venues.

Music across the 9BS0 specification

Theme 1: Marketing and people
1.1.1Mass and niche markets	Streaming of popular music is a mass market. Niche markets include vinyl records, specialist genres and small grassroots venues, where customers pay more for something distinctive.
1.1.3Market positioning and differentiation	Streaming services offer similar catalogues, so they differentiate through playlists, recommendations, podcasts and price plans. Festivals differentiate through line-up, location and atmosphere.
1.2.4Price elasticity of demand	Demand for one streaming service is fairly price elastic because rivals offer similar catalogues. Demand for tickets to see a very popular artist is price inelastic, as there is no close substitute.
1.2.5Income elasticity of demand	Streaming subscriptions are cheap relative to income, so YED is fairly low. Concert and festival tickets are closer to luxuries, so spending on them falls more when incomes are squeezed.
1.3.3Pricing strategies	Streaming uses psychological pricing (monthly prices just under a round number) and free trials to win subscribers. Some concerts use price skimming for the most popular tickets.
1.3.5Product life cycle and customer loyalty	Labels manage each artist's release like a product life cycle, using re-releases, remixes and anniversary editions as extension strategies. Labels build a product portfolio of established and new artists.
1.4.1Flexible workforce	Live events depend on temporary and casual staff such as security, bar staff and stewards, hired for each event or season.
Theme 2: Managing business activities
2.2.3Fixed costs, variable costs and break-even	For a live event, venue hire, the artist's fee, staging and security are mostly fixed costs, so the promoter must sell enough tickets to pass break-even before it makes any profit.
2.4.2Capacity utilisation	A venue's capacity utilisation is the share of tickets sold. Unsold tickets cannot be stored, and fuller venues also earn more from drinks and merchandise.
2.4.3Stock control and lean production	Recorded music is digital, so physical stock matters only for vinyl, CDs and merchandise. Labels press vinyl in limited runs to avoid unsold stock.
2.5.1Economic influences	When inflation squeezes disposable income, fans spend less on tickets and merchandise. Rising costs for staging, travel and energy push up ticket prices.
Theme 3: Business decisions and strategy
3.1.4Porter's Five Forces	The three major label groups give suppliers of music strong power over streaming services. Barriers to entry for artists are low, as anyone can upload music, but high for new streaming services that must license huge catalogues.
3.2.1Growth and economies of scale	Large label groups grew through takeovers of other labels. Live Nation's ownership of Ticketmaster is an example of vertical integration between promotion and ticketing.
3.4.4Business ethics and CSR	Ethical issues include fair pay for artists from streaming, ticket prices and fees, and the treatment of fans by secondary ticketing. Festivals face pressure over waste and their environmental impact.
Theme 4: Global business
4.3.1Global marketing and glocalisation	Streaming services operate worldwide but adapt to each country with local playlists, language and pricing, a form of glocalisation. Artists from one country can now build global audiences.
4.4.2Supply chain ethics	Merchandise is often made by overseas suppliers, raising labour conditions questions. Large live events also face scrutiny over environmental impact, such as travel and waste.

Words to use for music

Using the industry's own words in a point shows the examiner you are applying it to this context.

Streaming: Listening to music online without owning a copy, paid for by subscription or advertising.
Royalties: Payments to artists, songwriters and labels each time their music is streamed, played or sold.
Record label: A business that funds, records, markets and distributes artists' music.
A&R: Artists and repertoire: the team at a label that finds and develops new artists.
Promoter: A business that books artists and venues, sells tickets and takes the financial risk of a live event.
Secondary ticketing: Reselling tickets after the first sale, often at higher prices.
Merchandise: Products such as T-shirts sold under an artist's name, often at concerts.
Independent (indie): A label or venue not owned by one of the major groups.

Example businesses in music

Real businesses to use as evidence (the P in MOPS) when a question gives you no data.

Universal Music Group: Dutch-listed public company and the largest of the three major record label groups.
Spotify: Swedish streaming service, listed in the US. Earns revenue from subscriptions and advertising.
Live Nation: US public company that promotes concerts and owns the ticketing company Ticketmaster.
Independent labels and venues: Many small labels, grassroots venues and festival organisers are private limited companies or sole traders.

Practice questions on music

4 marksExplain one way the growth of streaming has changed the market for recorded music. Spec 1.1.1

Your answer

Model answer

One full MOPS chain.

MMake your pointStreaming has changed the market from owning music to accessing it.
OOffer an explanationCustomers now pay a monthly subscription, or listen free with adverts, instead of buying individual albums, so revenue comes from many small payments per stream rather than one sale.
PProvide evidenceStreaming services such as Spotify have replaced CDs and downloads as the main way people pay for recorded music.
SState significanceThis means labels and artists earn over a longer period from each song, but individual artists may earn much less per listener than they did from album sales.

4 marksExplain one reason why capacity utilisation is important to a live music venue. Spec 2.4.2

Your answer

Model answer

One full MOPS chain.

MMake your pointCapacity utilisation is the share of the venue's tickets that are sold for each event.
OOffer an explanationMost of the cost of an event, such as the artist's fee, staff and venue running costs, is fixed, so each extra ticket sold adds revenue for little extra cost.
PProvide evidenceA ticket for a gig cannot be sold after the night, and fuller venues also earn more from drinks and merchandise.
SState significanceTherefore a venue that runs well below capacity may not cover its fixed costs, which is why many small grassroots venues struggle to make a profit.

10 marksAssess the benefits to a concert promoter of owning a ticketing business. Spec 3.2.2

Your answer

Model answer

Two developed MOPS chains, one each way, then a judgement in context.

Argument for

MMake your pointOwning a ticketing business is vertical integration, which lets the promoter keep profit that would otherwise go to another business.
OOffer an explanationThe promoter earns the booking fees on its own events and controls how tickets are sold, including the customer data that comes with each sale.
PProvide evidenceLive Nation, the largest concert promoter, owns Ticketmaster, so it earns from both the event and the ticket sales.
SState significanceThis increases profit per event and gives the promoter market power over venues and artists that want access to its ticketing system.

Argument against

MMake your pointHowever, controlling both promotion and ticketing can attract action from competition authorities.
OOffer an explanationRegulators may decide the business is using its market power to reduce competition and raise prices for fans.
PProvide evidenceCompetition authorities in the US have taken legal action against Live Nation over its control of ticketing, and fans often complain about booking fees.
SState significanceThis could lead to fines, forced changes to the business or damage to its reputation, which may outweigh the extra profit from ticket fees.

Conclusion

EEvaluateOn balance, owning a ticketing business is likely to benefit a promoter in the short term by raising profit per event. However, the extent to which this is true depends on the size of the promoter: a small promoter gains control and data without attracting regulators, while a very large one risks legal action that could force it to sell the business. The most significant factor is therefore the promoter's market share.

Compare industries by specification topic

1.1.1Mass and niche markets in different industries

Supermarkets

Groceries are a mass market: almost every household buys them weekly. Niches exist within it, such as organic, free-from and premium ranges, which some chains use to win higher-income customers.

Airlines

Budget leisure travel is a mass market. Business class, private jets and routes to small destinations serve niche markets at much higher prices.

Cars

Mainstream family cars are a mass market. Niche markets include luxury, sports and off-road cars, which sell in small volumes at high prices and margins.

Confectionery

Everyday chocolate bars are a mass market dominated by big brands. Niche markets include premium, vegan, sugar-free and artisan chocolate, sold at much higher prices.

Clothing

Everyday clothing is a mass market. Niches include sportswear, sustainable fashion, plus-size and luxury, each with different customers and prices.

Music

Streaming of popular music is a mass market. Niche markets include vinyl records, specialist genres and small grassroots venues, where customers pay more for something distinctive.

1.1.3Market positioning and differentiation in different industries

Supermarkets

Chains position on a price and quality map. The discounters sit at low price; others differentiate through range, store locations, online delivery and loyalty schemes rather than price alone.

Airlines

Low-cost carriers position on price; full-service carriers differentiate through comfort, networks, lounges and loyalty schemes, which justify higher fares.

Cars

Brands position on price, reliability, prestige and technology. Premium brands differentiate through design and brand image; mass brands through value and reliability. Electric range and charging speed are new ways to differentiate.

Confectionery

Brands differentiate through taste, heritage and branding. Premium makers position on quality and ethical sourcing; mass brands on familiarity and price.

Clothing

Retailers position on price, speed and style: fast fashion on low price and the latest trends, premium brands on quality and design. Differentiation comes from design, brand image and customer experience.

Music

Streaming services offer similar catalogues, so they differentiate through playlists, recommendations, podcasts and price plans. Festivals differentiate through line-up, location and atmosphere.

1.2.4Price elasticity of demand in different industries

Supermarkets

Demand for a single supermarket is fairly price elastic because shoppers can switch chains easily and compare prices online. Demand for groceries as a whole is price inelastic, because people still need to eat.

Airlines

Leisure travellers compare fares on comparison sites, so their demand is price elastic. Business travellers often have to travel at set times, so their demand is more price inelastic.

Cars

Demand for one model is fairly price elastic because many rival models compete in each size class. Demand for premium brands is less elastic, as buyers pay for the badge.

Confectionery

Demand for confectionery overall is fairly price inelastic, as it is a cheap treat. Demand for one brand is more elastic, because rival bars are close substitutes on the same shelf.

Clothing

Demand for low-price fashion from one retailer is price elastic, as similar items are sold by many rivals. Strong brands face more inelastic demand because customers pay for the brand.

Music

Demand for one streaming service is fairly price elastic because rivals offer similar catalogues. Demand for tickets to see a very popular artist is price inelastic, as there is no close substitute.

1.2.5Income elasticity of demand in different industries

Supermarkets

Food overall is a necessity (YED between 0 and 1). Within a store, value ranges can behave like inferior goods, and premium ranges like luxuries, so the mix of sales shifts as incomes change.

Airlines

Foreign holidays and air travel are luxuries with YED above 1: bookings rise faster than income when the economy grows and fall sharply in a recession.

Cars

New cars are luxuries with YED above 1: when incomes fall, people keep their cars longer or buy used. Used cars and cheaper models are less affected.

Confectionery

Everyday treats have low YED. Premium chocolate and gift boxes are closer to luxuries, so their sales fall more in a recession as customers trade down.

Clothing

Clothing is partly a necessity, but fashion purchases are more like luxuries: customers buy fewer new items in a recession and switch to cheaper retailers.

Music

Streaming subscriptions are cheap relative to income, so YED is fairly low. Concert and festival tickets are closer to luxuries, so spending on them falls more when incomes are squeezed.

1.3.3Pricing strategies in different industries

Supermarkets

Competitive pricing and price matching against rivals are common, with psychological pricing (for example £1.99) on shelves. Loss leaders on staples bring customers in.

Airlines

Fares change as a flight fills up and as departure gets closer. Low headline fares on busy routes are competitive pricing, fares such as £19.99 use psychological pricing, and low-cost carriers earn ancillary revenue from extras.

Cars

Manufacturers use competitive pricing within each size class and psychological pricing on monthly finance offers. New technology is sometimes launched with price skimming.

Confectionery

Psychological pricing and multipack deals are common. Rather than raise prices, some firms use shrinkflation, which can damage trust if customers notice.

Clothing

Psychological pricing and competitive pricing are common. Unsold stock is cleared with markdowns, which cut the margin on those items.

Music

Streaming uses psychological pricing (monthly prices just under a round number) and free trials to win subscribers. Some concerts use price skimming for the most popular tickets.

1.3.5Product life cycle and customer loyalty in different industries

Supermarkets

Loyalty schemes (such as member prices) are used to build customer loyalty and collect data on what customers buy. Own-label products are relaunched and repackaged as extension strategies.

Airlines

Frequent flyer schemes build customer loyalty, mainly among business travellers. New routes go through a product life cycle: launch, growth, then maturity or withdrawal.

Cars

Each model goes through a product life cycle, and manufacturers use extension strategies such as facelifts and new trim levels. Dealers build customer loyalty through servicing and finance renewals.

Confectionery

Long-established bars are in maturity. Firms use extension strategies such as new flavours, sizes and limited editions, and brand extensions into biscuits, spreads and ice cream.

Clothing

Trends have very short product life cycles, so ranges change often. Social media and influencers build brand awareness, and loyalty schemes and apps encourage repeat purchase.

Music

Labels manage each artist's release like a product life cycle, using re-releases, remixes and anniversary editions as extension strategies. Labels build a product portfolio of established and new artists.

1.4.1Flexible workforce in different industries

Supermarkets

Stores open long hours and are busiest at evenings, weekends and Christmas, so chains rely on part-time staff and flexible hours to match labour to demand.

Airlines

Demand peaks in summer and school holidays, so airlines use seasonal and temporary cabin crew and may outsource ground handling.

Cars

Factories use temporary workers to meet peaks and may cut shifts when demand falls. Many workers are in trade unions, so pay is often set by collective bargaining.

Confectionery

Production peaks before Easter and Christmas, so factories use temporary staff and overtime to meet seasonal demand.

Clothing

Stores use part-time and temporary staff for weekends, sales and Christmas. Warehouses add temporary staff when online orders peak.

Music

Live events depend on temporary and casual staff such as security, bar staff and stewards, hired for each event or season.

2.2.3Fixed costs, variable costs and break-even in different industries

Supermarkets

Stores carry high fixed costs (rent, staff, refrigeration), while the goods themselves are the main variable cost. With thin margins, contribution per item is small, so a store needs high sales volume to pass break-even.

Airlines

Most costs, such as aircraft leases, crew and airport charges, are fixed once a flight is scheduled. Each extra passenger adds little cost, so contribution per extra seat is high and the break-even load factor is the key figure.

Cars

Car factories have very high fixed costs (plant, robots, design and testing), so a model must sell in large volumes to break even. Parts and batteries are the main variable costs.

Confectionery

Factories have high fixed costs (machinery, buildings), while cocoa, sugar, milk and packaging are variable costs. A rise in commodity prices raises variable cost per unit and so raises the break-even output.

Clothing

Stores have high fixed costs such as rent; the clothing itself is a variable cost. Markdowns reduce the selling price, and so the contribution per item, raising the number of items needed to break even.

Music

For a live event, venue hire, the artist's fee, staging and security are mostly fixed costs, so the promoter must sell enough tickets to pass break-even before it makes any profit.

2.4.2Capacity utilisation in different industries

Supermarkets

Capacity is floor space, checkouts and delivery slots. Under-used stores spread fixed costs over fewer sales; in peak weeks, full delivery slots mean lost online sales.

Airlines

Capacity utilisation is measured as load factor. An empty seat earns nothing once the aircraft leaves, so airlines cut fares to fill flights and keep turnaround times short to fly each aircraft more often.

Cars

Factories need high capacity utilisation to spread their fixed costs. When demand falls, plants run below capacity, raising the cost of each car.

Confectionery

Seasonal demand means factories run near full capacity before Easter and Christmas and below it at other times. Firms may build stock ahead of peaks to smooth production.

Clothing

Retail capacity is store space and warehouse capacity. Many retailers have closed under-used stores as sales moved online, to improve capacity utilisation.

Music

A venue's capacity utilisation is the share of tickets sold. Unsold tickets cannot be stored, and fuller venues also earn more from drinks and merchandise.

2.4.3Stock control and lean production in different industries

Supermarkets

Fresh food is perishable, so poor stock control means waste. Chains use just-in-time deliveries from central warehouses several times a day, which keeps stock low but depends on a reliable supply chain.

Airlines

Seats cannot be stored, so stock control applies to spare parts and fuel. Lean production shows in fast turnarounds and using one aircraft type to cut maintenance and training costs.

Cars

Car makers use just-in-time deliveries of parts from many suppliers, so a shortage of one part, such as computer chips, can stop a whole production line. Toyota is known as the origin of lean production.

Confectionery

Chocolate has a long shelf life compared with fresh food, so firms can hold buffer stocks of finished goods before seasonal peaks. Raw cocoa supply is less certain, so firms may hold buffer stock of ingredients too.

Clothing

Fashion stock goes out of date quickly, so poor stock control leads to markdowns and waste. Fast fashion retailers order small batches and reorder what sells, a form of lean production.

Music

Recorded music is digital, so physical stock matters only for vinyl, CDs and merchandise. Labels press vinyl in limited runs to avoid unsold stock.

2.5.1Economic influences in different industries

Supermarkets

Inflation in food and energy prices raises costs and pushes customers to cheaper chains and value ranges. Imported food becomes dearer when the pound depreciates.

Airlines

Jet fuel is priced in US dollars, so a depreciation of the pound raises a UK airline's costs. Higher interest rates raise the cost of financing aircraft, and a recession cuts leisure travel.

Cars

Cars are often bought on finance, so higher interest rates cut demand. Exchange rates matter because many parts and cars are imported and many UK-built cars are exported.

Confectionery

Cocoa is bought on world markets in US dollars, so exchange rates and commodity prices have a large effect on costs. In a recession customers cut back on premium products first.

Clothing

Most clothing is made abroad and paid for in foreign currency, so a depreciation of the pound raises costs. Rising inflation squeezes customers' disposable income, cutting spending on non-essentials.

Music

When inflation squeezes disposable income, fans spend less on tickets and merchandise. Rising costs for staging, travel and energy push up ticket prices.

3.1.4Porter's Five Forces in different industries

Supermarkets

Rivalry is intense and buyer power is high, because switching costs are almost zero. Large chains have strong buyer power over suppliers. Barriers to entry are high for new store chains because of the cost of property and distribution.

Airlines

Rivalry on popular routes is intense and buyer power is high because of comparison sites. Supplier power is high: only a few manufacturers make large passenger aircraft. Barriers to entry include aircraft costs and scarce airport slots.

Cars

Barriers to entry are very high because of the cost of design, factories and safety testing, but new electric car makers have entered. Rivalry is intense and buyer power is high because buyers can compare models and prices online.

Confectionery

Rivalry between the large brands is strong. Supermarkets have high buyer power over manufacturers. Supplier power can rise when poor harvests make cocoa scarce. Barriers to entry for mass brands are high because of advertising costs and brand loyalty.

Clothing

Rivalry is intense and buyer power is high, as customers can compare online. Barriers to entry are low for online-only brands, and substitutes include second-hand and resale.

Music

The three major label groups give suppliers of music strong power over streaming services. Barriers to entry for artists are low, as anyone can upload music, but high for new streaming services that must license huge catalogues.

3.2.1Growth and economies of scale in different industries

Supermarkets

Size gives purchasing economies of scale: large chains buy in huge volumes at lower unit cost. Growth into convenience stores and online increases market share but can bring diseconomies, such as harder communication across thousands of sites.

Airlines

Larger airlines gain purchasing economies of scale by ordering aircraft in bulk, and technical economies by spreading maintenance and IT over a bigger fleet.

Cars

Manufacturers gain technical and purchasing economies of scale through platform sharing and bulk buying of parts. Many brands sit inside large groups formed through mergers and takeovers.

Confectionery

The large firms grew partly by takeovers of established brands, gaining marketing economies of scale by spreading advertising across many products.

Clothing

Large retailers gain purchasing economies of scale by ordering huge volumes from suppliers. Rapid growth can bring overtrading if stock is bought faster than cash comes in.

Music

Large label groups grew through takeovers of other labels. Live Nation's ownership of Ticketmaster is an example of vertical integration between promotion and ticketing.

3.4.4Business ethics and CSR in different industries

Supermarkets

Ethical issues include food waste, plastic packaging, fair treatment of suppliers and paying staff fairly. CSR activity, such as donating surplus food, can protect the brand but adds cost.

Airlines

Aviation produces large carbon emissions, so airlines face pressure over climate change. Ethical issues also include treatment of staff and hidden charges that make the headline fare misleading.

Cars

Ethical issues include emissions and air quality, the honesty of emissions testing, and the sourcing of battery materials. Electric vehicles are part of many firms' CSR and sustainability plans.

Confectionery

Ethical issues include child labour in cocoa farming, fair prices for farmers and the health effects of sugar. Fairtrade and other certification schemes are part of many firms' CSR.

Clothing

Ethical issues include pay and working conditions at suppliers, textile waste and the environmental impact of fast fashion. Retailers publish CSR reports and sustainability targets in response.

Music

Ethical issues include fair pay for artists from streaming, ticket prices and fees, and the treatment of fans by secondary ticketing. Festivals face pressure over waste and their environmental impact.

4.3.1Global marketing and glocalisation in different industries

Supermarkets

UK grocery is mainly a domestic market, but the German discounters show international expansion: they adapt ranges to UK tastes while keeping the same low-cost model, an example of glocalisation.

Airlines

Airlines sell the same core product worldwide but adapt promotion, language and in-flight food to each market, a form of glocalisation.

Cars

Car makers sell global models but adapt them to each market, for example right-hand drive for the UK, local safety rules and local tastes in size and features: glocalisation.

Confectionery

Global brands adapt recipes, sizes and flavours to local tastes, for example different flavours of the same bar in different countries, which is glocalisation.

Clothing

Global fashion chains keep one brand worldwide but adapt ranges to local climate, sizes and culture, which is glocalisation.

Music

Streaming services operate worldwide but adapt to each country with local playlists, language and pricing, a form of glocalisation. Artists from one country can now build global audiences.

Edexcel A-Level Business Industry Profiles

Supermarkets across the 9BS0 specification

Words to use for supermarkets

Example businesses in supermarkets

Practice questions on supermarkets

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Airlines across the 9BS0 specification

Words to use for airlines

Example businesses in airlines

Practice questions on airlines

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Cars across the 9BS0 specification

Words to use for cars

Example businesses in cars

Practice questions on cars

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Confectionery across the 9BS0 specification

Words to use for confectionery

Example businesses in confectionery

Practice questions on confectionery

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Clothing across the 9BS0 specification

Words to use for clothing

Example businesses in clothing

Practice questions on clothing

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Music across the 9BS0 specification

Words to use for music

Example businesses in music

Practice questions on music

Model answer

Model answer

Model answer

Argument for

Argument against

Conclusion

Compare industries by specification topic

1.1.1Mass and niche markets in different industries

1.1.3Market positioning and differentiation in different industries

1.2.4Price elasticity of demand in different industries

1.2.5Income elasticity of demand in different industries

1.3.3Pricing strategies in different industries

1.3.5Product life cycle and customer loyalty in different industries

1.4.1Flexible workforce in different industries

2.2.3Fixed costs, variable costs and break-even in different industries

2.4.2Capacity utilisation in different industries

2.4.3Stock control and lean production in different industries

2.5.1Economic influences in different industries

3.1.4Porter's Five Forces in different industries