A-AS Level (CIE) Business Studies Paper-2: Specimen Questions with Answers 8 - 9 of 52


Case Study-1

Promotion is one of the most powerful elements in the marketing mix. It means to communicate and persuade the target market — by identifying the needs of the target segment — to buy the company՚s products. The promotion concept includes all marketing activities used to inform, persuade, and remind the target market about a firm and its products or services, in such a way as to build a favorable image in the mind of the customer (Sidhanta & Chakrabarty, 2010) . In the same context, Kotler, and Armstrong (2012) defined promotion as human activities based on a communication process that can be directed via personal selling points or indirectly via advertising messages through the media.

The main objective of the promotion process is to identify the firm and its products or services for the target market, and to increase the level of purchasing. The brand establishment and the brand name are based on the promotion process. The SME sector in Al Buraimi focuses on the promotion process to identify the products and services of the individual firm and to persuade their customers to buy their products or services repeatedly. However, the promotion process is affected by the decisions of SME marketing managers regarding the level of marketing expenditure or promotion. The promotion process comprises of a few components such as advertising, personal selling, sales promotion, and public relations. All these components blend to create the promotion mix aimed at achieving the organization՚s marketing objectives. Advertising is the most powerful element of the promotion mix, due to its involvement in developing the image of the product in the market, or positioning the product in the mind of the customer (Latif & Abideen, 2011) .

Question 8 (3 of 6 Based on Passage)

Write in Short

Short Answer▾

If the company produces a single article. Following cost data is given about its product:

Selling price per unit

Marginal cost per unit

Fixed cost per annum


(a) P/V ratio


We know that So,


Question 9 (4 of 6 Based on Passage)


Write in Short

Short Answer▾

What is the principal driving force in global marketing?


This perspective implies that in order to achieve competitive advantage, a firm needs to scan its external environments to spot market opportunities. Its marketing mix which fix the local market structure. Further, in order to ensure a high rate of customer acquisition and retention, a firms marketing mix must be customer centric. Customers and economies today are reaching out to cost reducing global firms. While the pattern of cross subsidization and retaliation describes the battle, world brand dominance is what the global (marketing) war is all about. Several Japanese, South Korean, US, and European companies have realized this and are actively pursuing this strategy.

For they know, that their only salvation now lies in creating and competitively retaining a satisfied global customer. They can ill afford to ignore world markets. They also know that the only way to fight price wars at a global level is to have the presence of a global brand in the market place. Otherwise, their products will not be in the shopping plaza but only in the “dollar street.”

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