2.4 The Marketing Mix Practice Questions

Text 2 — Fernway Drinks Ltd

Fernway Drinks Ltd makes chilled fruit juices and smoothies at a small factory in Shrewsbury. The business was started in 2016 by Priya Natarajan and now employs 42 people. Its drinks are sold through 340 independent cafés and three regional supermarket chains. Fernway Drinks Ltd sets the price of each bottle in line with the prices charged by its two main rival juice producers.

In 2023 the business launched a low-sugar sparkling range after market research showed that adult customers wanted drinks containing less sugar. The new range is made using bottling equipment that cost £95 000. Sales of the company's original juices have fallen in each of the last three years.

Priya is now considering selling Fernway Drinks Ltd's drinks directly to consumers through the company's own website, as well as continuing to supply cafés and supermarkets.

Fig. 1 — Fernway Drinks Ltd revenue by product range

Product range	2022 revenue (£)	2024 revenue (£)
Original juices	620 000	540 000
Smoothies	220 000	290 000
Low-sugar sparkling (launched 2023)	–	232 000
Total revenue	840 000	1 062 000

Text 1 — Ashtreen Drinks Ltd

Ashtreen Drinks Ltd makes cold-pressed fruit juices at a small factory in Shropshire. The business has nine employees and one refrigerated delivery van. Its juices contain no preservatives, so they must be kept chilled and have a shelf life of only 14 days.

Most of Ashtreen Drinks Ltd's juices are sold to a wholesaler, which supplies around 400 independent cafés across the UK. The remaining juices are sold directly to consumers through the company's own website.

Ashtreen Drinks Ltd has spent two years and £120 000 developing a new sparkling berry drink. The owner, Hugo Ferrier, believes it is the first product of its kind in the UK. Customers already describe the Ashtreen brand as 'premium' and the business has never used discounts. Two national supermarket chains have asked to stock the new drink.

Table 1: Ashtreen Drinks Ltd's revenue by distribution channel

Year	Revenue from the wholesaler (£)	Revenue from own website (£)
2022	310 000	84 000
2023	298 000	96 500
2024	286 000	115 500

Text 1 — Tansywell Soaps Ltd

Tansywell Soaps Ltd makes handmade soap and bath products in a small workshop in Shropshire. It was set up by Marissa Idowu in 2015 and now employs 14 people. Its soap bars sell for £4.50 each, which is the same price as the bars sold by rival handmade soap producers.

Tansywell Soaps Ltd sells through three channels: its own website, independent gift shops that are supplied through a wholesaler, and a stall at farmers' markets.

In 2024 the business launched a new range called Sea Breeze. At its market stall it gave out free sample bars of the new range to shoppers who had not bought from the business before. Marissa believes the handmade soap market is crowded, with many small producers offering very similar products.

Table 1: Tansywell Soaps Ltd revenue by distribution channel

Distribution channel	2022 revenue (£)	2024 revenue (£)
Own website	180 000	288 000
Independent gift shops (via wholesaler)	240 000	252 000
Farmers' market stall	60 000	60 000

Text 2 — Brisklow Snacks Ltd

Brisklow Snacks Ltd bakes protein oat bars at a small factory in Shropshire. Its 'Trail Fuel' range is aimed at 18–30 year olds who exercise regularly. When the range was launched the bars were priced at 89p each, well below the £1.45 charged by established rivals, so that the brand could build market share quickly. The price is now £1.25 a bar.

The business sells directly to shoppers through its own website. It also sells to a wholesaler, which supplies around 900 convenience stores and gym cafés across the Midlands and Wales. So far, almost all of Brisklow Snacks Ltd's promotion has been social media posts and the sponsorship of local running events. The directors now want to grow sales in the rest of the UK and are considering using television advertising for the first time.

Table 1: Brisklow Snacks Ltd's advertising spend and sales revenue

Year	Spend on advertising (£)	Sales revenue (£)
2023	14 500	504 000
2024	21 000	578 000
2025	28 000	640 000

Text 2

Tessaro Tools Ltd

Tessaro Tools Ltd manufactures hand tools such as hammers, chisels and screwdrivers at a factory in the Midlands. It employs 95 staff. For over 30 years the business has sold most of its tools to a wholesaler, which then supplies around 500 independent hardware shops. Tessaro Tools Ltd also sells directly to three national DIY retail chains.

In 2025 the owner, Harjit Mandair, launched a website so that customers can buy tools directly from the business. Prices on the website are set in line with the prices charged by competitors on their own websites. Harjit has employed two extra members of staff to manage the website and to pack and post orders, and deliveries are made by a courier firm.

Harjit wants to increase the proportion of revenue that comes from online sales. However, she is worried that the wholesaler and the DIY retail chains may order fewer tools as a result.

Table 1: Tessaro Tools Ltd revenue by distribution channel

Distribution channel	Revenue 2023	Revenue 2025
Sales to the wholesaler	£1 240 000	£1 116 000
Sales to DIY retail chains	£430 000	£486 000
Online sales through own website	£0	£158 000
Total revenue	£1 670 000	£1 760 000

Text 1 — Hartsmere Ltd

Hartsmere Ltd makes natural dog treats at a small factory in Shropshire. It started in 2016, selling only through its own website, and now also supplies 480 independent pet shops across the UK. Its best-selling product, Salmon Nibbles, was launched six years ago and sales are still rising quickly.

Hartsmere Ltd sets its prices using cost-plus pricing, adding a mark-up of 60% to the cost of making each pack. In 2024 a larger rival, Dalebarn Petfoods, launched a similar range of treats priced 15% below Hartsmere Ltd's packs and promoted it heavily on social media.

The owner, Odette Grainger, always collects market data before developing a new treat. Some of this data is shown in Table 1.

Table 1

Year	Value of the UK natural dog treat market (£m)	Hartsmere Ltd sales revenue (£m)
2021	240	4.8
2024	310	7.1

Quillby Games Ltd

Quillby Games Ltd makes board games. Its best-selling game, Castle Quest, was launched in 2019 and is sold for £30 through 300 independent toy shops and the company's website. Castle Quest provides 70% of the company's revenue.

Developing a brand new game takes about two years and costs around £250 000. The directors plan to extend the life of Castle Quest by launching an expansion pack with new characters and a new board, priced at £12. The expansion pack can only be played with the original game.

Table 1: Sales of Castle Quest

Year	Games sold
2019	4 000
2020	15 000
2021	38 000
2022	52 000
2023	54 000
2024	53 000
2025	41 000

Ottercombe Coffee

Ottercombe Coffee is one of four coffee shops in a small town. Table 1 shows the annual sales revenue of the four coffee shops last year.

Table 1: Annual sales revenue of the four coffee shops

Business	Annual sales revenue (£)
Ottercombe Coffee	60 000
Café Varenna	90 000
Coppergill Coffee House	120 000
Siphonworks	30 000

Cobbleford Drinks Ltd

Cobbleford Drinks Ltd, set up in 2014 by Harriet Cole, employs 32 people and makes four sparkling fruit drinks for supermarkets.

Its best-selling drink, Orchard Fizz, was launched in 2016 and provides 60% of the company's revenue. Supermarkets pay £1.20 for each bottle. The bottle and label have not changed since 2016. Since 2022, two much larger manufacturers have launched similar drinks and paid supermarkets for shelf space at the front of the chiller cabinets.

Harriet wants to increase sales of Orchard Fizz. In a survey of 500 supermarket shoppers, 68% said they were trying to cut down on sugar. Cobbleford has £260 000 of retained profit, enough for only one of two options:

• Option 1: a low-sugar recipe in a redesigned bottle, costing £180 000 and taking four months. Two supermarket buyers would give a low-sugar drink shelf space at the front of the chillers.
• Option 2: a 12-week television and social media advertising campaign costing £150 000. A similar campaign in 2021 was followed by an 18% rise in sales. Both larger competitors advertise on television all year.

Table 1: Bottles of Orchard Fizz sold each year (000s)

Year	Bottles sold (000s)
2020	540
2021	720
2022	800
2023	744
2024	680

Tavrin plc

Tavrin plc designs robot vacuum cleaners. It was founded in 2012 by Grace Khatri and now employs 600 people, selling its products in 18 countries through electrical retailers and its own website.

Tavrin has spent £4 million developing a new model, the Tavrin One. It uses mapping technology that no rival model offers, runs at only 42 decibels so it is quieter than any competing machine, and comes with a five-year guarantee.

In the last two years, three new businesses have entered the market selling basic robot vacuum cleaners for under £120. Grace expects rivals to copy the mapping technology within about a year.

Grace must decide on a pricing method for the launch of the Tavrin One:

• Option 1 (price skimming): launch at £349 and reduce the price after nine months
• Option 2 (penetration pricing): launch at £179, below the price of both best-selling rival models.

Table 1: Price and cost information

Item	£
Cost to make one Tavrin One	85
Best-selling rival model A: price	199
Best-selling rival model B: price	229
Option 1 launch price	349
Option 2 launch price	179

Glimmerton Lights plc

Glimmerton Lights plc designs and sells smart bike lights. The business was started in Manchester in 2012 and now sells in 14 countries, employing 600 people. Its best-known product is the Glimmerton X3, launched in 2019 at a price of £129. The X3 was the first smart bike light in its market to offer 40 hours of battery life.

Sales of the X3 grew quickly for three years. Since then, several rival manufacturers have launched bike lights with a similar battery life at prices of around £70. Glimmerton has not changed the price of the X3.

Glimmerton spends £4 million a year on promotion, most of it on targeted online advertising aimed at 16–30 year olds. The bike lights are also sold through large electrical retailers, who take a share of the selling price.

Glimmerton will launch a new model next year. The marketing director must decide whether to reduce the price of the X3 from £129 to £79 or to keep it at £129.

Table 1: Unit sales of the Glimmerton X3

Year	Unit sales
2021	420 000
2022	560 000
2023	480 000
2024	360 000

Ambleway Coffee plc

Ambleway Coffee plc runs 185 coffee shops in city centres and railway stations in England and Wales, and sells bags of its own roasted beans through its website and app. A large latte costs £3.40, which is 30p more than the price charged by the two largest chains.

The business has built its reputation on serving coffee roasted in its own factory in Bristol, and its dark green cups are easily recognised.

Ambleway's share of the market has fallen from 14% to 11% in three years as rival chains have opened new branches and supermarkets have begun selling cheaper takeaway coffee. The directors want to win market share back and have set aside £800 000 for advertising over the next year. Two options are being considered:

• Option 1: a national television advertising campaign
• Option 2: targeted social media advertising, shown to people within walking distance of an Ambleway shop and to app users.

Table 1: Share of the UK coffee shop market

Business	Market share (%)
Quernbury Café	28
Café Ombretto	19
Ambleway Coffee	11
All other businesses	42

Wrenford Audio plc

Wrenford Audio plc designs headphones. It was founded in 2009 by Euan Ramsay, employs 1 400 people and sells in 23 countries.

Until 2022, Wrenford sold all of its headphones through electrical retailers. These retailers buy the headphones from Wrenford at £65 per pair, display them in their stores, let customers listen to them, and sell them at around £109 per pair.

In 2022 Wrenford launched its own website. Customers in every country Wrenford supplies can order the same headphones directly for £99 per pair, with delivery in four days. Wrenford now rents two warehouses to hold its own stock and employs 60 people to deal with returns and customer questions.

Sales through the website have grown quickly. However, several electrical retailers have told Euan that they will give Wrenford products less shelf space because the website sells the headphones for £10 less than they do. Euan is considering whether to stop selling through retailers and sell only through the website.

Table 1: Wrenford Audio plc headphone sales, 2024

Distribution channel	Pairs sold	Price received by Wrenford per pair (£)
Electrical retailers	420 000	65
Wrenford website	180 000	99

Mango Lantern

Kofi Mensah opened Mango Lantern, a juice and smoothie bar, in 2021. It is a single kiosk inside a busy railway station in Bristol, where more than 20 000 passengers pass through each weekday.

Mango Lantern sells freshly made juices and smoothies at £4.50, which is 50p more than the two chain cafés in the same station. Every drink is made to order from fruit delivered each morning by a local wholesaler. Cups are compostable, and customers who bring their own cup pay £4.

Kofi posts a 'drink of the week' on social media every Monday and has 6 000 followers. Students who show a university card get 10% off between 2pm and 4pm, the quietest part of the day. Kofi rents the kiosk for £1 400 a month and employs two part-time staff. He believes the queue moves quickly because the menu is short.

Mango Lantern does not deliver and has no website. Kofi is considering setting up a website so that offices near the station can order drinks for delivery. He would need to employ a delivery rider.

Table 1: Number of drinks sold at Mango Lantern over four weeks

Week	Number of drinks sold
1	620
2	540
3	700
4	660

Pinecrook Candle Co

Ellie Marsh started Pinecrook Candle Co in Norwich in 2019. She hand-pours candles using rapeseed wax grown on Norfolk farms instead of the paraffin wax used by most large candle makers. Every scent is named after a Norfolk place, and each candle is poured into a glass jar that customers can return for a £2 refund.

A standard candle sells for £16 and a large candle for £26. This is around £4 more than similar candles sold in national gift shops. Ellie employs one part-time assistant.

Pinecrook Candle Co sells through three independent gift shops in Norfolk, at craft fairs, and through its own website, which Ellie launched in 2021. She promotes the business with photographs of the Norfolk countryside on social media three times a week and sends a weekly email to 1 900 customers.

Ellie believes it is the design of the candles that makes Pinecrook Candle Co successful. Her assistant thinks the business has grown because of the way it is promoted and because customers can now buy online.

Table 1: Pinecrook Candle Co sales revenue by channel

Sales channel	Year 1 revenue (£)	Year 2 revenue (£)
Craft fairs	14 200	12 800
Own website	9 600	18 400
Norfolk gift shops	7 400	8 100

Tyrewell Cycles

Dev Mistry is a sole trader who owns Tyrewell Cycles, a bicycle repair shop on a side street in Hull.

A standard service costs £35 and takes about an hour. A mobile mechanic who works in the same part of Hull charges £28 and repairs bikes at the customer's home. Tyrewell Cycles also sells accessories such as lights, locks and helmets, and every repair is guaranteed for three months.

Dev promotes the business by running a free bike-check event at a local school each September and by sponsoring a junior cycling club, whose 40 members wear shirts with the shop's name on them. He has 300 followers on social media.

Customers tell Dev that they like the three-month guarantee and that he always explains what he has done to their bike. However, since the mobile mechanic started, the number of services booked at Tyrewell Cycles has fallen from an average of 38 a week to 26 a week. Dev is considering two options:

• Option 1: reduce the price of a standard service from £35 to £28
• Option 2: buy a van and repair bikes at customers' homes.