Identify and explain one benefit and one cost to MF of developing the
new product.
Knowledge [2 × 1] – award one mark for each relevant benefit/cost
Analysis [2 × 1] – award one mark for a relevant explanation for each
benefit/cost
Application [2 × 2] – award two application marks for each benefit/cost
Answers are likely to include:
Benefit:
• Provides a USP
• Allows diversification/spreads risk
• Allows the business to expand into new markets/attracts new
customers/accommodates changing customer needs
• Allows the business to expand into existing markets/increases market
share/improved competitive advantage
• Increase revenue/increased sales
Cost:
• Costs of carrying out market research/product trials
• Increased production costs – new equipment/training/recruitment
costs/high cost of raw materials/high cost of waste removal
• Increased marketing costs – to build customer awareness
• If target market wrong, the company reputation may be damaged
Indicative response:
Provides a USP (1) if there are no other sugar-free ice creams in the market
(ap). This will allow MF to increase sales revenue of the ice cream (1). This is
a new market and MF is taking advantage of the trends for healthier foods
(ap).
Possible application marks:
Sugar free ice-cream; MF has a large market share of the food markets;
large variety of food products; objectives are growth and increased market
share; new automated production line required; new skilled workers need
recruiting; existing workers need to be retrained.
There may be other examples in context that have not been included here.