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Date November 2019 Marks available 10 Reference code 19N.2.SL.TZ0.4
Level Standard level Paper Paper 2 Time zone Time zone 0
Command term Discuss Question number 4 Adapted from N/A

Question

Imperial Falls (IF)

Imperial Falls (IF) is a luxury hotel in a city centre. The hotel is an old palace, elegantly furnished and overlooking the harbour. Of the highest quality, for decades IF has been the preferred hotel for business travellers to the city. Relying on reputation and word of mouth, IF does little promotion. Its facilities include a swimming pool and a high-quality restaurant. Table 1 shows information about the principal hotels located in this city centre in 2018.

Table 1: Selected information about the principal hotels in the city centre in 2018

In 2019, bookings at IF have begun to decline because of a new hotel, Guest Rooms (GR), which is part of a global chain. Many businesses have employees who travel to major cities, where most business meetings occur. Hotels in city centres are usually luxurious and expensive. GR is different. It offers clean, small rooms with Wi-Fi, a small desk and a double bed. Room prices at GR are significantly lower than most city-centre hotels. The new GR is located near the airport, 6 kilometres (3.72 miles) from the city centre.

GR uses a fee-based membership model and member companies require employees to stay at a GR hotel when on business. Employees may also stay there when on personal travel. Guests use self-service check-in machines (similar to those used at airport check-ins), which issue electronic keys. GR electronically bills the company directly. Service is minimal. GR relies heavily on social media marketing. It also uses above-the-line promotion.

State two types of above-the-line promotion.

[2]
a.

Using Table 1, construct a product position map/perception map for all four hotels prior to the opening of GR.

[4]
b.

Explain two ways in which GR is able to offer rooms at a lower price than IF.

[4]
c.

Discuss possible changes to IF’s marketing mix to reduce the loss of customers to GR.

[10]
d.

Markscheme

Appropriate types of above-the-line promotion include:

Accept any other relevant answer, including “advertising on the Internet” or “the Internet.”

Award [1] for each appropriate type of above the line promotion up to [2].

a.

Award [1] for the overall layout of the map with both axes labelled correctly (price: high or low; service: high or low).

N.B. It does not matter which one is horizontal/vertical.

The correct positioning is as shown above. Adjust appropriately if a candidate makes the price the vertical axis and quality the horizontal axis.

Award [2] for a correctly labelled position map with two of the companies properly placed.

Award [3] for a correctly labelled position map with three of the companies properly placed.

Award [4] for a correctly labelled position map with all four companies properly placed.

The position map has been scaled from $155–$245 for the horizontal axis and 3 stars to 5 stars for the vertical axis. If candidates scale the perception map differently (1 to 5 stars, for example), mark accordingly and per the explanation for [1], [2], [3] and [4] above.

The candidates were asked to position the four hotels prior to the opening of the GR. The four hotels represent the full range of the market (at the time, before GR opened) and, therefore, the positioning should be as shown above. However, candidates may consider a 3-star hotel to be “middle quality” rather than low quality because three is the mid-point between 1 star and 5 star. Thus, some candidates may position the four hotels more toward quadrant one than they should.

Nevertheless, examiners should have some forbearance: as long as the relative position of the hotels is accurate, award marks appropriately. For example, the position map below would earn [4].

N.B. If the relative position is correct but the candidate has compressed the positions of the four hotels into one quadrant (which would typically be quadrant 1), award a maximum of [3].

b.

Three ways in which GR is able to have lower costs than traditional hotels include:

Accept any other relevant example.

If a candidate refers to the airport versus city-centre location and assumes that the airport location is less expensive, award [1].

Mark as [2 + 2].

Award [1] for identification of a way to lower costs and an additional [1] for an explanation thereof.

c.

Refer to Paper 2 markbands for 2016 forward, available under the "Your tests" tab > supplemental materials.

Main differences in the marketing mix of the two hotels are:

The question of place is tricky. At one level of argument, place is different than location. However, in the case of a hotel, place and location are virtually indistinguishable, as hotels are ontologically a venue where customers rent rooms for the night. Thus, in the case of hotels, place devolves to location.

Possible changes to the IF’s marketing mix include:

Remember that at standard level, the candidates are not expected to know the extended marketing mix but rather just the four Ps: price, place, promotion, product. Candidates should not be penalized if they address the extended
marketing mix.

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

N.B. The marks listed in the far right column are maximum awards. Candidates could technically have a response that addresses two Ps in a balanced way yet still lacks the depth, precision, or application for [4] (for example).

d.

Examiners report

[N/A]
a.
[N/A]
b.
[N/A]
c.
[N/A]
d.

Syllabus sections

Last exams 2023 » Unit 4: Marketing » 4.2 Marketing planning (including introduction to the four Ps) » The effectiveness of a marketing mix in achieving marketing objectives
First exams 2024 » Unit 4: Marketing » 4.5 The seven Ps of the marketing mix » 4.5.8 Appropriate marketing mixes
Last exams 2023 » Unit 4: Marketing » 4.1 The role of marketing » How marketing strategies evolve as a response to changes in customer preferences
Last exams 2023 » Unit 4: Marketing » 4.2 Marketing planning (including introduction to the four Ps)
Last exams 2023 » Unit 4: Marketing » 4.1 The role of marketing
First exams 2024 » Unit 4: Marketing » 4.5 The seven Ps of the marketing mix
First exams 2024 » Unit 4: Marketing
Last exams 2023 » Unit 4: Marketing
Last exams 2023
First exams 2024

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