Question
JVS
JVS is a successful manufacturer of designer clothing. A marketing expert described JVS’s brand name, Izzys, as one of the business’s major strengths. Because of its market orientation approach, JVS spends significantly more on market research than its competitors.
JVS’s products are:
- Izzys, a range of high-quality fashion jeans, which contributes $70 \%$ towards JVS’s revenue and profit. The market for this range is not growing.
- IzzDen, a range of denim jackets, which is near the end of the product life cycle. Manufacturing of this product will cease later this year.
Izzys and IzzDen are sold through high-end independent retailers throughout countries in Europe. JVS uses a price leadership strategy for these two products. Consumers perceive JVS as fashionable. They also believe that JVS’s products are worth the premium price.
JVS is considering launching a new product, a range of fashionable shorts – Izzless – aimed at the 15-19 age group. With this product, JVS would reach a different, but highly competitive, market. Focus groups revealed that many low-income young consumers want to purchase fashion shorts. JVS would sell the new shorts to mass market discount retail stores. Consumers would also be able to order online for next-day delivery.[Source: (c) International Baccalaureate Organization 2018]
a. State two stages of the product life cycle.[2]
b. Apply the Boston Consulting Group (BCG) matrix to JVS’s current product portfolio.[4]
c. Explain one advantage and one disadvantage for JVS of using focus groups for its market research.[4]
d. Recommend whether JVS should launch the new product, Izzless.[10]
▶️Answer/Explanation
Ans:
a. Award [1] per stage identified. Acceptable answers are:
• Introduction
• Growth
• Maturity (or Saturation)
• Decline
• Withdrawal.
b.
Award [1] for a basic answer that shows some understanding of the Boston Consulting Group matrix.
Award [2] for an answer that shows a good understanding of the Boston Consulting Group matrix. This may be descriptive or in the form of a drawn diagram.
Award [3] for an answer that shows a good understanding of the Boston Consulting Group matrix and places both of JVS’s products (Izzys and IzzDen) in their correct segments in a BCG matrix or explains their positions. Izzys is a cash cow, IzzDen is a dog.
If a candidate correctly links the products to the BCG matrix but provides no explanation. Award [1] for each correctly linked product up to a maximum of [2].
Example:
Izzy – cash cow
IzzDen – dog
Award [2].
For Izzy – star
IzzDen – dog
Award [1].
If a candidate draws the matrix but does not label the axes but otherwise draws it correctly and correctly links and explains both products to the matrix, award [3]. If a candidate draws the matrix but does not label the axes but otherwise draws it correctly and correctly links one product, award [2].
N.B. Candidates are asked to apply the matrix to JVS’s current product range – do not penalize if a candidate also includes their proposed product (IzzLess) and places this as a question mark (problem child).
Award [4] for an answer that shows a good understanding of the Boston Consulting Group matrix and places both of JVS’s products (Izzys and IzzDen) in their correct segments in a BCG matrix (or explains their positions) AND explains clearly why they are in these segments.
c.
Advantages of focus groups include:
• They can provide detailed information about customer feelings, perceptions and opinions. The introduction of Izzless would represent a risky move by JVS, as the mass-market product could undermine Izzy’s established reputation as “high end”.
• They are cheaper than performing individual interviews. Already, JVS spends more on market research than its competitors. By relying on focus groups rather than individual interviews, JVS can get detailed information at a lower cost than individual interviews.
• They provide opportunities to clarify any issues or problems. The target market of Izzless is 15 to 19-year-olds, many of whom have low incomes. JVS has limited to no experience with this group. Focus groups, which allow for dialogue and back-and-forth, can allow JVS to get a clearer idea of issues and potential obstacles.
Disadvantages of focus groups include:
• They can be hard to control and manage. JVS will probably have two different types of focus groups: its traditional customers and the new 15 to 19-year-old group who would buy Izzless. Especially with the latter group, controlling and managing them could prove challenging.
• the results are difficult to analyse. Focus group feedback can be inconsistent and contradictory, a problem made worse because of the young age of participants.
• Members may not reveal their own feelings but are swayed by the majority view. This potential problem is true of any focus group but is especially heightened for the product Izzless. Teenagers tend to be more swayed by peer pressure than other groups.
• They may not be representative of the target market as a whole. Unless JVS is willing to go to considerable expense to have focus group participants flown in from across its market area (all of Europe), participants are likely to come from a handful of cities, or as few as one or two cities. These participants may not be representative of the whole market.
Accept any other relevant advantage/disadvantage. However, advantages and disadvantages that could apply to any form of market research should not be credited.
Accept any other relevant explanation.
N.B. Just using the name JVS does not constitute application to the stimulus.
Mark as 2 + 2.
Award [1] for each correct advantage/disadvantage identified or described and [1] for a relevant explanation with application to JVS. Award up to a maximum of [2].
Candidates should not be awarded [2] per advantage/disadvantage if the response lacks either explanation or application.
d.
JVS currently only has two products in its portfolio and will cease production of one of them, IzzDen, later this year. A business with just one product puts itself in a dangerous position, as if demand for that product falls the business could faces losses and possibly failure.
The launch of the new product would take the business into a new market targeting low-income young consumers want to purchase fashion shorts. It would also broaden JVS’s distribution channels as it would now use mass market retail discount stores and online delivery – at present the business only sells through high end independent retailers. Low-income consumers may relish the chance to buy shorts that have a brand name that is associated with high quality and designer fashion at affordable prices – this may give JVS a competitive edge in this highly competitive market.
However, the move is not without risk. The market is very competitive and JVS’s products may not be able to establish a foothold in the market. There is also the danger that this new product may impact of the sales of their cash cow, Izzys. This down-market product may damage its brand image, which, according to a marketing expert, is one of the business’s major strengths. It would end up with two products aimed at very different markets using premium prices for one product and competitive pricing for the other – this clash of images may not work. Perhaps JVS should consider launching a range of shorts at their current target market and work to its strengths.
Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.
A balanced response is one that provides at least two arguments for and two arguments against the option of launching the new range of shorts, Izzless.
For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].
Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.
Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.
