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Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Question 1
Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim. Mumtaz aims to become the UK's market leader in Asian ready meals. To... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which is most suitable for Mumtaz to achieve its aim - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Step 1
Arguments for producing own label ready meals for supermarkets
Answer
The ready meals market has grown by 2% in 2016, indicating a healthy interest in this segment. Supermarkets' own label ready meals hold a substantial market share of 68%, with Tesco leading at 18%. Given that Mumtaz currently supplies major supermarkets like Tesco, Asda, and Morrisons, this option allows Mumtaz to leverage existing relationships. By increasing its production capacity, Mumtaz can benefit from economies of scale, leading to lower costs and higher profitability. This approach aligns with Ansoff's market penetration strategy, which minimizes risk while enabling Mumtaz to achieve widespread distribution.
Step 2
Arguments for selling more Mumtaz premium brand name products
Answer
There is a notable trend among consumers to prefer premium ready meals. Introducing innovative products, such as the Halal baby food range, enhances the appeal of Mumtaz's premium offerings. Although this strategy involves higher risks, it allows for differentiation and the ability to command higher prices. By focusing on unique recipes and quality, Mumtaz can establish a strong unique selling proposition (USP) that might attract a specific consumer base looking for authenticity.
Step 3
Recommendation
Answer
Considering the aim of becoming the market leader, it is advisable for Mumtaz to prioritize the production of supermarket own label ready meals. This strategy not only presents a lower risk due to the existing market share but also provides a more extensive distribution network, thus increasing the likelihood of achieving its goal as the UK market leader in Asian ready meals.