BUSINESS TEST
Total Marks: 70
GREENCOMMUTE DYNAMICS (GCD)
Background
GreenCommute Dynamics (GCD) is a UK-based manufacturer of electric bicycles (e-bikes)
and electric scooters. Founded in 2010, the company originally operated in a niche market,
selling high-performance off-road e-bikes to mountain biking enthusiasts. However, due to
rising fuel prices and growing environmental concerns, the market has become dynamic. GCD
has recently shifted its focus toward the mass market, targeting urban commuters who want
to replace their cars with greener alternatives.
Market Research and Data
Before launching their new flagship product, the “CityGlider X” scooter, GCD conducted exten-
sive market research.
• Secondary Research: They analyzed government reports on urbanization and competi-
tor financial reports.
• Primary Research: The marketing team stood at train stations in London and Manch-
ester, conducting face-to-face interviews with 2,000 commuters. They used quota sam-
pling to ensure they interviewed an equal number of men and women aged 20–40.
The research produced quantitative data showing that 65% of commuters would consider an
e-scooter if the battery range exceeded 30 miles. Qualitative data from focus groups revealed
that customers were worried about safety and battery charging times.
Supply and Demand Factors
In 2023, two major external shocks occurred:
1. Income Changes: The economy entered a boom period, raising disposable incomes. As
e-bikes are considered a luxury (normal) good, demand surged.
2. Supply Chain Issues: A global shortage of lithium (used for batteries) caused the cost
of raw materials to skyrocket.
GCD’s operations director noted: “We are seeing excess demand. At the current price of £400
for the scooter, we have orders for 10,000 units, but we can only supply 4,000.”
Product Portfolio and Strategy
GCD manages a portfolio of products:
• The “MountainMaster” E-Bike: This was their original product. It has a high market
share but the market growth for off-road bikes has flattened (low growth). It generates
steady cash flow with little need for advertising.
• The “CityGlider X” Scooter: A new product in a rapidly growing market. It currently has
a small market share but requires heavy investment in promotion.
1
• The “Eco-Trike”: A tricycle for carrying cargo. It has low market share and operates in a
low-growth market. Management is considering discontinuing it (divesting).
The Marketing Mix (4 Ps) and Design
• Product/Design: The design team focused on the Design Mix. While aesthetics (look-
ing cool) were important, the function (foldability for trains) and cost (keeping it under
£500) were the priorities. In response to social trends, GCD ensures ethical sourcing of
their cobalt and lithium.
• Price: For the “CityGlider X”, GCD is debating between price skimming (launching high
to recover R&D costs) or penetration pricing (launching low to capture market share
from rivals like Xiaomi).
• Promotion: GCD uses above-the-line promotion by placing adverts in Metro newspa-
pers. However, they are shifting budget to below-the-line methods, specifically viral
marketing on TikTok, encouraging users to post videos of their commutes using the
hashtag #GlideToWork.
• Place: Traditionally, GCD sold directly via their website. To reach the mass market, they
are now negotiating to stock their products in major retailers like Halfords.
Elasticity Data
GCD’s financial analysts have calculated the following elasticities for the coming year:
• Price Elasticity of Demand (PED) for the CityGlider: −2.5
• Income Elasticity of Demand (YED) for the MountainMaster: +1.8
2
QUESTIONS
Section 1: The Market & Research (18 Marks)
1. Define “Dynamic Market” and explain one reason why the transport market has become
dynamic for businesses like GCD. (3 marks)
2. GCD moved from a “Niche Market” to a “Mass Market.” Analyze one advantage and one
disadvantage of this strategic move. (6 marks)
3. Assess the benefits to GCD of using quota sampling for their primary research rather than
random sampling. (9 marks)
Section 2: Positioning & Marketing Strategy (10 Marks)
4. Using the Boston Matrix, classify the “MountainMaster” e-bike and the “CityGlider X”
scooter. Justify your classification for each using data from the case study. (6 marks)
5. Explain the Product Life Cycle stage the “MountainMaster” is likely in. Suggest one
extension strategy GCD could use to prolong its sales. (4 marks)
Section 3: Demand, Supply & Markets (10 Marks)
6. Draw a Supply and Demand diagram illustrating the current situation for the “CityGlider X”
(where price is £400, Demand is 10,000, and Supply is 4,000). Clearly label the Excess
Demand. (4 marks)
7. The cost of lithium (a raw material) has increased. Explain, using a diagram if helpful,
how this will affect the Supply Curve for GCD’s products. (3 marks)
8. Disposable incomes in the UK have risen. As e-bikes are “Normal Goods,” explain the
likely impact on the Demand Curve. (3 marks)
Section 4: Elasticity (8 Marks)
9. The Price Elasticity of Demand (PED) for the CityGlider is −2.5.
(a) Does this represent price elastic or price inelastic demand? (1 mark)
(b) GCD is considering lowering the price by 10%. Based on the PED, explain what will
happen to the Total Revenue. (3 marks)
10. The Income Elasticity of Demand (YED) for the MountainMaster is +1.8. Explain what
this figure tells GCD about how sales will react if the economy enters a recession. (4
marks)
Section 5: Marketing Mix: Product, Promotion & Price (24 Marks)
11. Discuss the conflict GCD might face between Aesthetics, Function, and Cost (The Design
Mix) when developing the “CityGlider X.” (6 marks)
12. GCD is deciding between Price Skimming and Penetration Pricing for the launch of the
CityGlider X. Evaluate which strategy would be more appropriate for this specific product.
(12 marks)
13. Explain how Branding and Viral Marketing can help GCD reduce the Price Elasticity
of Demand for their products (making consumers less sensitive to price changes). (6
marks)
