Answer: Cafes: industrial (or intermediate/business) market. Website: consumer market.

Answer: Demographic (age 25 to 45, higher income) and geographic (Newcastle, Hunter and Central Coast). Psychographic (values quality and sustainability) is also acceptable.

Model answer: Price can act as a signal of quality. Kestrel has positioned itself as a premium roaster, and its wholesale customers use that reputation to justify a higher price to their own customers. Cutting the price to $36 per kilogram (a fall of $6, or about 14%) may increase short-term sales, but it risks sending a signal that the coffee is no longer premium, which could weaken the brand and allow competitors to position Kestrel as a mid-range supplier. The decision therefore trades a possible gain in volume against the risk of damaging the perceived quality that supports the whole marketing strategy.

Model answer: A 40% rise in online orders would move the business from about 600 kilograms to around 840 kilograms of retail coffee per month. Operations would need to source and roast the extra volume, which may require longer roasting shifts or a second roaster, and would increase the packing and dispatch workload, placing pressure on the two-person packing team and on delivery lead times. Finance would need to fund the additional green bean inventory and packaging before the sales revenue is received, affecting cash flow and possibly requiring an overdraft or retained profits. Finance would also want to confirm that the campaign cost of $9,000 is recovered: 240 extra kilograms a month at the $56 retail price is about $13,440 in additional monthly revenue, so the campaign would pay for itself quickly if the lift is sustained. The example shows the interdependence of the key business functions: a marketing success creates capacity and funding decisions elsewhere.

Model answer: Kestrel's promotion mix is only partly effective. Its strengths are personal selling and relationship marketing with cafes, which have produced a loyal wholesale base that generates about 70% of revenue, and publicity from the regional barista competition, which built credibility at little cost. Word of mouth from cafe customers is also working as an opinion-leader channel. However, the business spends almost nothing on reaching consumers directly: its social media posts are irregular, it has no email list and it has not used sales promotion to encourage a first online order. Given that retail sales have been flat for twelve months while wholesale has grown, the current mix is effective for the industrial market but ineffective for the consumer market. Overall, the mix is moderately effective and the proposed campaign addresses its clearest weakness.

Model answer: First, Kestrel should introduce a coffee subscription offered through its website, promoted by a targeted social media campaign aimed at 25 to 45 year olds within the Newcastle, Hunter and Central Coast region. A subscription converts one-off buyers into repeat customers, smooths demand so that roasting can be scheduled efficiently, and improves cash flow because payment is received before dispatch. Geographic targeting keeps delivery costs low and matches the existing brand recognition in the region. Second, Kestrel should build an email list by offering a small discount on a first online order and then send a monthly email featuring a new single-origin coffee, brewing tips and cafe partner stories. Email marketing is low cost, can be personalised, and allows the business to measure open and click-through rates so the strategy can be refined. Together the strategies target the identified weakness (little direct consumer promotion), use the business's existing strengths (quality and sustainability story) and are affordable within the $9,000 budget already set aside.

Model answer: Claims about sustainability are powerful because they match the values of Kestrel's target market, but they must be truthful and able to be substantiated. Australian Consumer Law, enforced by the ACCC, prohibits misleading or deceptive conduct and false representations about goods, and environmental claims have been a particular focus of regulators. If Kestrel buys only part of its beans from certified sustainable farms, describing all its coffee as 'sustainably sourced' would be misleading, and 'carbon neutral' should not be used unless emissions have actually been measured and offset through a credible scheme. Ethically, overstating green credentials, sometimes called greenwashing, exploits consumer trust and disadvantages competitors who make honest claims. On the other hand, accurate claims supported by evidence (for example naming the certification and the share of beans covered) are a legitimate differentiation strategy that rewards the business for genuine responsible sourcing. Kestrel should therefore verify the facts, use precise wording, keep records that support each claim and avoid vague terms. Doing so protects the business from fines and reputational damage and strengthens, rather than risks, its relationship with its customers.