Fig. 1 shows the locations selected by BrewLoop, a mobile coffee business testing demand for a new pre-order app. Staff approached people at three places in...
Question 1 Report
Fig. 1 shows the locations selected by BrewLoop, a mobile coffee business testing demand for a new pre-order app. Staff approached people at three places in one city during a weekday morning. Each person was shown a screen from the app studio and asked whether they would use it to order coffee before arriving. BrewLoop wants to decide where to promote the app first. Its manager believes that a large number of positive answers will guarantee strong sales, but the business has limited cash for advertising.
(a) Define market research. [2]
(b) State one reason why BrewLoop may use a face-to-face survey rather than a postal survey for this investigation. [2]
(c) Calculate the percentage of the total sample approached at the central station. Show your working. [2]
(d) Analyse why the sample shown in Fig. 1 may not give reliable evidence about the whole coffee market. [6]
(e) Justify which one location BrewLoop should select for its first app promotion. Use Fig. 1 and other relevant business factors in your answer. [6]
Answer Details
(a) Market research is the collection of information about customers and the market to help a business make decisions. [2]
(b) A face-to-face survey allows BrewLoop staff to demonstrate the app screen directly. They can also collect answers immediately, which may give a higher response rate than a postal survey. [2]
(c) Total sample \(=180+90+30=300\).
\[\frac{180}{300}\times100=60\%\]
60% of the sample was approached at the central station. [2]
(d) The central-station group is 60% of the sample, so commuters may dominate the findings. The survey was also conducted only during a weekday morning. People using coffee services in the evening or at weekends may have different routines and preferences. College and sports-centre visitors may differ from the whole market in age, income or coffee-buying habits. Finally, people who refused to stop were not included, creating response bias. These factors mean the sample may not be reliable evidence for the entire coffee market. [6]
(e) Central station is a valid first choice because it has the largest group approached, potentially allowing BrewLoop to reach many commuters. Commuters may value pre-ordering because it can save time before a journey.
However, the number approached does not prove that demand is highest there: BrewLoop may simply have allocated more staff to the station. Before spending limited advertising cash, it should compare positive-response rates at each location, advertising costs, nearby competition and expected profit.
On the information provided, selecting central station is justified by its potentially large commuter market, but another location could be selected if it has a stronger positive-response rate and better expected profit. [6]
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