Read the information below about a family business that makes handmade ceramic lamps. Kay sells products from a workshop and through a local furniture shop....
Question 1 Report
Read the information below about a family business that makes handmade ceramic lamps. Kay sells products from a workshop and through a local furniture shop. She is considering creating an online store that can accept payments from customers in other countries. The store would use product photographs, a delivery company website and social media advertising. Kay has one part-time assistant, a limited marketing budget and no specialist computer technician. She wants to know how the internet could alter the organisation rather than simply increase sales.
(a) Which four types of information should Kay provide on each online product page to help a customer make a purchase decision? [4]
(b) Give five ways in which an online store could benefit this small organisation. [5]
(c) Describe three ways that selling online could affect the existing relationship between the workshop and the local furniture shop. [6]
(d) Explain whether Kay should launch the online store immediately, using the information in the scenario. Give reasons for your decision. [6]
Answer Details
(a) An online product page must give enough information for a customer to judge what is being bought and the total practical cost. Four valid items are: product photograph, price, dimensions or size, and material. [4] Available colours or styles, stock availability, delivery cost or time, returns information and a product description are also acceptable.
(b) Five benefits of an online store are:
- It can reach customers outside the local area, including customers in other countries. [1]
- Sales can be made at any time, not only when the workshop or furniture shop is open. [1]
- It is likely to cost less than opening another physical shop. [1]
- Customers can view the full range of lamps online. [1]
- Social media advertising can target particular customer groups. [1]
Online sales data showing popular products, and direct communication through email or online messages, are further acceptable benefits. [5]
(c) Selling online may change the relationship with the furniture shop in different ways.
- The online store may compete with the furniture shop for the same customers. This could reduce the shop's sales or make it less willing to stock Kay's lamps. [2]
- Kay could instead use the website and social media to direct local customers to the furniture shop. This could increase visits and support the retailer. [2]
- They may need to agree different prices, sales territories or stock arrangements, so that both businesses know which customers each will serve and avoid conflict. [2]
[6]
(d) The strongest conclusion is that Kay should launch gradually, rather than make an immediate full-scale launch. An online store could reach new customers beyond the local area, so there is a clear opportunity. [1] However, Kay has limited marketing funds, so a small trial limits the financial risk if online demand is lower than expected. [2] She has no specialist technician, so using a reputable hosted store platform and secure payment provider reduces the technical and security burden. [2] She should test delivery arrangements, returns procedures and stock control before expanding, because customers in other countries will need reliable fulfilment and accurate availability information. [1]
An immediate launch could also be credited if it is justified using the scenario, but a supported decision is essential. [6]
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