What information is useful to describe the competitive environment of a music tuition business? SoundSteps teaches children after school. A new app offers r...
Question 1 Report
What information is useful to describe the competitive environment of a music tuition business? SoundSteps teaches children after school. A new app offers recorded lessons at a low monthly fee, while another local tutor offers face-to-face lessons at homes. SoundSteps has received complaints that parents find its booking system difficult to use.
(a) Identify the substitute service in this scenario. [1]
(b) Which one of the following is a direct competitor: the local face-to-face tutor, a piano manufacturer, a school cleaner or a music publisher? [1]
(c) Explain why improving the booking system could help SoundSteps compete with both alternatives. [2]
(d) When should SoundSteps use market research before changing its lesson prices? [1]
Answer Details
(a) The app offering recorded lessons is the substitute service. [1] It is an alternative way for customers to receive music tuition.
(b) The local face-to-face tutor is a direct competitor. [1] It provides a similar service to the same potential customers. A piano manufacturer, cleaner, and music publisher do not directly provide competing tuition.
(c) An easier booking system improves convenience for parents. [1] Parents may therefore be less likely to choose the app or the rival tutor, even if one alternative is cheaper. [1]
(d) SoundSteps should use market research before making the price change, to find out customers' price sensitivity and competitors' prices. [1] This reduces the risk of choosing a price customers will not accept.
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