Table 1 shows results from a market research survey for PedalFix, a business considering a premium annual bicycle-maintenance membership. Members receive th...
Question 1 Report
Table 1 shows results from a market research survey for PedalFix, a business considering a premium annual bicycle-maintenance membership. Members receive three workshop services each year. The business will charge $28 per service visit. PedalFix has limited mechanics and wants to choose one target market for its first year of sales.
Table 1
| Customer group | People interested in membership | Expected service visits per customer each year | Typical annual income |
|---|---|---|---|
| University students | 210 | 1 | $18,000 |
| Office commuters | 120 | 3 | $46,000 |
| Retired leisure cyclists | 95 | 2 | $31,000 |
(a) Which one of the following groups is the most suitable target market for PedalFix's premium membership?
A university students
B office commuters
C retired leisure cyclists
D people who do not own bicycles [1]
(b) Show the annual sales revenue PedalFix could receive if every interested office commuter bought the membership and used all expected visits. [2]
(c) Explain one reason, using Table 1, why PedalFix may choose the group selected in part (a). [2]
(d) Identify one further item of market research PedalFix should collect before setting its pricing. [1]
Answer Details
(a) Office commuters are the most suitable target market for the premium membership. [1]
(b) Expected annual service visits are:
120 customers × 3 visits each = 360 visits.
Annual sales revenue = 360 × $28 = $10,080. [2]
(c) Office commuters are expected to make three visits per year, more repeat sales per customer than university students or retired leisure cyclists. They also have the highest typical annual income, $46,000, so may be more able to afford premium pricing. Either developed reason is acceptable. [2]
(d) PedalFix could research the maximum price customers are willing to pay. Competitors' repair prices, preferred payment method, or demand for particular maintenance services would also be useful before setting a price. [1]
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