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Question 1 Report
RiverRoast sells coffee beans to independent cafes. Market research found that several customers want the business to check whether growers receive a fair payment. The purchasing manager can keep using the cheapest wholesaler, or choose a certified co-operative whose coffee costs more per kg. RiverRoast aims to increase sales while protecting its reputation as an ethical business.
(a) Identify one stakeholder, other than customers, affected by RiverRoast's choice of coffee supplier. [1]
(b) Explain one reason why responsible sourcing could help RiverRoast meet its business objective. [2]
(c) Which supplier should RiverRoast choose? Explain your answer. [4]
(a) Coffee growers are a stakeholder affected by the supplier choice. [1] Employees, owners or shareholders, café customers and the local community would also be acceptable.
(b) Responsible sourcing can improve RiverRoast’s reputation as an ethical business. [1] Customers who value ethical products may then buy its coffee, helping the business increase sales. [1]
(c) RiverRoast should choose the certified co-operative. [1] It is more likely that growers receive fair payment and that working conditions are monitored, which supports ethical business behaviour. [1] This can strengthen RiverRoast’s reputation with customers who want responsible products. [1] Greater sales or customer loyalty may outweigh the higher cost per kg. [1]
A choice of the cheapest wholesaler could also be credited if it is justified by lower costs, lower prices and maintaining competitiveness. However, it would need a credible way to improve worker conditions to address RiverRoast’s ethical objective and customers’ concerns.
(a) Coffee growers are a stakeholder affected by the supplier choice. [1] Employees, owners or shareholders, café customers and the local community would also be acceptable.
(b) Responsible sourcing can improve RiverRoast’s reputation as an ethical business. [1] Customers who value ethical products may then buy its coffee, helping the business increase sales. [1]
(c) RiverRoast should choose the certified co-operative. [1] It is more likely that growers receive fair payment and that working conditions are monitored, which supports ethical business behaviour. [1] This can strengthen RiverRoast’s reputation with customers who want responsible products. [1] Greater sales or customer loyalty may outweigh the higher cost per kg. [1]
A choice of the cheapest wholesaler could also be credited if it is justified by lower costs, lower prices and maintaining competitiveness. However, it would need a credible way to improve worker conditions to address RiverRoast’s ethical objective and customers’ concerns.
Question 2 Report
Table 1 shows findings from market research for a new independent cinema. The owner wants to segment customers before selecting films and setting ticket prices.
(a) Which customer group made the most visits per month? [1]
(b) Identify one way the cinema could adapt its product for families with children. [2]
(c) Explain why offering a student ticket price may help the cinema meet its sales objective. [2]
(a) Students aged 16 to 21 made the most visits per month. [1]
Note: the numerical Table 1 referred to in the question is not included in the supplied material, so the response follows the stated table finding in the mark scheme.
(b) The cinema could show children’s films and schedule them for Saturday afternoons. This adapts the product and timing to the needs of families with children. Other acceptable adaptations include child-sized snacks or family seating. [2]
(c) Students may have lower disposable income and may therefore be price sensitive. A student ticket price can encourage more student visits, increasing total ticket sales or filling seats that would otherwise be unused. [2]
(a) Students aged 16 to 21 made the most visits per month. [1]
Note: the numerical Table 1 referred to in the question is not included in the supplied material, so the response follows the stated table finding in the mark scheme.
(b) The cinema could show children’s films and schedule them for Saturday afternoons. This adapts the product and timing to the needs of families with children. Other acceptable adaptations include child-sized snacks or family seating. [2]
(c) Students may have lower disposable income and may therefore be price sensitive. A student ticket price can encourage more student visits, increasing total ticket sales or filling seats that would otherwise be unused. [2]
Question 3 Report
A family-owned restaurant has used the same fish supplier for eight years. A market research survey now shows that customers want more locally sourced food. A nearby supplier can provide fresh fish but charges 8% more. The restaurant's procurement decision could affect its pricing, costs and reputation.
(a) What is meant by locally sourced in this example? [1]
(b) Identify one advantage of buying fish from the nearby supplier. [1]
(c) Explain one possible disadvantage of changing to the nearby supplier. [2]
(d) Which information should the restaurant collect before deciding: the supplier's delivery schedule, the chef's shoe size, customers' home addresses or the restaurant logo? [1]
(a) Locally sourced means obtained from a supplier close to the restaurant, or produced in the local area [1].
(b) An advantage of buying from the nearby supplier is fresher fish [1]. A shorter delivery distance, support for a local image, or potentially more reliable delivery are also acceptable.
(c) The nearby supplier charges a higher price [1]. This may reduce the restaurant's profit or require higher menu prices, which could reduce sales [1].
(d) The restaurant should collect information about the supplier's delivery schedule [1]. It is relevant to whether fresh fish will arrive when needed for food preparation.
(a) Locally sourced means obtained from a supplier close to the restaurant, or produced in the local area [1].
(b) An advantage of buying from the nearby supplier is fresher fish [1]. A shorter delivery distance, support for a local image, or potentially more reliable delivery are also acceptable.
(c) The nearby supplier charges a higher price [1]. This may reduce the restaurant's profit or require higher menu prices, which could reduce sales [1].
(d) The restaurant should collect information about the supplier's delivery schedule [1]. It is relevant to whether fresh fish will arrive when needed for food preparation.
Question 4 Report
Fig. 1 shows a finance decision map prepared by the owner of a dog-grooming business. She needs $9,000 for a wash station and dryers. The business has operated for only six months and has limited retained profit.
(a) Identify the amount of external finance needed in Fig. 1. [1]
(b) Which option allows the business to use dryers without buying them immediately? [1]
(c) Explain one reason why the owner may prefer a loan to leasing the equipment. [2]
(a) External finance needed is $7,000. The owner supplies $2,000 from savings towards the $9,000 equipment requirement. [1]
(b) Leasing allows the business to use the dryers without buying them immediately. [1]
(c) A loan can be used to buy the wash station and dryers. Once purchased, the business owns the equipment and can keep using it or sell it, unlike leasing where the asset is normally not owned by the business. [2]
(a) External finance needed is $7,000. The owner supplies $2,000 from savings towards the $9,000 equipment requirement. [1]
(b) Leasing allows the business to use the dryers without buying them immediately. [1]
(c) A loan can be used to buy the wash station and dryers. Once purchased, the business owns the equipment and can keep using it or sell it, unlike leasing where the asset is normally not owned by the business. [2]
Question 5 Report
Table 1 shows information collected by a car-wash business after installing a water-recycling system controlled by sensors. The system measures the quality of used water and reuses it where suitable. The owner wants to judge whether the technology has reduced operating costs.
| Month | Cars washed | Fresh water used / m3 | Water cost |
|---|---|---|---|
| January | 1,800 | 324 | $648 |
| February | 1,850 | 259 | $518 |
| March | 1,900 | 247 | $494 |
(a) Show the reduction in water cost from January to March. [1]
(b) Identify one reason why comparing fresh water used is more useful than comparing only the number of cars washed. [1]
(c) Explain one non-financial benefit of the recycling technology. [2]
(a) Calculate the reduction in water cost:
\[\$648-\$494=\$154\]
Water cost fell by $154. [1]
(b) The number of cars washed changed from 1,800 to 1,900. Comparing fresh-water use is therefore more useful because it shows the effect of the recycling system more directly than output alone. [1]
(c) A non-financial benefit is that less water is wasted, reducing environmental impact. This conserves a scarce natural resource and may also improve the business’s environmental reputation. [2]
(a) Calculate the reduction in water cost:
\[\$648-\$494=\$154\]
Water cost fell by $154. [1]
(b) The number of cars washed changed from 1,800 to 1,900. Comparing fresh-water use is therefore more useful because it shows the effect of the recycling system more directly than output alone. [1]
(c) A non-financial benefit is that less water is wasted, reducing environmental impact. This conserves a scarce natural resource and may also improve the business’s environmental reputation. [2]
Question 6 Report
A startup that develops educational software is recruiting ten programmers. It can locate in a city with a university and many technology businesses, or in a coastal town where office rent is much lower. The city location has expensive accommodation, but the founder believes skilled people are more likely to live there. The business needs staff before it can start selling its product to schools.
(a) What type of employee is the startup seeking? [1]
(b) Identify one reason why the city may offer a larger pool of suitable workers. [1]
(c) Explain one way that a shortage of skilled workers could affect the business. [2]
(d) Which cost is likely to be lower in the coastal town? [1]
(a) The start-up is seeking programmers, also called software developers [1].
(b) The city may offer a larger pool of suitable workers because university graduates may be available there [1]. Existing technology businesses may also attract skilled people to the city.
(c) A shortage of skilled workers may mean that the business cannot recruit enough capable staff [1]. Product development could then be delayed, so sales to schools are also delayed [1].
(d) Office rent, or premises cost, is likely to be lower in the coastal town [1].
(a) The start-up is seeking programmers, also called software developers [1].
(b) The city may offer a larger pool of suitable workers because university graduates may be available there [1]. Existing technology businesses may also attract skilled people to the city.
(c) A shortage of skilled workers may mean that the business cannot recruit enough capable staff [1]. Product development could then be delayed, so sales to schools are also delayed [1].
(d) Office rent, or premises cost, is likely to be lower in the coastal town [1].
Question 7 Report
Explain one procurement decision that could help a start-up manufacturer of electric scooters meet its objective of reliable production. It needs batteries, tyres and electronic controllers from several businesses. A delayed controller delivery last month stopped the whole manufacturing line for two days, while customers waited for orders and sales were postponed.
(a) Identify one reason why a delay in one component can stop scooter manufacturing. [1]
(b) Explain one benefit of using an approved-supplier list. [2]
(c) Which component should procurement treat as a priority if it is required for every scooter and currently has the longest delivery time? [1]
(d) What is meant by lead time in this context? [1]
(e) Explain one reason why the business may hold a small buffer stock of controllers. [1]
(a) All required components are needed to complete a scooter, so a missing component prevents final assembly [1].
(b) An approved-supplier list identifies suppliers already checked for quality and reliability [1]. Procurement can order more quickly and reduce the risk of unsuitable materials or supply disruption [1].
(c) The electronic controller should be treated as the priority [1], because it is required for every scooter and has the longest delivery time.
(d) Lead time is the time between placing an order and receiving it [1].
(e) The business may hold a small buffer stock of controllers so manufacturing can continue if a delivery is late or demand rises unexpectedly [1]. Buffer stock is extra stock held to protect production against uncertainty.
(a) All required components are needed to complete a scooter, so a missing component prevents final assembly [1].
(b) An approved-supplier list identifies suppliers already checked for quality and reliability [1]. Procurement can order more quickly and reduce the risk of unsuitable materials or supply disruption [1].
(c) The electronic controller should be treated as the priority [1], because it is required for every scooter and has the longest delivery time.
(d) Lead time is the time between placing an order and receiving it [1].
(e) The business may hold a small buffer stock of controllers so manufacturing can continue if a delivery is late or demand rises unexpectedly [1]. Buffer stock is extra stock held to protect production against uncertainty.
Question 8 Report
A bakery uses an online spreadsheet to share its daily ingredient orders with two suppliers. The head baker enters expected sales of bread and cakes each evening. Suppliers can see the quantities needed the next morning. Previously, orders were sent by handwritten note and sometimes contained errors.
(a) Identify one type of data the baker could enter into the spreadsheet. [1]
(b) Explain one way shared online data could improve the relationship with suppliers. [2]
(a) One suitable item of data is expected sales. The quantity of flour needed or the quantities of ingredients ordered would also be valid. [1]
(b) Shared online data can give suppliers information faster and more accurately than handwritten notes. Suppliers can see the required quantities for the next morning and prepare the correct order, reducing delays and incorrect deliveries. Reliable ordering can improve the relationship between the bakery and its suppliers. [2]
(a) One suitable item of data is expected sales. The quantity of flour needed or the quantities of ingredients ordered would also be valid. [1]
(b) Shared online data can give suppliers information faster and more accurately than handwritten notes. Suppliers can see the required quantities for the next morning and prepare the correct order, reducing delays and incorrect deliveries. Reliable ordering can improve the relationship between the bakery and its suppliers. [2]
Question 9 Report
Table 1 shows an online retailer's trial of two advert messages for a new hiking backpack. Each advert was shown for the same number of days on the same website. The retailer is using the results as market research before it commits its advertising budget.
Table 1
| Advert message | Number of people who clicked | Number who bought |
|---|---|---|
| “Lightweight for long walks” | 540 | 54 |
| “Built to carry more gear” | 420 | 63 |
(a) Which advert led to more sales? [1]
(b) Show the conversion rate for the “Built to carry more gear” advert. [2]
(c) Identify one reason why the retailer should not base its final decision only on click numbers. [1]
(d) Explain one way this trial reduces the risk of the advertising decision. [2]
(a) “Built to carry more gear” led to more sales, with 63 purchases compared with 54. [1]
(b) Conversion rate measures the percentage of people who clicked and then bought:
\[\frac{63}{420}\times100=15\%\]
The conversion rate is 15%. [2]
(c) The retailer should not base its decision only on click numbers because clicks do not necessarily result in purchases or sales. [1] The advert with fewer clicks in this trial produced more purchases.
(d) The trial provides evidence of customers' actual response before the retailer spends its full advertising budget. [1] It can choose a message more likely to generate sales and avoid wasting promotion costs on a less effective message. [1]
(a) “Built to carry more gear” led to more sales, with 63 purchases compared with 54. [1]
(b) Conversion rate measures the percentage of people who clicked and then bought:
\[\frac{63}{420}\times100=15\%\]
The conversion rate is 15%. [2]
(c) The retailer should not base its decision only on click numbers because clicks do not necessarily result in purchases or sales. [1] The advert with fewer clicks in this trial produced more purchases.
(d) The trial provides evidence of customers' actual response before the retailer spends its full advertising budget. [1] It can choose a message more likely to generate sales and avoid wasting promotion costs on a less effective message. [1]
Question 10 Report
When a former chef starts a business producing chilled soup for local offices, he writes down his sales forecast before buying manufacturing equipment. His market research suggests that customers want fresh soup delivered before lunchtime. He is deciding whether the forecast should be shown to a potential investor.
(a) Identify one factor that could make the sales forecast inaccurate. [1]
(b) Explain one reason why the investor would want to see the sales forecast. [1]
(a) A sales forecast could be inaccurate because of a change in customer demand, a new competitor, incorrect market research, or changing economic conditions. Any of these can mean actual sales differ from the predicted figure. [1]
(b) An investor wants to see the forecast because it helps them judge likely future sales revenue and whether the business may make a return on their investment or repay finance. [1]
Examination reminder: A forecast is an estimate, not a guarantee. Explain uncertainty by identifying a factor that could change after the forecast is made.
(a) A sales forecast could be inaccurate because of a change in customer demand, a new competitor, incorrect market research, or changing economic conditions. Any of these can mean actual sales differ from the predicted figure. [1]
(b) An investor wants to see the forecast because it helps them judge likely future sales revenue and whether the business may make a return on their investment or repay finance. [1]
Examination reminder: A forecast is an estimate, not a guarantee. Explain uncertainty by identifying a factor that could change after the forecast is made.
Question 11 Report
Which one of the following actions by a cosmetics manufacturer is most likely to reduce animal welfare concerns: testing a new face cream on rabbits, using ingredients tested only through non-animal methods, increasing the price of the product, or moving its office? GlowKind has received online comments from people who want cruelty-free products. It is deciding whether to change its product-development process.
(a) Which action is most likely to reduce animal welfare concerns? [1]
(b) Explain one reason why GlowKind should check that a supplier's cruelty-free claim is genuine. [2]
(c) What is one possible consequence if customers discover that the claim was false? [2]
(a) The action most likely to reduce animal-welfare concerns is using ingredients tested only through non-animal methods. This avoids testing the new product through methods involving animals. [1]
(b) GlowKind should check the supplier’s claim so that it has accurate information before making a cruelty-free claim itself. Otherwise it could mislead customers and damage its ethical reputation. [2]
(c) If customers discover the claim was false, they may stop buying the product, causing sales to fall. The business could also receive complaints, negative publicity, or legal action for misleading claims. [2]
(a) The action most likely to reduce animal-welfare concerns is using ingredients tested only through non-animal methods. This avoids testing the new product through methods involving animals. [1]
(b) GlowKind should check the supplier’s claim so that it has accurate information before making a cruelty-free claim itself. Otherwise it could mislead customers and damage its ethical reputation. [2]
(c) If customers discover the claim was false, they may stop buying the product, causing sales to fall. The business could also receive complaints, negative publicity, or legal action for misleading claims. [2]
Question 12 Report
Read the information below about a family manufacturer of reusable lunch boxes. It currently sells mainly to schools. The owners want the business to be known for durable products and have decided not to use cheaper plastic, even though this could reduce costs. A buyer has asked the business to state its aims before discussing a long-term supply contract.
(a) What is meant by a business aim? [1]
(b) Explain one reason why the owners may choose product quality as an aim. [2]
(c) Which one of the following is a financial objective?
A Reduce damaged items returned by customers.
B Achieve a net profit of $30 000.
C Use recycled packaging on every product.
D Train all manufacturing staff. [1]
(a) A business aim is the broad, long-term purpose or overall goal of a business. [1]
(b) Making durable, high-quality lunch boxes can improve customer satisfaction and the business's reputation. [1] Satisfied customers may buy again, recommend the product, or accept a higher price, helping the business in the long term. [1]
(c) Achieving a net profit of \(\$30\,000\) is a financial objective. [1] Profit is measured in money; reducing returns, using recycled packaging, and training staff are non-financial targets.
(a) A business aim is the broad, long-term purpose or overall goal of a business. [1]
(b) Making durable, high-quality lunch boxes can improve customer satisfaction and the business's reputation. [1] Satisfied customers may buy again, recommend the product, or accept a higher price, helping the business in the long term. [1]
(c) Achieving a net profit of \(\$30\,000\) is a financial objective. [1] Profit is measured in money; reducing returns, using recycled packaging, and training staff are non-financial targets.
Question 13 Report
Table 1 shows the finance plan of a cosmetics business that has received a large order from a supermarket. It needs ingredients, containers and labels before the supermarket pays its invoice 60 days after delivery.
| Requirement | Amount ($) | Payment timing |
|---|---|---|
| Ingredients | 8,400 | Pay supplier in 30 days |
| Containers and labels | 3,600 | Pay immediately |
| Supermarket sales invoice | 18,000 | Received in 60 days |
(a) Identify the total manufacturing cost shown in Table 1. [1]
(b) Which source of finance could allow the business to receive money from the supermarket invoice earlier: factoring, retained profit or a mortgage? [1]
(c) Explain one disadvantage of factoring for this business. [2]
(d) Explain why finance is needed even though forecast sales are greater than manufacturing costs. [2]
(a) Total manufacturing cost = $8,400 + $3,600 = $12,000. [1]
(b) Factoring can allow the business to receive money from the supermarket invoice earlier. [1]
(c) A factoring company charges a fee or advances less than the full invoice value. This reduces the profit made from the supermarket order. [2]
(d) The ingredients and packaging costs must be paid before the supermarket pays the $18,000 invoice after 60 days. The business can therefore have a temporary cash-flow shortage even though sales revenue is greater than manufacturing cost and the order may be profitable overall. [2]
(a) Total manufacturing cost = $8,400 + $3,600 = $12,000. [1]
(b) Factoring can allow the business to receive money from the supermarket invoice earlier. [1]
(c) A factoring company charges a fee or advances less than the full invoice value. This reduces the profit made from the supermarket order. [2]
(d) The ingredients and packaging costs must be paid before the supermarket pays the $18,000 invoice after 60 days. The business can therefore have a temporary cash-flow shortage even though sales revenue is greater than manufacturing cost and the order may be profitable overall. [2]
Question 14 Report
A seaside guesthouse has received online reviews from customers who stayed during the summer. Many praise the location, but several mention that families could not find rooms with enough beds. The owner is deciding whether to convert two large double rooms into family rooms. This could attract a new customer segment but would reduce the number of rooms available for couples.
(a) Identify the customer segment that appears to have an unmet need. [1]
(b) Explain one benefit of converting rooms for this segment. [2]
(c) Explain one risk of using only online reviews to make the decision. [2]
(d) Which one of the following would provide further useful evidence: asking recent guests about room needs, changing the guesthouse logo, repainting the office, or replacing the owner's car? [1]
(a) The customer segment with an unmet need is families or customers travelling with children. [1]
(b) Converting rooms provides family rooms that meet a stated customer need. [1] This may encourage more families to book, increasing occupancy or sales. [1]
(c) People who write online reviews may not represent all guests and may be unusually satisfied or dissatisfied. [1] The owner could therefore make an expensive change, reducing rooms for couples, without enough genuine demand from families to replace those bookings. [1]
(d) Asking recent guests about room needs would provide useful further evidence. [1] It gathers information directly relevant to whether enough customers require family rooms.
(a) The customer segment with an unmet need is families or customers travelling with children. [1]
(b) Converting rooms provides family rooms that meet a stated customer need. [1] This may encourage more families to book, increasing occupancy or sales. [1]
(c) People who write online reviews may not represent all guests and may be unusually satisfied or dissatisfied. [1] The owner could therefore make an expensive change, reducing rooms for couples, without enough genuine demand from families to replace those bookings. [1]
(d) Asking recent guests about room needs would provide useful further evidence. [1] It gathers information directly relevant to whether enough customers require family rooms.
Question 15 Report
Read the information below about a sportswear business. Its online market research identifies three groups: competitive runners who value performance fabrics, gym beginners who want low prices, and people who buy clothing mainly for casual wear. The business must choose one segment for a new advertising campaign with a budget of $12 000.
(a) Identify the segment most likely to value performance fabrics. [1]
(b) What type of market segmentation is based on customers' main reason for buying sportswear? [1]
(c) Explain one reason why the business should estimate the size of each segment before selecting its target market. [2]
(d) Explain one reason why the competitive-runner segment may still be selected even if it is smaller than the casual-wear segment. [3]
(a) Competitive runners are most likely to value performance fabrics. [1]
(b) Segmentation based on the main reason for buying is behavioural segmentation, also called benefit segmentation. It groups customers according to the benefit they seek from a product. [1]
(c) The size of a segment shows the number of possible customers. This helps the business estimate likely sales and decide whether enough sales could be generated to recover the $12 000 advertising cost. [2]
(d) Competitive runners may be willing to pay higher prices for specialist performance products. This can create a higher profit margin on each sale. Therefore, even though the segment is smaller than casual-wear buyers, it may generate more profit overall and better meet the business objective. [3]
(a) Competitive runners are most likely to value performance fabrics. [1]
(b) Segmentation based on the main reason for buying is behavioural segmentation, also called benefit segmentation. It groups customers according to the benefit they seek from a product. [1]
(c) The size of a segment shows the number of possible customers. This helps the business estimate likely sales and decide whether enough sales could be generated to recover the $12 000 advertising cost. [2]
(d) Competitive runners may be willing to pay higher prices for specialist performance products. This can create a higher profit margin on each sale. Therefore, even though the segment is smaller than casual-wear buyers, it may generate more profit overall and better meet the business objective. [3]
Question 16 Report
When a mobile coffee cart business reviewed its market research, it found that customers at two nearby office parks wanted morning deliveries. The owner has sufficient retained profit from recent sales and wants to increase the business without selling shares or joining another business. The following are possible plans.
(a) Which one of the following is an internal method of growth for the coffee business?
A. Purchase a competing coffee cart
B. Open a second coffee cart using retained profit
C. Form a merger with a local bakery
D. Take over a national coffee manufacturer [1]
(b) Identify one advantage to the owner of using retained profit to finance this growth. [1]
(c) Explain one reason why the owner should use market research before deciding which office park to serve. [2]
(d) What effect could opening a second cart have on the business's costs? [1]
(a) Opening a second coffee cart using retained profit is an internal method of growth. [1] The business expands its own operations rather than merging with or taking over another business.
(b) Retained profit has no interest payments. [1] It also allows the owner to keep ownership and control, without having to repay a lender.
(c) Market research identifies the level of customer demand at each office park. [1] The owner can then select the location or products most likely to increase sales and avoid spending money where demand is low. [1]
(d) Costs are likely to increase because the business may need another cart, more stock, and possibly another employee. [1]
(a) Opening a second coffee cart using retained profit is an internal method of growth. [1] The business expands its own operations rather than merging with or taking over another business.
(b) Retained profit has no interest payments. [1] It also allows the owner to keep ownership and control, without having to repay a lender.
(c) Market research identifies the level of customer demand at each office park. [1] The owner can then select the location or products most likely to increase sales and avoid spending money where demand is low. [1]
(d) Costs are likely to increase because the business may need another cart, more stock, and possibly another employee. [1]
Question 17 Report
Table 1 shows results from a laundry subscription business. Customers were grouped by household size after a trial of a weekly collection service. The business is considering whether to offer a lower-priced package for smaller households.
(a) Which household segment has the highest average weekly laundry weight? [1]
(b) Identify one reason why a one-person household may not buy the largest package. [1]
(c) Explain why the business could use household size to segment its market. [2]
(d) Show how a package priced at $18 for 6 kg of laundry has a price per kg of $3. [2]
(a) The four-or-more-person household segment has the highest average weekly laundry weight. [1]
Note: the table values are not included in the supplied question material; the identified segment follows the supplied mark scheme.
(b) A one-person household may have less laundry than the largest package allows, or the package may be too expensive for its needs. [1]
(c) Household size affects how much laundry customers need washed. The business can therefore create package sizes and prices that match different households more closely, increasing likely sales. [2]
(d) Price per kilogram is calculated by dividing the package price by its weight:
\[\frac{\$18}{6\text{ kg}}=\$3\text{ per kg}\]
The price is $3 per kg. [2]
(a) The four-or-more-person household segment has the highest average weekly laundry weight. [1]
Note: the table values are not included in the supplied question material; the identified segment follows the supplied mark scheme.
(b) A one-person household may have less laundry than the largest package allows, or the package may be too expensive for its needs. [1]
(c) Household size affects how much laundry customers need washed. The business can therefore create package sizes and prices that match different households more closely, increasing likely sales. [2]
(d) Price per kilogram is calculated by dividing the package price by its weight:
\[\frac{\$18}{6\text{ kg}}=\$3\text{ per kg}\]
The price is $3 per kg. [2]
Question 18 Report
FreshFold is an online clothing business that makes shirts only after customers place orders. A competitor has begun offering next-day delivery from a large warehouse. FreshFold cannot match this delivery speed without holding stock, which could increase costs and the risk of unsold items. The owner is considering a new competitive strategy.
(a) Identify one disadvantage to FreshFold of holding large amounts of stock. [1]
(b) Which one of the following is a suitable way to differentiate FreshFold: made-to-measure shirts, remove all product images, reduce website security or stop responding to customers? [1]
(c) Explain why made-to-measure shirts could be a stronger strategy than attempting to copy the competitor's delivery service. [2]
(a) Holding large amounts of stock can create a risk of unsold stock. [1] It can also increase storage costs or tie up cash that could be used elsewhere.
(b) Made-to-measure shirts are a suitable way for FreshFold to differentiate. [1]
(c) Made-to-measure shirts provide a distinctive benefit that the warehouse competitor may not offer. [1] FreshFold can target customers who value a good fit rather than competing only on next-day delivery, which would require costly stock holding. [1]
(a) Holding large amounts of stock can create a risk of unsold stock. [1] It can also increase storage costs or tie up cash that could be used elsewhere.
(b) Made-to-measure shirts are a suitable way for FreshFold to differentiate. [1]
(c) Made-to-measure shirts provide a distinctive benefit that the warehouse competitor may not offer. [1] FreshFold can target customers who value a good fit rather than competing only on next-day delivery, which would require costly stock holding. [1]
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