Business Studies 0450 Oct / Nov 2023 Paper 21 Question 2

2(a) Explain two limitations and two benefits to a business of developing new products. 1 mark for each limitation/benefit (max of two limitations/benefits). Award a maximum of one additional mark for each explanation of the limitation/benefit of developing new products. There are no application…

Business Studies · Oct / Nov 2023 · Paper 21 · Question 2

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2(a)[8]
Explain two limitations and two benefits to a business of developing new products. 1 mark for each limitation/benefit (max of two limitations/benefits). Award a maximum of one additional mark for each explanation of the limitation/benefit of developing new products. There are no application marks available for this question. Relevant answers might include: Limitations:
Would need to carry out market research to see if there is a market for the new product – which is expensive/may not be accurate
Analysing the results to develop a new product that meets customer needs takes time – could have been used for alternative tasks
Trailing new products is expensive – as a free sample of the new product to try out still costs the business to produce
Demand may be so low that revenue does not cover costs/may not be a market for the new product – the new product may have to be withdrawn
Image of the business could be damaged – if the new product does not meet customer needs Benefits:
It could have a USP – which could make the products more popular with consumers than those of other businesses/business remains competitive
It could attract a different market segment/new customers/expand into a new market – leading to higher sales and revenue
It could encourage existing customers to buy the new product/return more often – increasing market share
It spreads risk/diversifies as the choices for customers may now be wider – reducing the likelihood of revenue falling if one product does not sell
Developing new products first before competitors – may be able to charge a higher price and achieve higher sales/revenue For example: Trialling new products is expensive (1)
as a free sample of the new product to try out still costs the business to produce (1).
2(b)[12]
Consider the advantages and disadvantages of the following three methods PH uses to collect market research data. Which method is most likely to ensure that accurate data is collected? Justify your answer.
A focus group made up of existing customers
An online survey with only 5 questions
Secondary research including government sources Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more methods. Well-justified conclusion. Candidates discussing all three methods in detail, in context and with a well-justified conclusion including why the alternative methods were rejected should be rewarded with the top marks in the band. 9–12 Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one method. Judgement with some justification / some evaluation of choices made. Candidates discussing two or more methods in detail and applying them to the case should be rewarded with the top marks in the band. 5–8 Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the methods with little/no explanation. Simple judgement with limited justification / limited evaluation of choices made. Candidates outlining three methods in context should be rewarded with the top marks in the band. 1–4 No creditable response. Relevant points might include: Market research method Advantages Disadvantages A focus group made up of existing customers
Asking questions of people that work in the construction and mining industries who are already familiar with the products – more likely to gain detailed/honest information about existing products - good and bad points to help develop a new protective hat
Interaction between members of the focus group can help the researchers understand the reasons for existing customer opinions
Discussion is likely to be biased – as the sample in the focus group is restricted to existing customers – may not gain information about existing competitors/the requirements for a new mining hat – may lose sales if new product doesn’t meet customer needs
Limited number of people asked as focus groups are small – may not gather the opinions of a large enough sample to gain accurate research data
Can be time-consuming and expensive to conduct – especially if carried out for PH by a specialist market research agency Market research method Advantages Disadvantages An online survey with only 5 questions
Results can be automatically analysed and presented using IT – quicker and cheaper to collate the results than alternative forms of survey
Fast and with quicker response times than postal survey – can be emailed out to existing customers of the hats to complete the survey – already have their email addresses so quick to send out links to the survey
Cheaper to carry out than interviews or postal questionnaires – no personnel or postage to pay
Larger sample from different parts of the world
Only including 5 questions may restrict the answers – less likely to be accurate due to other options not being available to answer
Absence of interviewer or person to explain the question – may be misinterpreted so results less accurate
May be completed quickly and therefore may not be taken as seriously as an interview when being asked questions – again results may not be accurate
May not be completed by a wide range of potential customers from the construction industry – as don’t have access to their contact details/they don’t have the internet Secondary research including government sources
Reliable as collected by the government – more likely to be accurate as less likely to be biased/carried out by experts
May be free to access information about the construction companies in the country – reducing market research costs
May be out of date – therefore may not reflect current trends
Restricted to single secondary source – may have been collected for a purpose that does not inform PH about their market – e.g. general information about mining industries
Available to competitors – so may not help competitiveness Market research method Advantages Disadvantages Conclusion Justification may include:
A focus group is likely to be the most accurate as it uses existing customers who are already familiar with the hats. It will allow detailed information to be gathered on the opinions of existing customers. Online surveys may not sample a wide enough group of people and the answers will be restricted by only 5 questions being asked so the answers to other questions will not be gathered. Government statistics may be out of date and therefore not reflect current trends in industries such as mining.
An online survey is likely to be most accurate as it can ask for responses about hats for construction sites and mining from a much larger sample than the focus group. This is more likely to provide opinions from a wider group of people than just existing customers as well.
Secondary research is likely to be the most accurate as government data on construction and mining industries will have been gathered by experts and hence is unlikely to contain inaccuracies or be biased.

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