Business Studies · May / June 2026 · Paper 21 · Question 2
0450
As printed in the paper
Show the answer and mark scheme
2(a)[8]
Explain how the following two sections of a business plan could help Ashanti when starting her business.
market researchhuman resources Award 1 mark for how each section a business plan could help Ashanti (max 2). Award a maximum of 3 additional marks for each explanation of the section of a business plan and how could help Ashanti – one of which must be applied to this context. Market researchAble to identify the needs of the market as being targeted at a specific age group – so inventory is more likely to be attractive to this market – sales are likely to be higherMarket research helps to identify that there is sufficient demand for the products – as there may be a gap in the market – shows that the business is more likely to be successfulTo help set prices – at a level that will be suitable for the target market – and to be more competitive with other businessesTo help gain a bank loan – to show that the new business is likely to have the demand to be successful – to be able to repay any loan she takes outTo help identify competitor behaviour – to find out about the range of products available – so she can differentiate the clothes she sells Human resourcesTo estimate how many people need to be employed – to ensure all tasks are completed – so that the business can operate efficientlyTo be able to calculate the cost of wages to be paid by Ashanti - to pay the employees a competitive rate – so she will budget the correct amount for the business to payTo identify the skills needed by employees – so that the employees can carry out their tasks correctly – not make mistakesHelps decide if Ashanti needs a manager – to run the business when she isn’t there – so that she doesn’t have to close Notes:This question is about planning for the future rather than what has been done.The business will sell rather than produce clothes.Do not award functions of market research or human resources.For market research it is the effectiveness that should be discussed rather than the process. For example: Market research will help YC to identify the market as being targeted at a specific age group (1)this will mean products are more likely to be attractive to this market (1)
and sales are likely to be higher (1)
making the start-up clothes shop more likely to succeed (app). Application could include: clothes;
clothes shop;
sole trader;
target market aged 16–30;
$20 000;
3/4 employees;
40% are in age group 16–30;
use competitive pricing method;
use social media;
economic growth predicted to be 4%;
information from Appendix 3.
2(b)[12]
Using Appendix 1 and other information, consider the following two elements of the marketing mix for Ashanti’s new shop. Would these be suitable as part of the marketing mix for the new shop? Justify your answer.
price – using competitive pricingpromotion – using social media Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both elements. Well-justified conclusion. Candidates discussing both elements in detail, in context and with a well-justified conclusion why these elements would or would not be a suitable part of the marketing mix 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 element. Judgement with some justification / some evaluation of conclusion made. Candidates discussing both elements 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 elements with little/no explanation. Simple judgement with limited justification / limited evaluation of conclusion made. Candidates outlining both elements in context should be rewarded with the top marks in the band. 1–4 No Creditable Response Notes:There are no marks for definitions.Understanding of competitive pricing must be implicitly shown (some idea of similar price to competition rather than lower prices).Understanding of social media must be implicit in the answer not just using websites/internet.Simple statements such as competitive pricing will attract customers and raise sales are not credited.Alternative pricing methods can be discussed – skimming, cost plus, penetration. Relevant points might include: Price – using competitive pricingCompetitive pricing should encourage customers to visit the new shop when it is first entering the market by setting prices similar to/lower than competitors – increasing sales/revenueMay need to set a very low price if competitors are setting a very low price – the target market are young people aged 16–30 who may not have a high income to buy clothesTime will be taken to research the prices of competitors’ products – may mean Ashanti is taken away from other tasks when setting up the shop – many products will need to be researchedThe prices may be so low as to not cover costs / make no profit – so may be better to use cost-plus pricingMay be better to use an alternative pricing method which sets a low price – such as penetration pricing – to encourage young people to enter the shop and buy clothes – as it is new to the market Promotion – using social mediaAdvertising on social media so will be seen by a large number of people – raising awareness of the new range of clothes at the shopAdvertising can be focused on the target market of young people aged 16–30 – so advertising is more effectiveCan use the language/culture of young people to advertise the new range of clothes – making it more accessible and appealing to the target marketLow or no cost to advertise – may not need to pay for adverts to be designed / design own adverts to post onlineDirect interaction with customers to answer questions / post favourable comments – satisfied customers will be able to quickly advertise the new clothes for YC – increasing sales / encouraging customers to try the new clothing Promotion – using social mediaAdvertising on social media so will be seen by a large number of people – raising awareness of the new range of clothes at the shopAdvertising can be focused on the target market of young people aged 16–30 – so advertising is more effectiveCan use the language/culture of young people to advertise the new range of clothes – making it more accessible and appealing to the target marketLow or no cost to advertise – may not need to pay for adverts to be designed / design own adverts to post onlineDirect interaction with customers to answer questions / post favourable comments – satisfied customers will be able to quickly advertise the new clothes for YC – increasing sales / encouraging customers to try the new clothingNot all customers may use social media – do not see the advertising and not aware of the clothes shopThere may be negative comments posted – difficult to counter negative publicity and may damage the reputation of the new shopAlternative methods of promotion may be discussed such as sales promotion examples of discount vouchers Conclusion Justification might include:Competitive pricing will be suitable as the price will encourage customers to visit the new clothes shop. This will help to ensure customers buy clothes and revenue is gained. Advertising on social media will also be suitable as it will widen the market for the new shop as more people can be reached with 40% of Main City in the target age group and will also generate revenue for this sole trader business.The method of promotion is suitable but competitive pricing is not the best pricing method to choose. Setting the same price as competitors may not attract customers who are price sensitive. Penetration pricing might be a better method for the target market of those aged 16–30 years as this could lead to more customers coming to the shop when it is new and may increase revenue.
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