Business 0450 · IGCSE · Marketing, competition and the customer
Marketing, competition and the customer — practice question
Having spent 20 years working in a bank, Luis has savings of $5000. He wants to launch his own business that sells and repairs mobile (cell) phones. The market is highly competitive. Luis has chosen not to buy a franchise for $4500 because he thinks it is better to run the business on his own rather than act as a franchisee. From his primary market research, he estimates he will need 15 customers each week to break even. Luis thinks that creating customer relationships will matter. He intends to use social networks to promote his new business.
(a)[2]
What does ‘break even’ mean?
(b)[2]
What does ‘primary market research’ mean?
(c)[4]
Identify and explain two reasons why Luis should build customer relationships.
(d)[6]
Identify and explain two benefits to Luis’s business of using social networks for promotion.
(e)[6]
Do you agree with Luis’s decision to stay independent rather than become a franchisee? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The output level where total costs are equal to total revenue, or the amount of output at which the business makes neither a profit nor a loss.” …