WYP operates as a partnership business. Greg and his 3 friends launched the business 7 years ago. WYP manufactures eyeglasses (spectacles), which are sold only via its website. Each pair of glasses costs $95. That is $200 cheaper than its main rival. Greg said: ‘It was hard at the beginning because we were unable to obtain trade credit. We also knew that building customer loyalty would take time.’ Greg believes that selecting the right promotion method is vital to the success of any new product.
(a)[2]
Define the term ‘partnership’.
(b)[2]
Define the term ‘customer loyalty’.
(c)[4]
Outline two reasons why WYP might have been unable to obtain trade credit.
(d)[6]
Explain two possible problems for WYP caused by charging low prices.
(e)[6]
Do you think promotion is more significant than product for a new business? 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: “Two or more people who agree to own a business jointly” …