RGO is a large airline business. It offers flights to 120 countries using the newest aircraft. Most of RGO’s customers are holiday travellers. RGO sells 80% of its tickets through its website. It works in a competitive market, so keeping customer loyalty matters. One of RGO’s objectives is to raise market share from 8% to 10%. The Managing Director said: ‘One option is to lower ticket prices but to do this we will have to reduce costs.’
(a)[2]
What does the term ‘customer loyalty’ mean?
(b)[2]
Identify two advantages of RGO being a large business.
(c)[4]
Identify and explain two possible problems for RGO if it lowers prices.
(d)[6]
Identify and explain two ways, other than lowering prices, that RGO could increase its market share.
(e)[6]
Explain two ways in which RGO could cut its costs. Recommend which way RGO should choose. 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 chance that existing customers keep buying from a business” …