Karen is a sole trader who operates a service business called Hot Bubblez (HB) from her own home. It is a laundry service in town P. Each day Karen spends the morning collecting laundry from customers' homes. Karen then washes, dries and irons the laundry and then delivers it back to customers' homes in the evening. She owns two washing machines, two drying machines and one iron. Each batch of washing takes approximately two hours to wash, dry and iron. Karen has completed some market research about which method of laundry households use in town P (see Fig. 1.1). There are 60000 households in town P. [Figure 1.1] Karen has 300 households that use HB's laundry service. Karen would like to employ someone to do the collections and deliveries. Karen has always relied upon customer recommendations to promote HB. However, she has not been able to gain any new customers and she thinks it is time for new promotion methods to be used. She would like to target the hotel laundry market. Table 1.1 shows some data about the local hotel market. [Table 1.1]

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [0] No creditable content
4. Content: An intangible product/process (1) which is offered to / paid for by customers (1). An action (1) sold by business (1).
5. A correct definition will include the following points: • something sold by a business / bought by a customer / to satisfy needs or wants • an idea of intangibility.
6. Exemplar: Something a customer buys which cannot be touched. [2] Both elements covered
7. Exemplar: A process sold by a business. [2] Both elements covered
8. Exemplar: An intangible product. [1] One element
9. Exemplar: Something sold by a business. [1] One element
10. Exemplar: A tertiary business [0] Not a definition of a service.
11. Award one mark for each point of explanation:
12. B One mark for each of the following (up to a maximum of two marks): • unlimited liability • shared legal identity with business • no continuity • no requirement to produce or make available accounts • no shares/shareholders • unincorporated • likely to be a small business • the owner keeps all the profits or bears the losses • has all the risk • has full control • makes all decisions themselves • example of a sole trader.
13. A One individual or one person (must be a clear idea of a single person)
14. Exemplar: A sole trader is owned by one person (A) who has unlimited liability (B) and does not need to publish financial accounts (Β). [3] All three elements
15. Exemplar: Owned and controlled by one person who bears the risk. [3] All three elements
16. Exemplar: A sole trader is owned by a single person (A) and does not have shareholders (B) [2] A and B
17. Exemplar: A one person business (A) [1] One mark only
18. Exemplar: A business where there is unlimited liability (B), no need to produce financial accounts, no continuity and no shareholders. [0] B only, which cannot be awarded without the A mark.
19. Exemplar: Owned business. [0] Tautology
20. [4] Correct answer with or without correct working or units.
21. [3] Attempt using some of the correct figures.
22. [2] Formula* and identification of correct numbers (i.e. 20% of 60 000).
23. [1] Formula* or identification of correct numbers (i.e. 20% of 60 000).
24. [0] No creditable content.
25. Content: Formula = Current share of the market / Total market size × 100
26. Total market = 60 000 households
27. Percentage who use a laundry service = 20%
28. 20% of 60 000 = 12 000 households
29. 300 households / 12000 households × 100 = 2.5%
30. Answer = 2.5% (allow 2.5)
31. Content: Factors affecting scale are about the ability of a business to supply products, not the demand of the market. These factors are likely to involve: • Capital - the quantity and quality of the capital items in a business, such as machinery – this can include human capital. • Labour - the quantity and quality of the workforce. • Enterprise - the ability and willingness of an entrepreneur to take risks, find business opportunities. • Land - the quantity and quality of natural resources available to the business
32. Context may include: • Karen is a sole trader – limited availability of finance to purchase washing machines, irons etc. • Machinery – Karen only owns two washing machines, two dryers and one iron • The use of washing machine / dryer / iron – affects the batch size of washing • The use of batch production • The time HB takes to do a load of washing (two hours) • The transport used by Karen (van) and the amount of laundry she can carry • Karen as an entrepreneur • The new worker
33. Analysis may include: • The impact this factor may have on the scale of HB • The factor may (or have the potential to) increase HB's scale • The factor may (or have the potential to) decrease HB's scale
34. Development of this affect may be on HB's revenue, costs and/or profit or another likely objective of HB, such as expansion or the industrial market.
35. Level 2 (APP) Explanation of an appropriate method of recruitment in context [2]
36. Level 1 (K) Identification of a method of recruitment [1]
37. Level 0 No creditable content [0]
38. Methods may include: • External recruitment • Internal recruitment (unlikely to be contextual) • Job advertisements • Job centre • Local online job websites • Recruitment agencies • Personal recommendations • Social media • Direct recruitment
39. Context may include: • Requires travel around local area/town. • HB operates from Karen's home. • Laundry market. • No other workers currently in business. • No specialist qualifications required (maybe driving licence). • Knowledge of local area • HB is a small business (sole trader).
40. Content: Knowledge may include: • Above the line; advertising (TV, radio, newspaper, etc.) • Below the line; direct promotion, website, leaflets, etc. • Through the line; social media, viral promotion, etc. • Informational and persuasive methods
41. Context may include: • Lack of finance, due to being a sole trader • Small business • Hotel/industrial market (B2B) • Data from Table 1.1 – 14 hotels in town P, 45 hotels within 30 mile of HB, 50 per cent of hotels have own laundry service (7 hotels in town P, 22/23 within 30 miles, 29/30 hotels in total)
42. Analysis may include: • Local advertising – appropriate to target the hotel industry – e.g. hotel trade publications, possibly local radio, billboards. • Sponsorship – unlikely to be targeted enough to the hotel market. • Public relations – could be targeted towards the hotel market if the articles/reports are in hotel related publications/programmes. • Personal selling – a sensible approach that has limited cost (for a small business such as HB) and could be done by Karen visiting local hotels to sell her service. Could also be done by a salesperson hired by Karen, possibly on commission only payment. • Direct marketing – again a sensible solution that keeps it under Karen's control. Can be done with a limited budget and Karen can target the hotels in the local area. • Sales promotion – unlikely to help HB enter the new market alone, but in combination with other informative methods may be a sensible approach to allow Karen to penetrate this new market. • Promotional price – do not reward use of price, but promotional pricing such as BOGOF, discounts sales promotions are rewardable.
43. Evaluation may include: • A judgement over the most appropriate promotion method for HB • Evaluation of the appropriateness of different promotion methods for HB • What the choice of promotion method may depend upon
44. Examples of how an answer could develop and how it should be annotated. Personal selling (K) Karen could visit each hotel which does not have its own laundry service. (APP) This should allow Karen to explain all the advantages of her service and answer the managers questions. (AN) This might make the hotels more willing to use HB's service. (DEV) Personal selling is likely to be a better promotion method than direct mail. (EVAL) This is because Karen can explain the USP of HB and try to convince the hotel to use her service. (EVAL) However, it depends on whether Karen is a good salesperson. If she is not good at selling her service, then it could be a waste of time and money. (EVAL)
45. Examples of how an answer could develop and how it should be annotated. Direct marketing (K) Karen could send details of her service to the 14 hotels in town P. (APP) A relatively low cost method because there are only 14 hotels. (AN) But it may be seen as junk mail and ignored by the hotels, so HB will not gain any new customers. (DEV)