Kala always wanted to be an entrepreneur. She used to work for a business which downsized its workforce 5 years ago. She then decided to start up CHL. She produced a business plan which helped her obtain finance. Kala now designs customised sports clothes for women. Kala sells these products directly to customers using e-commerce. She has a loyal customer base of 25-40 year olds. However, Kala is worried about increased competition in this niche market. One idea she has is to target different market segments.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. [2] A document containing the business aims/objectives and important details about the operations, finance and owners of a business
2. [2] States aim and/or objectives and shows how business aims to achieve them
3. [1] Partial definition e.g. a document showing what the business intends to do
4. [1] Economic crisis
5. [1] Factory/shop/office closure
6. [1] Merger or takeover
7. [1] Need to reduce costs
8. [1] Changes in management/strategy
9. [1] Automation or replaced by machinery
10. [1] Excess workforce
11. [1] Relocation
12. [2] Increase working capital/examples such as buy inventory or materials/pay day to day costs [k] so prevent cash flow problems [app]
13. [2] To expand/buy more non-current assets [k] so she can enter different market segments [app]
14. [2] To pay for market research and advertising [k] of her sportswear [app]
15. [3] Able to target customers [k] who are mainly women [app] so better able to attract attention of people most likely to buy her products [an]
16. [3] Less rent/fewer employees needed [k] which can help reduce costs [an] for her sportswear [app]
17. [3] Easy to update [k] so keep customers informed [an] about the ways the products can be customised [app]
18. [3] Widen market/more potential customers [k] which can increase revenue [an]
19. [3] Difficult to stand out from competition [k] at a time when she is worried about increased competition [app] leading to lower sales [an]
20. [1] Not everyone has access to internet [k]
21. [1] No passing trade [k] so could mean fewer sales [an]
22. [3] Increased costs of postage/distribution [k] as need to arrange for delivery/vans [an]
23. [1] Need to pay for pop-ups to advertise on popular sites [k]
24. [1] Lack of personal service [k]
25. [1] Customers may want to try before buy [k]
26. [1] Wider market base [k] could increase sales revenue [an]
27. [1] Spreads risk [k] as not reliant on one market for sales [an]
28. [1] Need to know reaction/current level of competition [k]
29. [1] as customers may be loyal to other businesses so not easy to obtain sales [an]
30. [1] High cost and time involved developing new products [k]
31. [1] Cost of promotion [k] as need to attract customer's attention [an]
32. [1] Could change prices e.g. lower prices could lead to lower profit margin/seen as lower quality [k]
33. [1] which could lower sales [an]
34. [1] Size of market could be a factor as if niche market [k]
35. [1] this will limit number of possible sales [an]
36. [2] Yes, selling to other segments means spreading risk [k] as not reliant on one market for sales [an]. This is much better than charging lower prices [k] could reduce revenue [an] if they cannot generate enough extra sales to cover the price reduction which could be a major issue for especially for a small business who not have the sufficient funds to be keep lower prices [eval] so could struggle to remain competitive [eval]