Explain one advantage and one disadvantage to Simon of using crowd-funding as a source of finance for FJ.

Mark scheme

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

1. [1] (a) Advantage: May have no initial fees to be paid to the crowd-funding platform
2. [1] (a) Advantage: Allows public reaction to the new business venture to be tested
3. [1] (a) Advantage: Can be a fast way to raise substantial sums of money
4. [1] (a) Advantage: May be used when other more 'traditional' sources are not available
5. [1] (a) Disadvantage: Crowd-funding platforms may reject Simon's proposal if it is not well thought through
6. [1] (a) Disadvantage: If total amount required is not raised, then the finance promised will have to be repaid
7. [1] (a) Disadvantage: Interest from the public will need to be generated to increase the chance of successfully raising the amount required
8. [1] (a) Disadvantage: May allow competitors to steal the idea and reach the market first
9. [1] (a) Explanation of advantage (e.g., Crowd-funding will allow large amounts of capital to be raised so Simon can start producing a large output of fruit drinks quickly)
10. [1] (a) Explanation of disadvantage (e.g., This will allow Simon to enter the new market before competitors can copy his drinks)
11. [1] (a) Application to context (e.g., and he will not have to pay back the money, unlike a bank loan.)
12. [9-12] (b) Level 3: Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more methods of market research. Well-justified conclusion. Candidates discussing the three methods in detail, in context and with well-justified conclusion including why the alternative methods were rejected should be rewarded with the top marks in the band.
13. [5-8] (b) Level 2: Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one method. Judgement with some justification/some evaluation of choice made. Candidates discussing two or more methods in detail and applying it to the case should be rewarded with the top marks in the band.
14. [1-4] (b) Level 1: Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the methods of market research with little/no explanation. Simple judgement with limited justification/limited evaluation of choice made. Candidates outlining the three methods of market research in context should be rewarded with the top marks in the band.
15. [0] (b) Online questionnaire advantage: Faster with quicker replies than other forms of survey
16. [0] (b) Online questionnaire advantage: Cheaper to collect quantitative data about customer purchases of drinks than interviews
17. [0] (b) Online questionnaire advantage: Can collate results about customer consumption of healthy drinks saving Simon time
18. [0] (b) Online questionnaire disadvantage: But with no interviewer questions may not be understood and answers less valid
19. [0] (b) Online questionnaire disadvantage: May not gain a wide range of views if people do not have the internet
20. [0] (b) Government population data advantage: Quicker to collect than primary sources
21. [0] (b) Government population data advantage: Gives an idea of age groups in the local area and total size of the market for fruit drinks
22. [0] (b) Government population data disadvantage: But this does not tell Simon which fruit juices people will like
23. [0] (b) Government population data disadvantage: May be out of date
24. [0] (b) Government population data disadvantage: Data is available to all drink's businesses including competitors
25. [0] (b) Focus group advantage: Qualitative data so opinions on different fresh fruit drinks can be gathered
26. [0] (b) Focus group advantage: Questions can be explained so opinions on which fruits to include in drinks is more reliable
27. [0] (b) Focus group advantage: Quicker and cheaper than individual interviews
28. [0] (b) Focus group advantage: Primary research is up to date and relevant
29. [0] (b) Focus group disadvantage: But expensive and time consuming to collect
30. [0] (b) Focus group disadvantage: Discussion could be biased if some of panel members have strong opinions on which fruits to include in drinks
31. [0] (b) Justification (Focus Group/Online Questionnaire preference): If opinions are required, then focus group or online questionnaire may be better as gain this data directly from potential customers. Also, if the budget for market research is high then a focus group will gather more qualitative data that may be more useful in developing the most successful new fruit drinks.
32. [0] (b) Justification (Government data preference): If only data on the total market is required, then accessing government population data might be best as it is cheap to collect and readily available giving details of the total size of the market for fruit drinks. It also does not take much time to collect unlike a focus group that will need to be set up, participants selected and invited to attend. Then the focus group will need to be led by an experienced market researcher or the data may be less accurate. An online questionnaire will still also need to have a suitable sample of respondents for it to be useful.