Samira owns a successful business selling takeaway fried food. She employs 2 part-time workers. Last year revenue fell for the first time in 10 years. This was because of increased competition from a well-known franchise. To respond to this, Samira could lower her prices, as shown in Table 1. Another option is to start a delivery service. Samira plans to do some market research. She has to decide whether to use secondary research or set up a focus group with some of her customers. Table 1: Price and variable cost information for Samira's business Current price Average price per item $4 Average variable cost per item $2 Forecast average number of customers per week 200 New price Average price per item $3 Average variable cost per item $2 Forecast average number of customers per week 300

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [2] (a) A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the licence to operate this business from the franchisor.
2. [2] (a) A business system where entrepreneurs buy the right to use the name, logo and product of an existing business.
3. [1] (a) Using the name or logo of another business
4. [2] (b) 900
5. [1] (b) 300 × 3 OR price times number of customers
6. [2] (c) Pay its day to day expenses [k] of producing/selling (fried) food [app]
7. [2] (c) Measure of success/size of business [k] against increased competition [app]
8. [2] (c) Need it to generate profit OR breakeven [k] for her takeaway [app]
9. [1] (c) Steady amount can help gain credit/support loan application [k]
10. [3] (d) Cost OR finance OR examples, e.g. have to buy/hire vehicle for deliveries [k] of takeaways [app] as may not be able to afford it [an]
11. [3] (d) Labour issues, e.g. access to workers [k] as she only has 2 part time employees [app] would they be willing or able to do the extra work [an]
12. [3] (d) Demand issues, e.g. as are there enough customers interested in the service [k] from her market research [app] otherwise may not generate sufficient extra revenue [an]
13. [1] (d) Does she have capacity/space/equipment to provide for the new service [k]
14. [2] (d) Actions of competitors, e.g. how many competitors offer this service [k] as already facing increased competition from the franchise [app]
15. [2] (e) Low cost way to gain information [k] so money saved can be used for other purposes [an]
16. [2] (e) Readily available [k] so decisions can be made quickly [an] about whether to increase prices [app]
17. [2] (e) May be out of date [k] which means the information may not be relevant [an]
18. [2] (e) Highly detailed responses OR chance to ask for explanations/follow up questions [k] which could allow her to make more informed decisions [an] such as whether to offer the delivery service [app]
19. [1] (e) Competitors do not have access to this information [k]
20. [2] (e) Some group members can influence what others say [k] leading to unreliable results [an]
21. [2] (e) High cost [k] which is not helpful at a time when revenue has fallen [app]
22. [1] (e) Time consuming to set up/carry out [k]
23. [2] (e) Justified decision made as to which of the two methods of market research Samira should use