LBM is an online fashion clothing retailer. LBM's target market is 18-35 year olds. Last year revenue increased by 25% to $600m. The Marketing Director said: 'All businesses have to satisfy customer needs. Customer service is important which is why all employees receive induction training. LBM offers customers a wider range of products than its competitors. Promotion is through social media networks. Is there any reason to open our own shops?' LBM plans to add 3500 new styles each week and will need to arrange finance for the additional inventory.

Mark scheme

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

1. [2] (a) Introduction given to new employees explaining the businesses activities, customs and procedures and introducing them to other workers
2. [2] (a) A training programme to help new recruits become familiar with their workplace, the people they work with and the procedures they need to follow
3. [1] (a) Training for new employees
4. [1] (a) give introduction about the business to employees
5. [1] (a) training given to employees before they are employed so they know what to do
6. [1] (b) increase sales OR increase revenue OR increase customers OR increase market share
7. [1] (b) build customer relations OR way to build customer loyalty OR maintain sales
8. [1] (b) help it remain competitive
9. [1] (b) reduce complaints
10. [1] (b) improve brand image OR reputation
11. [2] (c) Lack expertise OR unable to focus on single product OR less specialised [k] which could damage customer service [app]
12. [2] (c) Increased warehouse space OR increased cost of storage [k] for the new styles [app]
13. [2] (c) Lots of competitors [k] as others may focus on specific age groups between 18-35 [app]
14. [1] (c) Additional cost of purchasing items [k]
15. [2] (c) Increased risk of obsolescence [k] especially as trends in clothing can change quickly [app]
16. [3] (d) Able to attract passing trade OR increase sales [k] for its clothing [app] to increase revenue [an]
17. [3] (d) Can help advertise/promote [k] its new styles [app] increasing awareness OR interest in the business [an]
18. [3] (d) Able to have personal contact with customers [k] so able to provide a better customer service [app] which can help maintain customer loyalty [an]
19. [3] (d) Increase costs OR requires additional finance [k] for this online retailer [app] as need to pay rent [an]
20. [2] (d) No guarantee of additional sales [k] as promotion is through social media [app]
21. [3] (d) Increased number of employees needed [k] to provide the customer service [app] increasing labour costs [an]
22. [3] (e) Overdraft or short-term loan [k] which will have to pay interest on [an] increasing its expenses or cash outflows [an]
23. [3] (e) Ask suppliers for trade credit [k] for the 3500 styles [app] which will allow them time to sell its products before need to repay [an]
24. [1] (e) Cash reserves [k]
25. [2] (e) Justified decision made as to which source of finance LBM should use for the additional inventory