Following the end of a recession in country X, Beena wants to start up a hairdressing business. One option is to purchase a franchise from an established hairdressing business. Beena has $800 in savings and knows having enough working capital will be important for her business. She plans to use market research to help her decision-making. Beena knows there are many ways to segment a market.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. [2] When there is a period of falling gross domestic product / GDP
2. [2] OR a sustained (over a period of time) reduction in GDP / national income / output
3. [1] Partial definition e.g.-fall in output / fall in GDP
4. [1] Age
5. [1] Gender
6. [1] Socio-economic group / social status / class
7. [1] Geographical / region / location
8. [1] Lifestyle
9. [1] Ethnic group
10. [1] Family characteristics
11. [1] Education
12. [1] Occupation
13. [1] Use of product
14. Award: Demographic-if age / gender / socio-economic group / social status/ethnic group not awarded
15. Psychographic if lifestyle, personality, and attitudes not awarded
16. [k] To pay for (day-to-day) expenses / short-term debts; [app] of her hairdressing business
17. [k] Evidence to support loan applications; [k] if she decides to take the franchise; [app]
18. [k] Use in an emergency / pay for unexpected expenses; [k] in case she needs more than $800; [app]
19. [k] To ensure the business has a good credit reputation; [k] especially as her business is a start-up; [app]
20. [k] Ensures the business can take advantage of discount on bulk purchases
21. [k] Established brand / well-known brand; [k] therefore no need to spend on advertising; [an]
22. [k] Reduces risk of failure; [k] especially after a recession; [app]
23. [k] Training / advice offered by franchisor; [k] which saves costs; [an] which is important for a start-up business; [app]
24. [k] Attracts customers; [k] helping to ensure / increase revenue; [an] for her hairdressing business; [app]
25. [k] Easier to obtain finance / bank more willing to lend; [k] which may be necessary with savings of $800; [app]
26. [k] Franchisor pays for advertising
27. [k] Stock control and accounting systems often provided by franchisor; [k] which can help make business more efficient; [an] and improve her working capital; [app]
28. [k] All supplies are obtained from a central source / the franchisor; [k] which can help ensure quality; [an]
29. [k] Fewer decisions to be made (than an independent business)
30. [k] Relevant / up to date data gathered; [k] so should help you find out what you want to know; [an]
31. [k] High cost / time to collect information; [k] which a new business might not be able to afford; [an]
32. [k] Only available to own business
33. [k] May find it difficult to find people that represent target market / population
34. [k] May not be relevant / outdated; [k] which can lead to wrong decisions; [an]
35. [k] Readily available
36. [k] Cheap
37. [k] Can collect wide range of information
38. Primary research collects business specific data [k] helping to find out what you want to know [an]. Secondary research is cheaper than primary to collect [k] which could help reduce costs [an]. As this is a start-up business finance may be limited therefore secondary research may be better for them. [eval]. However the information must be from a reliable source. [eval]