Explain two limitations and two benefits to a business of developing new products.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] Limitation: Would need to carry out market research to see if there is a market for the new product.
2. [1] Explanation: Which is expensive/may not be accurate.
3. [1] Limitation: Analysing the results to develop a new product that meets customer needs takes time.
4. [1] Explanation: Could have been used for alternative tasks.
5. [1] Limitation: Trialling new products is expensive.
6. [1] Explanation: As a free sample of the new product to try out still costs the business to produce.
7. [1] Limitation: Demand may be so low that revenue does not cover costs/may not be a market for the new product.
8. [1] Explanation: The new product may have to be withdrawn.
9. [1] Limitation: Image of the business could be damaged.
10. [1] Explanation: If the new product does not meet customer needs.
11. [1] Benefit: It could have a USP.
12. [1] Explanation: Which could make the products more popular with consumers than those of other businesses/business remains competitive.
13. [1] Benefit: It could attract a different market segment/new customers/expand into a new market.
14. [1] Explanation: Leading to higher sales and revenue.
15. [1] Benefit: It could encourage existing customers to buy the new product/return more often.
16. [1] Explanation: Increasing market share.
17. [1] Benefit: It spreads risk/diversifies as the choices for customers may now be wider.
18. [1] Explanation: Reducing the likelihood of revenue falling if one product does not sell.
19. [1] Benefit: Developing new products first before competitors.
20. [1] Explanation: May be able to charge a higher price and achieve higher sales/revenue.
21. [1] Focus group - Advantage: Asking questions of people that work in the construction and mining industries who are already familiar with the products - more likely to gain detailed/honest information about existing products - good and bad points to help develop a new protective hat.
22. [1] Focus group - Advantage: Interaction between members of the focus group can help the researchers understand the reasons for existing customer opinions.
23. [1] Focus group - Disadvantage: Discussion is likely to be biased - as the sample in the focus group is restricted to existing customers - may not gain information about existing competitors/the requirements for a new mining hat - may lose sales if new product doesn't meet customer needs.
24. [1] Focus group - Disadvantage: Limited number of people asked as focus groups are small – may not gather the opinions of a large enough sample to gain accurate research data.
25. [1] Focus group - Disadvantage: Can be time-consuming and expensive to conduct - especially if carried out for PH by a specialist market research agency.
26. [1] Online survey - Advantage: Results can be automatically analysed and presented using IT – quicker and cheaper to collate the results than alternative forms of survey.
27. [1] Online survey - Advantage: Fast and with quicker response times than postal survey - can be emailed out to existing customers of the hats to complete the survey - already have their email addresses so quick to send out links to the survey.
28. [1] Online survey - Advantage: Cheaper to carry out than interviews or postal questionnaires – no personnel or postage to pay.
29. [1] Online survey - Advantage: Larger sample from different parts of the world.
30. [1] Online survey - Disadvantage: Only including 5 questions may restrict the answers – less likely to be accurate due to other options not being available to answer.
31. [1] Online survey - Disadvantage: Absence of interviewer or person to explain the question - may be misinterpreted so results less accurate.
32. [1] Online survey - Disadvantage: May be completed quickly and therefore may not be taken as seriously as an interview when being asked questions – again results may not be accurate.
33. [1] Online survey - Disadvantage: May not be completed by a wide range of potential customers from the construction industry - as don't have access to their contact details/they don't have the internet.
34. [1] Secondary research - Advantage: Reliable as collected by the government - more likely to be accurate as less likely to be biased/carried out by experts.
35. [1] Secondary research - Advantage: May be free to access information about the construction companies in the country - reducing market research costs.
36. [1] Secondary research - Disadvantage: May be out of date therefore may not reflect current trends.
37. [1] Secondary research - Disadvantage: Restricted to single secondary source - may have been collected for a purpose that does not inform PH about their market – e.g. general information about mining industries.
38. [1] Secondary research - Disadvantage: Available to competitors so may not help competitiveness.
39. [1] Justification: A focus group is likely to be the most accurate as it uses existing customers who are already familiar with the hats. It will allow detailed information to be gathered on the opinions of existing customers. Online surveys may not sample a wide enough group of people and the answers will be restricted by only 5 questions being asked so the answers to other questions will not be gathered. Government statistics may be out of date and therefore not reflect current trends in industries such as mining.
40. [1] Justification: An online survey is likely to be most accurate as it can ask for responses about hats for construction sites and mining from a much larger sample than the focus group. This is more likely to provide opinions from a wider group of people than just existing customers as well.
41. [1] Justification: Secondary research is likely to be the most accurate as government data on construction and mining industries will have been gathered by experts and hence is unlikely to contain inaccuracies or be biased.