Mabel wants to set up her own hairdressing business. She will need to build good customer relationships. She has done some secondary market research to find out possible demand and what methods of promotion to use. She has decided to buy her inventory (stock) from a wholesaler. Mabel is now looking for the right location for her business. She thinks that location will be more important than price charged to the success of her business.

Mark scheme

Marking points from the official mark scheme (May/June 2015). The mark or mark type is shown in brackets.

1. [2 x 1] Knowledge – award 1 mark per way
2. Points might include: Offer good / personal service e.g. be friendly with customers
3. Find out what customers want / offer the right product
4. Ask for feedback
5. Extra services e.g. delivery, credit terms, after sales, longer opening hours
6. Resolve complaints quickly / refunds
7. Communicate with customers regularly e.g. newsletters or mailshots
8. Reward customer loyalty e.g. loyalty cards, special offers, discounts, vouchers, BOGOF, events
9. Accept any reasonable answer
10. [2] Clear Understanding – e.g. Information about the market / customer needs or competition [1] that is already available / collected by other agencies [1]
11. [1] Some Understanding – e.g. Simple idea such as information already collected [1] / or what market research is e.g. information about the market or finding out what people want [1]
12. Do not accept examples
13. Desk research [0]
14. [2 x 1] Knowledge – identification of suitable method [max 2]
15. [2 x 1] Application - award 1 mark for each relevant explanation in context of this business (e.g. show how or why it might be used)
16. Points might include: Free gifts / samples [k] give customers small bottles of shampoo to try [app]
17. Demonstrations [k] let people watch whilst she shows possible styles on people's hair [app]
18. Loyalty cards [k] e.g. customers get a free haircut if they visit a set number of times [app]
19. Advertising (allow only once) [k] e.g. local paper / radio / television / leaflets to let potential customers know about her new business [app]
20. Sponsorship / public relations [k]
21. Competitions [k] customers will book appointments to have a chance of winning prizes [app]
22. Application marks may be awarded for appropriate use of the following: appointments, shampoo, haircuts, new business
23. [2 x 1] Knowledge - identification of relevant disadvantage
24. [2 x 1] Application - award 1 mark for each way if relevant reference made to this business
25. [2 x 1] Analysis – award 1 mark for each relevant explanation (i.e. why it is an disadvantage to a business)
26. Relevant points might include: May not stock all / latest products [k] so can't get all the hair products wanted [app] so wastes time looking elsewhere [an]
27. More expensive [k] which could push up her costs [an]
28. Take longer to receive stock [k] as many stages in distribution process [an] so large rival businesses might offer latest hair products first [app]
29. Has to buy more than she wants / can't just buy one [k] could be more than she can afford [an] so less money to spend promotion / her new business [app]
30. No direct contact with manufacturer [k] so cannot tell them what needed [an] so cannot build customer relations with her customers [app]
31. Do not accept high storage costs as not relevant to this business
32. Do not accept 'has to buy in bulk / large amounts' as the role of the wholesaler is to break bulk
33. Application marks may be awarded for appropriate use of the following: appointments, shampoo, haircuts, new business, (trying to build) customer relations
34. [1] Knowledge – award 1 mark for identification of relevant issue(s)
35. Positive or negative points allowed [max 1]
36. [1] Application – award 1 mark if relevant reference made to this business
37. [2] Analysis – award up to 2 marks for relevant development of point(s)
38. [2] Evaluation – justified decision made as to whether location or price is more important than the prices she charges to the success of Mabel's business. Note: Must consider both price and location to access evaluation marks
39. Relevant points might include: Near target market [k] e.g. women / men would help ensure sales [an]
40. If customer service is key feature [app] then price might not be important [k] as consumers might pay more for a better service [an]
41. High price could discourage customers [k] who would go to competitors [an]
42. Low prices could suggest low quality [k]
43. Right location could affect the level of competition [k]
44. Location / prices could influence image [k]
45. Cost of rent might be too high [k] leading to increased costs / higher prices [an] so fewer customers can afford to go there to get haircut [app]
46. Application marks may be awarded for appropriate use of the following: good customer service, hairdressing, salon, new business, secondary market research