Technology and the marketing mix · IGCSE Business

Define ‘ecommerce’. Award 2 marks for a full definition. Award 1 mark for a partial definition.

• The use of the internet (and other technologies used by businesses) to (market and) sell goods/services to customers [2]
• The online buying/selling of goods/services using computer systems linked to the internet/apps on mobile phones [2] Partial definition e.g.
• Using the internet/online/websites [1]
• Uses/builds websites to display products to customers [1]
• Digital market [1]

Explain two threats to a business of using ecommerce. Which threat is likely to be the most important? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which threat is likely to be most important to a business. Points might include:

• Increased/more competition [k] so may have to set lower prices (to compete) / may have to spend more on advertising/promotion [an]
• Need to design/build website [k] which increases costs [an]
• Time/cost for maintenance/updating of the website [k] so may need to employ someone to do this [an]
• No face-to-face contact with customer / suppliers / lack of personal service [k] so difficult to gain feedback [an] AND/OR may be difficult to build customer loyalty / supplier relationships / [an]
• Need to deliver the products to customers [k] increasing transport/postage costs [an] leading to lower profit margin [an]
• Technical problems/no power [k] so may lose potential sales [an]
• Security threats / risk of hacking / computer viruses / data theft/fraud / scams [k] which could damage its reputation [an] AND/OR reduce customer loyalty [an]
• Risk of bad reviews [k] lowering sales AND/OR revenue [an]
• High level of returns [k] Other appropriate responses should be credited. Justification might include: One threat is an increase in competition [k] so may have to set lower prices (to compete) [an]. Another threat is technical problems [k] so the business may lose potential sales [an]. Technical problems are likely to be the most important threat because if customers cannot access the website setting a lower price may be ineffective [eval] so gaining any revenue could be difficult to achieve. [eval].

Outline two opportunities for Max’s business of using ecommerce. Award 1 mark for each relevant opportunity (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:

• Lower rent / no/few shops needed [k] so may not need as much government support [app]
• Widen market / more potential customers / orders can be taken 24/7 [k] for the books [app]
• Website can be used to promote the business [k] which is helpful for this new business [app]
• Easy/quick to update [k] for this entrepreneur [app]
• Can provide detailed information [k] alongside the market research [app]
• Fewer employees needed [k] Other appropriate responses should be credited.

Explain four benefits to a business of using social media as its method 8 of promotion. Award 1 mark for each benefit (max 4). Award a maximum of 1 additional mark for each explanation of the benefit of using social media for promotion. There are no application marks available for this question. Benefits could include:

• Can target specific demographic groups who can then share the information on social media with friends – at no cost to the business
• Can target customers who will see the advert when they log on to social media – reaches existing customers to encourage repeat sales
• Information can be updated quickly – so can change quickly in response to market changes
• Low or no cost to advertise on social media – if not paying to have the advert on specific sites
• It can be used to reach groups that are difficult to reach in any other way – particularly if they live in other countries
• It can be interactive which can be attractive – possibly leading to higher sales
• Can provide more information in adverts than some other forms of advertising
• Links can be attached to adverts to take customers to other products the customer may be interest in
• May link to a website where the product can be easily ordered For example: Can target specific demographic groups who may be interested in your products (1). They can then share the information on social media with friends at no cost to the business (1).