Question

121

Exam practice questions


1 Magda is an optician, Magda tests people's eyes and then


solle them spectacles (eye glasses) if needed. However,


customers do not have to buy their spectacles from Magda,


Many customers have their eyes tested by Magda but then


buy their spectacles from other spectacle suppliers. Many of


these suppliers use e-commerce. These businesses have a


good customer base because they are not only cheaper, but


also offer a wider choice of spectacles than Magda.


a What is meant by customer base?


b Identify two ways Magda is not meeting the needs


of her customers.


121


c Identify and explain two factors that influence


consumer decisions when buying products


such as spectacles,


14]


d Identify and explain two effects on Magda's


business of e-commerce,


[6]


e Recommend two ways Magda could respond to


the competition from other suppliers of spectacles,


Justify your answer.


(6)

Answer 1

Customer base refers to the group of loyal and repeat customers. Magda is not meeting her customers' needs by offering limited choices and higher prices. Factors that influence consumer decisions when buying spectacles include price and quality. E-commerce can result in increased competition and expanded customer reach. Magda can respond to the competition by adjusting prices and enhancing the customer experience.

Step-by-step explanation:

a) Customer base refers to the group of customers who regularly purchase products or services from a particular business or company. It represents the loyal and repeat customers of the business.

b) Magda is not meeting the needs of her customers in two ways:
1. She is not offering a wider choice of spectacles compared to her competitors. This limits the options available to customers.
2. Her prices are not as competitive as other suppliers, making her spectacles more expensive.

c) Two factors that influence consumer decisions when buying products such as spectacles are:
1. Price: Consumers consider the cost of the spectacles and compare prices offered by different suppliers.
2. Quality: Consumers evaluate the quality of the spectacles, including materials used and durability.

d) Two effects of e-commerce on Magda's business are:
1. Increased competition: E-commerce allows customers to easily compare prices and options from different suppliers, resulting in greater competition for Magda.
2. Expanded customer reach: E-commerce enables suppliers to reach a larger customer base, potentially impacting Magda's customer acquisition and retention.

e) Two ways Magda could respond to the competition from other suppliers are:
1. Price adjustment: Magda could consider reducing her prices to be more competitive with other suppliers, attracting more customers.
2. Enhancing customer experience: Magda could focus on providing excellent customer service and personalized assistance to differentiate herself from other suppliers.

Answer 2

The 'customer base' is a business's frequent shoppers, and Magda's business struggles due to her higher prices and limited product selection. Factors like price and variety influence consumer choices, while e-commerce competition pressures Magda's business. She could diversify her range and adjust pricing to compete.

Step-by-step explanation:

The term customer base refers to the group of customers who repeatedly purchase the goods or services of a business and are considered the company's main source of revenue.

Two ways in which Magda is not meeting her customers' needs could be the higher prices of the spectacles she offers and a limited selection of products. Customers are turning to e-commerce businesses which offer a wider choice and more competitive pricing.

Factors that influence consumer decisions include price and variety. Consumers often look for competitive pricing and a broad range of options to choose from when making purchasing decisions.

The rise of e-commerce has impacted Magda's business by introducing increased competition and potentially causing a loss of market share as customers find alternative online suppliers that offer spectacles at lower prices and with greater convenience.

To respond to the competition, Magda could diversify her product range to offer a wider selection of spectacles and consider pricing strategies to remain competitive. Justifications for these recommendations include meeting consumer demand for variety and adjusting to market price expectations.