A2Z Designs is a business partnership between Azhar & Zoya. They make handmade jewellery. Azhar works from home making all the jewelry such as necklaces and bracelets. A2Z pays for materials when they are ordered, but allows their customers one month to pay. Zoya manages the accounts and the shop. She is worried about cash flow. Zoya said: ‘The bank will not increase our overdraft. We should ask customers to pay more quickly.’ Azhar thinks advertising would increase sales but is worried about legal controls on marketing.
07 Identify and explain two ways in which legal controls on marketing might affect A2Z. [6]
> Cannot make false claims about what the product will do (avoid misleading adverts)
> Products must be safe to use OR must offer to repair or replace faulty goods
> May have to change how products made
> Mistakes could lead to fines OR damage reputation
07 Identify and explain two ways in which legal controls on marketing might affect A2Z [6]
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Sir Afzal Shad
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Muzamil Ahmed
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Re: 07 Identify and explain two ways in which legal controls on marketing might affect A2Z [6]
[KN] Businesses are not allowed to make false or misleading claims.
[APP] A2Z Designs makes handmade jewellery. If azhar advertises the jewellery as pure gold and says that it will never lose its shine.
[AN] A2Z would be breaking marketing laws if false claims are made and this could lead to fines or legal action against them increasing costs for the business. It would worsen the cashflow which zoya is already worried about.
[KN] products are safe to use or must offer repair and replace faulty goods.
[APP] A2Z sells jewellery such as necklaces and bracelets. If the jewellery breaks or causes skin reaction to customers they could demand refunds or replacements.
[AN] A2Z will have to spend extra money replacing broken jewellery and this can lead to lesser profits for azhar and zoya. Selling poor quality products could damage A2Z reputation reducing their future sales.
Examiner Comments: [6/6]
[APP] A2Z Designs makes handmade jewellery. If azhar advertises the jewellery as pure gold and says that it will never lose its shine.
[AN] A2Z would be breaking marketing laws if false claims are made and this could lead to fines or legal action against them increasing costs for the business. It would worsen the cashflow which zoya is already worried about.
[KN] products are safe to use or must offer repair and replace faulty goods.
[APP] A2Z sells jewellery such as necklaces and bracelets. If the jewellery breaks or causes skin reaction to customers they could demand refunds or replacements.
[AN] A2Z will have to spend extra money replacing broken jewellery and this can lead to lesser profits for azhar and zoya. Selling poor quality products could damage A2Z reputation reducing their future sales.
Examiner Comments: [6/6]
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Shahmir Arshad
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Re: 07 Identify and explain two ways in which legal controls on marketing might affect A2Z [6]
KN: Might lead to mistakes in the business
APP:Fines would reduce cash immediately, making Zoya’s cash-flow problem worse.
AN: A damaged reputation may also lead to fewer customers, reducing sales and profits in the long run.
KN:May have to change how products made
APP: Changing how jewellery is made could slow down production or increase costs.
AN:Azhar works from home and makes all items himself, so this could reduce output. Fewer items sold means less cash coming in, which affects the partnership’s ability to pay for materials on time.
APP:Fines would reduce cash immediately, making Zoya’s cash-flow problem worse.
AN: A damaged reputation may also lead to fewer customers, reducing sales and profits in the long run.
KN:May have to change how products made
APP: Changing how jewellery is made could slow down production or increase costs.
AN:Azhar works from home and makes all items himself, so this could reduce output. Fewer items sold means less cash coming in, which affects the partnership’s ability to pay for materials on time.