IGCSE, A Level Business Student Forum

Samira owns a successful business selling takeaway fried food. She employs 2 part-time workers.

Last year revenue fell for the first time in 10 years. This was because of increased competition from a well-known franchise. To respond to this, Samira could lower her prices, as shown in the table below. Another option is to start a delivery service. Samira plans to do some market research. She has to decide whether to use secondary research or set up a focus group with some of her customers. Also;
> Now her selling price is $4 which she will reduce to $3.
> Now average weekly customers are 200 which she needs to increase to 300.

06 Identify and explain two factors Samira should consider before starting a delivery service. [6]

Possible Starter Points:
[KN] Cost of delivery against the sales & profit of the business.
[APP] Since the revenue was falling last year, offering the delivery service will add convenience for the customers & may place more orders.
[AN] ...

[KN] Samira should check how much demand will increase after offering delivery services.
[APP] Since, she is looking to increase customers by 100 & lower her average price, this would be possible only if the demand is high. Which can be checked using market research.
[AN] ...

[KN] : Samira needs to go through how much it will cost to start delivering like buying scooters, fuel or hiring delivery people.

[APP] : If the costs are higher than the extra money earned from more customers then the service could go in loss.

[AN] : If she hires a delivery driver she has to pay wages and insurance and fuel. If these costs are higher than the profit from new customers, the delivery service might not be worth it.
............
[KN] : samira should think about if her customers actually want delivery.

[APP] : If most of the customers want to be coming to her shop then delivery might not work for her business leading to a bad business decision.

[AN] : she could make a survey and ask her regular customers to see if people would order delivery or not. this would help her make sure that the service will actually increase her revenue.

KN:Cost of Implementing and the Delivery Service
APP:Samira is getting fewer customers because other shops are competing with her. She wants to get 100 new customers by delivering food. If paying for delivery costs , she will not make any money because she is selling her food for $3 instead of $4.
AN: If delivery costs more than the extra money she gets from new customers, she will lose profit even if she try to sell more, so she could set their target market in order to get more customer appearance.
KN:She should be known by the fact that after Starting delievery servicses her sales will increase or not.
APP:Therefore, she wants to increase his customers in order to get more customer footfall,this can only be possible if market is demanding such products .This can only be checked my doing marketing research.
AN:Thus, this could led her to get more sales and revenue into the business for which she could maintain customer loyality and offer more better promotions to customers who order by delievery.e.g 50% cash back.