02 08 Item A: TradeUp Answer all questions in the spaces provided. Number of stores TradeUp is a high street retailer that buys, sells and exchanges second-hand entertainment products and technology. These products include video games, mobile phones and tablet computers. TradeUp was established in 2002. The number of TradeUp stores since 2015 is shown below. 160 140 120 100 80 60 40 8 Section B 20 20 2015 Number of TradeUp stores 86 2017 Year 150 2019 To keep up with a growing market, TradeUp has used franchising since 2015 to expand rapidly as it had limited funds available to set up stores itself. To open a TradeUp franchise, each franchisee must make an initial investment of £150 000. This money is used to design and fit the shop, purchase opening stock and train managers. Franchisees must pay TradeUp an ongoing royalty fee of 7% of their revenue. One franchisee is Amelia Appleby. Amelia has had an idea to sell home appliances such as vacuum cleaners and microwaves, but she is unsure which products would be popular. Amelia is keen to present her idea to TradeUp as soon as possible, but she knows that she needs market research to support her proposal. Although Amelia is busy running her store, she has decided to conduct a focus group with her regular customers. To encourage customers to participate, Amelia will pay each of them a small fee. In the past, Amelia has used questionnaires to collect feedback from customers. These were placed on the shop counter for four weeks for customers to complete, but she had a very low response rate. Do not write outside the box IB/G/Jun20/8132/2 02 1 Identify the business sector that provides services to customers. 02 Tertier 09 02 2 Calculate the average number of TradeUp stores opened each year from 2017 to 2019. 9 Show all workings. Workings: 150 - 86 = 64:2=32 Answer 32 [1 mark] 3 Analyse one benefit for TradeUp of expanding through franchising. [2 marks] [6 marks] Turn over Do not write outside the box IB/G/Jun20/8132/2 02 10 10 4 Amelia is considering using a focus group of six customers to gain feedback on her idea. Advise Amelia whether it is a good idea to use a focus group for her research. Give reasons for your advice. [9 marks] Extra space Do not write outside the box IB/G/Jun20/8132/2 1 1 11 Question 2 continues on the next page Turn over Do not write outside the box IB/G/Jun20/8132/2 Item B: Trade Up 12 12 The demand for some second-hand products, such as mobile phones, changes quickly. Amelia needs to make sure that her prices are competitive with other second-hand retailers otherwise she will lose customers. Table 1 Extract of Income Statement for year ending April 2020 Sales revenue Cost of sales Gross profit 02 5 Explain one factor that influences pricing decisions. (£ 000) 140 84 56 Amelia has always liked her location in a busy town centre and has never had any direct competition. This location has provided Amelia with loyal customers who like the convenience of being able to visit her store when they are in town shopping. However, another retailer located nearby has announced that it will start to offer a similar service to TradeUp. Amelia has heard that a unit on an out-of-town retail park has become available. She has found out that although the size of the unit at the retail park is bigger than her current location, the rent would be £825 per month, which is lower than her current payment of £1100 per month. There is a bus link every hour to the retail park and lots of free parking; however not all her current employees can drive. [2 marks] Do not write outside the box IB/G/Jun20/8132/2

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02 08 Item A: TradeUp Answer all questions in the spaces provided. Number of stores TradeUp is a high street retailer that buys, sells and exchanges second-hand entertainment products and technology. These products include video games, mobile phones and tablet computers. TradeUp was established in 2002. The number of