Do you think maintaining customer loyalty should be more important to GBU than attracting new customers? Justify your answer.
Knowledge [1] – award 1 mark for identification of relevant issue(s) Application [1] – award 1 mark if relevant reference made to this business Analysis [2] – award up to 2 marks for relevant development of point(s)
Evaluation [2] – justified decision as to whether it is more important for GBU to maintain customer loyalty than attract new customers
Relevant points might include: Customer loyalty:
• Maintain market share / sales [k]
• Spread word / free advertising [k] as existing customers might recommend product to others [an]
• Keep reputation [k] in a mass market [app] leading to a competitive advantage [an]
• Able to match products to existing customer needs [k] for beauty products [app] so they know what to produce [an] New customers:
• Widen target market [k] as 80% of people like their products [app + an]
• Customer tastes change [k] so may be cheaper to find new customers rather than develop existing products [an]
• Need to carry out advertising to attract customers [k] which will increase costs [an] Other factors:
May be other reasons why customers do not buy [k] if prices are higher this may be why revenue fell [app]