2023 Paper 1 Flashcards
(10 cards)
Using the data in Extract A, explain one way demand for online food deliveries is affected by income elasticity of demand. (4)
Income Elasticity of Demand (YED) measures the responsiveness of demand to a change in income. As YED is -156 it is clear that Deliveroo orders are inferior goods.
This means that, as incomes fall, demand for its food delivery service rises
Explain one reason food delivery apps, such as Deliveroo, pay their workers commission. (4)
A commission is a payment to a worker based on a percentage of the value of sales Deliveroo’s food delivery drivers are incentivised to deliver more orders to earn more commission in total, potentially increasing the speed of delivery. This is likely to lead to positive ratings from customers on the Deliveroo app improving the business’s reputation
Assess the likely importance of emotional branding to Deliveroo. (10)
Emotional branding may be important for Deliveroo as it connects with customers’ feelings [K]. Deliveroo found that customers care about ‘food happiness’ when choosing an app. By focusing marketing on happiness, Deliveroo raised brand awareness from 3.1% to 6.6% [Ap]. Connecting emotionally could lead to more sales and repeat customers. However, despite these efforts, 93.4% still don’t know Deliveroo. This means emotional branding alone might not greatly boost business growth
Another factor to consider is the practical side of Deliveroo’s service.
Prices and delivery speed might matter more to customers than emotional appeal. With rivals like Just Eat and Uber Eats providing similar services, practical factors can strongly affect customer choices. If Deliveroo only focuses on emotional branding, it risks losing customers to competitors.Yet emotional branding might still help build long-term customer loyalty and repeat orders
Overall, emotional branding is important as it helps Deliveroo stand out and build loyalty. However, practical factors like price and reliable delivery remain key due to strong competition. Deliveroo should balance emotional branding with practical strengths to achieve lasting success
Assess the likely value of secondary market research data to Deliveroo’s marketing. (12)
One reason secondary market research is likely to be valuable to Deliveroo is that it is relatively cheap and quick to access [K]. Deliveroo can access data from YouGov Brandindex, a professional market research agency, which already collects information on consumer attitudes [Ap]. This means Deliveroo does not need to spend extra time or money conducting its own research. The data is also likely to be reliable because it is collected by experts with experience in tracking changes in brand perception and customer satisfaction. This is especially useful to Deliveroo. It wants to evaluate the success of a new marketing campaign focused on emotional branding and ‘food happiness’. However, while YouGov is a trusted source, there is still a risk that the data may not reflect the views of Deliveroo’s actuall customers. This could lead to poor marketing decisions [E]
Another reason it is useful is because secondary data can highlight trends over time. Online sales trends, media reports, and public reviews can help Deliveroo understand changing consumer food delivery preferences. This helps them make better decisions about pricing, advertising or promotions. This is vital in a fast-moving and competitive market [An]. However, rivals like Uber Eats and McDelivery can also use the same data. As a result, it may not provide a unique competitive advantage. Additionally, YouGov may charge high fees, raising Deliveroo’s marketing costs
In conclusion, secondary research is likely to be valuable to Deliveroo. It relates directly to their recent marketing efforts and can offer insights with low effort and cost. However, the value of this data depends on its accuracy and whether Deliveroo’s rivals, such as Uber Eats, also have access to it. In the short term, it helps shape marketing decisions quickly, but in the long term, Deliveroo may need more targeted primary research to maintain a competitive edge
In order to improve the motivation of delivery riders, Deliveroo could adopt the motivation theories of FW Taylor or Frederick Herzberg.
Evaluate these two options and recommend which one is more likely to improve the motivation of Deliveroo’s delivery riders. (20)
One option is for Deliveroo to follow Taylor’s theory of scientific management, which focuses on efficiency and financial rewards [K]. Taylor believed that work should be broken into small tasks to increase speed, and workers should be motivated by money [KJ. This suits Deliveroo, where riders complete repetitive tasks such as collecting food and delivering it fast to customers [Ap]. Deliveroo already pays per delivery and offers commission for speed and performance, which fits well with Taylor’s theory [Ap]. Riders would work faster, improving service times and increasing customer satisfaction. This is likely to make it more competitive [An] against rivals such as JustEat and Mc Delivery. However, Taylor’s theory sees workers as only motivated by money, which may ignore other needs such as security or respect [E]. Also, riders may become demotivated. They may feel they are treated like machines or are unfairly rated based on things outside their control, such as restaurant delays [E]
Another option is to use Herzberg’s two-factor theory, which separates motivators from hygiene factors [KJ. Herzberg believed that motivation comes from factors like recognition, growth, and achievement [K]. Deliveroo could offer riders (Ap] training or more control over their work, making them feel more valued. This might improve customer service if riders are more engaged and motivated by respect and growth, not just pay [Anj. Riders could have more secure contracts [Ap]. This would give them a sense of job security, which is a hygiene factor that could reduce dissatisfaction [An]. However, Deliveroo riders are often part of the gig economy. They may not expect long-term careers, so motivators like training may not matter as much to them [E]. Some may prefer the flexibility and fast pay [Ap] offered by the current system
In conclusion, Taylor’s approach is more likely to improve motivation for most of Deliveroo’s riders [E]. This is because Deliveroo operates in a fast-paced market where customers care most about speed and efficiency [Ap]. The business pays per delivery and relies on riders completing simple tasks quickly While Herzberg’s theory might improve loyalty and customer experience in the long run, it is less suited to riders who are often motivated by money and flexibility [El. The decision depends on Deliveroo’s future strategy. Ifit wants to improve service quality and long-term loyalty, Herzberg may be better. But in the short term, Taylor fits the current rider model more closely
Using the data in Extract D, calculate the difference in Price Elasticity of Demand for PlayStation 2 and the Xbox. State your answer to 2 decimal places. You are advised to show your working. (4)
-0.52
Explain one reason why global niche markets may be important to a games developer, such as Sukeban Games. (4)
Global market niches are smaller, specialised parts of a global market [K]. The niche market for Subekan’s visual novels [Ap] in one country might be too small for customers to provide the business with sufficient revenue and, as digital distribution is possible for the games it sells [Ap], Subekan can keep its distribution costs low, allowing them to make a healthy profit
Using the data in Extract F, assess Sony’s decision to manufacture the PlayStation 5 in Japan. (10)
One reason Sony may have chosen to manufacture the PlayStation 5 (PS5) in Japan is the availability of a skilled and educated workforce [K]. Japan spends $1,235 per person on education and ranks 13th in the world for innovation. This suggests that workers are well trained and able to contribute to high-quality and efficient production processes. In a competitive global market, Sony will want the PS5 to be produced to a high standard to maintain its reputation and brand image [An]. However, Japan also has a high average wage of $41,352, which may increase production costs, so Sony may have to charge a higher price than if its products were manufactured elsewhere [E]
Another possible reason is that Japan is Sony’s home country. The company has a long history of making consoles there, meaning it likely already has the necessary technology and expertise in place. This can reduce setup costs and speed up production. In addition, Japan’s membership in the RCEP trading bloc since 2022 [Ap] may make it cheaper to export PS5s to nearby countries such as China. On the other hand, the low unemployment rate of 2.7% could make it hard to recruit enough workers without paying even higher wages, raising costs further
Overall, Sony’s decision to manufacture in Japan is likely influenced by the country’s skilled workforce and Sony’s existing presence there. But higher labour costs and distance from major Western markets may reduce the overall benefits
There are several factors that have contributed to increased globalisation, including transport and communication.
(d) Assess the likely importance of transport and communication for the increased globalisation of the computer games market. (12)
One reason why transport and communication are important for globalisation in the computer games marketis that they help games reach more people faster and cheaper [K]. For example, better broadband means players in the US and Japan can play the same game at the same time.
This creates shared global interest and helps games sell in many countries at once, in several languages. Companies can also promote games worldwide using social media and streaming [An]. These tools lower marketing costs and help build global brands (An]. But in some countries, like China, internet controls reduce access to global games. This limits the power of communication alone to spread games
Transport has also helped, especially for physical products like consoles. Containerisation means consoles can be shipped cheaply to markets like India and South America. This lets game makers grow in new places and reach more customers. But many games are now downloaded or streamed. This means transport is less important than it used to be (E]
In conclusion, communication has played a big part in spreading games globally. The internet helps reduce costs and connects gamers pretty much everywhere. But global growth also needs rising incomes and fewer trade barriers. In the short term, communication may be the key driver. Over time, success will also depend on how demand grows in new markets
Sony could have either produced a standardised controller for sales in all countries or adapted the controller to the culture of local markets in order to maximise
Play Station 5’s sales.
Evaluate these two options and recommend which one Sony should have taken to maximise PlayStation 5’s sales. (20
Standardisation means selling the same product across all markets without changing it to meet local needs [K]. This may have helped Sony reduce costs during the launch of the PlayStation 5.
For example, by producing a single controller design, Sony can benefit from economies of scale in manufacturing. If machinery and staff are only required to produce one version of the controller, unit costs will fall. This allows Sony to sell the PS5 at a more competitive price globally (An]
However, customers may value familiarity with control systems more than cost savings.
Japanese customers are used to different button commands (e.g. using the circle button to confirm) [Ap]. Removing this feature could cause frustration and reduce customer satisfaction
Adaptation means changing a product to better suit a local market [K]. Sony’s previous success in Japan has partly been due to adapting its controllers to fit local expectations. This could help preserve loyalty in its home market, which might be particularly important if the PS5 is manufactured in Japan. Cultural symbols have strong meanings in Japan. Using them incorrectly in games could create confusion or offend consumers [An]
However, adaptation increases production costs, which could lower Sony’s profit margins. It also risks delays and supply chain issues if multiple versions of the same controller must be produced El
Overall, Sony should choose to standardise the PS5 controller. The games console market is global and highly competitive, with Microsoft Xbox and Nintendo unlikely to be adapting controllers for each country. This makes it important for Sony to keep its costs low and focus on price and playability. In markets like the US and UK, standardisation will likely have little impact on demand, and Japan represents only a small part of Sony’s global user base [Ap]. In the short term, some Japanese customers may be disappointed. But in the long term, offering a standardised product will reduce costs, boost efficiency and help Sony remain competitive in a global market. If Sony continues to manufacture the PS5 in Japan, this may be enough to show respect for its home market and maintain brand loyalty without adapting the controller
