Case study - Activity, marketing and people
Business activity, marketing and people (answering using PINCC)
Sunita Harman is passionate about music, and finally achieved her dream of opening her own shop, Music to Your Ears last year. She sells both equipment and instruments, from keyboards for beginners through to specialist guitars, speakers and amps for stage shows.
Operating her business as a sole trader, Sunita currently employs two part-time staff. She opened her business in the town centre on the high street near lots of other businesses, a housing estate and a large secondary school. Although she faces competition from two other local music stores, she feels that they are more traditional, and focus more on providing music lessons to local children, which is something Sunita does not offer. She has conducted market research which shows there is demand for her idea.
She has decided to use cost-plus pricing with a mark-up of 10% on total costs. The average cost to host music lessons is £12. Here is the results of her market research.
| Average price | Estimated customers per month |
| £14.20 | 100 |
| £14.80 | 85 |
| £15.40 | 45 |
| Average price | £14.20 |
|---|---|
| Estimated customers per month | 100 |
| Average price | £14.80 |
|---|---|
| Estimated customers per month | 85 |
| Average price | £15.40 |
|---|---|
| Estimated customers per month | 45 |
Sunita is keen to pursue her objective to grow the business, by offering what her customers want. At the moment, market research consists of inviting feedback from anyone who makes a purchase. This is done by stapling a customer feedback card to the customer’s receipt, with space for customers to write a comment. To give customers an incentive to fill in and return the feedback card, Sunita enters them into a monthly draw, with a prize of a £10 gift voucher to spend in the shop.
Example answers
One method of analysing a case study is called PINCC: product, industry, customers and competitors.
In the above case study, we can see that:
- the product is music equipment
- the industry is the retail music industry
- the customers are local musicians of all abilities
- the competitors are two other local music stores
Question
Explain one advantage of Sunita operating as a sole trader.
A (low mark - 1): A sole trader keeps all of the profits
A (high mark - 2): Being a sole trader means that Sunita has full control over her music shop, so she decides how much of her profits to reinvest in the business to help it grow.
The second response above is a high-mark response because the respondent has answered the question accurately, with context and a relevant example.
Question
Analyse one disadvantage to Sunita of using customer feedback cards to carry out market research.
A (low mark - 1): Customer feedback cards will only provide qualitative data from existing customers.
A (middle mark - 2): By using customer feedback cards Sunita will only be collecting the views of those people who are already aware of her music business, and this might not tell her anything about her two main competitors.
A (high mark - 3): Using customer feedback cards means that Sunita is only collecting comments from existing customers. It may help her to improve the service to these customers, but does not give her any information about how to attract other potential customers, including those who visit her shop but do not buy anything, that would help her to achieve her growth objective.
