1. What is the most appropriate method for the
business you have chosen to increase its profits?
2. TASK 3: What is the most appropriate method for
the business you have chosen to increase its
profits?
• investigate a business which provides a good or a service
• use primary research to briefly outline the current methods this business
uses to
ensure it is profitable
• use primary and/or secondary research to identify 2–3 other appropriate
methods
this business could use to increase its profits
• present useful information/data to support the points you are making
• analyse these different methods this business could use to increase its
profit
• make supported recommendations for how this business might increase
its profit
• using your analysis, arrive at a supported judgement that
6. Is the goal to increase profits over the next 6
months?
Possible reason:
◦ 1. To sell the business in 6 months’ time (for the
highest price possible)
◦ 2. To ensure the business survives after a period of
making losses
7. 1. Push prices up (it will take time for
customers to find another place to go, e.g.
barber puts price up from £7 to £9)
◦ + if the barber is good/friendly enough, people
may stay beyond 6 months
◦ - but usually people will drift away; in 2 years’ time
business will be down (especially as new customers
will go to those charging £7)
8. 2. Cut the costs you can: delay buying new
equipment; put redecoration on hold; refill
shampoo bottles with Tesco’s Value
◦ + it takes time for people to notice, so revenues in
the 6 months will not be affected
◦ - ... but in the longer term it will affect repeat
purchase (customer loyalty), word of mouth
reputation and therefore hit product trial
9. 3. Go crazy on (low-cost) promotion, e.g. Get
your staff to blitz nearby streets with door-
to-door leaflets, perhaps offering a special
deal, e.g. £5 Mondays
◦ + it will boost revenue and (probably) profits in the
coming months
◦ - it might be unsustainable in the long term, i.e.
too exhausting to be kept up (but if you’re selling
in 6 months, you may not care)
10.
11. Is the goal to increase profits over the long
term?
Possible reason:
◦ 1. To provide the funds for expanding the business
without needing to get bank loans
◦ 2. To build up the business so that it can support
the whole family (with a 3-15yr view)
12. Boost repeat purchase/customer loyalty
◦ Good customer experience, ranging from
satisfaction to delight
◦ Consistent customer experience (one bad
experience might stop you going)
◦ Ethics/environmental factors: you may feel
committed to the supplier’s ethical policies
13. Add value, to make price rises possible
◦ Add a distinctive, even unique, feature to the
product/service
◦ Create a fashionable/trendy image/vibe to make
people happy to pay more (eg Apple)
◦ Ethics/environmental factors: many people are
willing to pay a bit extra for Fairtrade, i.e. guilt-
free shopping
14. Become more efficient to lower costs
◦ Move to lean production to reduce wastage of
resources: stock, time and staffing
◦ Involve staff so that they feel part of the
business, and therefore want to keep costs
down, e.g. John Lewis employee ownership
◦ Increase investment in new IT systems, e.g. a
retailer might move to more online selling, and
fewer High Street shops
15.
16. Y/N How exactly is it done?
Open more outlets
Boost repeat purchase
Produce more efficiently
Raise prices
Cutting input costs
Opening longer hours
Short-term promotions
