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Edexcel GCSE Business · 1BS0
Edexcel 1BS0 · 1.5.2 Check the specification (PDF) (opens in a new tab)
Technology changes how a business reaches customers, takes orders, receives payments and communicates. For a small business, it can provide opportunities that would otherwise require expensive premises or more employees. However, competitors can use the same technologies, so adopting them does not guarantee success.
E-commerce means buying and selling goods or services over the internet. A business might sell through its own website or through an online marketplace such as Amazon or Etsy. A website that only displays opening hours provides information; one that lets customers place orders enables e-commerce.
Social media consists of online platforms where people and businesses share content and interact. A business can show products on Instagram, reply to comments and pay for advertisements. This can build relationships with customers as well as make them aware of products.
Digital communication means exchanging information electronically. Examples include email, messaging, website live chat and video calls. A customer can ask a question through live chat, while an owner can use a video call to discuss an order with a supplier without travelling to meet them. Social media is also a form of digital communication, but digital communication includes much more than social media.
Payment systems are methods through which businesses receive money from customers. Electronic examples include online debit or credit card payments, contactless cards and mobile wallets such as Apple Pay. They make it possible to complete online purchases and offer convenient ways to pay in shops.
These technologies often work together. For example, a small craft business could show a product on social media, link to its online shop, answer a customer's question by email and receive payment electronically.
E-commerce allows a business to reach customers beyond those who can visit its premises. An online craft seller can take orders from across the UK rather than relying only on local shoppers. Customers can also place orders outside shop opening hours. A larger potential market and greater convenience can increase the quantity sold.
Social media posts and email promotions can direct customers to an online shop. Helpful digital communication can answer questions that might otherwise prevent a purchase. Convenient payment options can also make buying easier, giving a business an advantage over a competitor with fewer ways to pay.
However, a wider market also brings wider competition. Customers can compare many online sellers quickly and switch to a cheaper rival. A slow website or unreliable checkout may lose orders, while negative comments and reviews can discourage potential buyers. Some customers want to see, touch or try a product before buying, so online selling may support a physical shop rather than replace it.
Sales revenue depends on both the price charged and the quantity sold:
If online competition forces a business to lower its price, selling more items does not necessarily mean revenue rises. Even if revenue does rise, profit depends on what happens to costs too.
An online-only business may avoid high-street shop rent and need fewer employees serving customers in person. Digital promotion can offer a lower-cost alternative to newspaper or television advertising. Video meetings can reduce travel expenses, and electronic messages can help employees and suppliers coordinate work more quickly.
These savings are not automatic. An online seller may still need storage space and staff to pick and pack orders. It must also account for delivery and returns. Building and maintaining a website, installing payment equipment, training staff and protecting digital systems all involve expenditure. Systems need updating, and introducing new technology can temporarily disrupt work.
The important comparison is between the costs avoided and the costs added. Moving online could save shop rent but create website and delivery expenses. Whether it is worthwhile depends on the scale of those costs and how many additional sales the business attracts.
The marketing mix is the combination of product, price, place and promotion used to meet customer needs and encourage sales. Technology can change all four elements, which need to work together.
Product — what the business offers. Online selling can allow a wider range than a small shop has room to display. Comments and reviews can also help a business identify improvements customers want. However, a wide online range is useful only if the business can supply it reliably.
Price — what customers pay. Lower operating costs may allow a business to charge a lower price. At the same time, easy online price comparisons put pressure on sellers to remain competitive. Digital communication also allows a business to send discount codes to particular customer groups rather than reduce prices for everyone.
Place — how products reach customers. E-commerce adds an online sales channel. For example, ASOS sells clothing through its website and delivery service rather than relying on high-street shops. A small seller can use a marketplace such as Etsy to reach customers nationally. Click and collect combines online ordering with collection from physical premises. The website takes the order, but the business still needs a reliable way to get the product to the customer.
Promotion — how the business informs and persuades customers. Social media, email and websites provide alternatives to traditional advertising. Digital advertisements can be aimed at likely customers, and links can take them straight to a product page. Businesses can track responses and purchases to help judge which promotions work. However, creating content takes time, paid advertising costs money, and public complaints can damage the brand's image.
The best choice depends on the business's customers, products and resources. A craft seller may benefit greatly from reaching buyers across the UK, whereas a business whose customers value personal advice may need to retain face-to-face service.
Technology decisions also connect different business functions. A successful online promotion affects marketing, but the extra orders must be fulfilled by operations, staff may need training, and finance must cover the investment. Technology is most useful when these parts of the business can support one another.
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Sales may rise: wider customer reach, ordering outside shop hours, digital promotion and convenient payments.
Sales may suffer: wider competition, negative reviews, unreliable systems or customers preferring personal service.
Possible savings: shop rent, customer-service staffing, travel and traditional advertising.
Added costs: installation, training, maintenance, security, delivery and returns.
Overall judgement: benefits depend on customer preferences, the product, additional sales and the balance between savings and new costs.
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Build a chain of reasoning: identify the technology, explain how it changes the business’s activity, then link this to sales, costs or the marketing mix.
Apply your explanation to the business in the question: its products, customers, budget and existing sales channels matter.
Distinguish sales revenue from profit. Extra online sales may bring extra delivery, advertising and technology costs.
When discussing the marketing mix, consider product, price, place and promotion—not just advertising.
Avoid claiming that technology always reduces costs or increases sales. Weigh the likely benefits against installation costs, running costs and customer preferences.
E-commerce
Buying and selling goods or services over the internet.
Social media
Online platforms on which users and businesses create and share content and interact with others.
Digital communication
The exchange of information using electronic technologies, such as email, messaging, live chat and video calls.
Payment system
A method through which a business receives money from customers, such as an online card payment or a contactless payment.
Marketing mix
The combination of product, price, place and promotion used by a business to meet customer needs and encourage sales.
Sales revenue
The money a business earns from selling goods or services: .
Put your knowledge into practice — try past paper questions for Business
E-commerce
Buying and selling goods or services over the internet.
Social media
Online platforms on which users and businesses create and share content and interact with others.
Digital communication
The exchange of information using electronic technologies, such as email, messaging, live chat and video calls.
Payment system
A method through which a business receives money from customers, such as an online card payment or a contactless payment.
Marketing mix
The combination of product, price, place and promotion used by a business to meet customer needs and encourage sales.
Sales revenue
The money a business earns from selling goods or services: .