A level AQA Business 2017 paper 1 Q25, A* essay 25/25, 'To what extent might the greater use of digital technology enable the business to increase its market share?'
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Unit 1 BUSS1 - Planning and Financing a Business
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A business is experiencing a fall in its market share. To what extent might
the greater use of digital technology enable the business to increase its
market share?
On one hand a greater use of digital technology may increase a businesses
market share significantly.
For example more efficient use of operations may increase productivity, so
supply can be matched to demand therefore a greater market of customers can
be reached increasing market share. Robotics is an example of this, where
companies can invest in robots to do jobs in place of employees, machines are
able to work 24/7 so productivity would increase along with capacity utilisation,
which would allow a larger customer base to be targeted if demand was already
high and the company was already over utilising.
If more customers demands have been met this increases the dependability of
the brand and therefore the companies brand image, which could increase
market share also as customers are more loyal to the brand.
Additionally making more efficient use of technology may increase market share
by investing in technologies which promote the business, this could enable a
larger customer base to be accessed hence increasing market share. For example
digital advertising may be used such as adverts via social media or TV
advertising such as shopping channels to promote a company or product.
This is a key aspect of the promotional mix which is implemented to spread
publicity about the brand. If advertised well the brand could have a good brand
image and be differentiated enough from other products offering something else
rather than just a low price, to entice new customers to buy their product or
service and increase market share.
Finally technology may be used in market research to increase the overall
market share of the business. For example secondary market research (obtaining
research about a desired market from an outside source) may be carried out to
get a better idea of which market of customers to target, to spot any arising
opportunities or revaluate business plans. If the right market is targeted and the
product/ service is positioned effectively to appeal to this market (for example
more sophisticated point of sales displays when targeting wealthier customers)
this may increase market share in the long run and the investment in secondary
market research has paid off.
Alternatively all of these points are not guaranteed. Investing in operations such
as robotics is expensive and quality may be sacrificed if more specialised goods
are produced via machinery, which would damage the brands image and
decrease market share. Using robots also decreases the personalised touch that
humans have and if used in shops this may put off customers as human
interaction is limited. Also digital marketing is risky as its expensive and may not
be effective. If the wrong target market is selected the brand may find it hard to
adjust their image to suit a ‘more profitable’ market if advertising for the old
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