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Assess the consequences to a business, such as Spirit Airlines, of only selling its tickets online. - Edexcel - A-Level Business - Question 1 - 2017 - Paper 1
Question 1
Assess the consequences to a business, such as Spirit Airlines, of only selling its tickets online.
Worked Solution & Example Answer:Assess the consequences to a business, such as Spirit Airlines, of only selling its tickets online. - Edexcel - A-Level Business - Question 1 - 2017 - Paper 1
Step 1
Knowledge: Selling online means that tickets are purchased electronically via a website or application.
Answer
Selling tickets online reduces the costs associated with distributing airline tickets to customers, bringing these costs down to virtually zero. This reduction allows Spirit Airlines to either lower ticket prices or increase profit margins if ticket prices remain stable.
Step 2
Application: Effects on customer booking experience.
Answer
Customers benefit from the convenience of booking tickets at any time of day, which may increase sales volume. Additionally, they might be attracted to online tracking changes for tickets, allowing them to seek the best prices and enhance their buying experience.
Step 3
Analysis: Impact on operational costs.
Answer
As both existing and potential customers are less likely to expect additional charges through online ticketing, Spirit's operating costs associated with call centers should decrease. This can also enhance customer satisfaction due to lower prices.
Step 4
Evaluation: Potential challenges of online sales.
Answer
However, not all customers may be comfortable with online transactions, which could lead to lost sales from those demographics. Furthermore, effective online support infrastructure is necessary to prevent purchase failures. Should the online system falter, customers may be dissuaded from using Spirit Airlines entirely.
Step 5
Counterbalance: Market limitations and competition.
Answer
With online ticket sales, low-cost airlines like Spirit must maintain competitive pricing. While faceless online booking systems can increase efficiencies, they also risk alienating customers who prefer human interaction in their purchasing processes, potentially limiting market share.