2023 Paper 1 Flashcards
Using the data in Extract A, explain one way demand for online food deliveries is affected by income elasticity of demand. (4)
Income Elasticity of Demand (YED) measures the responsiveness of demand to a change in income. As YED is -156 it is clear that Deliveroo orders are inferior goods.
This means that, as incomes fall, demand for its food delivery service rises
Explain one reason food delivery apps, such as Deliveroo, pay their workers commission. (4)
A commission is a payment to a worker based on a percentage of the value of sales Deliveroo’s food delivery drivers are incentivised to deliver more orders to earn more commission in total, potentially increasing the speed of delivery. This is likely to lead to positive ratings from customers on the Deliveroo app improving the business’s reputation
Assess the likely importance of emotional branding to Deliveroo. (10)
Emotional branding may be important for Deliveroo as it connects with customers’ feelings [K]. Deliveroo found that customers care about ‘food happiness’ when choosing an app. By focusing marketing on happiness, Deliveroo raised brand awareness from 3.1% to 6.6% [Ap]. Connecting emotionally could lead to more sales and repeat customers. However, despite these efforts, 93.4% still don’t know Deliveroo. This means emotional branding alone might not greatly boost business growth
Another factor to consider is the practical side of Deliveroo’s service.
Prices and delivery speed might matter more to customers than emotional appeal. With rivals like Just Eat and Uber Eats providing similar services, practical factors can strongly affect customer choices. If Deliveroo only focuses on emotional branding, it risks losing customers to competitors.Yet emotional branding might still help build long-term customer loyalty and repeat orders
Overall, emotional branding is important as it helps Deliveroo stand out and build loyalty. However, practical factors like price and reliable delivery remain key due to strong competition. Deliveroo should balance emotional branding with practical strengths to achieve lasting success
