CS owns 28 supermarkets which sell food and non-food products. Each CS supermarket has a large product portfolio with over 10000 different products. CS uses a number of different promotion methods and pricing strategies. The most effective of these is when CS temporarily reduces the price of a product. Each week 20 different products are selected and their prices reduced. Table 1 shows the sales data from a recent price reduction on bottled water from $0.90 to $0.63. Table 1: Sales data for bottled water Sales in week before price reduction 20000 bottles Sales in week of price reduction 40000 bottles CS has had poor cash flow for the past year and its profit margins are falling. The owners have decided to close one supermarket. They have short-listed two of the least profitable supermarkets and must decide which to close (see Table 2). Table 2: Data to help decide which supermarket to close Supermarket A Supermarket B Sales revenue (2017) $2000000 $1500000 Rent (2017) $400000 $250000 Local unemployment (2017) High Low Local population (households) 150000 80000 Number of years supermarket has been open 4 20 Profit/(Loss) 2015 ($20000) $5000 2016 ($10000) $3000 2017 ($5000) $2000

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [2] The transfer/movement of money in and out of the business
2. [1] The transfer/receiving of money in of the business
3. [1] The transfer/spending of money within/out of a business
4. [1] The movement of money/cash within a business
5. [0] The money made from selling goods
6. [1] Range/catalogue of products/services
7. [1] Sold by a business
8. [1] Example or some other way of showing good understanding
9. [3] The range of goods and services sold by a business which can be used to analyse the best-selling products
10. [2] The variety of products the company has to offer for the people
11. [2] The amount of different products a business sells
12. [1] What the company uses to keep track of all of its products
13. [0] The data of a product including price, opinion, etc.
14. [4] Correct answer with or without correct working (minus sign not required)
15. [3] Correct calculation of % change in QD AND % change in P
16. [2] Formula AND calculation of both actual changes OR correct calculation of % change in QD OR % change in P
17. [1] Formulae OR correct calculation of both actual changes
18. [0] No creditable content
19. [4] (-)3.33 (Correct final answer, no working needed)
20. [4] 3 (Correct answer, ignore minus, no recurring needed)
21. [3] 100 and 30 and wrong final answer (0.3) (% change P over % change QD (wrong way round))
22. [2] Formula and 0.27 and 20 000 (Formula and correct calculation of both actual figures)
23. [1] 0.27 and 20 000 (Correct calculation of both actual figures)
24. [0] 0.9 - 0.63 = 0.27 (Calculation of only 1 actual figure)
25. [2] PED is elastic so VC should gain more revenue from the sales discount
26. [2] VC should use more sales discount promotions because it shows an elastic response
27. [2] The sakes discount brought in more revenue and increased sales
28. [1] Identification of a use of PED
29. [2] Explanation of a use of the answer to 1(b)(i) in context
30. [7] A justified recommendation based on a developed argument on the closure of both supermarkets
31. [6] A developed recommendation based on a developed argument on the closure of both supermarkets
32. [5] A basic recommendation/judgement based on a developed argument on the closure of both supermarkets
33. [4] Developed argument based on the closure of supermarket A and supermarket B
34. [3] Developed argument based on the closure of supermarket A or supermarket B
35. [2] Limited analysis of supermarket A and supermarket B
36. [1] Limited analysis of supermarket A or supermarket B
37. [11] CS should choose SM A (Basic recommendation) because it has more potential to increase revenue in the longer term (Developed recommendation) however it depends on whether SM B's profit continue to fall (Justified recommendation)
38. [11] However the larger local population means there might be more long term potential to increase revenue and balance out cash flow in the future (DEV - LHS)
39. [11] Which means that it is never likely to be as profitable as Supermarket A (DEV – RHS)
40. [4] Developed analysis of the closure of the supermarket on two stakeholders of CS
41. [3] Developed analysis of the closure of the supermarket on one stakeholder of CS
42. [2] Limited analysis of the effect of closure on two stakeholders
43. [1] Limited analysis of the effect of closure on one stakeholder
44. [4] Shows understanding of the effect of the closure on two stakeholders of CS
45. [3] Shows understanding of the effect of the closure on one stakeholder of CS
46. [2] Shows knowledge of and gives one or more stakeholder examples OR two examples of stakeholders
47. [1] Shows knowledge of stakeholders (definition) OR one example of a stakeholder
48. [8] May struggle to find another job → Lead to a lower quality of life → affect the ability to look after their family/pay rent → lead to less emphasis on children's education
49. [8] Less tax paid → lowers the overall amount available for community projects → increases taxes or reduction in services → affects the community negatively
50. [8] May choose an alternative supermarket → which leads to increased travel time
51. [8] Reduction in demand → increase in wastage → reduction in employees needed → increased unemployment in the local area