Juliet's Theatre Group (JTG) Juliet and her friends would all like careers in acting. They have formed a co-operative called JTG which is based in city M. JTG is planning to hire a theatre in city M so that the co-operative members can act in a play. The theatre has 300 seats but Juliet has set a target of 200 customers to break even. This should ensure a margin of safety. City M is a large city with many theatres and music venues. Juliet estimates that they can sell 150 tickets in advance to friends, family and on the internet. Unsold tickets will be available to buy on the night of the performance. JTG is planning to perform the play at the hired theatre in city M for one night only. Financial information is shown in Table 2.1. Table 2.1: Financial information ($) Theatre hire per night (paid in advance): 600 Costume hire: 200 Printing tickets: 100 Variable costs per ticket: 2 Juliet has proposed going to different cities with the play, putting on performances for one night in each city. Arpitter is a business consultant and has offered some advice. She thinks that JTG should put on performances only in city M and has given the following reasons: • there is a suitable venue in city M • it is easier to build customer loyalty • minimal costs. Juliet disagrees. She thinks that JTG could: • build up a larger customer base by going to other cities • perform the same play in different cities so no need to rehearse other plays • access government grants for travelling acting groups.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [1] Content: A link to breakeven
4. [1] Content: Knowledge of the difference between breakeven and actual output
5. [1] Content: The difference between the break-even level of output (1) and the actual level of output. (1)
6. [3] C: Example or some other way of showing good understanding e.g. share the profits between members or provides a job for members
7. [2] B: Members could be employees, customers or local residents/community
8. [1] A: Businesses owned and run for and by their members
9. [1] Content: Businesses owned and run for and by their members.
10. [1] Content: Members could be employees, customers or local residents/community.
11. [1] Content: Members have an equal say in business decisions and share the profits.
12. [3] Correct answer, with or without working and $ sign
13. [2] Attempt to calculate with correct figures
14. [1] Formula/attempt to calculate
15. [1] Content: Fixed costs = $900
16. [1] Content: Variable costs = $2 per ticket
17. [1] Content: BE = 200 tickets
18. [1] Content: BE = FC / (P – VC) (1)
19. [1] Content: 200 = 900 / (P – 2)
20. [1] Content: P – 2 = 900/200
21. [1] Content: P− 2 = 4.50 (2) (if working present)
22. [1] Content: Price per ticket = $6.50 (3)
23. [1] Alternative Content: Total costs @ breakeven level = $1300 (1)
24. [1] Alternative Content: 1300/200 (2)
25. [1] Alternative Content: PPT = ($) 6.50 (3)
26. [3] Level 2a (App): Explanation of one advantage of using break even analysis in context
27. [2] Level 1b (K+K): Explanation of one advantage of using break even analysis
28. [1] Level 1a (K): Identifies one advantage of using break even analysis
29. [1] Content: Useful for pricing tickets.
30. [1] Content: Can carry out 'what if' analysis e.g. what if JTC cannot sell 200 tickets in advance?
31. [4] Level 2b: Shows understanding of two elements of the marketing mix in context
32. [4] Level 2b: Developed analysis of two elements of the marketing mix in context
33. [3] Level 2a: Shows understanding of one element of the marketing mix in context
34. [3] Level 2a: Developed analysis of one element of the marketing mix in context
35. [2] Level 1b: Shows knowledge of two elements of the marketing mix
36. [2] Level 1b: Limited analysis of two elements of the marketing mix
37. [1] Level 1a: Shows knowledge of one element of the marketing mix
38. [1] Level 1a: Limited analysis of one element of the marketing mix
39. [1] Content: Identification of marketing mix (K): Place
40. [1] Content: Understanding in context (APP): Is the theatre in a good location
41. [1] Content: Limited analysis (AN): Consumer wants and needs
42. [1] Content: Identification of marketing mix (K): Price
43. [1] Content: Understanding in context (APP): Break-even price could be used from 2bi
44. [1] Content: Limited analysis (AN): Cost to consumer
45. [1] Content: Identification of marketing mix (K): Promotion
46. [1] Content: Understanding in context (APP): Cost, probably a limited budget
47. [1] Content: Limited analysis (AN): Convenience to consumer
48. [1] Content: Identification of marketing mix (K): Product
49. [1] Content: Understanding in context (APP): is the play suitable for the audience
50. [1] Content: Limited analysis (AN): Communication to consumer
51. [1] K: Price
52. [1] APP: Breakeven price – $6.50 (or OFR)
53. [1] AN: Useful to attract customers
54. [1] DEV: Which increases revenue
55. [1] K: Place (distribution channel)
56. [1] APP: Sales on the internet Buying on the night
57. [1] AN: Allows convenience for customer in ticket purchasing
58. [1] DEV: Which would increase ticket sales
59. [1] K: Product
60. [1] APP: Is in a 300 seat theatre Anything to do with plays/ performances/1 night only
61. [1] AN: Increases customer satisfaction
62. [1] DEV: Which gets/spreads brand awareness
63. [1] K: Promotion
64. [1] APP: Co-operative/ any promotion method related to theatre
65. [1] AN: Which boosts customer awareness
66. [1] DEV: Which leads to an increase in demand
67. [11] Level 7: A justified judgement/evaluation based on developed arguments
68. [6] Level 6: A developed judgement/evaluation based on developed arguments
69. [5] Level 5: A basic judgement/evaluation based on developed arguments
70. [4] Level 4: Argument based on two factors affecting location in context
71. [3] Level 3: Argument based on one factor affecting location in context
72. [1] Content Arguments (for staying in M): Lower costs e.g. marketing and transport, so higher profits
73. [1] Content Arguments (for staying in M): Able to build up / engage with a loyal local audience
74. [1] Content Arguments (for staying in M): Finance sources such as crowdfunding
75. [1] Content Arguments (for staying in M): Build a reputation
76. [1] Content Disadvantages (of staying in M / arguments for touring): Smaller market - wider audiences if tour
77. [1] Content Disadvantages (of staying in M / arguments for touring): Would not be eligible for a touring grant from the government – cheap source of finance
78. [1] Content Disadvantages (of staying in M / arguments for touring): Need to put on new plays regularly
79. [1] Content Disadvantages (of staying in M / arguments for touring): Might be more profitable venues / bigger audiences in other towns
80. [1] K: Smaller market (disad)
81. [1] APP: People will usually only see a play once
82. [1] AN: Which leads to decreased long term revenues
83. [1] DEV: And lower profit share for coop members
84. [1] EVAL: JTG should stay in city M as it allows actors to become confident in their lines and improve, however it depends on whether city M is a popular destination for theatregoers so there is a constant supplier of new customers
85. [1] K: Lower costs (adv)
86. [1] APP: No transportation of sets and costumes
87. [1] AN: However gvmt grants are available
88. [1] DEV: Which increases profits for JTG
89. [1] EVAL: however it depends on whether city M is a popular destination for theatregoers so there is a constant supplier of new customers