TT is a private limited company in country J. TT has contracts to deliver products to secondary, tertiary and quaternary sector businesses. QZ is one of the largest manufacturers in country J and plans to outsource its supply chain management. A contract has been agreed between TT and QZ based on the following cost and revenue data (see Table 1.1). TT's Sales Manager has forecast that TT will make 5000 deliveries with the new contract. Table 1.1 Cost and revenue forecast for the QZ contract | | $ | |:--------------------------|:---:| | Direct costs (average per delivery) | 5 | | Total indirect costs | 9000 | | Total revenue | 40000 | TT employs 120 drivers. The majority of these drivers are white men aged between 40 and 60. A national newspaper has recently criticised the truck industry in country J for not having diversity and equality in the workplace. Klide, the Marketing Manager, has been set an objective to increase TT's revenue. He has decided to target small online retailers. TT will pick up individual products from the small online retailers and deliver them to households. This would require a new fleet of smaller trucks but has the potential to increase TT's revenue. Klide plans to use digital promotion to target these small online retailers.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] The quaternary sector consists of those industries providing knowledge/communication and information services, such as computing; ICT; consultancy; research and development (R&D); digital marketing; digital recruitment and selection; Intellectual property (copyright, patents)
2. [1] Allow examples of specific business', industries etc. that exist in the quaternary sector, including web/internet design; Education; Training; Media; Government; Cyber security
3. [1] The coordination (allow management) of the flow/movement of goods and services.
4. [1] From suppliers to business
5. [1] Within the business/From the business to customers
6. [1] Profit = TR – TC (direct costs + indirect costs) OR Calculation of total direct costs = $5 × 5000 = $25000
7. [1] TC = $25000 + $9000 = $34000
8. [1] $40000 - $34000 = $6000 (OFR rule applies)
9. [1] Identification of a reason why a business needs accurate cost information (e.g., To calculate the total cost of production; To make sure a profit is made; To identify the profit margin; To identify the break even point / margin of safety / target profit level; To know how much finance is needed; To categorise costs; To forecast sales; To budget/plan; To set prices)
10. [1] Explanation of a reason why a business needs accurate cost information (e.g., To calculate the total cost of production – to calculate profit levels; To make sure a profit is made – which can increase dividends; To identify the profit margin – to benchmark against other businesses; To identify the break-even point / margin of safety / target profit level – to ensure the business sells enough to cover the costs; To know how much finance is needed so that a bank can see how much profit may be made; To categorise costs – to budget for cost centres; To forecast sales - to estimate the break-even level of sales; To budget - so that the business can plan for future expansion; To set prices – by knowing the total costs which need to be covered.)
11. [1] Context applied to TT (e.g., TT has shareholders; Specialises in supply chain management; Contracts to deliver raw materials; To secondary and tertiary sector businesses; Agreed contract between TT and QZ; Use of Table 1.1; TT employs 120 drivers; Objective to increase sales; Targeting small, online retail businesses; Requires a new fleet of smaller trucks)
12. [1] Identification of an advantage of improving diversity and equality (e.g., Increase potential supply of workers; Reduce the chance of being sued; Increase motivation; Improve reputation/ brand image; Attract more diverse employees; Reduce labour turnover)
13. [1] Application of the advantage to TT (e.g., TT is a private limited company; Specialises in supply chain management; Contracts to deliver raw materials; To secondary and tertiary sector businesses; Works with one of the largest manufacturers in country J; Agreed contract between TT and QZ; Use of Table 1.1; TT employs 120 drivers; Objective to increase sales; Targeting small, online retail businesses; Requires a new fleet of smaller trucks; Plans to use digital promotion; Industry has been criticised for not having diversity and equality)
14. [2] Developed analysis that identifies connections between causes, impacts and/or consequences of one point. (e.g., Increase potential supply of workers: reduce labour costs – increase profitability; Reduce the chance of being sued – decrease business costs – increase profit; Increase motivation – increase efficiency of the business – increase profitability; Improve reputation – increase sales / contracts – increase profit; Attract more diverse employees – brings new ideas into the business – increase sales / profit; Reduce labour turnover – reduce business costs – increase profitability)
15. [1] Identification of a second advantage of improving diversity and equality
16. [1] Application of the second advantage to TT
17. [2] Developed analysis that identifies connections between causes, impacts and/or consequences of the second point.
18. [2] Knowledge of digital promotion (e.g., Social media; Email; Using the internet /technology (marketing); Online (marketing); Spam; Influencer; Search engine optimisation; Mobile/smartphone/ app-based (marketing); Viral (marketing); Pay per click)
19. [2] Application to TT (e.g., TT is a private limited company; Specialises in supply chain management; Contracts to deliver raw materials; To secondary and tertiary sector businesses; Works with one of the largest manufacturers in country J; Agreed contract between TT and QZ; Use of Table 1.1; TT employs 120 drivers; Objective to increase sales; Targeting small, online retail businesses; Requires a new fleet of smaller trucks)
20. [2] Analysis of the usefulness of digital promotion (e.g., To communicate: relatively inexpensive which reduces business costs – increases profit; To inform: digital promotion can be very fast with messages reaching customers instantly, this is likely to increase customer knowledge of a business and increase sales – increasing profit; To persuade: people spend vast amounts of time on digital devices so digital promotion is likely to target these customers more than other types of promotion, increasing sales – increasing profit; Always on: especially with the increase in wearable technology, digital promotion increases the chances of customers seeing the promotion and being persuaded to make a purchase – increasing profit.)
21. [6] Evaluation criteria (e.g., Relative usefulness of digital promotion in targeting smaller online retailers; Comparison with non-digital types of promotion; Comparison of different digital promotion methods; Use of digital methods may depend upon; cost of method, target market of customers for the online retailers, advances in technology (speed, influence etc.), budget available, geographical spread of market etc.; The impact of the chosen digital promotion methods method(s) and the impact of the methods themselves; The likely response from competitors; A judgement of the most useful method of digital promotion.)