AAA is a large chain of department stores. It has branches in cities all over the country.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2016). The mark or mark type is shown in brackets.

1. [2] (a) (i) 1 mark for each advantage identified up to a maximum of two advantages
2. • Can buy in bulk at discounted prices
3. • Can afford specialist employees
4. • Can use specialist computer systems
5. • Can charge lower prices
6. • Can raise large amounts of capital
7. • Benefit from economies of scale
8. • Sell a variety of goods
9. • Diversification of risk
10. Accept any other relevant points.
11. [4] (ii) 1 mark for each disadvantage stated with 1 further mark for an explanation of each disadvantage to a maximum of two disadvantages (Any 2 × 2 (1 + 1 marks))
12. • Prices tend to be high (1) in department stores because of their high overheads/located in CBD (1)
13. • Some department stores are regarded as being for the wealthy (1) which means budget conscious shoppers will go elsewhere (1)
14. • Some shoppers find the stores too big (1) not liking the impersonal atmosphere (1) can take time to find what you are looking for (1)
15. • Many department stores are in the centre of large cities where parking is difficult (1) and some shoppers will find it difficult/reluctant to visit them (1) due to cost/time involved in finding a parking space (1)
16. • Use of store cards (1) may lead to overspending (1)
17. Accept any other relevant points.
18. [2] (b) (i) Valid points include (Any 2 × 1 marks)
19. • A brand has a trademark/name (1) allow an example (1) of the manufacturer on the product or its packaging (1) to identify the producer (1) so as to distinguish it from other manufacturers'/producer products (1)
20. Accept any other relevant points.
21. [2] (ii) 1 mark for each service identified to a maximum of two services
22. • Delivery
23. • Setting-up/installation
24. • Repairs
25. • Maintenance/warranty
26. • Helpline/advice
27. • Recycle old washing machines
28. • Guarantee
29. Accept any other relevant points.
30. [6] (c) Level 2 (4-6 marks) Has discussed both sources of credit and has given a reasoned recommendation. (If a candidate has discussed only one source of finance option award 4 marks max)
31. Level 1 (1-3 marks) Has commented on one or both sources of credit with/without a recommendation
32. • The AAA store card will enable Mr Yip to purchase the washing machine with minimal paperwork as long as he already has the store card. He can pay for it in full when the monthly store card bill arrives, or spread the payments over a number of months. This will, however, attract interest usually at a high rate.
33. • He will legally own the washing machine from the outset.
34. • Hire purchase means Mr Yip will not legally own the machine until the final payment is made.
35. • Hire purchase will usually involve a third party lender and an application form will have to be completed and credit checks made.
36. • The interest rate charged can be less than the store card and the payments are usually a fixed amount monthly.
37. • If Mr Yip wants to spread the payments over as long a period as possible then he should choose hire purchase with its lower interest rate and fixed monthly payments.
38. • If Mr Yip wants to pay quickly for the machine then he should use the store card with its greater payment flexibility.
39. Accept any other relevant points.
40. [4] (d) Up to 2 marks for an explanation of a way with a maximum of two ways (Any 2 x 2 (1 + 1 marks))
41. • Mr Yip must ensure that the goods he sells are safe (1) not harm you (1) electrical safety would be particularly important with washing machines (1)
42. • The washing machine must also perform the tasks claimed (1) and be of merchantable quality/fit for purpose (1)
43. • Washing machines should be adequately described (1) not mislead (1) trades description acts (1)
44. • Prices are not too high (1) so not to be unfair to consumers (1)
45. • Consumers have rights (1) through consumer laws (1)
46. Accept any other relevant points.