Wholesalers deal with retailers and manufacturers. WW Wholesalers allows its retailers trade and cash discounts.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [4] Amount of payment = $4704
2. [1] Method 50 × $120 = $6000
3. [1] minus 20% = $4800
4. [1] minus 2% = $96
5. [1] Retailer may have a cash flow problem; [1] making losses / too much unsold stock / does not have enough money to pay for the goods now / has to wait for tracksuits to be sold / other stock to be sold / to receive the money to pay
6. [1] May have other important bills to pay; [1] wants to dispose of other stock / a business owner has to make decisions / prioritise / e.g. rent / so the business can continue to operate
7. [1] 2% is only a small amount of cash discount ($96 out of $4800); [1] compared to 20% trade discount / not worth having the discount / or having to pay bank charges on an overdrawn account
8. [1] May have a better use for his money; [1] earn more than 2% / increase the retailer's return / profit.
9. [Up to 2 marks] for describing wholesaler / chain of distribution
10. [Up to a further 2 marks] for analysing wholesaler functions to manufacturers
11. [Up to a final 2 marks] for discussing how important wholesalers are to manufacturers.
12. Wholesalers buy goods from manufacturers and then sell them to retailers so a wholesaler acts as distributor in the chain of distribution and may have specialised knowledge about the products in the market, so make it easier and simpler for the manufacturer to sell.
13. Why wholesalers are important to manufacturers: Aware of the trends in the market, passing on this information to the manufacturer who then knows what is selling well
14. Carry out marketing activities, helping to promote the goods
15. Store goods in their own warehouses, so reducing inventory costs and freeing up space for manufacturers to store raw materials rather than finished goods
16. Risk-bearing function – by buying and storing the goods the wholesaler reduces the risks of theft and spoilage to manufacturers
17. Can produce deliveries to customers which saves manufacturer costs
18. Buy in bulk which helps manufacturers clear production lines
19. May break bulk / brand / package so the manufacturer concentrates just on production.
20. Evaluation: These functions make wholesalers very important to some manufacturers as they save on the cost of goods and increase sales, while saving time for manufacturers who want to focus on production. However, some wholesaler functions are performed by manufacturers who sell their goods direct to customers, so wholesalers are very important to some manufacturers but not as important to others.