O-LevelCommerceWholesale trade7100/22 · May/June 2021 · Q518 Marks

WW Wholesalers supplies clothing. The commercial document in Fig. 5.1 has been sent to a customer. [Figure 5.1]

(a)(i)Name the document in Fig 5.1.[1]
(a)(ii)Calculate the figure for (ii) in the 'Total ($)' column for item LJ179.[1]
(a)(iii)Calculate the figure for (iii) for 'Trade discount 20%' applied to the subtotal.[1]
(a)(iv)Calculate the figure for (iv) in the 'Total' row, after discount.[1]
(b)Should trade discount be given to customers? Give reasons for your answer.[3]
(c)Which of these statements about the wholesale trade are TRUE and which are FALSE? Tick (✔) TRUE or FALSE in the correct column. The wholesaler breaks bulk by buying in small quantities. Export merchants are rewarded by profit. Cash and carry wholesalers offer hire purchase to retailers.[3]
(d)Many clothing retailers are finding it difficult to compete with online retailers. Two possible solutions are: • Develop a social media presence • Provide a customer loyalty card programme Discuss each of these solutions. Recommend a course of action. Give reasons for your answer.[8]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

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

5(a)(i) 1 Credit Note
5(a)(ii) 3 $5600 (1)
5(a)(iii) $1120 (1)
5(a)(iv) $4480 (1)
5(b) 3 Yes - offered to trade/regular customers (1) encourages customers to buy more / in bulk / more often (1) increases sales / attracts more customers (1) clears production lines / stocks (1) and creates customer loyalty / good relationships (1) ensuring repeat business (1) stops them from going to competition (1) retail customers can resell at a higher price (1) obtain more profit (1)
No - it is money lost (1) discounts add to up to significant sums over time (1) this can have a negative effect on sales revuenue (1) and ultimately profit (1)
5(c) 3 The wholesaler breaks bulk by buying in small quantities. ✓ (FALSE)
Export merchants are rewarded by profit ✓ (TRUE)
Cash and carry wholesalers offer hire purchase to retailers ✓ (FALSE)
5(d) 8 Level 3 (7-8 marks): The candidate is able to offer a thorough evaluation of whether clothing retailers should be developing a social media presence or providing a customer loyalty card.
Level 2 (5-6 marks): Candidate offers a satisfactory analysis of the advantages and/or disadvantages to clothing retailers of developing a social media presence or providing a customer loyalty card.
Level 1 (1-4 marks): Candidate demonstrates some knowledge and understanding, with application to clothing retailers, of developing a social media presence of providing a customer loyalty card.
Social media presence: Increases trust among consumers as a good impression can be made, e.g. if a celebrity is seen wearing the clothes, or the opposite if reviews are poor; Improves brand awareness as content can go viral, but not if PR is bad; Increases online sales because of quick links to retailer websites; Improves customer service and relations as consumers like to interact on social media by asking questions and giving feedback
Customer loyalty card programme: a good way to attract new customers and to retain customers; Increases sales as customers take advantage of sales promotions; Clothing retailers track and analyse customer shopping habits so they can target loyalty offers to specific customers, e.g. specific brands or types of clothing; Increases market e.g. recommend a friend and receive an extra reward
Example of Evaluation: In terms of cost, social media costs very little to run once it is set up, although it takes time to build up relationships with consumers and for posts to be shared. Loyalty rewards programmes can be more expensive to monitor and manage. Also, the promotions offered may reduce profit if not enough sales are made. So social media is recommended for clothing retailers to be more competitive, especially as fashion trends change so quickly.