Identify and explain two suitable pricing strategies ACE could use when selling its products in new markets in other countries.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

1. [8] (a) Content: Cost-plus; Competitive; Promotional; Penetration; Skimming; Psychological. The marks available for this question are as follows: 2 marks for knowledge; 2 marks for application and 4 marks for explanation/analysis. 1 mark for each pricing strategy identified a further mark for effect on price - plus 1 mark for further development or explanation of the strategy – plus 1 mark for application. Possible application marks: ovens; components; restaurants and hotels; new markets in country X. There may be other examples in context which have not been included here. 1 knowledge mark + up to 2 explanation marks + 1 application mark for each pricing strategy. (4 marks x 2 pricing strategies) Pricing strategy: ACE could use a competitive pricing strategy (1 mark for knowledge). Developed Explanation: ACE could use a competitive pricing strategy (1). It is selling its ovens to many different countries where there will be competitors (2). In order to ensure its ovens sell well the price must be similar to its competitors' prices or it will not sell many ovens unless its oven are much better quality (3). Application: The application mark could be achieved as the answer makes reference to selling ovens (1 application mark).
2. [12] (b) Content: Email; Telephone; Letter; Text/SMS; Video conferencing; Meetings; Fax. Level 1: 1 mark for each statement, e.g. the purchasing manager could use email to inform suppliers about the problem with the delivery of electrical components (1 mark). Level 2: 5 marks for the first level 2 answer and then 1 extra mark for each additional level 2 answer up to maximum of 8 marks, e.g. the purchasing manager could use email to inform suppliers about the problem with the delivery of electrical components. Email is quick and cheap to use and can be easily sent out to businesses located in other countries. However, the email may not be read straight away and so the message may not get through to supplier quickly enough to stop a delay in the production of ovens and it will be difficult to know if the message has been read. 5 marks for level 2 answer plus 1 application mark for including reference to a delay in the production of ovens in the answer. Level 3: Detailed discussion of at least two level 2 answers and then a recommendation at the end which justifies which is the best method of communication to choose compared to the other forms of communication. Possible application marks: ovens; restaurants and hotels; 200 production workers; plc/large company; country Z. There may be other examples in context which have not been included here. Application Level 3: 2 marks, Well applied to case. At least two examples of reference to, or use of, the case. Level 2: 2 marks, Well applied to case. At least two examples of reference to, or use of, the case. Level 1: 1 mark, Limited application to the case. At least one example of reference to, or use of, case. Knowledge/Analysis/Evaluation Level 3: 9–10 marks, At least 2 x Level 2 + Well justified recommendation as to the best method of communication to choose compared to the other methods of communication. Level 2: 5–8 marks, Good discussion of advantages/disadvantages of each method of communication OR explained balanced argument. Some limited judgement shown in recommendation about the best method of communication to choose. Level 1: 1–4 marks, Outline of advantages/disadvantages of each method of communication.