Business 9609/21 May/June 2021: question paper and mark scheme

Mark scheme

1(a)(i) Define the term ‘competitors’ (line 2). 2 Knowledge Marks A correct definition / to the same/ similar market 2 A partial, vague or unfocused definition / same or similar 1 product No creditable content 0 Content • One mark for other businesses/individuals • One mark for same/similar market; same/similar product • Other businesses (1) offering the same product or service (1) • Other similar businesses (1) that sell similar goods/services (1) • A rival person/organisation/company/firm (1) in the same or similar industry (1) trying to reach the same/similar target market (1) ARA 1(a)(ii) Explain the term ‘dynamic pricing’ (line 4). 3 Award one mark for each point of explanation: C Example or some other way of showing good 1 mark understanding B Understanding of dynamic (changes in response to 1 mark market/demand/time of day etc) A Understanding of pricing (allow any understanding of a 1 mark quantitative value) e.g. quantitative value/amount/figure charged/cost Content Varying what the customer pays (1) for a product or service to reflect changing market conditions (1) such as higher prices at peak times (1) to maximise revenue (1) e.g. often used on apps or websites (1) Allows firms to set prices according to demand. Businesses adjust prices on apps or websites. Flexible pricing in real-time. Exemplar Mark Rationale What the customer pays varies 3 A, B and C – websites shows due to changing demand factors HOW the price can change e.g. monitored on websites constantly What the customer pays varies 2 A and B mark – explanation due to changing demand factors of why prices change Pricing which changes due to 1 B mark – flexible pricing factors such as demand Price varies CONSTANTLY 1 B mark – flexible pricing Pricing that changes/differs from 1 No A mark – B mark only time to time Changes due to distance 1 Pricing that changes 0 Too vague ARA 1(b)(i) Explain one way Ray could increase his profit margin. 3 Level Knowledge and Application Marks 2 (APP+APP) Explanation of a factor which would increase 3 the profit margin in context 2a (APP) Explanation of a factor which would increase 2 profit in context 1a (K) Identification of a factor affecting profit 1 0 No creditable content 0 Content Increase number of journeys without a change in taxi maintenance costs Reduce costs without change in number of journeys/price eg buying an electric car Negotiate a higher (than 80%) return from Summus Work longer hours as Summus fixed costs do not change ARA Exemplar Mark Rationale Increases number of taxi 3 Explanation of a factor in journeys which reduce fixed context costs per journey Increases number of taxi 2 Explanation of a factor not in journeys context Increase the prices 1 Affects profit margin Decrease prices to increase 1 Profit, not profit margin revenue and profit 1(b)(ii) Refer to Table 1.1. Calculate Ray’s forecast average daily revenue if he 3 joins Summus. Rationale Marks Correct answer with or without correct working or $ 3 Attempt with correct figures 2 Formula/attempt to calculate 1 No creditable content 0 Content Revenue = (P × Q) (1) = ($15 × 16 journeys) = 240 (2) = $240 × 80% = 192 (3) = $192 (3) 1(c) Analyse two pricing methods, other than dynamic pricing, Summus 8 could use to price taxi fares. Knowledge and Analysis Level Application Marks Marks (4 marks) (4 marks) 2b Shows 4 Developed analysis 4 understanding of two of two methods of methods of pricing in pricing in context context 2a Shows 3 Developed analysis 3 understanding of of one method of one method of pricing in context pricing in context 1b Shows knowledge of 2 Limited analysis of 2 two methods of two methods of pricing pricing 1a Shows knowledge of 1 Limited analysis of 1 one method of one method of pricing pricing 0 No creditable content Content Any two pricing methods such as competitive, penetration, skimming. Context could come from competitive market, new service in city L. Note: • Do not reward dynamic as in the case study. • Be careful to distinguish between pricing methods for customers and payment methods for drivers Identification Understanding Developed of pricing Limited in context analysis in method analysis (AN) (APP) context (Dev) (K -1) Competitive As increasing Which would Which would competition (in mean the USP lead to an city L) may make them increase in more popular demand/revenue Penetration to increase Which would And hopefully brand lead to an long term awareness for increase of customer loyalty taxi’s (in city L) customers in the short term ARA 1(d) Recommend whether Ray should join Summus. Justify your 11 recommendation. Annotation Annotation Knowledge and Analysis and Marks Marks Application Evaluation (4 marks) (7 marks) A justified EVAL + EVAL + EVAL recommendation based on developed arguments 7 A developed EVAL + EVAL recommendation based on developed arguments 6 A basic EVAL recommendation/evaluat 5 ion based on developed arguments Shows understanding of two Two arguments based elements of decision making on two elements of DEV + DEV APP + APP in context decision making in context 4 3–4 Shows understanding of one One argument based on DEV APP element of decision making one element of decision 3 in context making in context 1(d) Annotation Annotation Knowledge and Analysis and Marks Marks Application Evaluation (4 marks) (7 marks) Shows knowledge of Limited analysis of two decision making or more elements of AN + AN K+K decision making 2 1–2 Limited analysis of one AN element of decision K 1 making No creditable content Content Knowledge and understanding • Factors affecting knowledge of decision making for a business Application • Ray’s demand has fallen • Increasing competitors • No other taxi drivers employed by Summus in city L • App uses dynamic pricing • Ray gets 80% / Sumus gets 20% • Data from Table 1.1 and 1.2 • Passengers like Summus app • Taxi drivers like Summus App • Signs of too many taxi drivers • Drivers not employed • Drivers not guaranteed revenue • Longer customer waiting times when fares are low Analysis • Analysis of reasons for and against Ray joining Summus Evaluation • A recommendation for Ray based on arguments in context as to whether he should or should not join Summus • A judgement over which argument is most important • An evaluation of the level of argument • What the judgement/evaluation might depend upon. K APP AN DEV EVAL More As booked Higher Although Ray should join Summus customers through app revenue dynamic pricing may as customers like convenience reduce Ray’s and creating his own app would overall be expensive, income if not a peak time however it depends on whether he is willing to work only at peak High total As $42 per Which Which may times and the revenue from costs day + 20% reduces be less than Summus is likely to be above Rays gross earnings as a his sole trader revenue profit sole trader

Mark scheme

2(a)(i) Define the term ‘margin of safety’ (line 4). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content A link to breakeven Knowledge of the difference between breakeven and actual output The difference between the break-even level of output (1) and the actual level of output. (1) ARA Exemplar Mark Rationale The difference between the BE 2 Clear understanding and actual level of output The output over breakeven 2 Correct answer The revenue over the breakeven 1 Understanding of difference point Anything explaining JUST 1 Partial definition breakeven Be careful not to award revenue for breakeven as it is output 2(a)(ii) Explain the term ‘co-operative’ (line 1) 3 Award one mark for each point of explanation: Marks C Example or some other way of showing good 3 understanding e.g. share the profits between members or provides a job for members B Members could be employees, customers or local 2 residents/community A Businesses owned and run for and by their members 1 C marks dependent on A and B mark being present Content Businesses owned and run for and by their members. Members could be employees, customers or local residents/community. Members have an equal say in business decisions and share the profits. NOTE – be careful not to award marks for a description of a partnership ARA Exemplar Mark Rationale A business owned and run by 3 All three elements members who share total profits A business owned and run by 2 No expansion members such as employees Owned and run by employees 1 No understanding of being a member Owned and run by members 1 No understanding of who members are Several people come together to 0 No ownership or decision create a business making 2(b)(i) Refer to Table 2.1. Calculate the price that JTG should charge per 3 ticket in order to break even at 200 ticket sales. Rationale Marks Correct answer, with or without working and $ sign 3 Attempt to calculate with correct figures 2 Formula/attempt to calculate 1 No creditable content 0 Content Content Fixed costs = $900 Fixed costs = $900 Variable costs = $2 per ticket Variable costs = $2 per ticket BE = 200 tickets BE = 200 tickets BE = FC / (P – VC) (1) Total costs @ breakeven level = $1300 (1) 200 = 900 / (P – 2) P – 2 = 900/200 1300/200 (2) P – 2 = 4.50 (2) (if working present) Price per ticket = $6.50 (3) PPT = ($) 6.50 (3) 2(b)(ii) Explain one advantage to JTG of using break-even analysis. 3 Level Knowledge and Application Marks 2a (App) Explanation of one advantage of using break 3 even analysis in context 1b (K+K) Explanation of one advantage of using break 2 even analysis 1a (K) Identifies one advantage of using break even 1 analysis 0 No creditable content 0 Useful for pricing tickets. Can carry out ‘what if’ analysis e.g. what if JTC cannot sell 200 tickets in advance? OFR ARA Exemplar Mark Rationale Can help in making pricing 3 1 advantage explained in decisions to ensure a profit is context made for the single theatre performance Identify how many tickets should 3 1 advantage explained in be sold to reach the amount context they need to breakeven Can help in making pricing 2 1 advantage explained decisions to ensure a profit is made Can help in making pricing 1 One advantage id’d decisions Less waste as can identify the 0 You need excess to make BE point profit 2(c) Analyse two elements of the marketing mix which would be useful to 8 JTG in marketing its play. Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2b Shows 4 Developed analysis 4 understanding of two of two elements of elements of the the marketing mix in marketing mix in context context 2a Shows 3 Developed analysis 3 understanding of of one element of one element of the the marketing mix in marketing mix in context context 1b Shows knowledge of 2 Limited analysis of 2 two elements of the two elements of the marketing mix marketing mix 1a Shows knowledge of 1 Limited analysis of 1 one element of the one element of the marketing mix marketing mix 0 No creditable content Content Place – Is the theatre in a good Consumer wants and needs location Price – Break-even price could be Cost to consumer used from 2bi Promotion – Cost, probably a Convenience to consumer limited budget Product – is the play suitable for Communication to consumer the audience ARA 2(c) Identification Understanding Limited Developed of marketing in context analysis (AN) analysis in mix (APP) context (Dev) (K) Price Breakeven price Useful to attract Which increases – $6.50 (or customers revenue OFR) Place Sales on the Allows Which would (distribution internet convenience for increase ticket channel) Buying on the customer in sales night ticket purchasing Product Is in a 300 seat Increases Which theatre customer gets/spreads Anything to do satisfaction brand with plays/ awareness performances/1 night only Promotion Co-operative/ Which boosts Which leads to any promotion customer an increase in method related awareness demand to theatre 2(d) Evaluate whether JTG should perform only in city M. 11 Annotation Annotation Marks Marks Knowledge and Analysis and Evaluation Application (4 marks) (7 marks) A justified EVAL + EVAL + EVAL judgement/evaluation based on arguments 7 A developed judgement/ EVAL evaluation based on 6 developed arguments A basic EVAL judgement/evaluation 5 based on developed arguments Shows understanding of Argument based on two two factors affecting factors affecting location in DEV + DEV APP + APP location in context context 4 4 Shows understanding of Argument based on one DEV APP one factor affecting location factor affecting location in 3 3 in context context Shows knowledge of two Limited analysis of two AN + AN factors affecting location factors affecting location K+K 2 2 2(d) Annotation Annotation Marks Marks Knowledge and Analysis and Evaluation Application (4 marks) (7 marks) Shows knowledge of one Limited analysis of one factor affecting location factor affecting location AN K 1 1 No creditable content Content Arguments Lower costs e.g. marketing and transport, so higher profits Able to build up / engage with a loyal local audience Finance sources such as crowdfunding Build a reputation Disadvantages Smaller market – wider audiences if tour Would not be eligible for a touring grant from the government – cheap source of finance Need to put on new plays regularly Might be more profitable venues / bigger audiences in other towns K APP AN DEV EVAL Smaller People will Which leads And lower JTG should stay in city M market usually only to decreased profit share (disad) see a play long term for coop as it allows actors to become once revenues members confident in their lines and improve, Lower costs No However Which (adv) transportatio gvmt grants increases however n of sets and are available profits for it depends on whether city M is costumes JTG a popular destination for theatre goers so there is a constant supplier of new customers