Table 1 shows quarterly figures from a manufacturer of solar garden lights. The business sells to DIY stores. Its directors are considering whether to start...
Question 1 Report
Table 1 shows quarterly figures from a manufacturer of solar garden lights. The business sells to DIY stores. Its directors are considering whether to start making a lower-priced product for customers during a period of slow economic growth.
(a) Identify the quarter in which sales revenue was lowest. [1]
(b) Show the fall in sales revenue from Quarter 1 to Quarter 3. [1]
(c) Explain one reason why slow economic growth may reduce sales of solar garden lights. [2]
(d) Which pricing strategy could be suitable for a lower-priced product aimed at a price-sensitive market? [1]
Answer Details
(a) Sales revenue was lowest in Quarter 3. [1]
(b) The fall in sales revenue is:
\[£248\,000 - £205\,000 = £43\,000\]
Therefore, sales revenue fell by £43 000. [1]
(c) During slow economic growth, customers may have lower income or less confidence about spending. They may postpone buying non-essential products such as solar garden lights, reducing sales. [2]
(d) Penetration pricing or competitive pricing could suit a lower-priced product aimed at price-sensitive customers. [1]
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