Question 5
(a) Explain four factors to be considered by a company before determining the price of its products.
(b) Explain the following:
(i) quantity discount;
(ii) cash discount;
(iii) trade discount;
(iv) seasonal discount.
Observation
Some candidates listed the factors without explanation in question 5(a), as such did not score full marks. For question 5(b), candidates performed well in this part of the question, however some candidates could not differentiate between trade and quantity discount.
Expected responses for quantity and trade discounts are;
Quantity discount - This is a discount given to customers for purchasing large quantities of products. It is a price reduction granted to a buyer for purchasing up to a certain quantity of products.
Trade discount – This type of discount is given to channel members to compensate them for the performance of certain services.