08 Explain why the profit margin might be important for Walt’s business. [4]

[BASEL Moderator]

Walt owns a company which has developed a new computer game for adults. A focus group report shows customers like it. Walt has been considering the marketing mix, including the packaging for this product which is likely to be sold in many countries. ‘I don’t want to use a wholesaler as it would affect my profit margin’ he said.

08 Explain why the profit margin might be important for Walt’s business. [4]

Possible KN Points:
• Profit as a proportion of sales revenue, a higher margin would mean more profit
• Influence price charged
• Indicates efficiency
• Measure of success/performance/comparison with other years
• Comparison with other real world businesses specified by the candidate