ICSE Class 10 Commercial Applications Board Exam Question Paper 2015 with Solutions

ICSE Class 10 Commercial Applications Board Exam Question Paper 2015 with Solutions

SECTION A (40 Marks)

Question 1
State a difference between each of the following:

(a) Commodity market and Capital market. [2 Marks]

Answer:

Teacher's Note:
a) Clearly distinguish between the nature of goods traded versus financial securities.
b) Mentioning examples or institutional participants helps secure full marks.

(b) Skimming pricing and Penetrating pricing. [2 Marks]

Answer:

Teacher's Note:
a) Highlight the initial price point (high vs. low) as the core basis of difference.
b) State the distinct objective of each pricing policy clearly.

(c) Current Deposit Account and Saving Deposit Account. [2 Marks]

Answer:

Teacher's Note:
a) Emphasize the target account holder (individuals vs. businesses).
b) Mentioning restrictions on transactions or lack of interest on current accounts adds clarity.

(d) Training and Education. [2 Marks]

Answer:

Teacher's Note:
a) Focus on specificity (job-specific vs. general knowledge).
b) Pointing out the location or provider highlights the practical difference.

(e) Money costs and Real costs. [2 Marks]

Answer:

Teacher's Note:
a) Define money cost in terms of explicit monetary expenditure.
b) Define real cost in terms of psychological and physical effort or sacrifice.

Question 2
(a) What is meant by Variable Cost? [2 Marks]

Answer:
Variable costs are those costs which vary in amount with changes in the level of output or activity. Such costs increase or decrease in the same proportion in which the level of output increases or decreases. Variable costs vary in total amount but remain constant per unit of production.

Teacher's Note:
a) Explain the direct relationship between output volume and total variable cost.
b) State that variable cost per unit remains constant.

(b) What is Tidal energy? [2 Marks]

Answer:
The energy possessed by rising and falling water in tides is known as tidal energy. Tidal energy is harnessed for producing electricity by constructing a dam across a narrow opening to the sea. This is not a major source of energy.

Teacher's Note:
a) Define the source of energy clearly as ocean tides.
b) Mention how it is converted into electricity using a barrage or dam.

(c) Mention any four main reasons for the rapid growth of public relations. [2 Marks]

Answer:
1. Communication gap.
2. Population growth.
3. Recognition of social responsibility.
4. Education in Public Relations.

Teacher's Note:
a) List any four standard points directly as required.
b) Ensure bullet points or numbered lists are clear and concise.

(d) What is Balance Sheet? [2 Marks]

Answer:
Balance sheet means a statement which shows the assets and liabilities of the organisation (including capital fund and other fund) on a particular date. It is a statement which reports the property values owned by the organisation and the claims of creditors and owners against these properties. It depicts the financial position of the organisation on a specified date.

Teacher's Note:
a) Emphasize that it is a statement showing financial position on a specific date, not for a period.
b) Mention both assets and liabilities/capital components.

(e) State two essentials of a good advertisement. [2 Marks]

Answer:
1. Prestige: This theme is used to popularize luxurious items like motor cars, refrigerators and furniture. Their possession acts as a symbol of prestige to their holders.
2. Comfort: This theme is used to advertise products like fans, air conditioners, refrigerators etc., as such products help to make life comfortable.

Teacher's Note:
a) Focus on key advertising themes or appeals as essentials.
b) Give relevant product examples for each theme.

Question 3
(a) What are Receipts and Payments Accounts? [2 Marks]

Answer:
It is the summary of Cash Book over a specified period. Actual cash receipts and actual cash payments during the year are considered in this account. These cash receipts and cash payments are recorded under appropriate headings. Such an account necessarily commences with the initial cash and Bank Balances/overdraft and closes with the final cash and Bank Balances/overdraft.

Teacher's Note:
a) Identify it clearly as a summary of the cash book.
b) Note that it includes both capital and revenue cash transactions.

(b) What is understood by the Principle of consistency? [2 Marks]

Answer:
Principle of consistency states that accounting procedures and methods should remain consistent from one year to another. These should not be changed from year to year as otherwise the net profits of different years will not be comparable.

Teacher's Note:
a) Explain that accounting methods must be applied uniformly over successive periods.
b) Mention that this ensures comparability of financial statements.

(c) What is meant by Discounting of a Bill of Exchange? [2 Marks]

Answer:
Discounting of a bill means selling the bill before the due date to a bank at less than the face value. The banker takes the bill and in return gives cash which is equal to the amount of the bill minus the discount. The bank may collect the amount of the bill from the drawee on the due date. In case, the bill is dishonoured on maturity, the bank can recover the payment from the drawer.

Teacher's Note:
a) Explain encashing a bill before maturity through a bank.
b) Mention the deduction of a nominal discount fee by the bank.

(d) What are the components of Marketing mix? [2 Marks]

Answer:
1. Product Mix.
2. Price Mix.
3. Place or Physical Distribution Mix.
4. Promotion Mix.

Teacher's Note:
a) List the four traditional Ps of marketing mix.
b) Ensure accurate spelling for each component.

(e) What is meant by In-house market? [2 Marks]

Answer:
In-Home Market: Marketer carries out door-to-door selling through trained sales force. Initial contact may be made by phone or mailed-in-coupon. This method is costly but effective. In India Eureka Forbes is using this method.

Teacher's Note:
a) Define it as direct selling at the customer's doorstep.
b) Provide an appropriate industry example such as Eureka Forbes.

Question 4
Justify a reason either for or against each of the following:

(a) Services are not homogeneous. [2 Marks]

Answer:
For: Services are highly variable. It is difficult to control and measure.

Teacher's Note:
a) State clearly whether the statement is justified as For or Against.
b) Give the reason citing service variability.

(b) Firms live forever (explain with reference to the concept of accounting). [2 Marks]

Answer:
For:
1. It is assumed that the business will continue to exist for a long period in the future. The transactions are recorded in the books of the business on the assumption that it is a continuing enterprise.
2. It is on this concept that we record fixed assets at their original cost and depreciation is charged on these assets without reference to their market value.

Teacher's Note:
a) Link the statement to the Going Concern concept.
b) Explain how asset valuation and depreciation depend on this assumption.

(c) Public relations is a propaganda. [2 Marks]

Answer:
Against:
1. Public Relations is not propaganda which is an instrument of politics and power for social control.
2. Propaganda does not necessarily require an ethical content and is guided solely by self-interest.

Teacher's Note:
a) Take a clear stance against the statement.
b) Differentiate public relations (ethical, truth-based) from propaganda (biased, self-interested).

(d) The cost of sugarcane is an avoidable cost. [2 Marks]

Answer:
For: The cost of sugarcane can be avoided by closing down the sugar factory for one year. But the cost of factory building cannot be avoided for the year.

Teacher's Note:
a) Define avoidable costs as those that cease if an activity is discontinued.
b) Contrast it briefly with unavoidable fixed costs.

(e) A cheque is an inconvenient method of making payments. [2 Marks]

Answer:
Against: A cheque is a very convenient method of making payment. There is no need of counting and checking notes when payment is made by a cheque.

Teacher's Note:
a) Refute the statement by highlighting convenience in handling large sums.
b) Mention the safety and elimination of cash-counting risks.

SECTION B (60 Marks)
(Attempt any four questions from this Section)

Question 5
(a) Distinguish between a Product and a Service citing suitable examples. [5 Marks]

Answer:
1. Tangibility: Products are tangible, i.e., they can be felt, seen, tasted, heard or smelled before they are purchased whereas services are intangible, i.e., they cannot be felt, seen, tasted or smelled before they are purchased. For example, a person wants to purchase a car. He/she can feel and see the car before purchase but a person going for a massage to the parlour, cannot feel the result before getting the massage done.
2. Variability: Services are highly variable but products are not. For example, if a patient wants to get his liver transplanted, the services given by a hospital situated in Delhi, which is equipped with all modern amenities for doing so, will be quite different from a hospital situated in rural areas of India.
3. Separability: Products are separable, i.e., products are manufactured, put into inventory, then through channel of distribution they reach the ultimate consumer. Thus, product is separable but this is not true in case of services, they are produced and consumed simultaneously. For example, a car is manufactured, put into inventory, distributed through their showrooms and then it is purchased by the customer but when a person travels by aeroplane, services of aeroplane (transportation) can be taken while it is flying, thus it is inseparable.
4. Perishability: Products can be stored whereas services cannot be stored. Thus, products are not perishable but services are. If a showroom keeps twenty scooters for sale during one month and they are not sold, they don't perish. But if a passenger bus has to carry fifty passengers at one time and it carries only 30 then the service meant for 20 passengers perishes.
5. Homogeneity: Products are homogeneous in many respects. In case of standardized products, a product is a perfect substitute for another where it is impossible for an individual to distinguish one from another. Thus, if a person has to buy a Gillette shaving gel, he can pick any one lying at the store. But services are not homogeneous, they are heterogeneous. For example, if one wants to take medicine from a doctor, he/she cannot choose any, but will choose the one which gives the best satisfaction.

Teacher's Note:
a) Provide clear points of distinction covering tangibility, variability, separability, perishability, and homogeneity.
b) Ensure appropriate examples are provided for each point to earn full marks.

(b) Describe the various steps involved in Personal selling. [5 Marks]

Answer:
1. Preparation: First of all a well-trained and motivated sales force is developed. Salespersons must have knowledge of the firm and its products and services, competitors and their products and services, customers and selling techniques. They must be fully aware with the quality, uses, prices, etc., of the goods to be sold.
2. Prospecting: Prospecting means locating and identifying the potential buyers. A list of prospective customers can be prepared with the help of dealers, salespersons, telephone and trade directories etc. Information about the age, income, education, family background, tastes, preferences, etc., of prospective buyers should be collected.
3. Approach: In this step, the salesperson makes face-to-face contact with the prospective buyer. The salesperson should introduce himself, greet the customer and start the conversation with him/her so as to create a good first impression.
4. Presentation: Now the salesperson displays and describes the product to be sold. He should tactfully demonstrate the product and explain its quality, utility, performance etc.
5. Closing: The salesperson concludes the sale by obtaining the consent of the buyer. Some concessions may be necessary for this purpose. He should assure the customer that he has made a wise choice and should thank the customer. In order to obtain repeat sales, the salesperson should carefully pack and deliver the product.

Teacher's Note:
a) List the steps in logical sequential order from preparation to closing.
b) Explain each step briefly with specific activities involved.

(c) Explain the main principles of Accounting. [5 Marks]

Answer:
1. The Business Entity Concept: According to this concept, a business firm is treated as a unit separate and distinct from its owners. A completely separate set of books is kept for the firm and business transactions are recorded from the firm's point of view. The capital provided by the owner is treated as a liability of the firm. Interest on capital is treated as an expense of business. Similarly, the money/goods withdrawn by the proprietor from the firm for his personal use is treated as drawings. The concept of separate entity is necessary for ascertaining the true net profits and financial position of a business firm.
2. The Going Concern Concept: It is assumed that the business will continue to exist for a long time in the future. Transactions are recorded on the assumption that the business will exist for an indefinite period of time. It is on this assumption that a distinction is made between capital expenditure and revenue expenditure. Fixed assets are recorded at their original cost less depreciation. Market value of fixed assets is not recorded, as these assets are not to be sold in the near future.
3. Accounting Period Concept: It is due to this concept that financial statements are prepared at regular intervals, generally one year. This period is called accounting period. The net profit/net loss of business is ascertained separately for each accounting period.
4. Money Measurement Concept: On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money. For example, the retirement of the chairman of the company cannot be recorded because it is not possible to measure the monetary effect of retirement except in terms of gratuity and other benefits payable to the chairman.
5. The Matching Principle: According to this principle, cost of a particular period should be charged from the revenue of the same period only. Only such matching of cost and revenue can reveal the true profit or loss for a period. When cost is associated with a particular product or service, revenue earned from that product or service should be matched to its cost. This principle provides the guidelines as to how the expenses are to be matched with revenue. It requires that in determining the net profit, all costs which are applicable to revenue of that period should be charged against that revenue.

Teacher's Note:
a) Detail standard accounting principles accurately.
b) Include conceptual explanations and practical examples for each principle.

Question 6
(a) Describe any two stages of Marketing. [5 Marks]

Answer:
From subsistence level and self-sufficiency to modern marketing has been a long journey. Advent of money led to the rise of markets and exchange system. The evolution of modern marketing can be traced through the following stages:
1. Production-Oriented Stage (1869-1930): In this stage the motto was 'sell what can be produced'. There was acute shortage of goods and there was no need to create demand. Product was the focus of attention and communication with the buyer was not needed. Products were manufactured on the assumption that customer would search and buy well-built and reasonably priced products. This was based on Say's law: 'Supply creates its own demand'. Production-oriented stage lasted till the Great Depression.
2. Sales-Oriented Stage (1930-1950): Great Depression resulted in drastic changes in buying habits and behaviour of consumers, technological advancements in transportation and communication also changed the thinking. The focus shifted from production to selling. How to sell became a problem and the new motto was 'get rid of what you have'. The focus was on increasing sales rather than on consumer satisfaction. Demand outstripped supply and it was still a seller's market.
(Note: Marketing-oriented stage focuses on customer satisfaction as the principal reason for corporate existence.)

Teacher's Note:
a) Describe the evolutionary stages of marketing clearly with their time periods.
b) Explain the core philosophy/motto associated with each stage.

(b) Advertising is a Social waste. Give reasons in support of your answer. [5 Marks]

Answer:
Advertising has been criticised on the following grounds:
1. Higher Prices: Advertising increases prices of products to consumers because the expenses incurred on advertisements are passed on to consumers. However, advertising will not increase prices if it leads to large scale production.
2. Creation of Monopoly: Big firms spend huge amounts of money on advertising. Small firms cannot compete with them and ultimately fail. As a result, big firms become monopolies and use their monopoly power to exploit consumers.
3. Wastage of Resources: Money spent on advertising is sheer waste because it does not add to the utility of products and services. Most of the advertisements are either ignored or escape the attention of consumers. Advertisements do not create new demand but only shift demand from one product to another.
4. Deceptive and Untruthful: In order to impress upon the people, false statements and exaggerated claims are made in advertisements. As a result, innocent people are misled to buy inferior and even worthless products. Advertising offers scope for fraud and deception.
5. Extravagance: Advertising tempts people to buy goods which they cannot afford. They become extravagant and do not hesitate even to adopt corrupt practices to earn more. This creates frustration and corruption in society. People become greedy and self-centered, causing unrest and jealousy.

Teacher's Note:
a) Present arguments criticizing advertising from a social standpoint.
b) Cover points like higher costs, monopoly creation, resource wastage, and deceptive claims.

(c) Explain any two causes responsible for the destruction of the ecosystem. [5 Marks]

Answer:
Two Factors Responsible for the Destruction of the Ecosystem:
1. Population Growth: Population is growing rapidly but the land is static, which is a great threat to our ecosystem. This is resulting in deforestation, destruction of natural resources, soil erosion, falling water table, pollution of water sources and atmosphere.
2. Industrialisation: Increase in the number of industries is a great danger to our ecosystem. It is resulting into deforestation to get more and more land for industries, contamination of water by industrial wastes, air pollution and sound pollution.

Teacher's Note:
a) Select major environmental threats like population growth and industrialization.
b) Explain their direct negative impacts on natural resources and pollution.

Question 7
(a) Explain any two types of interviews conducted by an Enterprise in the selection of its employees. [5 Marks]

Answer:
(i) Structured or Patterned Interview: This interview is systematically planned in advance and is conducted in a pre-planned manner. The questions to be asked and the time to be allowed to a candidate are decided in advance. This is the most common type of selection interview.
(ii) Panel or Board Interview: In this type of interview, the candidate is interviewed by a panel or board of selectors. Different interviewers ask questions on different topics. The candidate is judged on the basis of combined rating by the panel.

Teacher's Note:
a) Define two distinct interview formats used in recruitment.
b) Clearly bring out the methodology and purpose of each type.

(b) Real investment in today's society is not in plant and machinery: it is in people. With reference to the above statement, examine the importance of Human resources in a business organisation. [5 Marks]

Answer:
The role of human resources in a business organisation: Human resource management can help a business organisation in achieving its goals more efficiently and effectively in the following ways:
1. Attracting and retaining the required talent through effective human resource planning, recruitment, selection, placement, orientation, compensation and promotional policies.
2. Developing the necessary skills and right attitudes among the employees through training, development, performance appraisal etc.
3. Securing willing cooperation of employees through motivation, participation, grievance handling etc.
4. Utilising effectively the available human resources.
5. Ensuring that the enterprise will have in future a team of competent and dedicated employees.

Teacher's Note:
a) Emphasize the strategic value of human capital over physical assets.
b) Outline key functions and contributions of human resource management.

(c) Distinguish between a cheque and a Demand draft. [5 Marks]

Answer:

Teacher's Note:
a) Construct a tabular distinction comparing drawer, bearer status, charges, risk of dishonour, and stop payment.
b) Ensure all points are factually accurate with respect to banking practices.

Question 8
Write short notes on:

(a) Persuasion and Empathy as elements of Public Relations. [5 Marks]

Answer:
(i) Empathy: Empathy means looking at things and events from the other's point of view. It requires that the communicator be in tune with the communicatee. Empathy involves seeing and feeling matters as others see and feel. It enables an executive to be sensitive and sympathetic to the attitudes, expectations and problems of his workers and clients. A person with empathy can be receptive and appreciative of the ideas and opinions of others. Empathy contributes to the success of public relations in several ways. It fosters greater understanding and improves relationships with the client. Empathy tells an executive when he should talk and when he should remain silent. It tells when to be firm and when to be restrained. An empathic executive is more accurate in interpreting what a client says or does.
(ii) Persuasion: Persuasion is an important element of public relations. It is through some kind of communication that persuasion takes place. To persuade means to convince another person of some idea, product, service or institution, to induce a person or group to do something. A message becomes persuasive when people believe in the source of the message. Messages coming from credible sources are generally accepted without any questions being asked. Reasonable messages presented in an attractive manner tend to be more persuasive. A flexible approach is helpful in persuading others. A sense of human interest is necessary for anyone indulging in persuasion. The speaker has to ensure that people understand, approve and accept him and his words.

Teacher's Note:
a) Define both terms clearly within the context of public relations.
b) Explain how empathy builds rapport and persuasion secures agreement or action.

(b) Benefits of Training to a Business Enterprise. [5 Marks]

Answer:
Need and Importance of Training: Training is necessary and useful for a business enterprise. A trained work force is a very valuable asset to an organisation. Four main advantages of training:
1. Increased Productivity: Training helps to improve the quantity and quality of work performance. Well-trained employees produce more and better goods.
2. Better Utilisation of Resources: By training, employees learn new and better methods of doing jobs. They make better use of materials and machinery. As a result, wastage of resources and cost of production are reduced.
3. Better Safety: Training helps to improve the job knowledge and skills of employees. Trained employees operate machines and equipment more carefully and cause fewer accidents.
4. Less Supervision: Well-trained employees are less dependent on supervision. They are more disciplined, self-dependent and responsible. Therefore, need and cost of supervision are reduced.
5. Reduce Turnover and Absenteeism: As trained employees feel more satisfied and interested in jobs, labour turnover and absenteeism are reduced.
6. Expansion and Growth: With the help of trained staff, an enterprise can expand and grow easily and rapidly. Loss of a few employees does not threaten its survival. Trained employees can adapt more easily to technological advancements and competitive environment. Flexibility of the enterprise is improved.

Teacher's Note:
a) List organizational benefits derived from employee training.
b) Emphasize efficiency, reduced wastage, and safety aspects.

(c) Uses of Income and Expenditure Accounts. [5 Marks]

Answer:
1. Income and Expenditure Account shows the surplus or deficit arising from the activities of a non-trading concern during a year.
2. It shows all items of income and expenditure. With the help of this information, the organisation can take steps to increase income and reduce expenditure.
3. It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
4. It fulfils statutory requirements because non-trading organisations are legally required to prepare it.

Teacher's Note:
a) State the primary purpose of the Income and Expenditure Account (surplus/deficit determination).
b) Highlight its role in financial planning and statutory compliance for non-trading concerns.

Question 9
Case Study
With a glorious history of more than 50 years blended with a futuristic outlook, 'The Presidency Bank' has become a leading financial institution. The Bank with its customer-centric approach values transparency and nurtures knowledge and learning. It believes in the quality of its people and their efforts and therefore takes continuous initiatives for hiring the best talent and ensuring their development, motivation and growth through intensive training.
The Bank offers excellent career opportunities to dynamic individuals. In addition to exposure to a variety of banking segments, the Bank also provides personal growth opportunities for its employees.
With reference to the above:

(a) Suggest a suitable source of recruitment for the Bank. Give reasons to support your answer. [5 Marks]

Answer:
Sources of Recruitment:
1. Advertisements: Advertisements in newspapers and journals are the most widely used methods of attracting persons for jobs in banks. The requirement of the job and qualification of candidates are given in newspapers. This method helps to bring talented employees.
2. Placement Agencies: Another source of recruitment for the bank can be placement agencies. Banks can engage private employment agencies for recruiting staff. These agencies advertise the vacancies, receive applications, conduct interviews and shortlist candidates on behalf of the bank.
3. Educational Institutions: Management institutes and universities can be another source of recruitment. Here the bank can find out best talent among the students.
4. Promotion: For personal growth of its employees, the bank can transfer performing and dynamic individuals from one banking segment to another.
These sources of recruitment are suitable for the bank because of the following reasons:
1. Wide Choice: It offers a wider choice in the selection of candidates because a large number of persons apply for jobs.
2. Fresh Outlook: Recruitment of persons from outside brings in new ideas and fresh thinking.
3. Familiarity: Internal employees are already aware of the policies, rules and working conditions of the bank.

Teacher's Note:
a) Recommend external and internal recruitment sources suitable for a financial institution.
b) Justify the selection based on the need for top talent and fresh outlook as highlighted in the case.

(b) What Employment tests should be conducted by the Bank to select its employees? [5 Marks]

Answer:
(i) Proficiency Tests:
1. Achievement Tests: These tests measure the skills and knowledge which the candidate already possesses at the time of testing. These tests help to determine whether the claims made by the candidate about his knowledge and skills are correct or not.
2. Intelligence Tests: These tests measure a person's capacity for listening and comprehension in terms of his vocabulary, mental alertness, memory, etc.
(ii) Aptitude Tests:
1. Personality Tests: These tests are designed to judge the emotional balance, temperament and maturity of a candidate. They reveal the ability of the person to adjust to new surroundings.
2. Interest Tests: These tests are aimed at assessing the type of work in which a candidate shows special interest and involvement.

Teacher's Note:
a) Categorize tests into proficiency and aptitude/personality tests.
b) Explain how each test evaluates banking job competencies.

(c) What type of Training methods should be adopted by the Bank to train its employees? Why? [5 Marks]

Answer:
Banks adopt various methods of imparting training to their employees so that their efficiency improves and enhances the productivity of the organisation. These are:
1. Induction Training: It is an on-the-job training method. It involves providing relevant information about the organisation, its key personnel, terms and conditions of employment, rules and procedures of the organisation, etc.
2. Internship: This programme of training is a combination of theory and practice. It involves practical training of theoretical knowledge. During this period, only a stipend is paid to them.
3. Vestibule Training: It is an off-the-job training method. In this method, the workers are trained in a separate working area away from the job place in almost a similar working environment using the same type of technology.
4. Apprenticeship Programmes: This programme involves putting the trainee under the guidance of a skilled worker. During this period, the trainee is paid less than the skilled worker. It is an on-the-job training method.

Teacher's Note:
a) Mention both on-the-job and off-the-job training methods relevant to the banking sector.
b) Explain the utility of induction and vestibule training in maintaining service standards.

Question 10
Case Study
Mbees Tec Ltd. has added its latest addition the Zt and Zht smartphones to its smartphone family. These have created a record of sorts by selling more than 1 lac phones in three days since they were launched.
However Mr. Pawan, CEO of Mbees Tec Ltd, believes that the Company could have bettered their sales if the supply was met as per the demand for its exciting new range of smartphones.
Mr. Pawan also added that the company stands to deliver on its promises and hence the production capacity has been increased to meet the ever rising demands of its newly launched smartphones that have unmatched features at highly competitive prices.
With reference to the above:

(a) Explain the pricing strategy the Company has adopted to sell its new smartphones. [5 Marks]

Answer:
Mbees Tec Ltd. has adopted the skimming-the-cream pricing strategy to sell its new smartphones. This strategy involves charging high prices in the initial stages of the life of the product. The initial high prices serve to skim the cream of the inelastic market and the initial investment is recovered quickly. The producer sets a high price for his product to obtain high immediate profits for fear of competition at a later stage. This pricing policy has the following merits:
1. In the early stages the product is distinctive and imitations have not taken effect. Therefore, price is less likely to affect sales volume.
2. High price in the initial stages will provide funds for expansion into the big volume segments of the market.
3. By setting the initial price at a high level the producer can restrict demand to the level which he can meet.

Teacher's Note:
a) Identify skimming pricing from the context of launching innovative smartphones.
b) Explain its merits, particularly when initial demand outstrips supply capacity.

(b) Suggest a suitable media to advertise the newly launched smartphones of M/s Mbees Tech Ltd. [5 Marks]

Answer:
The most suitable media to advertise the newly launched smartphones can be visual advertising, i.e., television advertising. It is very popular and effective due to the combined force of picture and sound. It has a dramatic impact on the minds of viewers. On television, products can be demonstrated and their use can be explained. The message has a wide appeal and geographical selectivity is possible.

Teacher's Note:
a) Recommend television/visual media as ideal for consumer tech products.
b) Support the recommendation with advantages like demonstration capability and wide reach.

(c) Explain the stage of the product lifecycle of the smartphones as mentioned in the above case study with the help of a diagram. [5 Marks]

Answer:
The PLC concept consists of four stages, i.e., Introduction, Growth, Maturity and Decline. The company is in its launching period thus it is in the introduction stage. This stage starts when the new product is first launched. Introduction takes time, and sales growth is apt to be slow.
[Figure: Product Life Cycle curve showing Introduction, Growth, Maturity, and Decline stages on a Sales vs Time graph, with the current position marked at the Introduction phase.]

Teacher's Note:
a) Identify the Introduction stage based on the recent launch and record initial sales.
b) Describe the characteristics of the introduction stage along with a diagrammatic reference.