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Local Craft Business Research

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Local Craft Business Research

Read the case study and use the business data provided to answer the questions. Hearth & Hand is a fictional craft business in York, UK. Show your working for calculations and support evaluation answers with evidence.

Business profile

Hearth & Hand sells handmade ceramics, woven homewares and jewellery made by local artisans. It has a small shop and sells through its own website. Owner Zainab wants to increase sales without losing the personal service that distinguishes the business from large retailers. She is considering monthly in-store making demonstrations and a paid social-media campaign. A survey of 80 existing customers found that 52 would be interested in demonstrations, 18 were unsure and 10 were not interested. Zainab knows this sample may not represent potential new customers.

Measure

Current

If demonstrations run

Sales revenue

£8,400

£9,300

Variable costs

£3,360

£3,720

Fixed costs

£3,900

£4,140

The demonstration scenario includes £240 monthly staffing and materials costs in fixed costs. The forecast assumes sales rise by £900.

Research and decision-making

Complete each task using the case study and data. Treat the forecast as an estimate, not a guarantee.

1.Zainab asked 80 existing customers whether they would be interested in demonstrations. Is this primary or secondary research? Give one reason.

2.What percentage of the 80 surveyed customers said they would be interested in demonstrations? Show your calculation.

3.Using the demonstration-scenario figures, calculate monthly profit. Use profit = sales revenue − variable costs − fixed costs. Show your working.

4.Calculate the current monthly profit and state by how much the forecast demonstration scenario changes monthly profit.

5.Calculate the demonstration scenario’s profit margin as a percentage of sales revenue. Use profit margin = profit ÷ sales revenue × 100.

6.Which is the strongest limitation of Zainab’s survey evidence?

It only asked existing customers, so it may not represent potential new customers.
It collected primary research, which cannot inform business decisions.
It included numerical responses, so the results cannot be compared.
It asked about demonstrations rather than product prices.

7.Match each term to the correct meaning.

Primary research
Variable cost
Promotion
Market segment

A group of customers with shared characteristics or needs
New information collected directly for a specific purpose
A cost that changes as the level of output or sales changes
Business communication intended to inform or persuade customers

8.Hearth & Hand wants to attract people interested in handmade products and local makers. Which message is most closely aligned with that aim?

“See local makers at work: book a place at our monthly craft demonstration.”
“Lowest prices in town—everything must go.”
“Buy now before our mass-produced stock sells out.”
“We are open; visit us for products of any kind.”

9.Recommend one additional piece of research Zainab could carry out before committing to monthly demonstrations. Explain how it could improve her decision.

10.Should Zainab introduce monthly demonstrations? Weigh up the financial forecast and at least one non-financial factor, then reach a justified conclusion.