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Cambridge NATIONALS LEVEL 1/2

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Candidate Style Answers

Unit R065: Design a Business Proposal

ENTERPRISE AND MARKETING

http://www.ocr.org.uk/qualifications/vocational-education-and-skills/cambridge-nationals-enterprise-and-marketing-level-1-and-2-certificate-j819/

UNIT R065 CANDIDATE STYLE ANSWERSOCR LEVEL 1/2 CAMBRIDGE NATIONALS IN ENTERPRISE AND MARKETING

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CONTENTSIntroduction 3

MB1Learning Objective 2 – Be able to complete market research to aid decisions 4

relating to a business challenge

Marking commentary on MB1 candidate style answer 6

Suggested improvements to progress candidate style answer to MB2 6

Learning Objective 3 – Be able to develop a design proposal for a business 7

challenge



Learning Objective 4 – Be able to review whether a business proposal is 9

viable



MB3

Learning Objective 2 – Be able to complete market research to aid decisions 11

relating to a business challenge


Why it was awarded MB3 not MB2 19

Learning Objective 3 – Be able to develop a design proposal for a business 20

challenge



Learning Objective 4 – Be able to review whether a business proposal is 23

viable

Marking commentary on MB3 sample learner work 25


UNIT R065 CANDIDATE STYLE ANSWERS

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OCR LEVEL 1/2 CAMBRIDGE NATIONALS IN ENTERPRISE AND MARKETING

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You MUST NOT allow your learners to copy the samples contained in this guide. OCR moderators have been advised to report any copying, in whole or in part. Misuse of these samples will lead to a malpractice investigation being conducted and would put all submitted learner work at risk of investigation.

INTRODUCTIONThis resource has been written for teachers to help them mark work accurately and understand OCR’s expectations.

The guide contains candidate style answers for learning outcomes 2, 3 and 4 for this unit, graded at Marking Band 1 (MB1) and Marking Band 3 (MB3).

The accompanying commentary explains why each piece of work was awarded its grade.

For MB1 graded work, additional guidance has been added to suggest improvements that could be made to make it an MB2 graded piece of work.

For MB3 graded work, additional guidance has been added to explain why it was awarded that grade and not the lower grade of MB2.

Reproduction of Candidate’s Work

The candidates’ work within this document is reproduced for free of charge distribution to teachers in order to help them prepare candidates for examinations. The work has been reproduced as submitted by the candidates. Some of the work may contain third-party material for which we are unaware of the source, the rights owner or the existence of any permission that the learner may have had to use the material. If you are the owner of any third-party material contained within this document, and you wish to question its use, please contact The Resources Team at OCR through [email protected]

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Learning Objective 1 – Be able to complete market research to aid decisions relating to a business challengeMB1

Market research is important when you want to sell products because if you try and sell something that no one wants, then it will be as waste of money (investment) and also your time. There are 2 different ways that a person can research. These are primary and secondary research. Primary is when you find out the information yourself like a questionnaire and secondary research is when the information is already there like a newspaper article or information on the internet such as Wikipedia.

The advantages of primary research are that you can design it yourself and decide how many questions you might want to ask to people as well as who to ask. The disadvantage of primary research is that if I ask the wrong questions, I may not find out all the answers that I want so I must be careful about how I word my questions.

Secondary research is research that has already been completed by someone else which you can then look at. The advantage of this is that you don’t have to physically gather the information as it is there for you already. But, can you trust the information? You can put anything on the internet so you have to be careful.

I am going to produce a questionnaire for my primary research and research using the internet the types of straw hats that are currently available and how much they cost for my secondary research. I hope that this will help me produce a product that people will want to buy when they go to a music festival.

Deciding who to ask my questionnaire to can be called a sampling method. A sampling method is when you think about and divide a population up into different groups. Thinking about sampling this means that I could ask anyone in the street which would be ‘random sampling’ or I could ask people in my school which would be in a certain area so I restrict the location which is called ‘convenience sampling’. I am going to use the Convenience sampling method by asking my questionnaire in my school and also some of my mum and dad’s friends who are older and like them, have been to quite a few festivals.

My questionnaire is below:

1) How old are you?

2) Do you own a straw hat?

3) Have you ever been to any type of music festival?

4) How much would you pay for a funky straw hat which has a unique festival badge on it? Please circle

£3 £4 £5 £6 £7 £8 £9 £10+

5) Would you be interested in accessorizing your own straw hat if that was an option?

6) If so what would you prefer to have on your straw hat as an accessory? Please circle

Feathers Buttons Stitched on logo Felt flowers

Large bow Small bow Ribbon Bobble

7) How much would you pay to have an accessory on you straw hat?

50p 60p 70p 80p 90p £1.00 £1.10 £1.20 £1.30

Thank you for completing my questionnaire.


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I have completed some research using the internet. I looked at these websites

http://www.hatsandcaps.co.uk/festival-hats-c_festival_hats/

https://www.amazon.co.uk/Campbell-Cooper-Summer-Festival-Trilby/dp/B005ESJP3Q

Some straw hats are £9.99-11.99 plus more. This was useful research as I don’t want to over charge or not charge enough for my product.

I asked 20 people and the results of my questionnaire showed the following:

1) How old are you? – Most people were either 14-15 or 40-50 years old.

2) Do you own a straw hat? – Only 5 people had a straw hat

3) Have you ever been to any type of music festival? – 15 people had been to either a local music festival or a really big one like Glastonbury. I was quite surprised!

4) How much would you pay for a funky straw hat which has a unique festival badge on it?

Please circle £3 £4 £5 £6 £7 £8 £9 £10+

Most people said they would pay between £5 to £10 for a hat.

5) Would you be interested in accessorizing your own straw hat if that was an option? This result was 50/50 with 10 people saying they would like to accessorize their hat themselves and 10 people saying that they would not like to do it.

6) If so what would you prefer to have on your straw hat as an accessory? Please circle

Feathers – 1 person wanted a feather

Buttons - 0

Stitched on logo - 0

Felt flowers – 10 people

Large bow - 0

Small bow - 0

Ribbon – 9 people

Bobble - 0

7) How much would you pay to have an accessory on you straw hat?

50p 60p 70p 80p 90p £1.00 £1.10 £1.20 £1.30

50p was the most popular answer although one person said if the flower was really big they would pay £1.00.

This information gathered from my primary research is helpful as now I know that most people do not own a straw hat and that they would pay £5-£10 and like either a ribbon or flowers on it. Flowers are more for girls so if I did ribbon it could be for both boys and girls.

Secondary research is important and I am going to look on the Internet to look at designs of hats as well as some selling figures.1

1 Please note the learner included several relevant web based searches as part of the secondary research, describing them.

http://www.hatsandcaps.co.uk/festival-hats-c_festival_hats/

https://www.amazon.co.uk/Campbell-Cooper-Summer-Festival-Trilby/dp/B005ESJP3Q


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Marking commentary on MB1 candidate style answerThe learner has a basic understanding of the different types of research. They have knowledge of primary and secondary research and explained specifically about a few methods which are appropriate. They have briefly described both advantages and disadvantages of the methods. The learner has created a suitable questionnaire which has several questions, enabling them to come to conclusions when designing the product of a hat. The learner collated the results using figures, in order to summarise the findings to meet the learning outcome 2 requirements.

Suggested improvements to progress candidate style answer to MB2To achieve the middle band the learner would be required to demonstrate a better understanding of market research through clear descriptions which were more detailed. Further examples of the different methods would need to be described which includes advantages and disadvantages, enabling the learner to show an understanding of a range of research methods and tools. The current learner work is very limited. A variety of different sampling methods will be described by the learner in their work, which demonstrates a sound understanding of this aspect of the learning outcome. The market research methods selected need to be related to the overall objectives and the outcomes should be effectively collated and reviewed by the learner in order for them to make decisions based upon the results. This current portfolio is basic and although the learner has reviewed the data, it does not change the outcomes significantly. All results should enable the learner to produce a sound summary of the overall outcomes relating to this learning outcome.


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Learning Objective 3 – Be able to develop a design proposal for a business challengeMB1

Task 3 – LO3

I have produced 2 different design so now will analyse their designs. I used my primary and secondary research to help me when creating the designs.

Design 1 – I think this is a good design of a straw hat as it has ribbon on it and is a nice shape. However, I do think that is would be more suitable for ladies because of the shape.

Design 2 – is more unisex and more of a traditional style which customers would expect from a straw hat. It has ribbon around the edge plus in the middle. The little squares in the middle of the top bit of the hat are a feature but I am not very good at drawing so I don’t think it is that clear.

I am going to propose to use Design 2 with the more traditional design of straw hat for a festival. It has ribbon on which people wanted from the market research and also this will keep the costs down as it is one of the cheapest accessories that the business produces. Thinking about my customer profile, it is for people who will attend a music festival, who work but earn an average income who have a family. I think that this design will suit the customer profile.


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Marking commentary on MB1 candidate style answerThe learner has produced two simple designs of a suitable festival hat which meets the requirements of the business challenge. They have identified the strengths and weaknesses of each design briefly and linked these in a basic form to the customer profile from Task 1. They have also referenced the design to their completed market research but this is very limited. A modified design has been produced which incorporated comments that the learner acquired from peers as described within their work. The learner has also described why the final design is the best design for the business challenge.

Suggested improvements to progress candidate style answer to MB2The learner designs need to enable them to explain both the strengths and weaknesses linking this to the customer profile. The current portfolio of work does not provide the learner the opportunity to explain the various aspects of their design in the required detail and relating this to their market research. Further self-assessment and feedback is required with modifications clearly identified and made clear on the work, as well as explained separately in the portfolio. Currently the learner portfolio is very basic.


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Learning Outcome 4 – Be able to review whether a business proposal is viableMB1

Task 5 LO4

The fixed costs per month for my product are going to £6800.

In the first month when festivals start to become popular, around May time I think we would sell 1200 straw hats.

I am going to just sell adult hats as I do not think that child and infant will sell as well.

Variable costs for HATS = 1200 Adult hats = £1.80 x 1200 = £2160

Variable costs for RIBBON = £360

For an adult costs the hat total with a ribbon is: £1.80 + 0.30p = £2.10 New total variable cost = £2520.

My total costs are the fixed costs and variable costs together which are:

£6800+ £2520 = TOTAL COSTS £9320.

To work out the Break-even point I need to understand how to work it out. The calculation is:

Fixed costs £6800

Selling price – variable cost £15.00- £2.10 = £12.90

My break-even point is 527.13 so I need to sell 520 straw hats in order to break even. I think that is quite high.

The pricing strategy that I am going to use is value for money as I will make sure that my product is quality and the cheapest it can be to break even.

If I reduced the price of my product from £15 to £10 this will change the amount of hats that I need to sell.

6800

£10.00-£2.10 = £7.90.

New break-even would be 870 straw hats. This is a massive amount that I have to sell before I even make any profit and thinking about if I am only selling 1200 I don’t think that it is worth it.

The risks of selling straw hats are that it really is just a summer accessory. I would have to make sure that I try and persuade customers that mine are good quality and unique to the festival period of time.

Viability

Looking at my figures and the break event calculations, I think my business proposal would work in the summer months when festivals are popular. They would not sell that well in the winter months so I would need to make sure that I had enough hats for the busy summer months.


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Marking commentary on MB1 candidate style answerAccurate fixed costs have been identified and variable costs have been calculated by the learner with them predicting potential sales and total profits. The pricing strategy adopted was not really explained at all. Break even analysis was completed but this was not accurate. The outcomes have been discussed. Limited reference was given to risk factors and the viability of the business proposal. The learner has a basic understanding of the different types of research in terms of primary and secondary and has explained about a few methods which are appropriate. They have briefly described both advantages and disadvantages of method.

Suggested improvements to progress candidate style answer to MB2The current portfolio requires the learner to apply further knowledge of both fixed and variable costs, ensuring that these are specifically related to their product design accurately. Different appropriate pricing strategies would need to be related to the customer profile which would include information related to the selling price. The learner would be required to predict mostly accurate costs which will be related to break even. The results will be described and relate to the business proposal, enabling the learner to describe the impact of prices changes on the break-even analysis, in order to demonstrate the learner understanding. Impacts of the risk will be considered and a more detailed evaluation will enable the learner to describe the viability of their business. The current learning outcome 4 evidence is limited to MB1 as it does not demonstrate the required application, skill and knowledge to meet the MB2 requirements.


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Learning Outcome 2 – Be able to complete market research to aid decisions relating to a business challenge MB3

Market research is vital to any business. Market research enables a business to find out information using a variety of different methods, to make sure that they know more about the current business market that they may be entering when selling products. Market research can help a business to:

• Identify who their direct competition is

• What their target market is

• Help determine if their product is wanted or needed

• Monitor how products are selling.

It is important for any business to complete comprehensive market research using both primary and secondary research methods. Primary research is when you gather information that you want to know using a method that you have created, such as a questionnaire. If I was to make a questionnaire, I could decide the information that I need to find out and design suitable questions to help me find the answers. Using the information that I have then found out, I can then design or adjust the hat design to make sure that people will buy it. Other forms of primary research include: observation, postal surveys where sometimes the business includes an incentive to complete the survey as well as a free pen(!), telephone surveys where a business may phone up a customer expectantly to ask questions, online surveys which sometime pop up or when you have purchased a product online you are asked to review the product or the service received, focus groups where a number of people are invited to come together to discuss their opinions or view on a new product or service. In a focus group the participants are often paid a small amount of money for attending as it will be in their own time, and they will be asked questions on their opinions of a new product or service. This could cost a business quite a lot of money. The final different form of research that some businesses use is test marketing, where consumers are asked to test a product or service and feedback their opinions on it. Sometimes you see the results of this in an advert such as Iceland.

Secondary research is when a business can find out information using information that already exists. It is easy to access especially with the internet as completing a search on a specific topic is quick and convenient to do. This can save time. Other forms of secondary research include Commercial market research organisations, for example MINTEL, Keynote and Euro monitor. There is an issue however because there is so much information out there, how can you trust everything that you read? Also the information that is read may have been completed for a different reason so it is important that appropriate secondary research is found. I will have to ensure that when I complete this kind of research that I make sure it is relevant.

I have decided to use a mixture of both primary and secondary research methods which will include:

• Questionnaire

• Research on different types of classic felt hats for women using the internet

• Research various adverts for hats from different retail shops using magazines and newspapers.

The advantages of using a face to face questionnaire as my primary research is that:

• I can write the questions myself.

• I can try to make sure that the questions I ask, gain me the research information that I will need to help when designing, pricing and marketing my product.

• I can decide whom I ask by segmenting the market.

• The people that I ask are more likely to answer the questions that I write.

• I can ask more complex questions and explain them to the person if necessary, to clarify what I mean.


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The disadvantages are that:

• The results that I gain could potentially not help me with my research if I ask the wrong questions.

• It can potentially take a long time to ask the questions and collate the answers.

• It is not anonymous so I will know who said what unless I decide to make it anonymous.

• The person that I ask the questions too could lie or to refuse to answer a question which would not help my research!

For my secondary research I am going to look at high street retail outlets such as Next, Topshop, White Stuff, Joules and Burberry. These are quite high end retail shops and sell similar products. I am also going to look at independent sellers locally as they are more likely to have more unique hats. I am doing this so that I can gain some understanding and inspiration from the current market when I design my hats. It will also enable me to have more of an idea of what people can currently purchase. I am also going to research a variety of different adverts in magazines, specifically fashion magazines such as Vogue, Glamour, Look and Harper’s Bazaar. They are very current magazines and have many different adverts that will form part of my secondary research. Companies spend millions of pounds on advertisements, so this will be a great method of seeking knowledge related to my speciality hats.

The advantages of using my chosen methods of secondary research (fashion magazines and the internet) is that:

• It will not take me too long in terms of time to gain the required information.

• It is a cheap method of gaining the information. I have access to the internet and the magazines and I have friends who I can borrow magazines off as we all buy different ones. They will not mind sharing. I subscribe to Vogue online any how so can look back at past copies of the magazines as part of my subscription which is another advantage.

• Lots of data is available – There will be many opportunities to seek research using these two methods but I need to make sure I do not overload myself with data so as not to get confused!

• It could form the basis of my Primary Research because if I complete the secondary research first, this could help how I structure my questionnaire. It will also enable me to determine what information that I want to discover from my questionnaire. This is why research is important.

The disadvantages of secondary research are that:

• There is so much out there so I have to spend my time wisely with my research!

• Some of the information could be incorrect, so I have to use the information that I consider to be correct.

• I have to make sure that the information is up-to-date but having said that, I could get inspiration of designs from years ago, so this could be an advantage as well.

My primary research will hopefully guide me to discover where customers will want to see the products sold and how much they would purchase the item for.

I have to consider the sampling methods that I will use when asking my questionnaire. Sampling is when a business decides who they will ask their questionnaire to, in order to gain the most accurate and useful information. There are several different types of sampling methods that I could use.

Random sampling is when any one can be asked the questionnaire, as it is random so not in any order. That means that each member of the public has an equal and known chance of being chosen.

Systematic sampling is often used by businesses instead of random sampling. How it works is that they may stop every 5th person that walks past in the street - if they are using a face-to-face questionnaire. This sampling method is therefore quite similar to the random sampling method.


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Stratified sampling is commonly used by businesses. They will target a questionnaire at respondents who share at least one common thing or characteristic for example females aged over 30 years old. It may take time to complete this kind of sampling, because if you are not positioned in an area where the selected sample is, you may have to change your stratified sampling technique.

Cluster sampling is when the population is divided into different geographic groups or “clusters”, for example, secondary school children in Lincolnshire. Using the cluster, the respondents would be randomly selected. This makes the research quite quick and easy. I think that this method is going to be the most appropriate for my market research.

Convenience sampling is when people volunteer, so are not approached by a person asking a questionnaire. This sample is convenient for people wanting to know information, as they just ask for volunteers.

Quota sampling is quite similar to stratified sampling, as the population is divided into stratified sections, such as location, age etc. Using this information, a number of people will be selected to be asked the questionnaire equally from each ‘stratum’, so not in a random fashion.

I am going to focus on cluster sampling, as I am going to ask mostly people in school my questionnaire, so a range of teachers and also pupils who I know. That will give me a range of views which hopefully will help me with my research and designs. I already know that I am going to focus on gender in terms of female hats; the age range will be 14+, with people who have a middle income.

Market Research

I am going to produce a questionnaire for my primary research to try and find out specific information that relates to designs, the prices that people will purchase the product for, where they would like to see it sold etc.


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Primary Research Questionnaire

I am going to design a variety of different classic felt hats for women. I would welcome your honest answers to help me design a product that people will want to purchase. Thank you in advance for answering the following short questions:

1. How old are you? 11-14 15-20 21-30 31-40 41-50 51-60 61+

2. When did you last purchase a hat? ------------------------------------------------------------------------------

3. Where did you purchase your hat from? -------------------------------------------------------------------------

4. Did you purchase this hat online or in a retail shop? -----------------------------------------------------------

5. Do you prefer brightly coloured hats? Yes ------------ No ------------

6. What colour would you prefer to purchase?

Dark green Light green Navy blue Purple Fushia pink Black Brown Orange

7. Would you be interested in having the option of having a large accessory such as one of the following?

A bow

Felt flower

Badge

8. Would you like to purchase your hat from a high street retail shop? Yes ------------ No -----------

9. If so, which retail shop would you like to purchase your hat from? ------------------------------------------

10. Why would you like to purchase your product from a high street retail shop?

------------------------------------------------------------------------------------------------------------------------------

11. If no, where would like to purchase your hat from?

---------------------------------------------------------------------------------------------------------------------------------

12. How much would you pay for a felt hat which includes a matching accessory?

£12-£15 £16-£20 £21-£25 £26-£30

-----------------------------------------

Thank you for answering my questionnaire which will help me when designing my vintage hat.

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My questionnaire has been designed to ensure that I gain an insight to how often a person purchases a winter hat and where they purchased it. This will give me an idea as to how often people buy hats. I like them so buy them often, but that is not the case with everyone. The results of my questionnaire will also help me to consider the most popular colours and accessories that may sell well as well as how much people will pay. I know it does depend on the design but at least it will give me an idea. I am pleased with my design of the questionnaire.

The results of my questionnaire were very interesting. I asked a variety of different people and gained a real insight into my potential customers. I asked 35 people in total as I felt this gave me a good range of opinions. I have decided to collate and display my results in the form of different graphs. This is because I think they show the results very well.

This shows that I asked a wide range of ages of people when I asked the questionnaire. Mostly people were aged 11-20.

This graph shows that the majority of people will buy a winter hat most winters which is good news. I was worried that people only buy them every few years but this shows that I was wrong and has helped me.


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This is an interesting result as I wanted to know where people purchase hats from. I never would have imaged a supermarket but only one person bought theirs there! Next is the most popular and this did not surprise me at all.

I asked this question to see if people generally buy hats in shops or online. The results do not surprise me as with an accessory like a hat; you have to try it on to see if it suits you which you cannot do online.


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This result is quite self-explanatory and I wanted to know if bright colours or more winter dull colours would be preferred. Therefore, I will ensure that the more dull colours are available for my customers.

These results show that purple is the most popular colour followed by black and then dark green.


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This graph shows that my research showed that most people would want some sort of large accessory. I wish I had followed this up with the people stating which accessory they would prefer and why. This is a real shame so I will have to decide myself when I design the product.

This question was asked to discover if customers want to purchase the hat from a shop which they do, so I will make sure that this happens.

This shows where my customers would like to purchase the hat from, which shows Next and Accessorize, but the other shops (White Stuff, Joules, Monsoon, Topshop) are all quite similar with their results.


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This is a very important question as it shows how much people are prepared to pay for a hat. This will help when I cost out the price of how much the hat will cost to make and then how much I could sell it for. I will need to know how many I need to sell in order to break even which will be shown later on in this work.

Summary of Primary and Secondary research

This primary research has been really useful. It has confirmed many points that I hoped it would. I now know that my customer profile is quite accurate with the results showing that my hat will be:

• Aimed at females aged 11-20

• I will make it so that it has colours with some form of accessory, be available in shops and cost between £12-£20.

2I have also completed lots of secondary research using magazines as well as looking on specific websites. One website http://www.thehatmagazine.com was very useful. This has been very interesting as I like fashion but also useful in terms of the designs that I could use. I am pleased with all of my research that I have now completed so now I need to use this to help me make my designs.

2 Please note the learner displayed various adverts from up to date magazines as well as website information as part of their secondary research evidence.

Marking commentary on MB3 candidate style answerThe learner has given accurate descriptions of a range of both primary and secondary research methods, which does include a wide range of the different types which is appropriate for the MB3 level. Advantages and disadvantages are described for a variety of different market research methods, which also include the sampling methods that potentially could be used by the business. Using this research, the learner completed comprehensive primary and secondary research which is specific and accurately analysed. They have presented the results using graphs as well as a written commentary.

Why it was awarded MB3 not MB2The learner work has been marked within the MB3 for this element of the proposal as they have described and demonstrated a wide range or research methods compared to just a ‘range’. They have detailed explanations and a comprehensive understanding which has been applied and is demonstrated within their primary and secondary research. The results of the research are thorough within their analysis which has been displayed using a variety of different graphs. This enables the learner summary to be comprehensive rather than sound.

http://www.thehatmagazine.com


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Learning Outcome 3 – Be able to develop a design proposal for a business challengeMB3

Task 3: Produce a design for a business challenge

I have completed two different designs of my special felt hat. Both designs have the same shape hat but are also different. I need to consider the research that has been completed. The hats are a classic design and so are timeless so my customers will like it as it will not go out of fashion as it is a vintage look which suits most people. I will now discuss each of my designs in terms of their strengths and weaknesses.

Design one features a winter hat with a purple colour. This is a wintery colour as although it is not black, it is still quite dull and not bright which I thought would be appropriate for my customer profile. The material I have selected is felt as it is durable and also warm which is important for a winter hat. The hat has an interesting shaped rim to the edge which will give a unique feel and finish to the product as it is a little ‘different’ to the normal winter hats that you may see in shops. It is a well-known fact that heads do not retain heat so it is important for this hat to ensure that my potential customers’ heads are kept warm when they wear this hat. I like both classic and vintage designs of accessories and clothes because they never go out of fashion. I wanted to make sure that this hat was like this as it would be something that I would wear. By adding a large accessory to the hat will give some interest to the design and compliment the hat. The weaknesses to this design are that customers may not like the colour of the hat as the research showed that some customers also liked the colours dark green, black and navy blue for a hat. Black is a very wintery colour so I think would sell well so I need to really consider this. More than half of the people who took part in the research did not want a bright colour for a hat so they could think that this purple colour is too bright so this is also a weakness. The large accessory is in the same colour as the hat. This is a weakness as it may not be seen and as my potential customers like something a little different, this may not appeal as it cannot be seen. This is a major weakness in the design.

Design two strengths are that it is a classic design, that is it is timeless and has a standout bow which is in a different colour as an accessory. The bow is in black compared to the hat being purple. The large bow accessory stands out compared to design one, where it blends into the colour of the hat and therefore cannot be seen. The hat also is a good winter colour. The weaknesses are that the colour may not appeal to my customer profile so I really should consider in the future providing a variety of different colours for customers to select. Customers may even decide to purchase several different hats of various colours which would be very positive for my sales! This is really the main weakness of this hat as it is a modification of the original design.

By completing extensive primary and secondary research, I was able to design a hat that would appeal to my potential customers. It is important to complete both types of research in order gauge the current fashions as well as get the opinions of others as to what they would like to see in a design. My primary research enabled me to discover that winter colours such as purple, dark green, black and navy blue would be colours that would appeal to my customers who would purchase the product for between £12-£20. They certainly were not interested in a hat that was brightly coloured. It also is important that customers can purchase the hat in a shop because they need to try it on and see if it suits them. It is hard to purchase a product like this without being able to feel the quality materials that it is made from as well as see if the design suits you. My primary research showed that customers would want to purchase the hat in retail shops such as Next and Accessorize. The advertisements and articles that I saw in the magazines (which formed part of my secondary research) were all looking back at vintage fashion. This was part of my inspiration for my chosen designs as it is clear that fashion does go through different phases and classic designs are very current.

I have ensured that the hat is a colour and has an accessory which compliments the colour of the hat and makes a statement and stands out. As the hat is a classic design, this fits with my customer profile which is a female, who has taste, who is aged 11+, has a middle size income due to the cost that the hat will cost. Using my detailed market research I will ensure that my designed hat will be sold in a variety of different retail shops so that they can try it on. My customers will not want to purchase it online as they want to try it on to see if it will suit them in terms of the fit and colour. The hat is a statement in a positive way. As it is quite expensive, it will mean that people who like bargains will not purchase it. I do not think that this is a problem as I know that the hat will sell to my target market which is the point of completing all the research. I feel that I have reacted well to my both my primary and secondary research and have a product that my target audience and customer profile will buy.


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Marking commentary on MB3 candidate style answerUsing the results the learner has applied the customer profile and market research information directly to their designs. They have reviewed the designs using self-assessment, peer reviews and justifying the overall final design which directly reflects the requirements of the scenario.

Why it was awarded MB3 not MB2The learner has ensured that their reasons are justified, thorough and appropriate when designing their vintage hat design, accessing and applying the research appropriately.


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Learning Outcome 4 – Be able to review whether a business proposal is viableMB3

Task 5: Be able to review whether a business proposal is viable

I have to consider the different types of pricing strategies that I could use in order to sell the product to customers. Competitive pricing is when a business researches and analyses what similar businesses are charging for the same or similar product and then sets its own price. This will normally be cheaper so that customers will purchase their product compared to a rivals. Competitive pricing occurs when a firm decides its own price based on that charged by rivals. Psychological pricing is a method that businesses use using the theory that certain prices will impact on a customer rather than others. For example would you purchase a cake that was £2.99 rather than £3.00? It is only 1p difference buy £2.99 sounds much better than £3.00 and that is how psychological pricing works on consumers! Another type of pricing strategy that I could use is Price skimming. This is when a business wants to boost profits for a short time so will increase the price of products to gain some extra profit. This is not something that I would consider for my business as I want to sell as many products as I can. Penetration pricing is often used in supermarkets as products are put on offer at a low price for a short amount of time (up to 4 weeks) so that sales are boosted in that time. This could be in the form of a sale at the end of a season such as Homebase selling garden furniture with 1/3rd off the RRP. Sometime businesses also use this form when a new product is launched.

The pricing strategy that I am going to use is Competitive pricing. By researching what my rival businesses such as Next and Accessorise price their winter hats; I will try to compete with these businesses ensuring that my customers get value for money, but also that this item is luxury because of the price. If it is too cheap, customers may consider the quality of the product and not purchase it. I will make sure that my product is quality and fashionable in a timeless way.

In the first month when the hat is available and starts to become popular, I will want to sell around 1000 adult hats. I have decided to concentrate on adults as most teenager heads are the same size as adults. The product is not aimed at children at all. My fixed costs per month for my product are going to be £6800 in total but that is for the fixed costs only. There are other costs that I will need to consider:

Variable costs for felt HATS = 1000 Adult hats = £2.50 x 2000 = £5000

Variable costs for a large accessory which will be a bow = 0.80 x 2000 = 1600

For an adult costs the hat total with a ribbon is: £2.50 + 0.80p = £3.30 New total variable cost = £6600

My total costs are the fixed costs and variable costs together which are:

£6800+ £6600 = TOTAL COSTS £13400

To work out the break-even point I need to understand how to work it out. The calculation is:

Fixed costs £6800 Selling price – variable cost £19.99 - £3.3 = £16.69

My break-even point is 407.42 so I need to see 408 (rounded up) classic hats in order to break even. I think that is quite a reasonable figure to achieve in the first month that I start to sell my products. I think that it would be useful to work out how many hats I would need to sell per week and also then per day. This could make me focus when I am selling my products as targets often help me. There is an average of four weeks in a month. Using these figures, I would need to sell the following amounts of hats per week:

407/4 = 101.75 so lets say 102 hats to round it up.

This could then be broken down into selling days so to work out this figure I decided to work out 102 hats per week divided by 7 days if I were to sell every day which would be: 14.5 so rounded up 15 hats per day. If I sold any more then that is profit for me.

My total profit if I were to sell 2000 hats will be: £26587.17


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If I reduced the price of my product from £19.99 to £15 this will change the amount of hats that I need to sell. This will change my pricing strategy. If I want to sell more products for a short amount of time, I will use Price penetration as my pricing strategy. In this example I am using this method:

6800£15.00-£3.30 = £11.70

New break-even would be 581 classic felt hats.

My total profit will be: £16602.30

This is a much large selling amount that will need to be sold in order to break even. I do not think that I will consider this at the moment. If of course, the product was not selling, I may have to consider this in the future, but I do not think with my correct customer profile, that I will have to resort to this. I want to ensure that I sell a quality product which people will enjoy wearing and their friends will ask where they got it from and then buy one for themselves.

Risks

I have identified four three risks with this business proposal which are quality, overspending, wastage, loss of money:

The risks of selling my design of hat is that even though I have completed extensive research, it may not appeal to people so it may not sell. My research does show that people like it but that is different compared to people parting with their money to purchase the hat. It is very important that there is demand for the product from customers so I will need to consider the pricing strategy that I initially use and maybe change this to boost my sales in the short term. It is a risk but it is very important that I have customers.

I need to also ensure that the hat is made of quality products but consider the money that I allocate to the materials. It is important that I do not overspend especially in the early days of producing the product but I must make sure that my customers are happy with their purchase. Overspending is when a budget is set for individual projects or a product such as a hat. If the budget is spent and the hat is not finished and more materials are needed, or the advertising is not fully finished, more money will need to be spent in order for it to be finished. This would then be classed as an overspend. If this happens frequently, it will show that the business is not budgeting realistically. The errors could occur if the materials selected are too expensive so the business could look at cheaper options, maybe the time it takes to make one hat has not been accurate. Both these examples will cost the business which will impact on the overall overspend. If they change the materials to something cheaper and if customers review the product and the feedback is negative, this will potentially impact on future sales for other customers. These days this is an important aspect of purchasing.

Another consideration in terms of a risk is losing money. If the wrong type of material is selected for the hat and a large amount of the material has been ordered this would be wasted. Any wasted material will mean that the business loses money as it has been spent on something that was not needed. It is important for my business to select the correct material to keep the wastage rates low. I need to ensure that when the outline of the hat is cut, that as much of the material is used as possible so that the wastage rates are limited. If I spend too much from the budget that I set myself for the hat, then this will also be negative for my business. Careful consideration must be given to this issue.

This hat is an autumn/ winter accessory. If the weather is not that cold, then people may not have the need for the hat so may not buy it. The weather I cannot control however!

Importance of customer demand

I know that the best way to make sales of this hat is to make sure that my customers and potential customers can try on the hat to check that it fits and suits them. The best way to do this is complementing customers when they try on the hat as if they are confident that they like it, they are most likely to purchase the product. My research showed that people do not tend to buy hats like this on line as they prefer to try them on. I understand this so need to ensure that customers can. The risk is that if they do not know where they can purchase the product, and then I will not get these potential, customers so I need to be aware of this. I must ensure that my marketing is good so that customers know where they can purchase the hats. I need to try and create the need for my hat and if for example a famous person was spotted wearing my hat, then this could get press coverage meaning that other people may


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want to purchase it. This would create a large customer demand for the product. You often see this with clothing that reality stars or pop stars wear. Their fans then want to dress like them and purchase the same products. This would be great for my business but obviously this is quite rare so I cannot rely on this. I need to make sure that the product is wanted, needed and able to be purchased by my customers.

My product is an original design. I have not copied the idea from anyone else. I have had inspiration from all the secondary research that I completed as well as the primary research that was important for my design. By using this research, I was able to take into consideration the views of my potential customers to help ensure that my designs would appeal. It would be a good idea to patent my design as well as complete the copyright process. This is when your idea is legally assigned to the business so that they are the only ones who can make, use or sell the exact product and make sure that others cannot. Other businesses could make something similar but it could not be exactly the same. This is something that I would need to consider. Copyright is when the person or business has the legal right over the product and others cannot copy it. This is why if you use something from a website you have to quote it and put in the author because they wrote it. Also with pop songs, pop singers can’t use another song and claim that they have written it. They can re-mix a song and re-record it but can’t say that they wrote it. Products also have their own copyright symbol which looks like this: © This is how you can identify if the product is copyright and you often see it on many items. This is a challenge for my business as I need to make sure that I have not copied any other ideas from my secondary research. I know that my design is original.

Summary of the viability of my proposal

I do consider that my business proposal of producing a felt hat with a vintage design is a viable. I think that I have demonstrated that selling the hat at £19.99 is a realistic figure meaning that I need to sell 407 hats in the first month of trading. I feel with a product like this, if it is too cheap, then customers may not buy it because it is too cheap. Sometimes this is the case with products as customers do not trust that the product is good quality. I do not want this to happen. I have also been able to break the break event figure down into daily targets for myself, which would mean that I would have to sell 15 hats per day to customers. All these figures and targets I know are achievable making this design of hat and proposal a realistic project that would be successful at if I was given the opportunity. I know that my targets that I have set the business are realistic and will help with the viability of the financial side of this business proposal. Setting both targets per day and per week gives me a focus ensuring that the business is aware of the targets and can adjust selling techniques if required in order to sell more of the product. I know that my calculations are correct so are viable so I need to ensure that the selling techniques used will sell the products. My identified customer profile was aimed at females aged 11-20 with a qwerky sense of fashion which includes timeless classics and who have access to a middle income and can afford a hat which costs between £12-20. My design two of the hat, meets the requirements of my potential customers very well.

The original business brief was to design a hat to be stocked in ‘Progress Ahead’ outlets, using some figures that were given as part of the brief.

I feel that I have produced a clear customer profile, completed extensive market research which has been analysed and reviewed in detail, produced original designs, developed a proposal and calculated costs including the break-even point, enabling me to discuss the viability of the proposal. This has been a really enjoyable project.

Marking commentary on MB3 candidate style answerAccurate fixed and variable figures have been calculated relating to break even have been applied. The learner decided to take this further and workout weekly and daily targets with reasons given for this. The selling price was justified which was linked to the customer profiling. All figures and calculations were accurate showing that the learner has understood clearly the break even process and how it can help a business, changing the prices to illustrate how this would change the break even. Risk factors overall were considered and understanding applied as well as a clear justification which evaluates the overall viability of the proposal.

Why it was awarded MB3 not MB2The portfolio of work has demonstrated that the learner has grasped the concept of break-even very well, as all figures and calculations were accurate and applied well with valid reasons given relating to the concept. They have a thorough understanding rather than a ‘sound’ understanding of break-even which pushes them into MB3. All analysis is effective rather than ‘described’ with risks and viability being fully evaluated rather than ‘partly evaluated’.

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