Aim for FiveBusiness with Personal Finance

Question 1: Business Canvas Project

TutorLoop: testing a marketing campaign

  • Units 1 and 2
  • 10 points
  • About 25 minutes

You can use a calculator on this question, just like on exam day.

Questions about the business project you built during the course: you pitch your product, explain how you tested a hypothesis to make a decision, and explain whether a common challenge for entrepreneurs, such as getting outside funding, threatens your idea. Practice questions here use a made-up sample project. On the exam: Question 1 of 4 (official name: Business Canvas Project Exam-Day Validation), Section IIA: 25 minutes, 15% of the score. Covers Units 1–4 and Skill Categories 1, 2 and 4. Section II has 4 free-response questions in 90 minutes (40% of the score). The exam is fully digital in Bluebook, and only a 4-function calculator is allowed (handheld or the built-in Desmos 4-function calculator).

The question and its sources

This is a practice version of Question 1. On the real exam, you answer about the Business Canvas Project you built during the course. Here, answer about the sample project below, which a made-up student built.

Sample Business Canvas Project: TutorLoop

Student entrepreneur: Daniel, a high school senior.

Product: TutorLoop matches middle school students in grades 6–8 with trained high school tutors for one-hour math sessions, online or at the public library. A session costs $20. The tutor earns $14 and TutorLoop keeps $6.

Customer and consumer: Parents pay for TutorLoop (the customers), and their children use it (the consumers).

Target customer profile: parents ages 35–50 in Daniel's town with a child in grades 6–8 who is struggling in math. They work long hours, want affordable help and prefer tutors their children can relate to.

Customer problem (validated in Unit 1): Daniel surveyed 60 parents at a middle school open house. 38 said their child needed help in math, and 41 said private tutors, who charge $45 to $70 an hour in their town, cost too much.

Marketing hypothesis: A social media ad featuring a parent's story will win more sign-ups per dollar than an ad that features the price.

Test: Daniel spent $75 on each of two paid ads in a local parents' social media group for two weeks. The ads went to similar audiences, and each linked to its own sign-up form. Ad A said 'Math help from trained high school tutors: just $20 a session.' Ad B showed a parent's quote: 'My daughter went from a D to a B in six weeks.' Results are in Table 1.

Decision: Daniel moved the rest of his advertising budget to parent-story ads and asked satisfied families for more stories he could use.

Early results: The first 15 families booked an average of 6 sessions each in their first semester.

Source: Hypothetical sample project written for this practice question

Table 1. Results of Daniel's two-week ad test

AdCostViewsClicksFamilies who signed up
Ad A (price)$751,900384
Ad B (parent's story)$752,1008411

Source: Hypothetical data written for this practice question

Suggested time: 25 minutes

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Part (A)

3 points

Pitch TutorLoop. Cover four things: what the product is; who the target customer is; the problem, need or want it's meant to address; and why customers would find it valuable.

0 / 2,500 characters

Part (B)

1 point

Businesses typically test hypotheses about their marketing campaigns. Describe one reason a business would use A/B testing to test a hypothesis.

0 / 2,500 characters

Part (C)

4 points

Explain how Daniel tested a hypothesis about TutorLoop's marketing campaign. Cover four things: the hypothesis; the research method Daniel used; the evidence that came back; and how that evidence changed Daniel's decisions.

0 / 2,500 characters

Part (D(i))

1 point

The cost of winning customers may be a problem for entrepreneurs with a new idea. Describe how a business calculates its customer acquisition cost.

0 / 2,500 characters

Part (D(ii))

1 point

Explain why the cost of winning customers does or does not represent a challenge to the viability of TutorLoop. Your response should include evidence from the canvas that supports your explanation.

0 / 2,500 characters

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