Question 1: Business Canvas Project

Crumb & Co.: testing a brand

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: Crumb & Co.

Student entrepreneur: Nora, a high school senior.

Product: gluten-free cookies (chocolate chip, lemon and ginger) made with almond flour, sold in two-cookie packs. Nora sells packs to three local coffee shops for $2.50 each, and the shops sell them for $4.00. Each pack costs Nora $1.10 to make.

Target customer profile: adults ages 18–40 who avoid gluten because of celiac disease or a gluten sensitivity, buy a coffee most days and want a fresh treat with it.

Customer problem (validated in Unit 1): Nora interviewed 12 gluten-free shoppers at a farmers market. 10 said local coffee shops rarely offer gluten-free baked goods, and the ones they do offer are dry and prepackaged. 3 of the 4 coffee shop owners she spoke with said customers ask for gluten-free options every week.

Branding hypothesis: A brand name that highlights flavor ('Crumb & Co.') will appeal more to gluten-free customers than a name that highlights the diet ('GlutenGone').

Test: Nora shared an online survey in two local gluten-free social media groups. It showed two package labels with the same cookie photo, one for each name, and asked which one respondents would pick up. Of 150 responses, 96 chose Crumb & Co. and 54 chose GlutenGone. In a follow-up question, 70% said a gluten-free label must be easy to see on the front.

Decision: Nora named the brand Crumb & Co. and put a large 'Gluten-Free' badge on the front of every package.

Legal factor: Nora's county health office told her that cookies baked in a home kitchen may be sold directly to customers, such as at a farmers market, but cookies sold to businesses for resale must be made in a licensed commercial kitchen. (This rule is part of the made-up sample; real rules vary by state.)

Commercial kitchen: A shared commercial kitchen nearby rents for $30 an hour. The coffee shops order 90 packs a week in total, and Nora can bake and package 45 packs an hour there.

Source: Hypothetical sample project written for this practice question

Suggested time: 25 minutes

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Part (A)

3 points

Pitch Crumb & Co. 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.

Your answer to part (A)

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Part (B)

1 point

Businesses typically formulate and test hypotheses about how to reach customers. Describe one reason a business would sell its product through an indirect marketing channel, such as a retailer.

Your answer to part (B)

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Part (C)

4 points

Explain how Nora tested a hypothesis about her brand identity. Cover four things: the hypothesis; the research method Nora used; the evidence that came back; and how that evidence changed Nora's decisions.

Your answer to part (C)

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Part (D(i))

1 point

Laws and regulations may be a problem for entrepreneurs with a new idea. Describe one way a legal factor can affect the businesses in a market.

Your answer to part (D(i))

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Part (D(ii))

1 point

Explain why the commercial kitchen rule does or does not represent a challenge to the viability of Crumb & Co. Your response should include evidence from the canvas that supports your explanation.

Your answer to part (D(ii))

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