At a coastal town council meeting, Omar presents a proposal for a refill kiosk selling washing-up liquid, shampoo and laundry detergent. Customers would bri...

(a) Two likely characteristics of Omar's target market are:

• local residents; and
• customers concerned about reducing plastic waste.

People who already buy environmentally friendly products and customers willing to refill containers or make repeat purchases are also acceptable. A target market is the group of customers most likely to buy the product. [2]

(b) Market research can estimate how many potential customers would use the refill kiosk and can identify their preferred products, prices or refill sizes. Omar can use this evidence to judge whether expected sales are likely to cover rent and other costs before committing to rent the kiosk. This reduces the risk of taking on a location with insufficient demand. [3]

(c) Penetration pricing means charging a low price when the kiosk first opens. The low introductory price is intended to encourage customers to try the new business and help it enter the market. [1]

(d) A cash-flow forecast records expected cash inflows and outflows over time. For the first months of trading, it shows cash received from sales and cash paid out for costs such as rent, stock and wages. It identifies months in which cash outflows may be greater than cash inflows. Omar can then arrange finance, reduce costs or delay spending before the business runs out of cash. Cash flow matters because a business can have sales but still fail if it cannot pay bills when they are due. [4]