Zach has a technical background and does microscopic repairs to electronic devices for a company called Tech Know Fix. He is very good at doing those repairs and he has found that his friends are asking him to do such repairs on their phones and tablets as well. Zach thought that it might be helpful to start his own small side business. He started a sole proprietorship called, Zachs Quick Fix. Zach decided that being in a mall, where there is high volume traffic, and his kiosk cart could be placed near the cell phone providers. Added to that, Zach thought another option is to buy used phones and refurbish them and then sell them to customers who are looking for used phones. This means that he needs to have a way to get old phones and then sell them to customers once they are repaired.

Option 1:

He needs to rent a kiosk cart in the mall and that would be $600 a month. Added to that, are marketing costs for signage and business cards, which cost $1,200 as the initial cost. Further marketing is to create a website, Instagram page and Facebook ads that cost him $200 a month. To get started, his tools would cost $500. For the repairs, there is a flat rate he would charge which is $30 assessment and the repairs would cost $100. He found that for each repair, supplies would cost $40.

Option 2:

For option 2, Zach needs a way to get phones from people who no longer needed them due to upgrades. He would pay $50 for a used phone in decent condition, he would then refurbish it for $40 and after it was repaired, he would then sell them for $200. He would no longer set up a kiosk in the mall but rather do everything online. This means that he would need to create a website, Instagram and Facebook ads and this would cost him $200 a month. He would need to spend $500 on tools to get started.

Based on the information provided, you must answer the following:

1. Select a reasonable way that he might choose a research method to understand his customer needs to help him pick the best of the two options 2 marks
2. Assess option 1 using the break even in units assessment 2 marks
3. Assess option 2 using the break even in units assessment 2 marks
4. Which option do you feel is best suited for Zach and justify how you decided 2 marks