Demand (AQA A Level Business): Exam Questions

Source B: Brompton Bicycle Ltd

Brompton Bicycle Limited makes folding bicycles. Andrew Ritchie designed the first one in 1975 and built it in a workshop under a railway arch, and the company was registered the following year. Fifty years on, every Brompton is still made by hand and quality checked at the company's own factory in Greenford, west London. It is a private limited company with around 100 shareholders and is led by chief executive Will Butler-Adams, who joined the company in 2002 and has led it since 2008.

In principle the product has barely changed. A Brompton folds into a small package in under 20 seconds, so an owner can carry it onto a train, put it in a car boot or tuck it under a restaurant table. The range now includes electric, lightweight titanium and larger-wheel models. Brompton describes its purpose as creating urban freedom for happier lives, and it sells durability as part of the deal. Every frame carries a seven-year warranty, the bikes are designed to be repaired rather than replaced, and there are now more than a million Brompton owners and over 300 owners' groups around the world.

The year to 31 March 2025 was harder than usual. Turnover slipped by 0.9% to £121.45 million, the workforce fell by 54 people to 790, and cash at the bank almost halved. Over the same year the company's total liabilities rose by 53.5%.

Brompton would like to invest £15 million in its factory so that it can build more bikes at a lower cost per bike. It does not hold enough cash to pay for this out of its own resources. It could borrow the money from a bank, or it could ask its existing shareholders to buy new shares.

Source: information sourced from Companies House and Brompton Bicycle Ltd, 2026

Appendix D: Brompton Bicycle Ltd selected financial data

Source: Companies House

Appendix E: Analyst estimates of pricing for the Brompton C Line model

• Average selling price, 2024 = £1 650

• Average selling price, 2025 = £1 815

• C Line bicycles sold, 2024 = 38 000

• C Line bicycles sold, 2025 = 36 480

• Price elasticity of demand for the C Line = ?

Source: Analyst

Assess whether raising the price of the C Line was likely to increase Brompton Bicycle Ltd's revenue.

Calculate the price elasticity of demand for the C Line to support your answer.

Give your answer to one decimal place.

Source B: Center Parcs

Center Parcs runs five holiday villages in the United Kingdom: Sherwood Forest in Nottinghamshire, Elveden Forest in Suffolk, Longleat Forest in Wiltshire, Whinfell Forest in Cumbria and Woburn Forest in Bedfordshire. Woburn Forest, which opened in 2014, is the newest. Guests stay in lodges set in woodland and pay separately for activities, restaurants and the spa.

It is a private limited company, so it has no shares traded on any exchange and no share price. During the 53 weeks to 24 April 2025 it paid dividends of £115.5 million to its owner.

The business is close to full. Occupancy for the year was 97.3%, up from 96.8%, and Appendix E shows that it is not full only in summer: in every month of the year the villages run at or above 93%. Revenue rose 4.7% to £649.8 million and adjusted EBITDA rose to £283.8 million from £277.3 million.

The number that stands still is the price. The net average daily rate was £243.10, against £243.17 the year before. Across a year in which costs rose, Center Parcs took seven pence a night less than it had the year before.

That leaves the company in an unusual position. It cannot sell many more nights, because it has almost no empty ones. It has not raised its daily rate for two years. Growth has therefore had to come from somewhere other than filling lodges or charging more for them, and the directors must decide where the next stage of growth is going to come from. Building a sixth village would take years and a great deal of money. Raising the price would work immediately, if guests accepted it.

Source: information sourced from the Center Parcs (Holdings 1) Limited annual report and financial statements for the 53 weeks ended 24 April 2025, which cover the five UK villages only

Appendix D: Center Parcs selected results

Source: Center Parcs

Appendix E: Center Parcs occupancy by month, analyst estimates

• Average occupancy across the year: 97.3%

Source: Analyst

Assess whether Center Parcs is likely to increase its revenue by raising its average daily rate.

Source A: Moonpig Group plc

Moonpig Group plc sells greeting cards, gifts and experience days online. It has no shops. The group owns the Moonpig brand in the UK, Greetz in the Netherlands, and Buyagift and Red Letter Days, which sell experience days such as spa breaks and driving days. It is a public limited company listed in London.

The business runs on knowing when a customer's friends and family have birthdays. A customer who sends one card gives Moonpig Group plc a name and a date, and the company then reminds them when that date comes round again. Around that reminder it offers a gift to send with the card, which is where much of the growth now comes from. It also sells a paid membership called Plus, and during the year it launched tools that use artificial intelligence to help customers write and design cards.

In the year to 30 April 2025 revenue was £350.1 million, 2.6% up on the year before. That figure hides three very different businesses. The Moonpig brand grew 8.6%, and its revenue in the United States, Australia and Ireland grew 36.1% between them. Greetz fell 4.7%. The Experiences business was difficult enough that the group wrote £56.7 million off the value of it.

Underneath, the numbers the company watches most closely moved the right way. Active customers across Moonpig and Greetz reached 12.0 million, up from 11.5 million. Total orders grew 4.1% and the average order value grew 2.1%.

Profit depends entirely on which figure is read. Adjusted profit before tax, which leaves out the write-off, was £67.5 million against £58.2 million, a rise of 16.0%. Reported profit before tax, which includes it, was £3.0 million against £46.4 million, a fall of 93.6%. Free cash flow was £66.1 million, and the company bought back £25 million of its own shares during the second half.

Source: information sourced from Moonpig Group plc results announcement for the year ended 30 April 2025

Appendix A: Moonpig Group plc selected results

Source: Moonpig Group plc

Appendix B: Moonpig Group plc, three measures

Source: Moonpig Group plc

Assess whether Moonpig Group plc should encourage more of its customers to add a gift to the card they are sending.

Source A: Meadowbank Pet Foods Ltd

Meadowbank Pet Foods Ltd makes dry dog food at a single factory in Shropshire. It is a private limited company owned by Ros Calderwood, who started it after eleven years as a vet, and it employs 34 people.

It does not sell in supermarkets and has never wanted to. Its food reaches customers through independent pet shops, veterinary practices and its own website, where about a third of customers buy on a repeating subscription. A 12 kilogram bag costs £48. Supermarket own label sells at around £22 for the same weight, and the mid-range brands sit between the two.

What the company sells is an explanation. Every bag lists the percentage of each ingredient, names the farm the meat came from and carries a batch number that a customer can look up. Ros Calderwood's view is that people who read the label are the only customers worth having, because they are the ones who do not switch when a rival runs a promotion.

Last year Meadowbank Pet Foods Ltd took £9.02 million, up from £8.20 million. Almost all of it is still British: £8.06 million against £7.71 million the year before. The two export markets are small and growing quickly. Ireland went from £0.38 million to £0.62 million and the Netherlands from £0.11 million to £0.34 million, both sold through independent pet shops in the same way as at home.

Ros Calderwood has £400 000 to spend and two ways to spend it. She has been offered a distributor in Germany, which is one of the largest pet food markets in Europe and one Meadowbank Pet Foods Ltd has never sold into. Or she can spend the money at home, where growth has slowed to 4.5% and where nine tenths of the revenue already is.

Before deciding anything she ran a test. For three months the price of the 12 kilogram bag went up from £48 to £52, and she watched what happened to the number of bags sold.

Appendix B: Meadowbank Pet Foods Ltd, the three-month price test

Source: Analyst

Assess whether Meadowbank Pet Foods Ltd should raise the price of its 12 kilogram bag to £52.

Calculate the price elasticity of demand shown by the three-month test to support your answer.

Give your answer to one decimal place.

Source A: Nine Acres Kitchen Ltd

Nine Acres Kitchen Ltd delivers meal kits: a box of measured ingredients and a recipe card for each meal. It is a private limited company founded by Dan Ferreira and Aisha Nkemelu, it employs 210 people across a packing site in Northamptonshire and an office in Manchester, and it has 12 600 active subscribers.

A subscriber chooses their meals on an app each week. The standard box costs £48.99 and the average subscriber takes two a month, which gives revenue of £14.8 million a year. Ingredients, packing and delivery cost £31.20 a box.

Getting people to try it is not the problem. The first box costs £14.99, and the offer works: the company recruits about 1 400 new subscribers a month. Keeping them is a different matter. Appendix B shows what happens to every hundred people who join. By the fourth box, the third charged at the full £48.99, 41 of them have gone.

The company knows a great deal about all of this. The app records what each subscriber cooks, what they skip, when they pause and what they were looking at before they cancelled. Dan Ferreira wants to use it to work out who is about to leave so the company can offer them something. Aisha Nkemelu wants to use it to suggest what they might cook next, on the grounds that people who enjoy the food do not cancel.

There is a third thing neither of them has raised at a board meeting. Starting a subscription takes about two minutes on the app. Cancelling one requires a telephone call, on weekdays between nine and five.

Appendix A: Nine Acres Kitchen Ltd, last year

Source: Analyst

Appendix B: Nine Acres Kitchen Ltd, what happens to every 100 subscribers who join

Source: Analyst

Assess whether Nine Acres Kitchen Ltd should reduce the gap between its £14.99 first-box price and the £48.99 it charges for every box after it.

Source B: Center Parcs

Center Parcs runs five holiday villages in the United Kingdom: Sherwood Forest in Nottinghamshire, Elveden Forest in Suffolk, Longleat Forest in Wiltshire, Whinfell Forest in Cumbria and Woburn Forest in Bedfordshire. Woburn Forest, which opened in 2014, is the newest. Guests stay in lodges set in woodland and pay separately for activities, restaurants and the spa.

It is a private limited company, so it has no shares traded on any exchange and no share price. During the 53 weeks to 24 April 2025 it paid dividends of £115.5 million to its owner.

The business is close to full. Occupancy for the year was 97.3%, up from 96.8%, and Appendix E shows that it is not full only in summer: in every month of the year the villages run at or above 93%. Revenue rose 4.7% to £649.8 million and adjusted EBITDA rose to £283.8 million from £277.3 million.

The number that stands still is the price. The net average daily rate was £243.10, against £243.17 the year before. Across a year in which costs rose, Center Parcs took seven pence a night less than it had the year before.

That leaves the company in an unusual position. It cannot sell many more nights, because it has almost no empty ones. It has not raised its daily rate for two years. Growth has therefore had to come from somewhere other than filling lodges or charging more for them, and the directors must decide where the next stage of growth is going to come from. Building a sixth village would take years and a great deal of money. Raising the price would work immediately, if guests accepted it.

Source: information sourced from the Center Parcs (Holdings 1) Limited annual report and financial statements for the 53 weeks ended 24 April 2025, which cover the five UK villages only

Appendix D: Center Parcs selected results

Source: Center Parcs

Appendix E: Center Parcs occupancy by month, analyst estimates

• Average occupancy across the year: 97.3%

Source: Analyst

Appendix F: Data for two ways of growing

Source: Analyst

Appendix F shows two ways in which Center Parcs could grow.

Evaluate both options and recommend which one would be the better way for Center Parcs to grow.

Source A: Dr. Martens plc

Dr. Martens plc designs and sells boots, shoes and accessories. The footwear is what the brand is known for, but it also sells bags, belts, socks and shoe care products alongside it. It is a public limited company listed in London, and it sells in more than 60 countries through its own shops, its own website and wholesale customers such as department stores and independent retailers.

Almost everything the brand is worth rests on two ideas. The first is where it comes from: the company began in Northamptonshire and still makes its Made in England range at the Cobbs Lane factory in Wollaston. The great majority of its boots are not made there. They are made in Asia, and the Made in England range costs a good deal more than the standard one. The second idea is that the boots last. Customers are told they are buying something they will still be wearing in ten years, and that promise is why many of them accept the price.

The year to 30 March 2025 was the second difficult one in a row. Revenue fell 10.2% to £787.6 million, from £877.1 million. At constant exchange rates, which strips out the effect of the pound moving against other currencies, the fall was 8.2%. It was not the same everywhere: revenue fell 11.0% in EMEA, 11.4% in the Americas and 3.8% in Asia Pacific, and on a constant currency basis Asia Pacific actually rose 0.6%, helped by Japan and China.

Nor was it the same in every channel. Selling direct to the customer, through Dr. Martens plc's own 239 shops and its website, was down 4%. Selling wholesale, to other retailers, was down 19.5%.

Profit fell much further than revenue. Adjusted profit before tax was £34.1 million against £97.2 million the year before. Reported profit before tax was £8.8 million.

The company spent the year fixing what it could control. It took £25 million a year out of its costs, cut its inventory by £67 million and reduced its net debt, excluding leases, by £83 million. It also says it has reset its marketing so that it talks about the product rather than the brand around it.

Source: information sourced from Dr. Martens plc preliminary results for the 52 weeks ended 30 March 2025

Appendix A: Dr. Martens plc selected results

Source: Dr. Martens plc

Appendix B: Dr. Martens plc group revenue, five years

Source: Dr. Martens plc

Appendix C: Where boot brands sit, analyst estimates

Source: Analyst

Appendix B shows that Dr. Martens plc's revenue has fallen for two years running, from £1 000.3 million to £787.6 million.

Evaluate whether Dr. Martens plc should lower the price of its classic boot or hold its price and spend more on marketing the brand.

Source A: Skylark Adventure Ltd

Skylark Adventure Ltd runs six indoor adventure parks, in converted warehouses on the edges of northern towns. Each one has climbing walls, trampolines, an obstacle course and a café. It is a private limited company owned by Ben Attah and Priya Shergill, who opened the first site in 2016, and it employs 148 people, most of them part time.

Almost all of the money comes from families. Last year 412 000 family visits brought in £4.86 million, an average of £11.80 a head once the café is counted. The rest, £1.34 million, came from schools and nurseries, who book weekday mornings a whole year ahead.

The two kinds of customer behave nothing like each other. A school booking is made in September for the following July and is almost never cancelled. A family visit is decided on a Saturday morning and is the first thing to go when money is tight. Appendix B shows what happened to family visits over five years as real household disposable income moved, and the two lines are hard to look at separately.

Ben Attah and Priya Shergill have £250 000 to spend across the six sites. They can lower prices, which they have never done, or they can put a new activity into every site and leave the price where it is. They are also arguing about something larger: whether a business that depends on families having spare money is one they should be trying to change.

Appendix A: Skylark Adventure Ltd, where the money comes from

Source: Analyst

Appendix B: Skylark Adventure Ltd family visits and household income

Source: Analyst

Appendix C: Data for two ways of spending £250 000

Source: Analyst

Appendix B shows how Skylark Adventure Ltd's family visits have moved with household income.

Evaluate whether Skylark Adventure Ltd should protect itself against falling household incomes by selling more to schools and nurseries or by making itself cheaper for families.