Read the following extracts (A to C) before answering Question 1 - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1

Evaluation of Options

Option 1: Business to Business (B2B)

Remaining a B2B company allows Bon Bon's to leverage their existing relationships with retailers. By securing bulk purchases and utilizing established marketing channels, they can benefit from economies of scale, leading to potentially improved profitability. In addition, their recent investment in a new distribution warehouse should enhance the reliability of deliveries, helping to maintain customer satisfaction.

This model allows Bon Bon's to focus on profitability through improved operational efficiency while maintaining the benefits of established connections in the industry.

Option 2: Business to Customer (B2C)

Shifting to a B2C model could open up new revenue streams by selling directly to consumers. This retailing approach can increase brand visibility and position Bon Bon's to tap into the growing demand for sweets, as indicated by the projected market growth. Emotional branding and direct engagement with customers could enhance loyalty and repeat purchases.

However, transition to B2C may require substantial investment in marketing and new sales channels, which could strain current resources and potentially impact profitability in the short term.

Recommendation

Given the current market potential and Bon Bon's established reputation, pursuing the B2B model is the safer option in the short term. This allows them to continue focusing on efficiency and maximizing current resources while gradually exploring B2C options without immediate financial pressure. If they can solidify their position in the B2B space, they can later consider expanding into B2C, ensuring sustainable profitability.