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Evaluate these two options and recommend which one is more likely to improve Bon Bon's profitability - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Question 1
Evaluate these two options and recommend which one is more likely to improve Bon Bon's profitability. Option 1: Business to business (B2B) is where a company sells ... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which one is more likely to improve Bon Bon's profitability - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Step 1
Option 1: Business to Business (B2B)
Answer
In this model, Bon Bon's can use its existing marketing channels and secure bulk purchases from retailers. This approach can help reduce costs through economies of scale, allowing for increased profitability.
By continuing to focus on partnerships with retailers, Bon Bon's can enhance its delivery reliability and better manage stock levels. Furthermore, the new distribution warehouse established in 2018 may streamline operations, allowing Bon Bon's to be more efficient in its supply chain.
Overall, the B2B model allows Bon Bon's to leverage established relationships in the market and minimize risks associated with entering the consumer market.
Step 2
Option 2: Business to Customer (B2C)
Answer
Conversely, the B2C model involves directly selling products to consumers. This route has the potential to increase revenues significantly due to direct engagement with customers, but also presents challenges. To succeed, Bon Bon's would need to effectively market its brand and create emotional connections with consumers, which could entail significant investment in marketing strategies.
The UK sweet market's projected growth offers an auspicious environment for Bon Bon's to expand its sales directly to consumers, bypassing intermediaries. However, it requires a substantial shift in business strategy.
Step 3
Recommendation
Answer
After evaluating both options, the B2B model appears to be the more logical choice for Bon Bon's profitability at this time. It allows the company to capitalize on existing relationships and systems, reduces risk, and aligns with the current trends seen in Extract B, indicating stability in the independent retail space. Transitioning to a B2C model could dilute profitability in the short term due to the increased initial investment required.