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Bon Bon’s is currently a business to business (B2B) company with an objective to increase profitability - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Question 1
Bon Bon’s is currently a business to business (B2B) company with an objective to increase profitability. To do this, Bon Bon’s could either remain a B2B company or b... show full transcript
Worked Solution & Example Answer:Bon Bon’s is currently a business to business (B2B) company with an objective to increase profitability - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Step 1
Option 1: Business to Business (B2B)
Answer
Bon Bon’s can improve profitability by leveraging existing marketing channels and securing bulk purchases from retailers. By focusing on B2B, Bon Bon’s can build strong relationships with retailers, allowing the establishment of a more reliable distribution network.
Using a new distribution warehouse can enhance the efficiency of deliveries to retailers. By taking advantage of economies of scale, Bon Bon’s can reduce costs, thereby improving profitability. Additionally, maintaining B2B relationships can lead to consistent revenue without the need to establish a brand presence in consumer markets.
Step 2
Option 2: Business to Customer (B2C)
Answer
Switching to B2C can allow Bon Bon’s to sell directly to consumers, potentially leading to higher profit margins as they would eliminate intermediaries. Given the projected growth of the UK sweet market, Bon Bon's can tap into a growing consumer base.
Marketing directly to consumers can increase brand loyalty and emotional connection, especially using nostalgic branding. However, Bon Bon’s would need to invest in establishing a customer-facing infrastructure, which may initially decrease profitability unless brand awareness is effectively built.
Step 3
Recommendation
Answer
While both options have merit, Bon Bon’s should continue with the B2B strategy. This option allows them to maximize existing relationships and distribution channels, minimizing the risk associated with entering the consumer market. Given their recent investment in a distribution center, they can focus on optimizing operations in the B2B space, leading to improved profitability without the uncertainties of B2C operations.