A-Level Edexcel Business Minerals: Option 1
Business to business (B

Question

Option 1
Business to business (B2B) is where a company sells its products to another business e.g. Bon Bon’s sells to shops at tourist attractions.

Profitability may be improved by Bon Bon’s using their existing marketing channels and securing bulk purchases from retailers. These bulk purchases will allow Bon Bon’s to gain economies of scale from purchasing from its suppliers and these lower unit costs can help to improve Bon Bon’s profitability.

Bon Bon’s knows the retailers they currently deal with and they can extend this model to securing purchases from other retailers so that they can boost profits.

The new distribution warehouse should help with reliability of deliveries to retailers as it will provide Bon Bon’s with an enhanced reputation and an improved ability to supply stock when required.

Bon Bon’s packaging in larger quantities may allow greater automation in the warehouse making operations more efficient thereby reducing costs.

Selling to customers (B2C) requires Bon Bon’s to set up new retail outlets, which would damage profitability by introducing risk in the short-term.

Option 2
Customers often make purchases based on emotional involvement and in response to promotion and branding. A nostalgic, traditional brand such as Bon Bon’s could take advantage of this by retailing directly to consumers.

The UK sweet market is forecast to grow to £2734m by 2023, so Bon Bon’s could expect to see increased revenue from growing consumer demand for their sweets.

Extract B suggests that convenience store sales are important in the sweet market, so there is scope for Bon Bon’s to open similar, small-scale outlets.

Once the methods of distribution have been decided (via shops or online), the potential profit margins for selling B2C are higher, because there are fewer intermediaries between producer and consumer, taking their share of the profits.

Potential judgement: Bon Bon’s are an established B2B company, with a growing reputation. They have just invested in a new distribution centre, so this could strengthen their current retail customers. These customers, such as Thorntons, are more likely to buy in bulk, which may allow Bon Bon’s to gain economies of scale which will increase profitability this way.

If they continue in the short-term, they could need to set up new outlets, which would require additional investment to set up and stock the stores. This would damage profitability by putting a strain on resources. Some costs like a new distribution centre have already been accounted for, could raise sales and increase profitability. It depends on the success of the marketing needed to get their brand known to customers.

Option 1 Business to business (B2B) is where a company sells its products to another business e.g - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1

Worked Solution & Example Answer:Option 1 Business to business (B2B) is where a company sells its products to another business e.g - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1

Option 1

Option 2

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