Evaluate ways for small businesses to compete through differentiation, service, promotion, niche targeting, quality, convenience and customer relationships.
Sources for use with Extract A Bee Hive Candles US-based business, Bee Hive Candles (BHC) produces candles made from 100% pure beeswax. All candles are handmade using beeswax from US bees. Jennifer Wesolowski started the business in 2000, using personal savings. She decided to change from making candles as a hobby to setting it up as a business. A wide range of candles are offered but by using 100% beeswax, all candles are environmentally friendly. Unlike typical paraffin candles, they are biodegradable and produce no harmful toxins. They burn for longer, meaning better value for money. Although still a small business, BHC is growing. This is due to increasing consumer awareness of environmental issues and positive feedback on social media platforms. Jennifer remains dedicated to making quality candles and offering outstanding customer service. Newsletters are emailed to existing customers to advise of new products and offers. BHC charges $9.95 to send its candles to customers all over the US but at the moment does not accept orders from outside the US. Prices of the candles range from $6.95 to over $100 for a large pack of candles. The best-selling product is the pillar candle, priced at $17.95. It is popular because of its relatively low price and burns for approximately 50 hours. Extract B Candle sales in the US – some figures • The US has the largest share of customers buying candles in the world. • In the US 35% of all candles are sold online and this is increasing. • Beeswax candles account for only 2% of all candle sales in the US market; this figure is increasing. • Paraffin candles are currently the most popular type of candle, with nearly 40% of the market. This is followed by soy wax, palm wax and beeswax.
Discuss whether BHC can successfully compete with larger candle making
businesses.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- The size of a business can affect the market share of competitors in a
market
- Large businesses can be very powerful, making it difficult for smaller
businesses to operate and attract customers
- As large businesses can benefit from economies of scale, they can
charge lower prices, making them more competitive than smaller rivals
like BHC
- Shipping costs may be cheaper when buying from a larger business,
again meaning that customers may prefer to buy from the larger
competitor
- BHC may not be able to cope with big orders, meaning it cannot satisfy
demand from some customers
- This could lead to large businesses increasing market share, at the
expense of BHC
- However, BHC produces candles made from 100% beeswax meaning it
offers a more specialised product (niche market)
- Therefore, customers may prefer to buy from a small business with a
unique product, particularly as beeswax candles account for only 2% of
all candle sales in the US market
- As BHC aims to provide outstanding customer service as well as quality
candles, it may be preferred by customers who value communication
and personal service more than price
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
Isolated elements of knowledge and understanding - recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2
3-5
Accurate knowledge and understanding.
Applied accurately to the business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s)
but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced and
unlikely to show the significance of competing arguments.
Level 3
6-8
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or
qualitative information, and shows an awareness of competing
arguments/factors.
Question
Assess the possible benefits for BHC of using labour-intensive production methods.
Indicative content