As mentioned previously, the typical guest spends between $8.00 and $15.00 per visit on beverages and food. Arianas profit is higher on beverage items and she strives to achieve a margin of 50% overall. Thus, on an $8.00 ticket, Arianas profit would be $4.00. Ground or whole bean coffee in 1-pound bags is $25.00, t-shirts are $15.00 and ceramic mugs are $12.00. Ariana can achieve a 50% margin on logo merchandise and 75% margin on packaged coffee. Since Ariana has such strong relationships with small growers and shares profit with the growers, she makes approximately $18.75 on each bag of coffee she sells. The high mark-up on coffee is also why Ariana is considering a wholesale model and the merits of developing coffee programs for other local businesses.

Ariana would like your assistance in identifying B2B market segments and determining the wholesale price(s) she should charge business-to-business customers for a coffee program. For example, New Roots Coffee has identified four B2B segments: coffee shops & cafes, specialty food & grocery, restaurants, and offices.

Answer the following questions and submit your assignment by the due date.

1. Identify ONE business-to-business target market segment Ariana should pursue and a brief discussion as to WHY this segment is most appropriate or best. Use some type of secondary research to estimate the number of businesses that currently exist in the market area that Ariana will serve in YOUR HOMETOWN. For example, if you suggest that Ariana offer 1-pound bags in retail stores (e.g. specialty/gift stores), define what type of retail outlets would be most appropriate and identify the number of entities that fit this description within your hometown. Note: It would be VERY difficult for Ariana to gain placement of her product in a major retail store chain such as Walmart, Target, Kroger.
2. Identify the wholesale cost that Ariana should sell the roasted coffee beans for 1, 5 or 10 pound bags of coffee depending upon your identification of the target market in question #1. Discuss how you determined your prices. [Note: if your market segment is a fine-dining restaurant and they will likely be purchasing bulk bags of 5 or 10 pound coffee to serve brewed coffee to their own patrons, you would determine prices of either the 5 or 10 pound bag.] Recognize that these business customers must be able to make a profit on their sales of the product as well.
3. Forecast the wholesale revenue that Ariana will likely achieve within the first year of pursuing a business-to-business strategy. You will need to make some assumptions about the number of accounts she can acquire and the estimated pounds of coffee each account would purchase per month. Identify your assumptions and show your calculations. Finally, calculate the gross profit that Ariana will earn on the wholesale coffee sales. Summarize this information in a table. [Please include both a discussion and summary table.]

For Question #3, I'm expecting some simple or basic math - see below:

Table Revenue Projection of Wholesale Coffee Business

Will your customers be purchasing 1 lb, 5 lb, 10 lb bags or a variety of each? Show your calculations.

Potential Accounts# of 1, 5 or 10 lb bags purchased per monthTotal Revenue (wholesale price of 1, 5 or 10 lb bag * quantity purchased

Profit per month

(Total revenue costs)

Annual Gross Profit

(12 months * profit per month)

Account #1 Account #2 etc. TotalTotal Quantity Sold per monthTotal Revenue per monthTotal profit per monthTotal profit per year

Note: In the retail setting, Ariana sells a 1 lb bag of coffee for $25 and earns $18.75 in profit. Thus, her costs on a 1 lb bag are $6.25. How much should Ariana charge her B2B accounts for the coffee considering that they will be selling to their end customers at perhaps $25 per pound too?

So, who are your wholesale customers, what size of coffee bag will they purchase from you, how much will you charge them, and how much do you think they would buy per month?

It's OK to "blue sky" things and make assumptions about the sales based on your knowledge of the market or personal experiences.