Question

Jose Cuervo is a coffee farmer in Colombia. Not satisfied with the prices large coffee corporations offer to local buyers, he installs roasting and packing equipment and develops a website to sell his organic, shade grown coffee by the pound directly to consumers around the world. His production, roasting, and advertising costs are $5 per pound. Customers pay actual shipping fees for deliveries made directly to their addresses.

Mr. Cuervo wishes to expand his sales to organizations buying larger quantities of coffee for their cafeterias and break rooms. Though the prospect of selling larger orders of coffee to a smaller number of customers is attractive, Mr. Cuervo should also be aware that, relative to individual consumers, organizational customers typically

a. pay lower prices and demand tighter delivery schedules

b. buy exclusively from multinational suppliers

c. are more influenced by emotional (rather than rational) promotional messages

d. make individual rather than group buying decisions

Answer 1

The answer is (a). Organizational customers buy in bulk, and therefore have the bargaining power to negotiate lower prices. They also negotiate tighter delivery schedules with sellers.

(b) false - Buying exclusively from multinational suppliers is not a typical behavior. They would typically buy from suppliers that offer the best price for the desired quality, irrespective of whether the suppliers are domestic or multinational.

(c) false - organizational customers tend to take analytical, and result-oriented decisions. Hence,emotional promotional messages will not influence their decision

(d) false - organizational customers have the opportunity to collaborate in buying decisions and they will do so if it is beneficial in terms of price or quality or both