Contemporary Marketing 3rd Canadian Edition By Boone - Test Bank

Contemporary Marketing 3rd Canadian Edition By Boone – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 5—Business-to-Business (B2B) Marketing

 

MULTIPLE CHOICE

 

1. How does the purchasing process for business products differ from the purchasing process for consumer products?

a.	distribution channels for business products are significantly longer
b.	customer relationships for business products tend to be short term and transaction based
c.	personal selling plays a much larger role in business product markets
d.	customer service plays a smaller role in the distribution of business products

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

2. Why do marketing strategies designed to reach consumers differ from strategies designed to reach businesses?

a.	consumers expect a higher level of customer service than do businesses
b.	businesses respond better to advertising than do consumers
c.	consumers act in groups but business buyers act alone
d.	business buying often involves more technical issues

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   139

OBJ:   5-1                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Strategy

 

3. What do MOST businesses expect when they enter the marketplace to buy goods and services?

a.	to enjoy a high level of customer service
b.	to locate vendors through the Yellow Pages
c.	to find standard items that will fill their needs
d.	to make quick purchasing decisions

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

4. Which of the following statements best describes the business market compared to the consumer market?

a.	Customization tends to be less.
b.	Negotiations are shorter.
c.	Distribution channels are shorter.
d.	Customer relations are less enduring.

 

 

ANS:  C                    PTS:   1                    DIF:    3                    REF:   138

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

 

5. Which of the following is NOT included in the four segments of the B2B marketplace?

a.	the entertainment industry
b.	government
c.	the commercial market
d.	trade industries

 

 

ANS:  A                    PTS:   1                    DIF:    1                    REF:   138

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

6. What is the largest segment of the business market?

a.	trade industries
b.	institutions
c.	government organizations
d.	commercial markets

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

7. What is the name of the component of the business market that consists of individuals and firms that acquire goods and services to be used, directly or indirectly, in producing other goods and services?

a.	wholesaling and retailing
b.	government
c.	the commercial market
d.	an institution

 

 

ANS:  C                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

8. What do the trade industries consist of?

a.	manufacturers
b.	wholesalers and retailers
c.	farmers
d.	transportation

 

 

ANS:  B                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

9. Which of the following characteristics best describes the institution segment of a B2B market?

a.	It may have rigid purchasing procedures.
b.	It provides business services to the other members of the market.
c.	It tends to have greater financial resources than industrial customers.
d.	It is accountable to their clients and shareholders.

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   141

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

 

10. Why does the government segment of the B2B market MOST commonly buy products?

a.	to resell to the public
b.	to provide public benefits
c.	to acquire customized items
d.	to use domestic sources only

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

11. What market has the primary motivation of providing some form of public benefit when making a purchase?

a.	the industrial market
b.	the global market
c.	the government market
d.	the trade industries

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

12. Which of the following is NOT found in e-commerce serving the business market?

a.	private portals that allow customers access to products and vendors
b.	service pages accessed using passwords provided by B2B marketers
c.	online auctions where business goods may be purchased
d.	chat rooms dedicated to opinions of new products

 

 

ANS:  D                    PTS:   1                    DIF:    1                    REF:   141

OBJ:   5-1                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

13. Which of the following is NOT a commonly used basis for segmenting the business market?

a.	educational attainments of buyers
b.	customer type
c.	demographics using the size of the firm
d.	product end-use application

 

 

ANS:  A                    PTS:   1                    DIF:    3                    REF:   143

OBJ:   5-2                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

14. When the B2B market is segmented on the basis of product specifications issued by organizational buyers, what type of segmentation is it known as?

a.	customer-based segmentation
b.	profit-generating segmentation
c.	benefits segmentation
d.	engineering and design segmentation

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   143

OBJ:   5-2                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

 

15. Zardo Inc. divides its customers into the following categories: small business, large business, government, and not-for-profit institutions. Which type of segmentation is Zardo practising?

a.	end use
b.	customer type
c.	demographic
d.	purchase category

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   143

OBJ:   5-2                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

16. What is the system for grouping businesses that grew out of the North American Free Trade Agreement known as?

a.	the Standard Industrial Classification System
b.	the Industrial Data Recording System
c.	the Standard Industrial Census System
d.	the North American Industry Classification System

 

 

ANS:  D                    PTS:   1                    DIF:    3                    REF:   144

OBJ:   5-2                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

17. What type of segmentation are customer relationship management systems MOST useful in?

a.	end use
b.	demographic
c.	customer type
d.	purchase category

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   145

OBJ:   5-2                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

18. In the B2B marketplace, what type of segmentation is based on the precise way in which the business will use the product?

a.	segmentation by purchasing situation
b.	segmentation by customer type
c.	segmentation by end-use application
d.	segmentation by demographic characteristics

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   144

OBJ:   5-2                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

19. What is the basis for market segmentation for a manufacturer that produces glass for microwave-oven doors, shower enclosures, and patio tabletops?

a.	cost-plus considerations
b.	end-use application
c.	benefits offered
d.	design factors

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   144

OBJ:   5-2                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

20. Which of the following is NOT a characteristic that distinguishes B2B markets from consumer markets?

a.	Organizational markets are more geographically concentrated.
b.	More people exert influence on the organizational buying decision.
c.	The organizational market tends to have a greater number of buyers.
d.	Organizations often engage in multiple sourcing and vendor analysis.

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   145

OBJ:   5-3                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

21. Which of the following will generally NOT be affected by the location of a business supplier compared to its customers?

a.	end-use applications of products
b.	ability of the supplier to render better service
c.	supplier costs
d.	supplier parts inventories

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   145

OBJ:   5-3                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

22. Dell Computer purchases parts and resources for its computers from suppliers worldwide. What is this practice known as?

a.	outsourcing
b.	global sourcing
c.	joint demand
d.	derived demand

 

 

ANS:  B                    PTS:   1                    DIF:    1                    REF:   148

OBJ:   5-3                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model International Perspective

 

23. The demand for computer microprocessor chips is based on the demand for personal computers. What is this an example of?

a.	joint demand
b.	derived demand
c.	volatile demand
d.	demand variability

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

 

24. Cotton and polyester are used in the production of permanent press clothing. If the supply of cotton is reduced, there will be an immediate effect on the demand for polyester. What does this relationship represent?

a.	derived demand
b.	demand variability
c.	inventory adjustments
d.	joint demand

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

25. If the demand for product A stays constant regardless of the increase or decrease in demand for product B, what kind of demand is product A experiencing?

a.	derived
b.	joint
c.	volatile
d.	inelastic

 

 

ANS:  D                    PTS:   1                    DIF:    3                    REF:   149

OBJ:   5-3                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

26. What type of delivery reduces inventories to absolute minimum levels and requires vendors to deliver the items as they are needed in the production process?

a.	in-real-time (IRT) delivery
b.	just-in-time (JIT) delivery
c.	on-time (OT) delivery
d.	next-time-in (NTI) delivery

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   150

OBJ:   5-3                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

27. Which of the following questions would NOT likely be considered when deciding whether to manufacture needed parts and equipment in-house?

a.	Do we have the needed capability to manufacture this equipment?
b.	Can someone else do this job better than we can?
c.	Can someone else do this work cheaper than we can?
d.	Do we create new distribution systems by manufacturing this equipment?

 

 

ANS:  D                    PTS:   1                    DIF:    3                    REF:   152

OBJ:   5-4                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

 

28. Why is outsourcing often chosen as an alternative to making goods in-house or providing in-house services?

a.	outsourcing solves customer pressure for firms to diversify production
b.	outsourcing guarantees that the highest-quality product will be produced
c.	outsourcing solves security problems when proprietary technology is involved
d.	outsourcing allows firms to concentrate their resources on their core businesses

 

 

ANS:  D                    PTS:   1                    DIF:    3                    REF:   152

OBJ:   5-4                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

29. What is turning to outsiders to provide goods and services that were formerly produced or handled internally known as?

a.	outsourcing
b.	supplier sourcing
c.	supply-chain management
d.	external buying

 

 

ANS:  A                    PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

30. Which of the following is NOT a drawback of outsourcing?

a.	lower-than-anticipated cost savings
b.	concerns over proprietary technology
c.	poor customer service
d.	higher risk of losing touch with customers

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   152

OBJ:   5-4                 BLM:  Remember

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

31. How do unions generally view outsourcing?

a.	as a threat to union jobs
b.	as a bargaining tool for higher wages
c.	as a good idea to stay competitive and preserve jobs
d.	as a means of saving money and putting the savings into wages and benefits

 

 

ANS:  A                    PTS:   1                    DIF:    1                    REF:   153

OBJ:   5-4                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

32. Which of the following is NOT an important product factor in the buying decision?

a.	replacement cost
b.	purchase price
c.	operating and maintenance costs
d.	vendor service

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   153

OBJ:   5-5                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

33. The Fairchild Company decides to defer purchasing new production equipment for its factory due to slowing economic activity. What type of factor has influenced the company’s buying decision?

a.	a product-specific factor
b.	an environmental factor
c.	an organizational factor
d.	an interpersonal factor

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   153

OBJ:   5-5                 BLM:  Higher Order

NOT:  AACSB Analytic | TB&E Model Strategy

 

34. When a firm undertakes systems integration and designates a major trade industry supplier as the systems integrator, what is that supplier known as?

a.	the category captain
b.	the purchasing coordinator
c.	the division leader
d.	the supply-chain manager

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   154

OBJ:   5-5                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

35. What is an employee participating in when he/she recognizes that the use of a new product can potentially improve the company’s market performance?

a.	need or opportunity recognition
b.	identification of suppliers
c.	word-of-mouth exploration
d.	information search

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   155

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

36. What contributes to the need for more steps in the organizational buying process than the consumer buying process?

a.	the limited number of suppliers in the B2B marketplace
b.	the importance of integrating the responsibilities of the wholesalers or retailers
c.	interpersonal and environmental influences not seen in consumer buying decisions
d.	business purchasing introduces new complexities that do not affect consumers

 

 

ANS:  D                    PTS:   1                    DIF:    3                    REF:   155

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

37. What is the price negotiation process commonly experienced by government and institutional entities known as?

a.	competitive bidding
b.	decentralized buying
c.	collective bargaining
d.	systems integration

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   156

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Pricing

 

38. Once a search for suppliers is completed and the company makes the suppliers aware of its needs, what will the company do next?

a.	evaluate proposals
b.	notify the distribution channels of the new product introduction
c.	acquire and analyze proposals
d.	select an order routine

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   156

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

39. What step in the business buying process involves establishing specifications for a required product?

a.	recognizing a need
b.	describing product characteristics
c.	qualifying potential vendors
d.	selecting an order routine

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   156

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

40. Adam, a purchasing agent for the American Heart Association, has made a list of suppliers that may be considered for payroll services. What step in the organizational buying process is Adam currently at?

a.	recognizing a problem or opportunity
b.	determining the characteristics and quantity of the needed product
c.	describing the characteristics of the needed product
d.	searching for and qualifying potential sources

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   156

OBJ:   5-6                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

41. What step in the organizational buying process would involve procedures that measure characteristics such as a supplier’s reliability, price, and order accuracy?

a.	searching for potential sources
b.	analyzing proposals
c.	recognizing a need
d.	evaluating proposals and selecting suppliers

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   155

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

42. What is the final step in the business buying process?

a.	selecting an order routine
b.	obtaining feedback and evaluating performance
c.	evaluating proposals and selecting suppliers
d.	acquiring and analyzing proposals

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   156

OBJ:   5-6                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

43. What is a unique purchase situation in the business market called that requires considerable effort on the decision maker’s part?

a.	a straight rebuy
b.	a modified rebuy
c.	new-task buying
d.	a selective rebuy

 

 

ANS:  C                    PTS:   1                    DIF:    1                    REF:   158

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

44. What kind of buying situation is it when a business purchaser accepts the terms of sale of an item that has performed satisfactorily in the past and requires no new information to decide to purchase it again?

a.	straight rebuy
b.	service purchase
c.	contract purchase
d.	modified rebuy

 

 

ANS:  A                    PTS:   1                    DIF:    1                    REF:   157

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

45. What is often the cause when business purchasers shift from straight rebuy to modified rebuy behaviour?

a.	a change in the accelerator principle
b.	the routine buying format being outdated
c.	corporate expansion
d.	a deterioration in supplier service or delivery

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

46. What is a buying situation in which business purchasers are willing to re-evaluate their available options known as?

a.	a straight rebuy
b.	a modified rebuy
c.	new-task buying
d.	routinized response behaviour

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

 

47. What term refers to the business buying situation in which a company buys component parts never before purchased?

a.	complex rebuying
b.	new-task buying
c.	technical buying
d.	modified rebuying

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

48. What is the practice of buying from suppliers that are also customers known as?

a.	a modified rebuy
b.	a straight rebuy
c.	vendor analysis
d.	reciprocity

 

 

ANS:  D                    PTS:   1                    DIF:    1                    REF:   158

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

49. What is the ongoing evaluation of a supplier’s performance in categories such as price, Electronic Data Interchange capability, delivery times, and attention to special requests known as?

a.	product-substitution analysis
b.	component redesign
c.	vendor analysis
d.	costs-benefits analysis

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

50. Reciprocity has been MOST common in industries featuring what type of products?

a.	homogeneous products with different prices
b.	diverse products with different prices
c.	diverse products with similar prices
d.	homogeneous products with similar prices

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

51. What does a company’s buying centre encompass?

a.	a representative from each department within an organization
b.	a gatekeeper and a buyer
c.	everyone who is involved in any aspect of the buying process
d.	a top-notch buying department

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

 

52. In a business buying centre situation, who are the people that sometimes initially request the product, utilize the purchased product, and may assist in developing the product specifications?

a.	users
b.	consumers
c.	influencers
d.	gatekeepers

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

53. What is the function performed by the gatekeeper in the company buying centre?

a.	to supply information to guide evaluation of alternatives
b.	to select a supplier and implement the procedures for securing the goods and services
c.	to choose which goods and services will actually be bought
d.	to control the information that all buying centre members will review

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

54. Who controls the information that enters the company’s buying centre?

a.	the buyer
b.	the influencer
c.	the gatekeeper
d.	the user

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

55. Which of the following is one type of buying centre role?

a.	the influencer, who supplies information to guide evaluation of alternatives
b.	the contractor, who has the formal authority to select a supplier
c.	the distributor, who controls the information that all buying centre members will review
d.	the technician, who presents technical requirements

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

56. The buying centre concept explains how groups of people participate informally in business purchase decisions. What else does the buying centre concept explain?

a.	the methods to break through group perceptions
b.	the roles group members play in making the decisions
c.	the formation dynamics of new groups of decision makers
d.	the way family units operate as buying centres

 

 

ANS:  B                    PTS:   1                    DIF:    3                    REF:   159

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

57. Janet works in distribution management at a winery and has formal authority to select a bottle supplier, although many people have provided her with input regarding the decision. What role does Janet play in the buying centre?

a.	the influencer
b.	the gatekeeper
c.	the buyer
d.	the user

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   160

OBJ:   5-8                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

58. Which of the following is NOT a challenge ordinarily encountered in marketing to government entities?

a.	handling retail sales contracts using credit cards
b.	fixed-price contracts based on a bid process
c.	cost-reimbursement contracts providing for allowable costs and profits
d.	a standing offer

 

 

ANS:  A                    PTS:   1                    DIF:    2                    REF:   161

OBJ:   5-9                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

59. Who does much of the purchasing for the federal government of Canada?

a.	the City of Toronto
b.	Public Works and Government Services Canada
c.	MERX
d.	independent merchandisers

 

 

ANS:  B                    PTS:   1                    DIF:    1                    REF:   161

OBJ:   5-9                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Product

 

60. How are institutional markets characterized?

a.	by similar buying practices
b.	by widely diverse buying practices
c.	by few group purchasing arrangements
d.	by little negotiation to secure volume discounts

 

 

ANS:  B                    PTS:   1                    DIF:    2                    REF:   162

OBJ:   5-9                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Customer

 

61. Which of the following types of organizations would NOT ordinarily be considered a part of the institutional market?

a.	public libraries
b.	department stores
c.	educational foundations
d.	churches

 

 

ANS:  B                    PTS:   1                    DIF:    1                    REF:   162

OBJ:   5-9                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

62. What do many institutions choose to do in order to receive quantity discounts on needed purchases?

a.	purchase products they do not need
b.	put off purchases for as long as possible
c.	join cooperative associations to pool purchases
d.	rely on their independence and future growth

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   162

OBJ:   5-9                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

63. A car tire supplier is noticing an 5% increase in sales in tires it sells to car manufacturers. What is this an example of?

a.	joint demand
b.	derived demand
c.	volatile demand
d.	demand variability

 

 

ANS:  B                    PTS:   1                    DIF:    3                    REF:   149

OBJ:   5-3                 BLM:  Higher Order

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

64. A rail service company has a special “2 for 1 seat sale” and requires an additional 100 railcars to meet the forecasted demand in the next 10 months. After the 10 months, demand is anticipated to fall to previous levels.  Which of the following is the MOST LIKELY option for the company to choose?

a.	Manufacturing the product in-house
b.	Purchasing the product from an outside vendor
c.	Leasing the product
d.	Outsourcing

 

 

ANS:  C                    PTS:   1                    DIF:    3                    REF:   151-152

OBJ:   5-4                 BLM:  Higher Order

NOT:  AACSB Analytic | TB&E Model Marketing Plan

 

65. ACME Inc., a small and growing computer animation business, requires laptops for 10 new employees.  Which of the following is the MOST LIKELY option for the company to choose?

a.	Manufacturing the product in-house
b.	Purchasing the product from an outside vendor
c.	Leasing the product
d.	Outsourcing

 

 

ANS:  C                    PTS:   1                    DIF:    2                    REF:   151

OBJ:   5-4                 BLM:  Higher Order

NOT:  AACSB Analytic | TB&E Model Marketing Plan

 

 

66. Which of the following BEST describes the challenge of identifying participants in international buying centres, compared to domestic buying centres?

a.	Quite easier to identify
b.	Slightly easier to identify
c.	Same level of difficulty to identify
d.	More difficult to identify

 

 

ANS:  D                    PTS:   1                    DIF:    2                    REF:   160

OBJ:   5-8                 BLM:  Remember     NOT:  AACSB Analytic | TB&E Model Marketing Plan

 

TRUE/FALSE

 

1. The B2B marketplace is significantly larger in sales dollars and volume of transactions than the consumer marketplace.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   138

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

2. B2B relationships tend to last longer than those in the consumer market.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   138

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

3. Organizational buyers tend to purchase standardized products, unlike the consumer market in which customization is more prevalent.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   138

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

4. Business needs are so varied that businesses that sell to other businesses must be ready to customize products when necessary.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

5. Personal selling and customer service are more important in business markets than in consumer markets.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   138

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

6. Due to the complexity of the buying process and potential need for technical assistance, the distribution channels in the B2B marketplace tend to be longer than those in the consumer market.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Distribution

 

 

7. The biggest distinction between B2B marketing and consumer marketing is the lack of advertising and visibility in the marketplace the business company services.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Promotion

 

8. Personal selling is less important in business markets than in consumer markets because of the longer distribution channels involved.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   138

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

9. The primary purchasing need of an organization is meeting the demands of its own customers.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   139

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

10. Purchasing decisions in the B2B sectors are more complex and often include many levels of decision making.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   139

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

11. Since Home Depot markets to consumers and business customers, the company would MOST likely use television and print media to reach both marketplaces.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   139

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

12. A marketing strategy comprising of trade advertising, participation in trade shows, representation in trade organizations, and customer trips would MOST be found in B2B marketplace.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

13. Members of the trade industries acquire goods and services primarily for use in production.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

14. The commercial market consists of retailers and wholesalers that purchase finished goods primarily for resale to other businesses and to the consumer.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

 

15. The term reseller is often used to describe wholesalers and retailers that make up membership of the trade industries.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Distribution

 

16. The four categories that define the business market are the commercial market, producers, institutions, and government agencies.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   140-141

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

17. The commercial market purchases products for use directly and indirectly in the manufacturing of other products.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

18. The trade industries include manufacturers, farmers, and other resource-producing industries.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

19. When Cannondale purchases aluminum for use in its bicycle frames, the company is participating in the commercial market.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

20. Glasco & Sons purchases compounded motor oils in a variety of grades from a nearby oil refinery. Technicians make slight modifications to the oil and package it in containers. Grocery and auto parts retailers then contract with Glasco to have the containers labelled with their store names. Once they reach store shelves, the products are ultimately sold to the consumer. For this reason, Glasco is considered to be a consumer products company.

 

ANS:  F                    PTS:   1                    DIF:    3                    REF:   140

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

21. Even though Office Depot sells products directly to consumers, its major customers are other businesses. Therefore, Office Depot is considered part of the commercial market.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

22. Electrical, plumbing, construction, and farming companies are considered part of the trade industries.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

23. Organizations such as hospitals, universities, and museums comprise the commercial segment of the business market.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

24. Because of its size, the government represents the largest segment of the B2B marketplace.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

25. The majority of Internet sales are B2B transactions.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   141

OBJ:   5-1                 NOT:  AACSB Technology | TB&E Model Product

 

26. The Internet is intended to replace, not just enhance, personal selling and the traditional relationships between businesses.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   141

OBJ:   5-1                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

27. Companies that sell to businesses in foreign markets must consider the possibility of variations in government regulations and cultural practices.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   141

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Product

 

28. Organizational size is regarded as a demographic basis for segmenting business customers.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   143

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

29. The NAICS classification system provides a useful tool for segmenting B2B markets by customer type.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   144

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

30. With the implementation of the NAFTA accord, the NAICS system was developed to subdivide the business marketplace into detailed segments.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   144

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

31. An effective strategy for organizational marketing is to group prospective customers according to type, such as manufacturers, service providers, and government agencies.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   143

OBJ:   5-2                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

32. The NAICS codes provide information about businesses that allows users to compare business sectors among the member nations of NAFTA.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   144

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

33. Some companies segment markets into categories such as small business, large business, consumers, educational institutions, and government. This is an example of end-use segmentation.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   144

OBJ:   5-2                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

34. End-use classification can help smaller marketers locate potential target markets.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   144

OBJ:   5-2                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

35. Segmentation of B2B customers based on the stage of the relationship between the supplier and a particular customer is the part of segmentation called end-use application.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   144

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

36. Segmenting businesses by purchasing categories is particularly beneficial when an organization allows decentralized buying.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   145

OBJ:   5-2                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

37. Geographic concentration of an industry has no effect on the location decisions of the industry’s suppliers.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   145

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Customer

 

38. The Canadian automobile assembly industry is concentrated in southwestern Ontario. Automotive parts manufacturers and suppliers have established sales offices and distribution centres in southwestern Ontario to service this industry. This shows that these businesses understand the importance of segmenting a customer based on demographics.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   145

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

 

39. The Internet is changing the buying process of many customers, including the federal government, making it less likely that suppliers will need to be geographically close to their customers.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   141

OBJ:   5-1                 NOT:  AACSB Technology | TB&E Model Customer

 

40. Business markets tend to have more buyers and suppliers than are found in the consumer marketplace.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   145

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Customer

 

41. Purchase decision making in B2B is more formal and professional than in the consumer market.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   141

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

42. Global sourcing involves contracting to purchase goods and services from suppliers worldwide.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   148

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model International Perspective

 

43. If Product A is used primarily to manufacture Product B, then the demand for Product A is derived from the demand for Product B.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

44. Companies that sell products affected by derived demand can avoid the negative effects of downturns by diversifying the markets in which they sell their products.

 

ANS:  T                    PTS:   1                    DIF:    3                    REF:   149

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

45. As demand for air travel increases, the demand for commercial aircraft will also increase. This is an example of derived demand.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

46. Organizational buyers basically purchase two categories of products: capital items and expense items.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

47. Capital purchases are expended quickly, whereas expense items are more expensive and last longer.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

48. The difference between capital and expense items is not only the size and length of use, but also the way the accounting department handles production costs.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

49. Volatile demand means that even slight shifts or variations in the market can have an effect on sales.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

50. If the consumer demand for dishwashers increases, dishwasher manufacturers will buy more raw materials, components, and supplies as a result of the link between the consumer market and the industrial market. This linkage is called joint demand.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

51. Assume the price of jet fuel rises, but airlines continue to purchase the same amount of fuel in order to meet operational needs. As a result, the demand for jet fuel is said to be inelastic.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   149

OBJ:   5-3                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

52. JIT II inventory systems may require suppliers to have on-site representatives at their customers’ production facility.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   150

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

53. Lower-than-anticipated cost savings is one potential downside to offshoring.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 NOT:  AACSB Analytic | TB&E Model Product

 

54. Outsourcing and offshoring can reduce a company’s ability to respond quickly to the marketplace.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 NOT:  AACSB Analytic | TB&E Model Product

 

 

55. The development and customer service support for computer software is rarely sent offshore due to language differences.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 NOT:  AACSB Analytic | TB&E International Perspective

 

56. India has become a major supplier of customer service labour, while China offers inexpensive manufacturing labour.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 NOT:  AACSB Analytic | TB&E Model Product

 

57. Organizational buying decisions are affected by many factors, including economic, political, regulatory, competitive, and technological conditions.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   153

OBJ:   5-5                 NOT:  AACSB Analytic | TB&E Model Product

 

58. Successful organizational marketers understand their customers’ organizational structures, policies, and purchasing systems.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   153

OBJ:   5-5                 NOT:  AACSB Analytic | TB&E Model Product

 

59. Personal and interpersonal influences affect consumer purchasing decisions, NOT B2B decisions.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   154

OBJ:   5-5                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

60. When selling to organizational customers, sales representatives need to be able to interact effectively with employees of the various departments involved in the purchase decision.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   154

OBJ:   5-5                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

61. Centralized purchasing units may contract with only a few suppliers to service multiple locations because they lack interest in long-term relationship building and place greater reliance on immediate results.

 

ANS:  F                    PTS:   1                    DIF:    3                    REF:   154

OBJ:   5-5                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

62. Organizational purchasing decisions tend to be standardized, resulting in the same procedures being used for both capital and expense items.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   141

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Product

 

 

63. Purchase decisions for capital items vary significantly from those of expense items.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   154

OBJ:   5-5                 NOT:  AACSB Analytic | TB&E Model Product

 

64. Merchandiser is the common designation for a purchasing agent in wholesale and retail trades.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   154

OBJ:   5-5                 NOT:  AACSB Analytic | TB&E Model Product

 

65. Business purchase decisions begin when the recognition of problems, needs, or opportunities activates the buying process.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   155

OBJ:   5-6                 NOT:  AACSB Analytic | TB&E Model Product

 

66. The organizational buying process is more systematic, and thus involves fewer steps than the consumer buying process.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   155

OBJ:   5-6                 NOT:  AACSB Analytic | TB&E Model Product

 

67. A firm deciding to purchase more energy-efficient machines in response to rising fuel prices illustrates the first step in the business buying process.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   155

OBJ:   5-6                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

68. In some cases, the purchaser and the supplier must work hand in hand to design and manufacture the exact product to fit a particular need.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Product

 

69. Locating and qualifying sources for business products may involve examining the provisions and programs of many different vendors.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   156

OBJ:   5-6                 NOT:  AACSB Analytic | TB&E Model Product

 

70. A straight rebuy is to the business market what a routinized purchase is to the consumer market.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   157

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

 

71. A company that believes in “quality, service, and reliability” will have a better chance of experiencing straight rebuys from its customers.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

72. Extended problem-solving behaviour in the consumer market is the equivalent of a modified rebuy in the B2B marketplace.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

73. New-task buying for businesses is comparable to the extended problem solving that takes place in consumer markets.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

74. The purchasing decision can move to a modified rebuy status with either the introduction of new products or poor performance by the original supplier.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   157-158

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

75. When a business purchases a new product that requires considerable effort on the decision maker’s part, it is called new-task buying.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Product

 

76. The ongoing evaluation of a supplier’s performance on such criteria as price, Electronic Data Interchange capability, delivery times, and attention to special requests is called vendor analysis.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

77. Value analysis is a continuous process of evaluating the cost of doing business with a particular buying unit. Suppliers must ensure they are receiving adequate benefits from the time invested in a customer.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

78. In the B2B market, the practice of buying from suppliers that are also customers is called reverse reciprocity.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

79. Reciprocal arrangements are common in industries in which products are homogeneous and prices are similar, such as the chemical, paint, rubber, and steel industries.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   158

OBJ:   5-7                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

80. The buying centre is a formal part of a firm’s organization structure.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-8                 NOT:  AACSB Analytic | TB&E Model Customer

 

81. Gatekeepers in the buying centre affect the buying decision by determining which individuals within the organization will be part of the buying process.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-8                 NOT:  AACSB Analytic | TB&E Model Customer

 

82. In the B2B purchasing process, the user, the influencer, and the decider might all be the same individual.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

83. Influencers in the purchasing decision can be both internal and external to the organization.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   159

OBJ:   5-8                 NOT:  AACSB Analytic | TB&E Model Customer

 

84. The participants in international buying centres are generally easier to identify than those in domestic buying centres.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   160

OBJ:   5-8                 NOT:  AACSB Analytic | TB&E Model International Perspective

 

85. Most of the purchasing for the Canadian federal government is done through the office of Public Works and Government Services Canada.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   161

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Product

 

86. The government buys products under two basic types of contracts: fixed-price contracts and cost-reimbursement contracts.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   161

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Product

 

 

87. In respect to government purchases, while there is some variability between departments, purchasing procedures are largely determined by the dollar size of the individual purchase.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   161

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Product

 

88. It is not uncommon for organizations in institutional markets to join cooperative associations to pool purchases in order to obtain quantity discounts.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   162

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Product

 

89. MERX is a privately owned e-tendering service that is used by the federal government, but not by provincial governments.

 

ANS:  F                    PTS:   1                    DIF:    1                    REF:   161

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Product

 

90. Institutional buyers pose a challenge for marketers because of the diversity of their purchasing philosophies; B2B marketers must be flexible in order to meet the needs of the institutions.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   162

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E International Perspective

 

91. International vendors must consider local economic conditions, geographic characteristics, and legal restrictions in their assessment of marketing opportunities.

 

ANS:  T                    PTS:   1                    DIF:    2                    REF:   163

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Customer

 

92. Maintaining a local presence, especially in Asian markets, is NOT advisable until the marketer’s organization has achieved a dominant share of the market.

 

ANS:  F                    PTS:   1                    DIF:    2                    REF:   162

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Customer

 

93. To sell successfully in international markets, business marketers must consider buyers’ attitudes and cultural patterns within areas where they operate.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   162

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E International Perspective

 

94. Restoring worn-out products to like-new condition is known as remanufacturing.

 

ANS:  T                    PTS:   1                    DIF:    1                    REF:   163

OBJ:   5-9                 NOT:  AACSB Analytic | TB&E Model Customer

 

 

ESSAY

 

1. Define B2B marketing. How does it compare to the consumer marketplace in terms of size and transaction volume?

 

ANS:

B2B is defined as business-to-business marketing and describes a marketplace that dwarfs the consumer marketplace in terms of dollar sales and transaction volume. B2B marketing involves the sale and purchase of products used directly or indirectly in the manufacture of other products for resale, or for use in providing services to customers.

 

PTS:   1                    DIF:    2                    REF:   138                OBJ:   5-1

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

2. Describe some of the differences between B2B marketing and consumer product marketing.

 

ANS:

 

1. Consumer purchase decisions are usually made by one person. Organizational purchases often take longer, have more decision makers involved, and can follow rigid purchasing procedures.
2. Business products tend to be more technical and require a higher level of customer service than consumer products. They may also have to conform to strict specifications.
3. Businesses often require non-standard products for which prices and terms must be negotiated. Consumers usually purchase “off the shelf.”
4. Organizations usually buy in larger quantities than consumers. Consumer product companies tend to advertise more, especially on television and in print media. Businesses use trade publications, conventions, and peer organizations to advertise.
5. Business channels are usually short and direct due to the quantities and complexity of the products involved. Consumer channels tend to be longer but less technical.
6. Business buyers expect their relationship with a vendor to be long term and involve a great deal of customer service. The same is not always true of consumers.

 

PTS:   1                    DIF:    3                    REF:   139                OBJ:   5-1

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

3. Identify and describe the four categories of business markets.

 

ANS:

 

1. Commercial market—individuals and firms that acquire goods to be used directly or indirectly in producing other goods and services
2. Trade industries—retailers and wholesalers that purchase goods for resale to others
3. Government organizations—all levels (as well as foreign), that purchase a wide variety of items for use in providing public benefits
4. Institutions—hospitals, universities, museums, and other not-for-profit groups

PTS:   1                    DIF:    2                    REF:   140-141         OBJ:   5-1

NOT:  AACSB Analytic | TB&E Model Customer

 

4. What is the NAICS?

 

ANS:

The NAICS (North American Industrial Classification System) is used by NAFTA countries to categorize the business marketplace into detailed market segments. The NAICS is a six-digit classification system that not only allows uniform identification among countries, but also provides a flexible sixth digit that each country can use to track its own business activity. Additionally, new industries have been added to the identification process.

 

PTS:   1                    DIF:    2                    REF:   144                OBJ:   5-2

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

5. Assume a firm sells similar products to different types of organizational customers. Which type of segmentation would be MOST suitable?

 

ANS:

Customer segmentation divides a B2B market into homogeneous groups based on product specifications for each buyer. This type of segmentation would probably make the most sense for a firm that sells similar products to a variety of customers.

 

PTS:   1                    DIF:    2                    REF:   143                OBJ:   5-2

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

6. Identify and describe the major approaches to segmenting the organizational market.

 

ANS:

The four MOST commonly used approaches to segmenting the organizational market are

 

 

1. Demographic segmentation—grouping potential customers based on location (country, region, province, city) or organization size (sales, number of employees, number of locations).
2. Segmentation by customer type—dividing the market based on whether customers are manufacturers, service providers, government agencies, or members of the trade industries, or on the basis of their industrial classification (NAICS). This may be done according to buyers’ product specifications. In such cases, it is called customer-based segmentation. This is often used in the business market because business users tend to have more precise product specifications than ultimate consumers.
3. End-use application segmentation—segmentation based on the precise way in which the industrial purchaser will use the product.
4. Segmenting by purchasing situation—the market is broken down on the basis of how firms structure their purchasing functions or, alternatively, on the basis of the buying situation for a specific purchase.

 

PTS:   1                    DIF:    3                    REF:   143-144         OBJ:   5-2

NOT:  AACSB Analytic | TB&E Model Customer

 

 

7. List four characteristics that differentiate the B2B market from the consumer market.

 

ANS:

There are four major differences between the B2B and consumer markets:

 

 

1. The B2B market is more concentrated geographically (though the Internet is reducing that concentration somewhat).
2. The business market features fewer buyers.
3. The purchase decision process is more complicated and involves more steps in the B2B market.
4. Buyer-seller relationships are more complicated and require superior communications among organizations’ personnel.

 

PTS:   1                    DIF:    2                    REF:   145-146         OBJ:   5-3

NOT:  AACSB Analytic | TB&E Model Customer

 

8. Discuss the demand characteristics that distinguish business markets from consumer markets.

 

ANS:

a.	Derived demand—the linkage between demand for consumer products and the impact on demand for business products (business product demand is derived from consumer product demand).
b.	Volatile demand—derived demand in the business market creates large shifts in demand for business products associated with smaller changes in consumer demand; the disproportionate nature of the change is known as the accelerator principle.
c.	Joint demand—demand for one industrial product moves jointly with demand for another industrial product that is necessary for use of the first item.
d.	Inelastic demand is the fact that demand in an industry stays relatively constant and does not change significantly, even in the face of increasing supply costs.
e.	Inventory adjustments and changes in inventory policies can impact business demand. The just-in-time inventory system and its developments have moved the risk in manufacturing up the channel of distribution, affecting the relationship between customers and suppliers profoundly.

 

 

PTS:   1                    DIF:    3                    REF:   149-150         OBJ:   5-3

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

 

9. Just-in-time (JIT) inventory practices are effective in boosting efficiency and cutting the cost of holding large inventories. As a result of the widespread use of this process, what changes has the B2B marketplace experienced?

 

ANS:

 

1. reduction in the number of suppliers used by companies practising JIT
2. supplier representatives working onsite to facilitate the JIT process
3. increased use of Electonic Data Interchange and private web portals that suppliers and customers can access to facilitate the JIT process

 

PTS:   1                    DIF:    2                    REF:   149-150         OBJ:   5-3

NOT:  AACSB Analytic | TB&E Model Product

 

10. Discuss the make, buy, or lease decision for industrial organizations.

 

ANS:

Businesses must decide the best way to acquire a product for use. They evaluate the options of making it themselves, purchasing it, or leasing it. In deciding whether or not to make the product, organizations must decide if they have the capability to make it efficiently and if it makes good use of company resources to commit the necessary equipment, staff, and supplies to producing the product.

 

The leasing decision is another alternative to buying a product and allows organizations the flexibility to upgrade or lease on an “as-needed” basis, while allowing organizations financial flexibility by spreading out costs, instead of purchasing products and paying out larger lump sums. Purchasing is usually cheaper than leasing and may have some accounting advantages.

 

PTS:   1                    DIF:    3                    REF:   151                OBJ:   5-4

NOT:  AACSB Analytic | TB&E Model Product

 

11. What is outsourcing? Why do firms outsource production, and what are some potential drawbacks of outsourcing?

 

ANS:

Outsourcing is the use of outside vendors to produce goods and services formerly produced in-house. Outsourcing is on the rise because firms need to reduce costs to remain competitive, and outsourcing allows firms to concentrate resources of core businesses. Outsourcing can be a smart strategy if a company can find a vendor that provides high-quality products at a lower cost.

 

On the other hand, the cost savings from outsourcing have been less than expected in many cases. Moreover, there are security concerns involving proprietary technology. Outsourcing may also reduce a company’s ability to respond quickly to marketplace changes and cause a company to lose touch with customers. Finally, outsourcing can have a negative impact on employee morale and the company’s relationship with unions.

 

PTS:   1                    DIF:    2                    REF:   152-153         OBJ:   5-4

NOT:  AACSB Reflective Thinking | TB&E Model Product

 

12. What is the difference between offshoring and nearshoring? Discuss some offshoring trends occurring in the global marketplace today.

 

ANS:

Offshoring is the movement of domestic jobs to lower-cost overseas locations. Nearshoring is a form of offshoring in which the jobs are moved to geographic locations as close to the domestic market as possible. Trends in offshoring include the transfer of development of software, financial services, and customer services to India. Manufacturing operations are sent to China, a country that wishes to expand into some areas now held by Indians. Eastern Europe offers a labour source for many European countries, and American firms are also recognizing the educated and talented labour pool in eastern Europe.

 

PTS:   1                    DIF:    3                    REF:   152-153         OBJ:   5-4

NOT:  AACSB Reflective Thinking | TB&E Model International Perspective

 

13. What distinguishes the business buying process from the consumer buying process? What do B2B marketers need to understand about organizational buying behaviour?

 

ANS:

The business buying process is more complex than the consumer decision process. Business buying takes place within a formal organization’s budget, cost, and profit considerations. Furthermore, B2B and institutional buying decisions usually involve many people with complex interactions among individual and organizational goals. To understand organizational buying behaviour, business marketers need to know factors regarding the influence on the purchase decision process, the stages in the organizational buying model, types of business buying decisions, and techniques for purchase decision analysis.

 

PTS:   1                    DIF:    3                    REF:   153                OBJ:   5-5

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

14. What factors influence business buying decisions?

 

ANS:

B2B buying decisions react to various influences, some external to the firm and others related to internal structure and personnel. In addition to product-specific factors such as price, installation, operating costs, and vendor services, companies must consider broader environmental, organizational, and interpersonal influences.

 

PTS:   1                    DIF:    2                    REF:   153-154         OBJ:   5-5

NOT:  AACSB Analytic | TB&E Model Customer

 

 

15. What is the role of a professional buyer?

 

ANS:

Many large organizations attempt to make their purchases through systematic procedures by employing professional buyers. In the trade industries, these buyers, often referred to as merchandisers, are responsible for securing needed products at the best possible prices. A firm’s purchasing or merchandising unit devotes all of its time and effort in determining needs, locating and evaluating alternative suppliers, and making purchase decisions.

 

PTS:   1                    DIF:    2                    REF:   154                OBJ:   5-5

NOT:  AACSB Analytic | TB&E Model Customer

 

16. List the eight stages of the buying process for businesses.

 

ANS:

 

1. Anticipate or recognize a problem/need/opportunity and a general solution.
2. Determine the characteristics and quality of the needed good or service.
3. Describe the characteristics and quantity of the needed good or service.
4. Search for and qualify potential sources.
5. Acquire and analyze proposals.
6. Evaluate proposals and select supplier(s).
7. Select an order routine.
8. Obtain feedback and evaluate performance.

 

PTS:   1                    DIF:    2                    REF:   155-156         OBJ:   5-6

NOT:  AACSB Analytic | TB&E Model Customer

 

17. In addition to price, what other factors are important in the final purchasing decision?

 

ANS:

Pricing, although important, is not the only variable that purchasers consider. Other terms of sale, such as delivery, payment options, quantity discounts, and availability are also important. Technical support and installation needs can be critical determinants of the final sale. Relationship factors, including trust, reliability, and history of product quality have a significant impact on which supplier will be chosen.

 

PTS:   1                    DIF:    2                    REF:   156                OBJ:   5-6

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

 

18. Describe the three organizational buying situations. How do they correlate to the purchasing decisions of consumers?

 

ANS:

The purchasing situations ordinarily found in the organizational market include

 

1. Straight rebuy—a recurring purchase decision in which an item has performed satisfactorily and is repurchased by a customer without much analysis; this behaviour is similar to routinized buying in the consumer market
2. Modified rebuy—a situation in which purchasers are willing to re-evaluate their available options; consumers have a similar process called limited problem solving
3. New-task buying—first-time or unique purchase situations that require considerable effort on the decision maker’s part; this process closely resembles extended problem solving in the consumer market

 

PTS:   1                    DIF:    3                    REF:   157-158         OBJ:   5-7

NOT:  AACSB Reflective Thinking | TB&E Model Customer

 

19. Explain the difference between value analysis and vendor analysis.

 

ANS:

Value analysis is the evaluation of product attributes, and vector analysis is the evaluation of the customer-supplier relationship. Value analysis is the systematic study of the components of a purchase to determine the most cost-effective approach. Vendor analysis is an assessment of supplier performance in areas such as price, product quality, back orders, timely delivery, and attention to special requests.

 

PTS:   1                    DIF:    2                    REF:   159                OBJ:   5-7

NOT:  AACSB Analytic | TB&E Model Customer

 

20. Identify and describe the five roles that buying centre participants contribute to the organizational purchasing process.

 

ANS:

 

1. Users are the people who will actually use the purchased product or service.
2. Gatekeepers are those who control the information to be reviewed by other buying centre members. They may choose to allow information in or keep it out.
3. Influencers are the buying centre members who affect the group decision by supplying information for the evaluation of alternatives or by setting specifications.
4. Deciders are those who actually make the buying decision, even though they may not have the formal authority to perform the buying transaction.
5. Buyers have the formal authority to choose the supplier and implement the buying procedures to obtain the product or service.

 

PTS:   1                    DIF:    3                    REF:   159-160         OBJ:   5-8

NOT:  AACSB Analytic | TB&E Model Customer

 

 

21. Describe the unique challenges of selling to government markets.

 

ANS:

	Government purchases usually involve dozens of interested parties who specify, legislate, evaluate, or use the products or services being purchased, but need not be government employees themselves.
	Contract guidelines make selling to the government more bureaucratic. Bids are required to obtain contracts. Contracts are generally either fixed-price (firm price is established before the contract is awarded) or cost-reimbursement (vendor is reimbursed for allowable costs incurred while fulfilling contract terms).

 

 

PTS:   1                    DIF:    3                    REF:   160-161         OBJ:   5-9

NOT:  AACSB Analytic | TB&E Model Customer

 

 

MATCHING

 

Match each item to the statement or sentence listed below.

a.	commercial market
b.	trade industries
c.	market segmentation
d.	customer-based segmentation
e.	end-use segmentation
f.	global sourcing
g.	joint demand
h.	inelastic demand
i.	outsourcing
j.	value analysis
k.	vendor analysis
l.	buying centre
m.	reciprocity
n.	gatekeeper
o.	modified rebuy

 

 

1. The person who controls the information all members of a buying centre will review is a(n) _____.

 

2. The _____ consists of individuals and firms that acquire products used to support the production of other products.

 

3. is the practice of buying from suppliers who are also customers.

 

4. consists of retailers and wholesalers who purchase products for resale to others.

 

5. A(n) _____ comprises participants in an organizational buying action.

 

6. By applying _____ concepts to groups of business customers, marketers can develop a strategy that best suits the needs of those customers.

 

7. The assessment of supplier performance is called _____.

 

8. is the process of dividing a B2B market into homogeneous groups based on product specifications.

 

9. is the systematic study of the components of a purchase to determine the most cost-effective approach.

 

10. Dividing a B2B market based on how customers will use a product is called _____.

 

11. is the use of outside vendors to produce products that were formerly produced in-house.

 

12. Purchasing products from suppliers worldwide is called _____.

 

13. If the demand for a product remains constant, even if its price changes, then this product is said to exhibit _____.

 

14. indicates that the demand for one product depends on the demand for another product.

 

15. A(n) _____ occurs when a purchaser is willing to consider new products or re-evaluate available alternatives.

 

 

1. ANS:  N                    PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-8                 NOT:  AACSB Analytic | TB&E Model Customer

 

2. ANS:  A                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

3. ANS:  M                   PTS:   1                    DIF:    1                    REF:   158

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

4. ANS:  B                    PTS:   1                    DIF:    1                    REF:   140

OBJ:   5-1                 NOT:  AACSB Analytic | TB&E Model Customer

 

5. ANS:  L                    PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

6. ANS:  C                    PTS:   1                    DIF:    1                    REF:   143

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

7. ANS:  K                    PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

8. ANS:  D                    PTS:   1                    DIF:    1                    REF:   143

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

9. ANS:  J                     PTS:   1                    DIF:    1                    REF:   159

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer

 

10. ANS:  E                    PTS:   1                    DIF:    1                    REF:   144

OBJ:   5-2                 NOT:  AACSB Analytic | TB&E Model Customer

 

11. ANS:  I                     PTS:   1                    DIF:    1                    REF:   152

OBJ:   5-4                 NOT:  AACSB Analytic | TB&E Model Product

 

12. ANS:  F                    PTS:   1                    DIF:    1                    REF:   148

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model International Perspective

 

13. ANS:  H                    PTS:   1                    DIF:    1                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

14. ANS:  G                    PTS:   1                    DIF:    1                    REF:   149

OBJ:   5-3                 NOT:  AACSB Analytic | TB&E Model Product

 

15. ANS:  O                    PTS:   1                    DIF:    1                    REF:   158

OBJ:   5-7                 NOT:  AACSB Analytic | TB&E Model Customer