Marketing 361 Chapter 7

_____ is the marketing of goods and services to individuals and organizations for purposes other than personal consumption.
a. Secondary marketing
b. Interactive marketing
c. Business marketing
d. High-level marketing
e. Industrial marketing
ANS: C
This is the definition of business marketing.
A product is defined as a business product rather than a consumer good on the basis of its:
a. intended use.
b. physical characteristics.
c. price.
d. distribution method.
e. tangible attributes.
ANS: A
The key characteristic distinguishing business products from consumer products is intended use, not physical characteristics.
Business marketing does NOT include goods and services that:
a. become part of another product.
b. are used to manufacture other products.
c. are used for personal consumption.
d. facilitate the normal operations of an organization.
e. are acquired for resale.
ANS: C
Intended use is the key factor in the classification of a business versus a personal good. Use for personal consumption classifies the good or service as a consumer product.
Which of the following is the best example of a sale that could only take place in the business market?
a. A professor is purchasing a Mac to use at home
b. A music store owner is ordering the newest Elvis Ultimate Live collection DVD for her mother
c. A teen is purchasing ringtones to use on her phone
d. A librarian is purchasing new books for the school’s library
e. All of these are examples of business sales
ANS: D
When a product is bought for use in a business, it is a business product. All other choices reflect purchases for personal use, which would be part of the consumer market.
The Solar Group, a Mississippi-based mailbox manufacturer, sells mailboxes to contractors who are building mega-subdivisions, to hardware stores, and directly to new homeowners. What kind of products is Solar Group selling?
a. Business products only
b. Both business and consumer goods
c. Installations
d. Consumer goods only
e. Supplies
ANS: B
Products are classified as either business or consumer goods, based on the intended use of the product. Obviously, some of the mailboxes are sold for business use and some for personal use.
The largest percentage of B-to-B social media spending goes toward creating:
a. viral videos
b. customer community
c. podcasts
d. blogs
e. webinars
ANS: B
The greatest percentage of spending allocation in social media goes toward creating customer community, followed by podcasts and blogs to create thought leadership and spending on Twitter.
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Which of the following tools is particularly effective for B-to-B marketers to use for product demonstration?
a. text messaging
b. social networking sites
c. blogs
d. mobile marketing
e. video
ANS: E
Video is particularly effective for product demonstrations. B-to-B marketers are increasingly using sites such as YouTube to boost brand awareness and demonstrate products and services.
_____ relates to the fact that customers who have made a purchase lately are more likely to purchase again in the near future than customers who haven’t purchased for a while.
a. External search traffic
b. Effective reach
c. Stickiness
d. Recency
e. Effective frequency
ANS: D
This is the definition of recency.
_____ is a measure of a Web site’s effectiveness and is calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit.
a. Effective reach
b. Effective frequency
c. Gross rating points
d. Interactiveness
e. Stickiness
ANS: E
By measuring the stickiness factor of a Web site before and after a design or function change, the marketer can quickly determine whether visitors embraced the change.
All of the following are current roles of the Internet in business marketing EXCEPT:
a. reduce costs.
b. eliminate distributors.
c. build channel partnerships and trust.
d. brand building and development.
e. integrate online and traditional media.
ANS: B
See Exhibit 7.2
The elimination of intermediaries such as wholesalers or distributors from a marketing channel is referred to as:
a. disintermediation.
b. disassociation.
c. unencumbrance.
d. demarketing.
e. selective retention.
ANS: A
This is the definition of disintermediation.
Before toll-free telephone numbers and the Internet were used as commercial tools, passengers usually purchased airline tickets from travel agents. Travel agents no longer receive a commission from the airlines for selling tickets to consumers. This is an example of:
a. reintermediation.
b. disassociation.
c. disintermediation.
d. discrimination.
e. transference.
ANS: C
Disintermediation is the elimination of intermediaries from a marketing channel–in this case, travel agents.
The reintroduction of an intermediary between producers and users is called:
a. disintermediation.
b. reinstatement.
c. selective retention.
d. re-establishment.
e. reintermediation.
ANS: E
This is the definition of reintermediation.
A cooperative agreement between business firms is called a:
a. shared capital contract.
b. global partner development strategy.
c. strategic alliance.
d. joint contract.
e. comarketing effort.
ANS: C
This is the definition of a strategic alliance.
IBM and Cisco work together to provide banks with the products and services they need to manage their multiple locations. In other words, the two companies have joined in a:
a. retail cooperative.
b. direct investment venture.
c. transactional relationship.
d. strategic alliance.
e. synergistic relationship.
ANS: D
A strategic alliance is a cooperative agreement between business firms.
Sometimes a _____ is created for the purpose of sharing resources. This was why the Donnelly Corporation, a company that designs, manufactures, and markets automotive parts, joined with Applied Films Laboratory, Inc. to manufacture and supply the world market with coated glass for liquid crystal displays (LCDs).
a. shared capital contract
b. global partner development strategy
c. strategic alliance
d. cobranding effort
e. market cooperative
ANS: C
A strategic alliance is a cooperative agreement between business firms.
In the early 2000s, Levi Strauss invested millions of dollars to develop a website on which they could sell jeans directly to consumers. However, the effort was unsuccessful and the company switched course, announcing that jeans would be sold only through its retailer partners. This is an example of:
a. recency
b. reintermediation
c. keiretsu
d. disintermediation
e. reinstatement
ANS: B
Levi Strauss reintroduced an intermediary—its retail partners—between its products and consumers. This is an example of reintermediation.
Which of the following means that a firm believes an ongoing relationship with some other firm is so important that it warrants maximum efforts at maintaining it indefinitely?
a. Amae
b. Trust
c. Relationship quality
d. Strategic alliance
e. Relationship commitment
ANS: E
Relationship commitment is a firm’s belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely.
DHL maintains a strategic alliance with UPS because it has confidence in UPS’s reliability and integrity. This condition is referred to as:
a. tTrust.
b. tomo.
c. commitment.
d. Amae.
e. reciprocity.
ANS: A
Trust is the condition that exists when one partner has confidence in an exchange partner’s reliability and integrity.
In Japan, reciprocity and personal relationships contribute to the development of:
a. global ventures.
b. amae.
c. agricola.
d. keiretsu.
e. an independent network of small retailers.
ANS: B
Amae is the feeling of nurturing concern for, and dependence upon, another. Reciprocity and personal relationships contribute to amae. Keiretsu is a network of interlocking corporate affiliates.
A keiretsu is a(n):
a. type of strategic alliance commonly found in Japan.
b. method of business e-commerce found in Asia.
c. Internet site that offers its customers access to various languages that they can use to conduct their business.
d. form of relationship marketing that is illegal in the United States.
e. Bribe.
ANS: A
A keiretsu is a network of interlocking corporate affiliates in Japan.
A particular segment of the business market includes those individuals and organizations that purchase goods and services for the purpose of making a profit. They achieve this goal by using purchased goods and services to make other goods, to become part of other goods, or to facilitate the daily operations of the organization. This group is called the _____ segment of the business market.
a. institution
b. reseller
c. wholesaler
d. producer
e. government
ANS: D
This describes the producer segment of business customers.
According to the text, another commonly used name for producers is:
a. fabricators.
b. installers.
c. original equipment manufacturers.
d. product providers.
e. component networks.
ANS: C
Original equipment manufacturers, or OEMs, include all individuals and businesses that buy business goods and incorporate them into the products they produce for eventual sale to other producers or to consumers.
Corn refiners buy shelled corn and convert it into a variety of products, including high-fructose corn syrup. The refiners then sell the syrup to soda and food product companies for use in foods and beverages. The corn refiners represent the _____ sector of the business market.
a. channel
b. reseller
c. producer
d. government
e. distributor
ANS: C
Producers use purchased goods and services to produce other products, to incorporate into other products, or to facilitate the daily operations of the organization.
Southern Fireworks Manufacture Company in Liuyang, China, provides fireworks for companies in America such as Premier Pyrotechnics in Richland, Missouri. This means that Southern is a(n):
a. installer of original materials.
b. demand company.
c. reseller.
d. government buyer.
e. OEM.
ANS: E
An original equipment manufacturer (OEM) is an organization that buys business goods and incorporates them into the products it produces and sells.
Caterpillar, Inc., a manufacturer of earthmoving equipment, uses completed drivetrains (engines/transmissions/axles), drivetrain components, electronic controls, hydraulic and electrohydraulic components and systems, cooling systems, and undercarriage track systems produced by other organizations in its manufacturing process. Caterpillar is an example of a(n):
a. fabricator.
b. installer.
c. original equipment manufacturer.
d. product provider.
e. component network.
ANS: C
An original equipment manufacturer (OEM) is an organization that buys business goods and incorporates them into the products it produces and sells.
Businesses that buy finished goods and sell them for a profit are called:
a. inventory carriers.
b. producers.
c. distribution networks.
d. resellers.
e. business facilitators.
ANS: D
The reseller market includes retail and wholesale businesses that buy finished goods and resell them for a profit.
In the past 24 years, Mothers Work has grown from a small, mail-order catalog business headquartered inside the founder’s home to the world’s largest seller of maternity apparel, with nearly 1,600 locations. In terms of the business market, Mothers Work would be best classified as a(n):
a. reseller.
b. producer.
c. distribution network.
d. inventory carrier.
e. business facilitator.
ANS: A
Mothers Work purchases finished goods and resells them; it does not produce the goods or change their form.
Hensley Poultry is a wholesaler that buys poultry food and health products from Provini, Inc., feeding systems from Big Dutchman, Inc., and incubation systems from Copca Corp. Hensley then sells those products to poultry producers and farmers’ cooperatives in Iowa. Hensley Poultry could be best classified as a(n):
a. producer.
b. distribution network.
c. inventory carrier.
d. specialty retailer.
e. reseller.
ANS: E
The reseller market includes retail and wholesale businesses that buy finished goods and resell them for a profit.
The U.S. government is:
a. not a business market segment.
b. the world’s largest single customer.
c. an organization accounting for over 50 percent of the U.S. gross national product.
d. mainly a military equipment purchaser.
e. using one centralized purchasing office for the entire government.
ANS: B
The U.S. federal government is the world’s largest customer. The other alternatives do not apply because various branches of the government have separate purchasing departments, and billions of dollars are spent on food, clothing, desks, and other standard supply items (not just military hardware).
Which of the following statements about the government business market is CORRECT?
a. Only large vendors with annual sales of more than $20 million are authorized to sell to the federal government; small vendors are restricted to the state and local government market.
b. The Office of Management and Budget is the federal agency that contracts for all the U.S. government’s buying requirements.
c. Selling to states, counties, and cities can be less frustrating for both small and large vendors than selling to the federal government.
d. The president of the United States must personally authorize all federal government purchases.
e. Contracts for government purchases are rarely put out for bid.
ANS: C
One reason that selling to states, counties, and cities is less frustrating than selling to the federal government is that paperwork is typically simpler and more manageable than it is at the federal level.
Which of the following NAICS codes designates an economic subsector?
a. 33
b. 334
c. 3346
d. 33461
e. 334611
ANS: B
The third digit designates an industry subsector, such as crop production or apparel manufacturing.
One segment of the business market has primary goals that differ from the ordinary business goals such as profit, market share, or return on investment. This segment includes many schools, churches, and civic clubs. Which business market is this?
a. Institutions
b. OEMs
c. Services
d. Providers
e. Resellers
ANS: A
Institutions such as schools, churches, and hospitals have service or activity goals but not profit goals and are an important business market.
Which of the following is the BEST example of an institution market?
a. The federal government
b. eBay
c. Claire’s Boutique
d. Hillsdale United Methodist Church
e. Starbucks
ANS: D
Examples of institutions include schools, churches, and hospitals that have service or activity goals but not profit goals.
Organon Teknina sells inexpensive equipment to detect Escherichia coli, listeria, or salmonella bacteria in food. The company serves not-for-profit institutions that need to regularly check food quality. Organon Teknina would be LEAST likely to sell to:
a. The Montgomery County school system.
b. Cincinnati Children’s Hospital.
c. Taco Bell.
d. A chain of church-sponsored retirement homes.
e. American Red Cross emergency shelter kitchens.
ANS: C
The only example of a for-profit organization in the list is Taco Bell, which would not be a customer of an institution-only food supplier. To answer this question, students will have to remember that institutions are not operated for profit.
What would a U.S. company that manufactures the lighted signs used in amusement parks, at outdoor sports arenas, for restaurant promotion, and by state departments of transportation on the sides of roads use to facilitate its market segmentation and targeting if it wanted data that were readily available and usable?
a. A large amount of marketing research, including scanner data and focus groups
b. Other competing firms as a strategic alliance referral service
c. Government bidding processes
d. The North American Industry Classification System
e. Derived demand
ANS: D
NAICS codes enhance a company’s marketing efforts.
The government uses a system called NAICS to classify North American business establishments. NAICS stands for:
a. Non-American Industry Classification System.
b. North and South American Institutional Coding Services.
c. Non-American Industrial Corporation System.
d. North American Institution Code System.
e. North American Industry Classification System.
ANS: E
The North American Industry Classification System (NAICS) is an industry classification system for classifying North American business establishments.
Imagine that you are the research director of a major industrial marketing firm. You need to select an NAICS code that defines the most homogeneous group of companies in a particular group of highly competitive companies. Which of the following codes might you use?
a. 7432
b. 532
c. 19
d. 7
e. 999
ANS: A
The more digits in a code, the more homogeneous the group will be. The alternatives presented in this question are to illustrate the point that more digits results in a more homogeneous grouping. They may or may not be actual NAICS codes.
NAICS data are helpful for analyzing, segmenting, and targeting markets. The system was developed by:
a. large manufacturers in United States and Mexico that produce similar goods.
b. the North American Free Trade Agreement partners.
c. Brazil, Chile, Argentina, Canada, and the United States working together in a joint venture.
d. the SIC committee.
e. the U.S. government.
ANS: B
NAICS is an industry classification system that replaced the standard industrial classification (SIC) system in 1997 for the North American Free Trade Agreement partners. The partners include the United States, Canada, and Mexico.
Managers can use the NAICS data to:
a. create a more focused mission statement.
b. eliminate risk.
c. classify consumer behavior.
d. identify potential new customers.
e. determine purchase motives.
ANS: D
NAICS data can be converted to market potential estimates, market share estimates, and sales forecasts. It can also be used for identifying potential new customers.
All of the following are demand characteristics of business markets EXCEPT:
a. inelastic demand.
b. fluctuating demand.
c. joint demand.
d. stable demand.
e. derived demand.
ANS: D
Business markets are characterized by derived demand, inelastic demand, joint demand, and fluctuating demand.
The demand for consumer goods often affects the demand for business products. This characteristic of business markets is called _____ demand.
a. elastic
b. inelastic
c. fluctuating
d. derived
e. joint
ANS: D
The demand for business products is called derived demand because organizations buy products to be used in producing their customers’ products.
Inland Eastex manufactures a heavy paper stock that is used for printing covers for many different types and sizes of consumer magazines. Consumer magazine sales determine how much paper Inland Eastex sells. This is an example of _____ demand.
a. joint
b. inelastic
c. elastic
d. congruent
e. derived
ANS: E
Derived demand for a business product comes from the original consumer demand.
As the demand for VCR players has fallen, so has the demand for blank VHS tapes because the demand for VHS tapes is an example of a(n) _____ demand.
a. joint
b. inelastic
c. elastic
d. fluctuating
e. derived
ANS: E
The demand for VHS tapes is driven by the consumer demand for VCR players; therefore, the tapes have a derived demand.
Bàbolina Tetra is a Hungarian company that has genetically created a chicken that is guaranteed to produce uniform brown eggs with strong shells. It breeds and sells young chicks to farmers all over Europe who want to sell eggs in local markets. When consumers began to worry about cholesterol content and stopped eating as many eggs, the demand for the Tetra hen also declined. This would be an example of _____ demand.
a. derived
b. elastic
c. multiplying
d. bundled
e. inelastic
ANS: A
Demand for hens is derived from consumers’ demands for eggs, which has declined.
When two or more items are used in combination to produce a final product, they are said to have _____ demand.
a. derived
b. inelastic
c. joint
d. fluctuating
e. elastic
ANS: C
This is the definition of joint demand.
Apple iTunes has sold over five billion downloads. Without iTunes, the demand for the Apple iPod line of products would be small. Without the musicians, there would be no iTunes. In this situation, a condition of _____ demand exists.
a. bundled
b. incremental
c. functional
d. developmental
e. joint
ANS: E
Joint demand occurs when two or more items are used together in a final product.
A decline in the availability of bicycle handle bars will decrease Huffy Bicycle Company’s production of bicycles. Decreased production in turn reduces Huffy’s demand for bicycle seats. This is because the products in this situation have _____ demand.
a. inelastic
b. joint
c. elastic
d. congruent
e. derived
ANS: B
When two or more items are used in combination in the final product, they have a joint demand.
When demand for a product is _____, an increase or decrease in the price of the product will not significantly affect demand for the product.
a. responsive
b. elastic
c. inelastic
d. derived
e. bundled
ANS: C
This is the definition of inelastic demand.
Lanover Manufacturing supplies windshield wiper blades to General Motors and Ford. A sudden jump in the price of rubber and its substitutes has forced Lanover and other wiper blades manufacturers to double the price of the blades. This increase in price has not affected sales volume for wiper blades. The price change did not change demand for the blades because demand for this product by business customers is:
a. inelastic.
b. secure.
c. bundled.
d. elastic.
e. resistant.
ANS: A
A change in price has not really made a change in quantity demanded; therefore, the good is price inelastic.
Due to rapidly rising overhead costs and increases in raw material prices, Framarx Corporation was forced to raise the price of its waxed and coated paper by 35 percent. (The paper is used between frozen hamburger patties to keep the patties from freezing together.) Framarx is the leading manufacturer in this industry, and its competitors will follow suit. While the sales force for Framarx believes the price increase will result in a drop in sales, its marketing manager disagrees because the demand for the waxed and coated paper is more than likely:
a. resistant.
b. inelastic.
c. derived.
d. elastic.
e. bundled.
ANS: B
A good is price inelastic if a change in price causes little or no change in demand. Paper used between hamburger patties is a fairly insignificant cost item and might even be considered a necessity item.
Salt is an important ingredient in many soups produced by Campbell’s. If the price of salt rises, Campbell’s will not likely reduce the amount of salt it purchases from salt suppliers, because salt is such a crucial ingredient. Therefore, you know the demand for salt is:
a. resistant.
b. inelastic.
c. derived.
d. elastic.
e. bundled.
ANS: B
A product is price inelastic if a change in price causes little or no change in demand. Salt is a fairly insignificant cost item in the overall costs of a product and might even be considered a necessity item.
Although the price of a chemical added to paint to protect surfaces from mold and mildew has almost doubled, the price of paint has risen an average of only 5 percent, and the demand for both paint and the chemical that eliminates mold and mildew has remained stable. The demand for this chemical is:
a. elastic.
b. derived.
c. bundled.
d. inelastic.
e. change resistant.
ANS: D
A good is price inelastic if a change in price leads to a small change in quantity demanded or does not significantly affect demand for the product.
As a result of the _____, a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to manufacture the consumer product.
a. demand fluctuation principle
b. joint demand principle or division effect
c. inelastic demand effect
d. multiplier effect
e. derived force effect
ANS: D
The multiplier effect (accelerator principle) is a phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.
Electric cars will increase the demand for electricity, which will then dramatically increase demand for the equipment needed to provide consumers with the electricity. This dramatic increase is due to the:
a. demand fluctuator principle.
b. joint demand principle or division effect.
c. inelastic demand effect.
d. circumlocution effect.
e. accelerator principle.
ANS: E
Increased consumer demand leading to a larger increase in demand for manufacturing equipment to make the consumer product is known as the multiplier effect (or accelerator principle).
Jif is the best-selling brand of peanut butter in the country. The manufacturer purchases large quantities of peanuts every year to manufacturer its product. This order size is an example of _____ and would give Jif an advantage over other buyers of peanuts.
a. purchase volume
b. joint demand
c. fluctuating demand
d. sales volume
e. multiplier effect
ANS: A
Business customers buy in much larger quantities than consumers.
Buyers in the business market tend to _____ than buyers in the consumer market.
a. use reciprocity less
b. purchase in much smaller quantities
c. buy more products that have a reduced probability of being affected by derived demand
d. generate more stable demand trends
e. be much more geographically concentrated
ANS: E
Business customers tend to be much more geographically concentrated than consumers. More than half of all U.S. business consumers are concentrated in just 7 of the 50 states.
Kaplan Construction needs a backhoe for a job, so Donna Kaplan decides to lease the equipment from Premier Leasing Services. In this case:
a. Kaplan is the licensee.
b. Premier is the lessee.
c. Kaplan is the licensor.
d. Premier is the lessor.
e. Kaplan is the lessor.
ANS: D
The lessor is the firm providing the product.
The distribution structure in business marketing typically:
a. includes at least one wholesaler.
b. is direct.
c. is complex and multistage.
d. uses a three-step channel.
e. uses retail distributors.
ANS: B
Direct channels, where manufacturers market directly to users, are much more common in business markets than in consumer markets.
_____ is commonplace in business marketing and can sometimes occur over several months.
a. Negotiation
b. Need mediation
c. Customerization
d. Purchase arbitration
e. Disintermediation
ANS: A
Negotiating is common in business marketing.
If a business needs a particular good or service and decides to look among its own customers for a provider of that good or service, the business is:
a. working to create purchase arbitration.
b. opening itself up to prosecution for illegal activities.
c. acting unethically.
d. trying to eliminate derived demand barriers.
e. practicing reciprocity.
ANS: E
Reciprocity is the practice of business purchasers choosing to buy from their own customers.
General Motors buys engines for use in its vehicles from BorgWarner, which in turn buys many of the vehicles it needs from GM. This is an example of:
a. nested demand.
b. derived demand.
c. reciprocity.
d. elastic demand.
e. circular buying.
ANS: C
Reciprocity is the normal business practice of using customers as suppliers of goods or services.
_____ occurs when a deli decides to buy its office supplies from a company that regularly buys sandwiches for its employees.
a. Reciprocity
b. Joint demand
c. Elastic demand
d. Derived demand
e. Bidding conformity
ANS: A
Reciprocity is the normal business practice of using customers as suppliers of goods or services.
Which of the following statements does NOT describe the business market?
a. Business buying decisions are usually made independently by a purchasing agent, while consumer buying decisions are made jointly.
b. Business customers tend to be more geographically concentrated, and customers in consumer markets tend to be more geographically dispersed.
c. The channel of distribution is more often direct for business markets than for consumer markets.
d. Purchasing by businesses is a more formal process than it is in consumer markets.
e. Business marketers tend to have far fewer customers than consumer marketers.
ANS: A
Business buying decisions usually involve more people than a consumer purchase. Review Learning Outcome 6.
_____ is the primary promotional method for the sale of all business products.
a. Direct mail
b. Advertising
c. Personal selling
d. Public relations
e. Trade promotions
ANS: C
Business sales tend to be large in dollar amounts and quantities and may require negotiation; thus, they may rely heavily on the salesperson’s ability to communicate and work with the customer.
Which type of business product includes such capital goods as large or expensive machines, mainframe computers, blast furnaces, generators, airplanes, and buildings?
a. Major equipment
b. Raw materials
c. Component parts
d. Accessory equipment
e. Investment goods
ANS: A
This describes major equipment, which is also called installations.
Major equipment goods such as machines, mainframe computers, and buildings are also referred to as:
a. investment goods
b. necessity goods
c. capital components
d. strategic goods
e. installations
ANS: E
Major equipment goods are also known as installations.
Which of the following is the BEST example of an installation?
a. A baseball stadium
b. A checkout counter
c. A lifeguard stand
d. A file cabinet
e. Original artwork
ANS: A
An installation, also called major equipment, is expensive and large, such as a building.
Products such as parking garages, mainframe computers, privately owned office buildings, and street-cleaning equipment are depreciated over time rather than expensed in the year they are purchased. These are classified as:
a. processed materials.
b. accessory equipment.
c. major equipment.
d. supplies.
e. component parts.
ANS: C
Major equipment is depreciated over time rather than charged as an expense in the year it is purchased.
Claas is Europe’s largest manufacturer of combine harvesters. As farming becomes more professional and more intensive, farmers are buying more sophisticated machines, which Claas can supply. The expensive machines sold by Claas would be examples of:
a. Installations.
b. component parts.
c. accessory equipment.
d. processed materials.
e. minor equipment.
ANS: A
Installations, also called major equipment, are expensive and large.
TruColor Printers has purchased a Heidelberg printing press with auto-blanket wash and chilled rollers for $2.2 million. The company will depreciate the value of the printing press over several years. The printing press would be considered:
a. major equipment.
b. a component part.
c. processed material.
d. a fabricating item.
e. accessory equipment.
ANS: A
Major equipment is depreciated over time rather than charged as an expense in the year it is purchased.
Which type of business product represents goods, such as portable tools and office equipment that are less expensive and shorter-lived than major equipment?
a. Accessory equipment
b. Component parts
c. Processed goods
d. Supplies
e. Intermediate goods
ANS: A
This is the definition of accessory equipment.
Copying machines, personal computers, and fax machines are typically classified as _____ because they are not expensive, have short useful lives, and are frequently purchased from local distributors.
a. accessory equipment
b. mobile equipment
c. component parts
d. processed materials
e. supplies
ANS: A
Accessory equipment is generally less expensive and shorter-lived compared to major equipment. Accessory equipment also tends to be purchased by a widely dispersed market.
For Renovation Remodeling Company, wrenches, drills, and circular saws are all examples of _____ because they are shown as expenses on the yearly accounting statements.
a. mobile installation
b. component part
c. processed material
d. supply
e. accessory equipment
ANS: E
Accessory equipment is generally less expensive and shorter-lived than major equipment and is often charged as an expense in the year it is bought rather than depreciated over its useful life.
Which of the following is the BEST example of accessory equipment?
a. A parking lot
b. A store display rack
c. Accounting services
d. A river barge
e. Light bulbs
ANS: B
Accessory equipment is generally less expensive and shorter-lived compared to major equipment and is used in the conducting of business. Accessory equipment also tends to be purchased by a widely dispersed market. Light bulbs are supplies. Accounting services represent a business service.
Unprocessed extractive or agricultural products, such as copper, peanuts, soybean, bauxite, fruits, ore, and so on, that become part of finished products are examples of:
a. supplies.
b. OEM parts.
c. component parts.
d. processed materials.
e. raw materials.
ANS: E
Raw materials are unprocessed extractive or agricultural products.
One brand of tomato sauce advertises that the tomatoes it uses are processed within 24 hours of being picked to ensure product freshness. The fresh tomatoes it buys from growers are examples of:
a. OEM parts.
b. raw materials.
c. component parts.
d. processed materials.
e. supplies.
ANS: B
Tomatoes are an agricultural product. Agricultural products are a type of raw material.
Hazelwood Farms provides local restaurants with organic fruits and vegetables that have been grown without the use of pesticides or chemical fertilizers. Hazelfield Farms is a supplier of:
a. accessory parts.
b. supplies.
c. raw materials.
d. unprocessed extractive products.
e. processed materials.
ANS: C
Raw materials are unprocessed extractive or agricultural products.
All of the following are considered types of business products EXCEPT:
a. raw materials.
b. convenience goods.
c. major equipment.
d. accessory equipment.
e. component parts.
ANS: B
The types of business products are major equipment, accessory equipment, raw materials, component parts, processed materials, supplies, and business services.
Finished items ready for assembly, or products that need very little processing before they become a part of some other product, are called:
a. supplies.
b. raw materials.
c. accessory equipment.
d. processed materials.
e. component parts.
ANS: E
This is the definition of component parts.
There are two important markets for many component parts: the original equipment market and the _____ market.
a. replacement
b. processed materials
c. accessory
d. raw materials
e. integrated parts
ANS: A
The two important markets for component parts are the original equipment market and the replacement market.
Within the business market, roller belts that are purchased by vacuum manufacturers are examples of:
a. supplies.
b. raw materials.
c. accessory equipment.
d. processed materials.
e. component parts.
ANS: E
Component parts are either finished items ready for assembly or products that need very little processing before becoming a part of some other product.
PAS Systems has developed an unobtrusive flashlight-alcohol detector. The flashlight readings are inadmissible in court but are used by police officers to decide whether to hold someone for a sobriety test. Each one costs $600. The manufacturer assembles a breathalyzer from one supplier with a slightly modified flashlight case from another supplier to make the new product. The breathalyzer and the flashlight case are examples of:
a. major equipment.
b. component parts.
c. processed materials.
d. integrated parts.
e. accessory equipment.
ANS: B
Component parts are either finished items ready for assembly or products that need very little processing before becoming part of some other product.
Products that have had some processing are used directly in the production of other products, and do not retain their identity in the final product are called:
a. raw materials.
b. supplies.
c. processed materials.
d. component parts.
e. replacement parts.
ANS: C
This describes processed materials.
No-Glut is a small company that manufactures several gluten-free products for consumers who cannot digest this substance. For this manufacturer, rice flour, which will be used in its manufacturing process, is:
a. accessory equipment.
b. fabricating material.
c. a component part.
d. an integrated material.
e. processed material.
ANS: E
Processed materials are products used directly in manufacturing other products.
A dog food manufacturer purchases processed meat by-products that it uses in the manufacture of a dry dog food. These processed meat by-products are examples of:
a. raw materials.
b. OEM products.
c. processed materials.
d. component parts.
e. replacement parts.
ANS: C
Processed materials are used in the manufacture of another product and do not retain their original identity.
One way processed materials differ from component parts is that processed materials:
a. do not retain their identity in final products.
b. are always much cheaper than component parts.
c. have had some processing.
d. do not become part of a final product.
e. All of the above are true.
ANS: A
Component parts retain their identity in final products; processed materials do not.
_____ are consumable, inexpensive, and often standardized items that do not become part of the final product.
a. Processed materials
b. Supplies
c. Provisions
d. Accessory equipment
e. Replacement parts
ANS: B
This is the definition of supplies.
Another name for business supplies like pens, paper, and file folders is:
a. processing goods.
b. components.
c. OEM parts.
d. MRO items.
e. accessories.
ANS: D
MRO stands for maintenance, repair, or operating supplies.
At an accounting firm, the secretary orders printer cartridges, cases of paper, paper clips, and other small items. These items would be classified as:
a. replacement parts.
b. provisions.
c. OEM parts.
d. accessory equipment.
e. supplies.
ANS: E
Supplies are consumable, inexpensive items that do not become part of the final product and are routinely bought.
Business services:
a. are capital items.
b. are never outsourced.
c. are not used in reciprocity arrangements.
d. typically become part of the finished product.
e. are expense items.
ANS: E
Business services are expense items that do not become part of a final product, such as janitorial, advertising, or legal services.
A dentist hired a janitorial service to clean her office every evening. The janitorial service provided the dentist with:
a. OEMs.
b. processed services.
c. business services.
d. accessory services.
e. service supplies.
ANS: C
Business services are functions performed by outside providers.
The Barter Company, (TBC), located in Kennesaw, Georgia, acts as a broker between companies that want to trade products or services. Companies must be a TBC member, and there is a one-time fee to join. TBC charges a brokerage fee on each transaction facilitated. This company is an example of a(n):
a. service integrator.
b. job source.
c. business service.
d. extended service.
e. component service.
ANS: C
Business services are functions performed by outside providers.
The _____ is the set of all persons in an organization who become involved in the purchasing process.
a. buying center
b. stakeholder committee
c. ad hoc purchasing staff
d. board of directors
e. comptroller’s staff
ANS: A
This is the definition of a buying center.
The buying center:
a. will be composed of the same decision makers as long as the purchasing process lasts.
b. is typically on the formal organizational chart under the VP for operations.
c. requires all purchasing participants to be employed by the purchasing department.
d. refers to all those organizational members who become involved in the purchasing process.
e. regularly generates formal announcements of who is in the buying center.
ANS: D
The buying center is not a formal, well-defined group. It is simply all the people who become involved in the purchasing process within the company, no matter what their department or position.
Which of the following statements about buying centers is true?
a. The most efficient buying centers have no more than five members.
b. No one individual should assume more than two buying center roles.
c. Buying centers are clearly labeled on all organizational charts.
d. Complex purchase situations usually have fewer people involved in the buying center than less complex purchases.
e. Membership and influence in a buying center vary from company to company.
ANS: E
Buying centers can have more than five members. They are not shown on organizational charts. One person may assume all of the buying center roles. The number of people involved in a buying center varies with the complexity and importance of a purchase decision. Buying centers vary from company to company.
The _____ is the member of the buying center who regulates the flow of information.
a. decider
b. influencer
c. purchaser
d. gatekeeper
e. user
ANS: D
The gatekeeper is a group member who regulates the flow of information. For instance, this person can regulate who gets an appointment to meet with the other members of the buying center.
Bob works for the Zinn Plumbing Company. After struggling with a particularly difficult job one day, he tells his supervisor, Miguel, that if he’d had a special type of wrench he could have finished the job much more quickly. Bob asks Miguel if the company would be willing to purchase the wrench. Miguel agrees that the wrench would be a good purchase, so the next day he approaches the company owner, Phyllis Zinn, and lays out for her all the reasons why the new wrench should be purchased. After listening to Miguel’s presentation, Phyllis agrees that the wrench should be purchased and authorizes Miguel to pick one up from the plumbing parts distributor that afternoon. In this scenario:
a. Miguel is both the buyer and the decider.
b. Bob is both the influencer and the user.
c. Miguel is both the gatekeeper and the influencer.
d. Phyllis is both the initiator and the decider.
e. Both Bob and Miguel are initiators, and Phyllis is the influencer.
ANS: C
As an influencer, Miguel brought Bob’s request to the attention of the company owner. As a gatekeeper, Miguel determined whether to share Bob’s request with Phyllis or keep the information private.
You have started raising your first litter of AKC-registered Chihuahuas. You want to sell your puppies to Pets and People, the locally owned and operated pet store. How do you find the buyer?
a. Look at the formal organization chart of the company.
b. Get a copy of Pets and People’s phone directory, where all buying center members are listed.
c. Contact the store and probe to see who is in charge of buying.
d. Locate the decider at Pets and People.
e. Wait for Pets and People to call you when they hear about your new breeding program.
ANS: C
There is no formal buying center structure. It changes from decision to decision, as well as at different stages of the decision-making process.
All of the following are roles found within a buying center EXCEPT:
a. influencers.
b. gatekeepers.
c. suppliers.
d. users.
e. initiators.
ANS: C
The roles in the buying center include initiator, influencers/evaluators, gatekeepers, decider, purchaser, and users.
Harold works as a new business manager for a manufacturer of marine lubricants. He often talks to several different people before he locates someone who can give him a purchase order or a refusal. In terms of the buying center, he has the most trouble identifying the _____ for his services.
a. decider
b. influencer
c. purchaser
d. gatekeeper
e. user
ANS: A
The decider is the person who has the formal or informal power to approve the buying decision. In complex situations, it is often difficult to determine who makes the final decision.
The three most important evaluative criteria for business-to-business purchases are quality, price, and:
a. competitive offers.
b. service.
c. reliability.
d. assurance.
e. existing relationships.
ANS: B
Quality is the most important criterion, followed by service and price.
In terms of how business buyers evaluate products and suppliers, the most important criterion is:
a. price.
b. behavior.
c. quality.
d. personal relationships.
e. reciprocity.
ANS: C
Quality is the most important criterion, followed by service and price.
Business buyers use a variety of criteria to evaluate alternative products and suppliers. The three most important criteria, in order of importance, are:
a. price, sales support, and service.
b. quality, service, and price.
c. reputation, price, and capability.
d. price, delivery time, and product reliability.
e. service, quality, and reputation.
ANS: B
The three criteria, in order of importance, are quality, service, and price.
The Beaumont Homeowner’s Association had to replace its pool pump. They asked two local companies—Thompson Pools and Southern Pool and Spa Company—for quotes on replacing the pump. Beaumont negotiated with both companies and quickly decided to buy from Thompson Pools because its quote was $200 cheaper in its labor estimate. Which evaluative criterion appears to have been most important in making this purchase decision?
a. Price
b. Familiarity with the product
c. Reliability
d. The availability of replacement parts
e. Buyer/seller relationship
ANS: A
Business buyers want to buy at low prices–at the lowest prices, under most circumstances.
A _____ is a situation requiring the purchase of a product for the first time.
a. straight rebuy
b. value buy
c. modified rebuy
d. new buy
e. make-or-buy
ANS: D
This is the definition of a new buy situation.
A new buy situation refers to the:
a. setting of new standards for current vendors.
b. establishment of a new buying center.
c. resolution of new conflict between buyer and seller.
d. search for replacement vendors for standard, currently used parts.
e. purchase of a product or service when a new demand arises.
ANS: E
A new need (new demand) signifies that this is a new buy situation.
A university is considering the purchase of a Web-based course delivery system due to increased demand for online courses and degrees. Since the school has not offered online courses before, what type of buying situation does this represent for the school?
a. Value engineering task
b. Modified rebuy
c. Straight rebuy
d. New buy
e. Derived rebuy
ANS: D
A new buy is a situation requiring the purchase of a product for the first time.
A small police department wants to buy a machine with which it can perform alcohol breath tests. It has never had this capability before but feels it is an essential tool as the community grows. The machine costs about $5,000, which is almost 75 percent of the department’s entire supply budget. This purchase would be an example of a(n) _____ situation.
a. extensive buying
b. low-involvement buying
c. new buy
d. modified rebuy
e. straight rebuy
ANS: C
A new buy represents a situation requiring the purchase of a product for the first time.
A _____ situation is normally less critical and less time-consuming than a new buy situation but does require some change in the original good or service.
a. synergistic rebuy
b. value buy
c. negotiated rebuy
d. modified rebuy
e. make-or-buy
ANS: D
A modified rebuy is normally less critical and less time-consuming than a new buy, as well as a situation where the purchaser wants some change in the original good or service.
Apple, Inc. wants a faster microprocessor for its new Macs. Apple most likely engaged in a:
a. value engineering task.
b. modified rebuy.
c. straight rebuy.
d. new process.
e. new buy.
ANS: B
When a previously purchased item needs to be reordered, but with changes or additions, it is considered a modified rebuy.
A dentist hired a janitorial service to clean her office every evening. The original contract called for the janitorial service to dust, mop all floors, and vacuum the rugs. After six months, the dentist decided to renegotiate the contract with the janitorial service to include cleaning the office bathroom and washing the office windows as well as the original tasks. The renegotiated contract is an example of a:
a. contingency buy.
b. modified rebuy.
c. negotiated buying system.
d. straight rebuy.
e. newbuy situation.
ANS: B
Familiarity with the product and its manufacturers made this situation a modified rebuy.
Axel Spring AG, one of Europe’s largest newspaper publishers, with 10,000 employees and more than 150 papers in 30 countries, announced it would switch its entire operation from PCs to Macs. Axel decided to make a switch to Apple because the company’s layout work was already being done by Macs and the Macs were more user-friendly, more elegant, and cheaper to maintain than they had been in the past. This is an example of a:
a. new buy.
b. value buy.
c. straight rebuy.
d. modified rebuy.
e. make-or-buy.
ANS: D
Axel already had PCs but decided to make a switch to Apple, which is an example of a modified rebuy.
Which of the following is the best example of a modified rebuy situation?
a. The purchase of a replacement hamster as the class mascot
b. Bidding on a new high school multipurpose gymnasium to replace one built in 1963
c. The purchase of three large-screen computer monitors to replace smaller monitors
d. The annual purchase of calendar refills for the desks of all company executives
e. The monthly updating of computer virus protection
ANS: C
When a previously purchased item needs to be reordered, but with changes or additions, it is a modified rebuy situation.
A routine purchasing situation in which the purchaser is not looking for new information or other suppliers is called a:
a. modified rebuy.
b. value buy.
c. synergistic buy.
d. straight rebuy.
e. make-or-buy.
ANS: D
This is the definition of straight rebuy.
Leo buys coffee weekly for his espresso shop. This purchase is most likely an example of a(n) _____ situation.
a. need-related buy
b. limited rebuy
c. straight rebuy
d. rebuy sourcing
e. institution buy
ANS: C
A straight rebuy is a situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.
A professor sent the following memo to his department chair for his authorization:
Glen: I need to purchase a camera, Mac computer, and microphone for the selling center lab #2 just like we did for lab #1. This buying situation should be described as a:
a. make-or-buy.
b. value buy.
c. new buy.
d. modified rebuy.
e. straight rebuy.
ANS: E
A straight rebuy is a simple repurchase of items (no changes) without seeking a new supplier.
Purchasing contracts are commonly used in which type of buying situations?
a. Reciprocal
b. Straight rebuy
c. New buy
d. Extended rebuy
e. Modified rebuy
ANS: B
Purchasing contracts are common instruments used in straight rebuy situations and are used with products that are bought often and in high volume.
Which of the following is becoming increasingly more important in business marketing strategies?
a. Customer service
b. Price collusion
c. Ethnocentrism
d. The divider effect
e. Competitive advertising
ANS: A
Business marketers are increasingly recognizing the benefits of developing a formal system to monitor customer opinions and perceptions of the quality of customer service.
Refer to Etruscan Railing Company. Etruscan Railing sells:
a. consumer products
b. business products
c. supplies
d. consumer and business products
e. major equipment
ANS: B
Business products include those that are used to manufacture other products or become part of another product.
Refer to Etruscan Railing Company. When Etruscan sells railing to contractors to use in building loading docks in accordance with federal government regulations, it is selling to:
a. government.
b. institutions.
c. resellers.
d. producers.
e. consumers.
ANS: D
Producers are individuals or organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.
Refer to Etruscan Railing Company. When Etruscan sells railings to refurbish a private university’s football stadium, it is selling to a(n):
a. intermediary.
b. institution.
c. reseller.
d. producer.
e. consumer.
ANS: B
Institutions are nonprofit organizations like state-operated universities.
Refer to Etruscan Railing Company. Etruscan has experienced a strong increase in railing sales as a result of the growth of college football. This increase in the demand for railings as a result of the demand for new football stadiums is called _____ demand.
a. joint.
b. derived.
c. inelastic.
d. fluctuating.
e. elastic.
ANS: B
Demand for railing is driven by the growth of college football.
Refer to Etruscan Railing Company. Companies that make bicycle racks for bike safekeeping in public places receive the railing as 30-foot lengths of pipe. For these companies, Etruscan railing is classified as:
a. supplies.
b. accessory equipment.
c. an installation.
d. processed material.
e. raw material.
ANS: D
Processed materials are products used directly in manufacturing other products. They have had some processing.
Refer to Federal Aviation Administration. The FAA is what type of business buyer?
a. Producer
b. Reseller
c. Government
d. Institution
e. Unbiased
ANS: C
Government organizations include federal, state, and local buying units. The FAA is a federal agency.
Refer to Federal Aviation Administration. The company that wins the contract to develop the satellite-based system for the FAA will have to purchase satellites and mainframe computers for this system. These types of products are best described as which type of business product?
a. Raw materials
b. Processed materials
c. Accessory equipment
d. Business equipment
e. Major equipment
ANS: E
Major equipment includes such capital goods as large or expensive machines, mainframe computers, buildings, and so on.
Refer to Federal Aviation Administration. Harris Corporation provides which type of business product to the FAA?
a. Major equipment
b. Accessory equipment
c. Raw materials
d. Business services
e. Component parts
ANS: D
Businesses often retain outside providers to perform essential services, such as keeping the FTI operational.
Refer to Federal Aviation Administration. Ultimately, the FAA must get authority from the President to spend the billions of dollars necessary to upgrade the system because Congress must authorize the funds and the President must approve that authorization. In terms of the buying center, the President is the:
a. initiator.
b. gatekeeper.
c. purchaser.
d. decider.
e. user.
ANS: D
The decider is the person who has the formal or informal power to approve a purchase.
Refer to Federal Aviation Administration. When the FAA purchases a satellite-based system, it is purchasing an entire system, not just a modified part or new vendor for existing parts. Basically, this is a situation in which the FAA will be purchasing a system for the first time and is referred to as a(n):
a. straight rebuy.
b. modified rebuy.
c. new buy.
d. original equipment purchase.
e. primary purchase.
ANS: C
A new buy is a situation requiring the purchase of a product for the first time.
Refer to Boise Cascade. Boise Cascade sells:
a. consumer products
b. business products
c. supplies
d. consumer and business products
e. installations
ANS: B
Business products include those that aid the normal operations of an organization.
Refer to Boise Cascade. Boise Cascade’s excellent supplier relationships allow the company to provide the best value on the top brands in the industry. Because Boise Cascade has confidence in its suppliers’ reliability and integrity, a high degree of _____ exists between the firm and the suppliers.
a. trust
b. tomo
c. amae
d. reciprocity
e. derived demand
ANS: A
Trust is the condition that exists when one partner has confidence in an exchange partner’s reliability and integrity.
Refer to Boise Cascade. Home Depot purchases large amounts of plywood and lumber from Boise Cascade, which it sells to contractors and others in the building trade. Home Depot would be which type of customer?
a. Producer
b. Reseller
c. Government
d. Institution
e. Wholesaler
ANS: B
Businesses that purchase goods and services that are then sold to other consumers are resellers.
Refer to Boise Cascade. When the demand for new housing is high, the _____ demand for the products manufactured by Boise Cascade is also high. This is an example of:
a. joint demand.
b. inelastic demand.
c. derived demand.
d. fluctuating demand.
e. elastic demand.
ANS: C
The demand for new houses will affect the demand for building materials. This is an example of derived demand.
Refer to Boise Cascade. The plywood, lumber, particleboard, and engineered wood products manufactured by Boise Cascade would be classified as:
a. processed materials.
b. accessory equipment.
c. installations.
d. supplies.
e. component parts.
ANS: C
Processed materials are products used directly in manufacturing or building other products.
Refer to Baseball Dirt. Roger Bossard, the White Sox head groundskeeper, most likely did NOT assume which of the following buying center roles since he has the authority to buy whatever is needed to make the baseball field the best playing surface possible?
a. Gatekeeper
b. Decider
c. Evaluator
d. Influencer
e. Initiator
ANS: A
Since Roger Bossard occupies most of the roles himself, he would not be restricting the flow of information to himself. A gatekeeper regulates the flow of information.
Refer to Baseball Dirt. Some of the dirt sold by Partac Peat is used to make clay tennis court surfaces. As the number of people playing tennis increases, so does the demand for new clay courts and, therefore, the demand for Partac Peat’s dirt. This occurs because the demand for the dirt is:
a. inelastic.
b. intangible.
c. heterogeneous.
d. derived.
e. elastic.
ANS: D
As consumers demand more space to play tennis, the demand for the materials to make new tennis courts increases. This is an example of derived demand.
Refer to Baseball Dirt. An increase in the price of Partac Peat’s dirt will not affect the demand for the product because many groundskeepers believe there is no substitute for the product. Thus, demand for Partac Peat’s secret mix is:
a. inelastic.
b. intangible.
c. heterogeneous.
d. synergistic.
e. elastic.
ANS: A
Inelastic demand means an increase or a decrease in price will not significantly affect product demand.
Refer to Baseball Dirt. Because Partac Peat’s secret mix is a business product, the primary promotional method used for its sale is:
a. trade promotions.
b. slotting allowances.
c. personal selling.
d. advertising in consumer magazines.
e. publicity.
ANS: C
The sale of many business products requires a great deal of personal contact, so personal selling is the primary promotion method.
Refer to Baseball Dirt. What type of business product would Partac Peat’s dirt be since it is used in the making of baseball fields?
a. Equipment
b. Accessory equipment
c. Capital item
d. Processed materials
e. Component parts
ANS: E
The dirt is purchased from Partac Peat because it needs to be used in the construction of the baseball fields. The dirt receives no further processing.
Refer to Baseball Dirt. The first time Roger Bossard purchased Partac Peat’s secret mix, it was most likely an example of which type of buying situation?
a. Modified rebuy
b. New buy
c. Habitual buying decision
d. Buying heuristics
e. Straight rebuy
ANS: B
A new buy is a situation requiring the purchase of a product for the first time.
Refer to Claxton Fruitcakes. Because demand for raisins to bake into the fruitcakes does not change on the basis of the price fluctuations of dried fruits, Claxton’s demand for raisins is an example of _____ demand.
a. inelastic
b. derived
c. fluctuating
d. elastic
e. joint
ANS: A
Inelastic demand means that an increase or decrease in the price of the product will not significantly affect demand for the product, and the demand for many business products is inelastic with regard to price.
Refer to Claxton Fruitcakes. In terms of business-to-business products, the large ovens in which the cakes are baked are examples of:
a. component parts
b. MRO equipment
c. specialty equipment
d. processed supplies
e. major equipment
ANS: E
Major equipment includes capital goods such as large or expensive machines like the large ovens used by Claxton.
Refer to Claxton Fruitcakes. In terms of business-to-business products, the flour used in fruitcakes is an example of:
a. OEM supplies.
b. installations.
c. MRO supplies.
d. processed materials.
e. accessory supplies.
ANS: D
Processed materials are products used directly in manufacturing other products that have had some processing.
Refer to Claxton Fruitcakes. Any company that purchased Claxton fruitcakes to give to its customers would treat this purchase like any other purchase and evaluate the cake and the company in terms of:
a. demand, value, and promotion.
b. quality, service, and price.
c. order time and delivery time.
d. customer relationships, costs, and ethical behavior.
e. time requirements, order speed, and customer reactions.
ANS: B
Business buyers evaluate products and suppliers against three important criteria: quality, service, and price–in that order.
Refer to Claxton Fruitcakes. For a corporation that has been giving its key customers Claxton fruitcakes since 1950, placing the order for cakes to be delivered this year would be an example of a _____ because some negotiation about price and quantity would likely occur each year.
a. new buy
b. contingency buy
c. modified rebuy
d. situational buy
e. straight rebuy
ANS: C
A modified rebuy will require some changes in the purchase order. In this situation, the firm may open the bidding to examine the price/quality offerings of several suppliers.
Refer to RockTenn. RockTenn makes paper products for companies to use in their product and service offerings. This is an example of:
a. business marketing.
b. consumer marketing.
c. Internet marketing.
d. retail marketing.
e. complex marketing.
ANS: A
RockTenn produces a product that will be used in business rather than personal for consumption.
Refer to RockTenn. RockTenn makes paper products for companies to use in their product and service offerings. The business market consists of four categories of business customers. RockTenn’s customers are an example of:
a. producers.
b. resellers.
c. governments.
d. institutions.
e. all of the above.
ANS: A
RockTenn’s customers are profit-oriented organizations that use purchased goods to facilitate the daily operations of the organization.
Refer to RockTenn. RockTenn makes paper products for companies to use in their product and service offerings. RockTenn buys paper, wood chips, and supplies from companies to make its cartons. RockTenn would be considered a(n):
a. FAQ
b. NAICS
c. OEM
d. NP
e. LOL
ANS: C
RockTenn is a type of producer that is often called an original equipment manufacturer (OEM). An OEM buys business goods and incorporates them into the products it produces for eventual sale to other producers or to consumers.
Refer to RockTenn. The demand for RockTenn’s cardboard cartons depends on how many Dunkin’ Donuts, Chick-fil-A waffle fries, and Chinese take-out meals consumers order. This is an example of _____ demand.
a. inelastic
b. derived
c. joint
d. fluctuating
e. elastic
ANS: B
Derived demand for a business product comes from the original consumer demand.
Refer to RockTenn. RockTenn makes paper products for companies to use in their product and service offerings. As long as there is a demand for Dunkin’ Donuts, there will be demand for their dozen-donut cartons, which will ensure demand for paper to manufacture into cartons. This is an example of _____ demand.
a. derived
b. inelastic
c. joint
d. consumer
e. upward
ANS: C
Joint demand occurs when two or more items are used together in a final product.
Refer to RockTenn. RockTenn makes paper products for companies to use in their product and service offerings. As demand for their products increased due to rising plastic prices, RockTenn had to acquire other plants and equipment to help in its business. This is an example of the:
a. customer accelerator.
b. volume principle.
c. growing principle.
d. marketing effect.
e. multiplier effect.
ANS: E
The multiplier effect is a phenomenon in which, in this case, an increase in demand caused a larger change in demand for equipment needed to produce the consumer goods.
Refer to RockTenn. Power tools used to maintain the machinery that produces cartons would be an example of:
a. major equipment.
b. accessory equipment.
c. raw materials.
d. component parts.
e. processed materials.
ANS: B
Accessory equipment examples include power tools, which are less expensive and shorter-lived than major equipment.
Refer to RockTenn. Lubricants used to maintain the machinery that produces cartons would be an example of:
a. major equipment.
b. accessory equipment.
c. raw materials.
d. supplies.
e. processed materials.
ANS: D
Supplies are consumable items that do not become part of the final product, and lubricants would be an example of supplies.
Refer to RockTenn. A sales representative from a paper-producing company wants to do business with RockTenn. The representative needs to locate the person who actually negotiates the purchase, in other words, the _____ in the buying center.
a. influencer
b. gatekeeper
c. decider
d. purchaser
e. user
ANS: D
The purchaser is the person who negotiates the purchase.
Refer to RockTenn. A sales representative from a paper-producing company calls on RockTenn routinely every month to review the company’s ordering needs. The monthly sale of paper to RockTenn would constitute a:
a. new buy
b. modified rebuy
c. straight rebuy
d. modified new buy
e. straight new buy
ANS: C
As this is a regular purchase, it would be an example of a straight rebuy.