MKTG 351 Ch. 8
The North American Industry Classification System (NAICS) replaced the Standard Industrial Classification (SIC) system and divides industrial activity into _____ sectors compared to the SIC system which used _____ divisions.
20; 10
Which of the following would be classified as an institutional buyer?
American Cancer Society
Which of the following countries is not included in the North American Industry Classification System (NAICS)?
China
______ demand is defined as demand for business products that stems from demand for consumer products.
Derived
A traditional online auction occurs when an online buyer invites businesses to bid to supply the specified good or service in competition with each other. T/F
False
After identifying a group of potential customers by industry and location, the next step is to begin production. T/F
False
Reciprocal dealing is widespread because it is one of the few avenues not regulated by the FTC, and it facilitates optimal purchases. T/F
False
How has the Internet impacted supply chains?
It has streamlined supply chains.
Alibaba could classify as an independent B2B E-commerce site because _____.
It is a neutral third party that provides a trading forum for a fee
______ demand involves the use of two or more items in combination to produce a product.
Joint
A source of information typically utilized by marketers to identify the identities and locations of organizations in specific groups is ____________. It contains information about firms, their names, industrial classification, address, phone number, and annual sales.
Standard & Poor's Register
What happens in a reverse online auction?
The buyer invites businesses to bid to supply the specified good or service in competition with each other.
The government decides to purchase a new fleet of fighter jets for the U.S. Air Force. What type of buying procedure is the government most likely to use?
The government will select a few firms and enter into negotiations with them until the contract is awarded.
The four major factors influencing business buying decisions are
environmental, organizational, interpersonal, and individual.
Demand for business products is derived from consumer demand which may fluctuate over time. When consumer products are in high demand, producers buy large quantities of raw materials to meet demand. On the other hand, a decline in demand for certain consumer products reduces demand for business products. This is known as _____ demand.
fluctuating
Your university has decided to purchase new computers for all of the computer labs on campus. Typically, the purchasing agent negotiates with manufacturers and makes the decision on what to buy. However, for this purchase he has asked members of the computer science department to give input on the purchase decision. In this instance, the computer science department would be acting as a(n) ____, while the purchasing agent is a(an) ______.
influencer; decider
When Dell Computer Company purchases Seagate hard drives for use in producing computers, Dell is part of the _____ market for hard drives.
business
U.S. Foods provides food products to institutions such as hospitals, nursing homes, schools, and large companies who offer food services. The director of food service is the only person at St. Joseph hospital who has the authority to sign contracts and is meeting with the account executive from U.S. Foods who is providing some information about new products that could be added to the hospital menu for patients and guests. The director of food service recommends that the account executive meet with the chef to discuss which new products the chef would like added to the order. The director of food service believes that the chef should have the ability to determine what food products he'd like to offer. In this case, the director of food service is acting as a ______, while the chef is a(n) ______ member of the buying team.
buyer; decider
Individuals who are members of the buying center and serve in a purchasing agent capacity are also called
buyers
Which of the following is a disadvantage of reciprocity?
can result in less-than-optimal purchases for the buyer
The North American Industry Classification System (NAICS) _____.
contains the most up-to-date information for the NAFTA partners
If demand for a business product is inelastic
demand will be based on the number of items purchased
Which of the following is not a type of demand for business products? -joint -derived -dependent -fluctuating
dependent
Apple purchases Gorilla Glass from Corning to manufacture the screens on iPhones and iPads. Most consumers keep their phone equipment or tablet computers two years or more and may need to replace a broken screen during that time and repair at an Apple authorized dealer. The demand for Gorilla Glass for Apple and replacement parts is most likely
derived
Demand for business products is ______ because producers purchase products for direct or indirect use in the production of goods and services in order to satisfy consumers' needs.
derived
Justin works for a mill that provides traditional corn and wheat products, as well as gluten-free products. He has noticed that bakeries and packaged goods manufactures have increased the amount of gluten-free products they are purchasing and seem to be purchasing a greater volume of gluten-free products compared to traditional products. Justin is also noticing a large variety of gluten-free items on store shelves, such as pasta, cookies, and bread. Therefore, the demand for gluten-free products from Justin's mill is
derived
What is the second stage of the business buying decision process?
develop product specifications
Which of the following represents a limitation of the North American Industry Classification System (NAICS)?
double counting may occur when products are shipped between two establishments within the same firm
Chi Omega Sorority is a national fraternal organization with chapters at a variety of colleges and universities across the country. Each Chi Omega chapter is responsible for making purchases for their "house" such as food items, furniture, mattresses, entertainment products such as TVs, and services such as cable, satellite, or Internet. Chi Omega is a(n) _______ type of business market.
institutional
Pi Delta Mu sorority purchases food in bulk to feed its members living in the house. This means it is part of a(n) ____ market.
institutional
The Wisconsin Avenue Church purchases office supplies and printing services from businesses in the area to use when creating newsletters to send members or create weekly bulletins for church services. These purchases would qualify the Wisconsin Avenue Church as a(n) ______ market.
institutional
Sororities and fraternities on college or university campuses who make purchases for goods or services utilized in their daily operations are considered
institutional markets
Buffalo Trace is a distiller of several brands of Kentucky bourbon. One brand, Blanton, a single barrel bourbon, is placed in a silky cloth bag and packaged in a gold and green gift box to make an appealing display on retail shelves and make purchasers equate the elaborate packaging to the quality and taste profile of the bourbon. The demand for the gift boxes and silky cloth bags is an example of _____ demand.
joint
A disadvantage of reciprocity is that it can lead to _____.
less-than-optimal purchases for the buyer
The North American Industry Classification System (NAICS) is superior to the SIC system due to its
level of comprehensive and up-to-date information
Carlos is the purchasing manager for beer and liquor at his restaurant/bar and enjoys purchasing from Williams Distributing because the company provides a discount of 5% to customers who pay when the products are delivered. Carlos appreciates the opportunity to save money and has become a loyal customer of this company because of the favorable payment terms they offer. This is an example of a(n) _____ influence on the business buying decision process.
organizational
A(n)_______ is created when suppliers and their customers build and maintain mutually beneficial relationships.
partnership
Phillip uses a secure system that allows his organization to share information with other organizations that share the same supply chain. The system he uses is most likely an example of a(n) _____________.
private B2B exchange
Sherwin Williams Company and Zimmerman Construction have worked together for many years whereby Zimmerman Construction purchases most of their paint and paint-related supplies from Sherwin Williams and Sherwin Williams delivers products directly to the job site in an efficient and convenient manner. The relationship between the two companies is an example of a(n) ________.
reciprocity
Willamette Valley Community College often hosts receptions for alumni and business leaders and serves local wine from the Oregon valley. They have an agreement with the Willamette Valley wine cooperative to only serve Oregon wines from the region at their events and purchase directly from members of the cooperative organization. This agreement is an example of _____ that is unique to business markets.
reciprocity
What are the stages (in order) of the business buying decision process?
recognize problem, develop product specifications to solve problem, search and evaluate possible products and suppliers, select product/supplier and order product, and evaluate product and supplier performance
What are the three purposes for which individuals or groups utilize products in order to be considered a business-to-business or B2B market?
resale, direct use in producing other products, or use in general daily operations
A(n) _____ market is defined as individuals and business organizations that buy finished goods and resell them to make a profit.
reseller
Companies such as the "big box" stores, Staples, and Best Buy are considered to be classified as _____ markets.
reseller
Dianne's Gifts purchases a wide variety of gift items by various companies at the semiannual wholesale markets in Dallas, Atlanta, and Chicago. She sets her prices so that she can make a profit and one that her customers will pay. What classification of business is Dianne's Gifts?
reseller
Jim's Hardware Store sells a wide variety of hardware items, such as tools, nuts, and bolts; paint and paint accessories; fishing equipment; and lumber to name a few. Jim's Hardware has a wide variety of companies from whom he purchases merchandise that he makes available for sale in his store. He's responsible for setting prices and strives to be competitively priced to other stores and make a profit. Jim's Hardware is classified as a(n) _______ market.
reseller
Sysco Foods provides a wide variety of food products—over 12,000 different products —to customers in the restaurant, hospital, education, and hospitality industry and works with companies such as Hormel Foods to offer high-quality, nutritious, tasty, and sustainable foods. What type of business market does Sysco Foods represent?
reseller
A Pillsbury mill in Utah buys grain from growers in the western region. The purchasing agent for Pillsbury will most likely use which buying method?
sampling
Kraft Foods purchases flour from Ardent Mills for use in manufacturing at their various plants. The purchasing agent for Kraft foods most likely utilizes the _____ method of business buying.
sampling
The _____ method of business buying entails evaluating a portion of the product on the assumption that its characteristics represent the entire lot.
sampling
Jeff Bordelon is director of computer services for the College of Business at a regional University and responsible for purchasing computers, printers, and monitors for faculty, staff, classrooms, and the computer labs in the college building. He's decided that he will be replacing about 50 desktop machines and has developed a list of specifications for the desktop computers regarding memory, processor speed, and graphics cards. His next step is to
search and evaluate possible brands of computers and suppliers.
Matt is the purchasing manager for GE Technologies and has recently met with a team to develop product specifications that are necessary for a new line of MRI machines. What is the next stage in the purchase decision process for Matt and/or the buying team?
search and evaluate possible products and suppliers
Firms that purchase products from manufacturers and resell the products to other firms in the distribution system are known as
wholesalers
_____ refer to the group of people within a business who are involved in making business buying decisions.
Buying centers
_______ markets are defined as organizations with charitable, educational, community, or other nonbusiness goals.
Institutional
Alejandra is an account executive for a heavy equipment distributor and received a call from a small landscaping company who is interested in purchasing a skid steer or Bobcat machine. The landscaping company has never owned or used a skid steer and doesn't know where to begin or the types of add-ons that they should also purchase. The company has purchased other equipment such as mowers and tractors but has never purchased a skid steer and plans to spend a considerable amount of time in the purchase process since this represents a significant investment for the company. What type of business purchase does this represent?
New-task purchase
Glendale High School would be an example of an institutional market. T/F
True
Value analysis focuses primarily on the examination of the cost of products relative to design, quality, and materials used. T/F
True
When trying to estimate the purchases of a potential business customer, it is reasonable to suppose that there is a relationship between the size of the potential customer's purchases and a variable such as the number of personnel employed by the customer. T/F
True
_______ analysis is sometimes utilized during the search and evaluation stage of products/suppliers. During this process, companies may examine the quality, design, materials, and item reduction or deletion to acquire products or services in the most cost-effective way.
Value
Business purchasing decisions are typically made by
a firm's buying center.
When the County Sherriff's office purchases laptop computers for use in the deputy vehicles, the purchase would be considered
a government purchase.
Lauren Williams is a sales representative for Otis who primarily strives to market service agreements to companies who have an Otis Elevator in place or a competitor's elevator that is no longer serviced by the original equipment manufacturer. Lauren enjoys her job and especially likes to take treats such as cookies or cupcakes to offices when she visits. Lauren has found that being personable and offering a nice treat to the office staff such as the secretaries or office managers enables her to make appointments with the Facility Managers who make decisions about the service agreements. Lauren is attempting to create positive relationships with the secretaries and office managers who serve a(n) _____ role as a member of the buying team.
gatekeeper
Sylvia Turner is an account executive with GlaxoSmithKline—a pharmaceutical company—and works with physicians who prescribe the medications she represents. She is not able to make appointments with the physicians but works with the office manager to get a few minutes of the doctor's time when she visits the doctor offices. The office manager is usually able to arrange a 5- to 10-minute meeting between Sylvia and the physician. What role of the buying center does the office manager perform?
gatekeeper
The _______ business market is characterized as having the most complex procedures when purchasing products or services.
government
The city of Bloomington is responsible for providing police and fire protection for its residents and purchases equipment for the departments, such as vehicles, computers, weapons, and other needed items. The city receives funds through tax collection as well as from state or federal governments to support its mission of serving the residents. The city is a(n) _____ type of business market.
government
Four major factors influence business buying decisions. The _____ factors refer to personal characteristics of participants in the buying center, such as age, level of education, personality, and position.
individual
Hart Farms recently increased its prices on organic cheese products that it sells to high-end restaurants and specialty stores in the region. The owner of Hart Farms was surprised when customers continued to order the same amount of product and didn't complain about the price increase. What type of demand does Hart Farms possess for its cheese products?
inelastic
Harvest Café is a farm-to-table restaurant and prides itself on offering fresh, local foods to its customers. They purchase chicken from Heart Farms which are cage-free and organic. Harvest Café typically purchases 20 pounds of chicken each week and usually pays $3 per pound. However, when placing a recent order, the chef noticed that the price had increased to $3.40 per pound. The chef placed the usual order for 20 pounds of chicken and reasoned that he could either reduce the portion size or increase the menu price to order to maintain his profitability goals. This is an example of business products having _______ demand.
inelastic
Situations where price increases or decreases do not alter the demand for a product are known as _____ demand.
inelastic
Williams Tool & Die manufactures steel and aluminum parts for a variety of automobile manufacturers such as head rest standards and aluminum inserts for beverage holders. Williams Tool & Die typically contracts with the automobile manufacturers for a two-year time frame at an agreed-upon price for the parts. Recently, the price of steel and aluminum has increased, resulting in increased production costs for Williams Tool & Die. However, Williams Tool & Die cannot pass along a price increase to its customers and must absorb the increases in raw materials. The demand for steel and aluminum for Williams Tool & Die is
inelastic
Central State University purchases projectors for use in its classrooms and typically purchases 100 new projectors each year. Central State wonders if any improvements have been made in bulb life or brightness of projectors and anticipates reviewing the various brands of projectors before placing an order. What type of purchase will Central State utilize for the projector purchase this year?
modified rebuy
Eagle Food stores purchases snack products from Frito Lay and usually buys two to three cases each week. They are placing an order for the week of Labor Day—a holiday weekend associated with grilling and picnics and wants to order additional products for the weekend. What type of purchase will Eagle Food stores make for the Labor Day week Frito Lay order?
modified rebuy
Whitney is an account executive with Simmons Mattress Company and markets directly to hotels and the hospitality market. She enjoys the opportunity to gain a large sale of 100-200 mattresses when hotels are remodeling or building a new facility. Usually, a hotel will replace mattresses every four to five years since they receive so much use and are also monitored by the health department to ensure sanitary conditions are met. Recently, Simmons Mattress Company has unveiled a new and improved mattress for the hospitality industry and Whitney is meeting with the purchasing manager at the Hilton Hotel headquarters to discuss a large order. The Hilton Hotel Company has purchased from Simmons in the past, but the new mattress is a latex foam product and would be unique in that a box spring is not needed. What type of purchasing decision does this represent for the Hilton Hotel Company?
modified rebuy
The Temple University College of Business is seeking to purchase new monitors for their classrooms, computer labs, faculty, and staff offices. They create a description of the project and ask suppliers to submit bids. The University identifies the top two to three suppliers who present the most competitive packages and will begin discussions with each supplier to determine which company will be awarded the contract. This is an example of the ______ method of business buying.
negotiation
A _______ type of business purchase is defined as one where an organization makes an initial purchase of an item to be used to perform a new job or solve a new problem.
new task
Jeckel Mowing & Maintenance has provided lawn, garden maintenance, and snow removal services and is considering offering landscaping services to their customers. The company owner, Prescott Jeckel, is considering the purchase of a skid steer or Bobcat machine. While Prescott has purchased many different varieties of mowers and lawn tractors, he does not have any experience with skid steer machines. What type of purchase will the skid steer decision be for Prescott?
new task
What are the three types of business purchases?
new task, modified rebuy, and straight rebuy
A buyer for Macy's Department Stores orders handbags from a supplier because that supplier allows the buyer to maintain Macy's company policy of 30-day advance purchase notice. This is an example of ____ influence on the business buying decision process.
organizational
A(n) _____ market is defined as individuals and business organizations that purchase products to make profits by using them to produce other products or using them in their operations.
producer
An accountant who purchases software for maintaining clients' books is an example of a buyer in a(n) ____ market.
producer
An electrician who purchases light switches for installation in a client's new construction project is an example of a(n) _______ market.
producer
Fitbit purchases plastic materials that are utilized in the process to manufacture the Fitbit devices that individuals wear to track their activity, heartrate, and sleep. The plastic material is utilized to create the flexible bands that fit comfortably around the wearer's wrist. Fitbit is a buyer in a(n) _____ market.
producer
Mitsubishi Motors manufactures a line of automobiles and heavy trucks that it sells in the global marketplace. Mitsubishi Motors' manufacturing plants utilize just-in-time processes to receive delivery of raw materials such as steel, glass, and wire as well as component parts such as engines and alternators. What category or type of business market best represents Mitsubishi Motors?
producer
The four categories of business markets include
producer, reseller, government, and institutional.
The North American Industry Classification System (NAICS) is based on the types of ______________ performed. It divides industrial activity into _______ sectors.
production activities; 20
Business Systems, a reseller of office machines such as photocopiers, service, and maintenance business uses Speedy Cleaning Services to maintain their office facilities. Both Business Systems and Speedy Cleaning Services recommend each other's businesses to their customers and have a _____ relationship.
reciprocal
L'Oreal manufactures cosmetics, shampoos, conditioners, and other health and beauty aids. It purchases surfactant chemicals for use in the manufacturing process for several products and has decided to utilize ______ and purchase their entire surfactant product from the Stepan Company.
sole sourcing
In its purchase of desktop business computers, Albertson's asked that potential suppliers provide information only on units with 8GB of memory. As Albertson's management evaluates this purchase, it finds that 8GB is inadequate for many of the software programs used at Albertson's. In this instance, the firm would need to modify which aspect of the purchase process?
specification development
RJ Distribution maintains a fleet of vehicles for their delivery drivers and sales representatives to utilize. They've recently expanded and now have a fleet of approximately 55 vehicles. They currently have their fleet insured through State Farm Insurance and are considering making some changes to the coverages. They now recognize that many people are driving very expensive foreign cars such as Mercedes Benz, Audi, and BMW and that the policy limits for damage may need to be increased. What aspect of the buying decision process would the decision to modify policy limits relate to?
specification of product/service
Patagonia, the well-known outdoor enthusiast clothing manufacturer, purchases cotton and other cloth from a variety of suppliers around the world. Patagonia has crafted a set of ______, which detail the characteristics sought from suppliers regarding the attributes of the fabric.
specifications
Jessica is the purchasing manager at Morton Pediatrics and places orders for routine products such as office supplies and disposable medical supplies such as gloves, syringes, and cotton swabs. She purchases the medical supplies from Johnson & Johnson and utilizes their website where she has an intranet portal to easily place orders and receive a company discount. Johnson & Johnson makes it easy and convenient as well by providing a list of previously purchased items that Jessica can select and simply click "reorder." What type of purchase process does Jessica use when buying these items from Johnson & Johnson?
straight rebuy
St. Francis Hospital system purchases medical supplies from Medline Industries with whom it has done business for the last five years. The hospital and system medical offices typically reorder standard supplies such as gloves, syringes, and other disposable supplies from Medline. This is an example of the _____ type of business purchase.
straight rebuy
The majority (over 90%) of B2B buyers use _____________ to gather research before making a purchase.
the Internet
Most businesses try to control the level of quality in the parts they buy from suppliers. Most firms develop standards for ____ in order to achieve their quality goals.
the percentage of defects allowed
The search and evaluation of possible products and suppliers is the _____ step in the business buying decision process.
third
The business buying decision process includes five steps or stages in the process. One stage, the _____, is characterized by the business conducting an evaluation of each component of a potential purchase by examining the quality, design, materials, or item reduction in order to purchase the needed items in the most cost-effective manner.
third stage—search and evaluation of potential products and suppliers
The buying center would like to include which of the following entities?
users
Bridget Kingman is the purchasing manager for Williams Contracting, paint contractors for residential and commercial projects. Bridget typically purchases paint from Sherwin Williams and usually buys a premium paint product that is priced higher due to its quality and ability to cover surfaces with one coat. She's reviewing various alternatives and has identified a Benjamin Moore product that could offer the same level of quality at lower costs. What type of analysis is Bridget conducting?
value
The formal and systematic evaluation of current and potential suppliers focusing on price, product quality, delivery service, product availability, and overall reliability is known as ______ analysis.
vendor
