Chapter 8: Business Markets and Buying Behavior

When Hunter Ceiling Fans buys electrical wire for use in producing its ceiling fans, Hunter is part of what type of market for electrical wire? a) Resale b) Wholesale c) Customer d) Consumer e) Business

business

______ buy products from manufacturers and then resell the products to other firms in the distribution system. a) Retailers b) Producers c) Distributors d) Warehouses e) Wholesalers

wholesalers

T F A major source of input-output data is the Survey of Current Business.

true

About what percentage of the annual U.S. gross domestic product is government spending? a) 2 percent b) 10 percent c) 20 percent d) 30 percent e) 50 percent

20 percent

T F NAICS provides less information about service industries and high-tech products than did the SIC system

false; provides more information and up-to-date information than SIC

T F The term business markets refers only to producer markets

false; refers to business-to-business markets

Demand for a business product is _____ when two or more items are used in combination to produce a product. a) inelastic b) joint c) fluctuating d) derived e) partnered

joint

T F Interpersonal dynamics are easy to observe and simple for the marketer to assess

false; interpersonal dynamics and varying communication abilities within the buying center may complicate processes

Which of the following products is most likely to be purchased on the basis of contract negotiation? a) Eggs b) Office supplies c) Used cars d) A custom-made bulldozer e) Wheat

a custom-made bulldozer

Most business buying decisions are made by a) one person. b) a team of purchasing agents. c) a firm's buying center. d) inventory control personnel. e) the sales force.

a firm's buying center

Inelastic demand simply means that a) buyers will not make a modified rebuy purchase. b) demand depends on how many items are purchased. c) a price increase or decrease will not significantly change the demand for an item. d) when price goes up, demand goes down. e) when supply is reduced, the price will increase.

a price increase of decrease will not significantly change the demand for an item

What are the two ways governments make purchases? a) Cash or credit b) Contracting previous suppliers and bids c) Bids and negotiated contracts d) Lottery system and contract negotiations e) Request for new purchases and recurring orders

bids and negotiated contracts

T F The old Standard Industrial Classification system is more comprehensive than NAICS.

false; is comprehensive and up-to-date

What is a primary difference between business and consumer buyers? a) Consumer buyers require more product information than business buyers. b) Business purchases are made by one individual whereas families make consumer purchases together. c) Repeat sales are more common with consumer buyers than business buyers. d) Consumers primarily buy inexpensive items; businesses only buy expensive items. e) Business buyers generally make larger orders than consumer buyers.

business buyers generally make larger orders than consumer buyers

Which of the following is true with respect to buyers in business markets? a) Business buyers always act rationally when making purchases for their company. b) Business customers tend to be less informed about the products they purchase than consumer buyers. c) Business customers demand detailed information about a product's quality, features, or technical specifications. d) Business customers are no different than buyers in consumer markets. e) Business customers tend to buy products from their friends and contacts with business suppliers.

business customers demand detailed information about a product's quality, features, or technical specifications

In a buying center, purchasing agents or purchasing managers are also known as a) gatekeepers. b) deciders. c) buyers. d) users. e) influencers.

buyers

T F It is customary for contracts for raw materials and components to be negotiated semiannually.

false; long-term agreement

Johnson's Industrial Pest Control Service wants to meet its customers' expectations with regard to the quality of service it provides. How should Johnson's identify these expectations? a) Conduct market research. b) Use management judgment. c) Trace existing service levels. d) Stress quality service with employees. e) Train employees better.

conduct market research

T F Of the three types of business purchases, the straight rebuy purchase usually requires the most information

false; new-task

T F One very important consideration for business purchases is the type of packaging used

false; price is the important consideration

Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV's. It also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states. Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual consumers are in the midwestern states, while dealers who sell to small business landscaping companies tend to be located in the northeastern states. Company executives are considering expansion of its distribution to markets in the midwest. Given the type of business market in which Precision Brake is currently operating, which group would it be least likely to sell to? a) Producers b) Governments c) Retailers d) Consumers e) Institutions

consumers

Compared with the SIC system, the North American Industry Classification System (NAICS) will a) look at many industries at one time. b) be used throughout the world. c) contain the most up-to-date information for the NAFTA partners. d) provide less information about service industries. e) generate statistics that will not be useful in comparing countries.

contain the most up-to-date information for the NAFTA partners

Demand for business products is characterized as derived. From what is the demand derived? a) Industrial demand b) Modified demand c) Demand for consumer products d) Future product demand e) The business cycle

demand for consumer products

Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods, and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun negotiations with their sales representatives. There are many factors that would influence Samsung's business buying decisions. Which one of the following would not? a) Environmental b) Organizational c) Interpersonal d) Demographic e) Individual

demographic

Goodyear is a manufacturer and marketer of tires for new passenger cars. In recent years, the company's business has declined because of the overall decrease in consumer demand for new cars. In this case, the demand for Goodyear's tire products is said to be _______since it depends on the demand for new cars. a) inelastic b) fluctuating c) derived d) elastic e) nonderived

derived

The fact that business customers purchase products to be used directly or indirectly in the production of goods and services to satisfy customers' needs means that demand for business products is a) joint. b) economically stable. c) derived. d) inelastic. e) more fluctuating.

derived

Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV's. It also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states. Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual consumers are in the midwestern states, while dealers who sell to small business landscaping companies tend to be located in the northeastern states. Company executives are considering expansion of its distribution to markets in the midwest. Last year, Precision Brake's sales to the manufacturers of lawn tractors declined, partially due to the fact that more consumers were hiring small landscaping businesses to cut their grass. This decline in sales for Precision Brake is an example of a) Product scarcity b) Joint demand c) Derived demand d) Reciprocity demand e) Inelastic demand

derived demand

Which method of business buying is most likely to be used when the products being purchased are standardized based on certain characteristics? a) Homogeneous selection b) Inspection c) Description d) Sampling e) Negotiation

description

The second stage in the business buying decision process is to a) search for products and suppliers. b) select the most appropriate product. c) develop product specifications. d) evaluate product and supplier performance. e) recognize the problem.

develop product specifications

T F Orders placed by business customers are usually smaller and more numerous than consumer sales.

false; business customers are usually bigger and less numerous than consumer sales

T F When purchasing products, business customers are especially concerned about quality, service, price, and supplier relationships.

true

When buying materials, the purchasing agent for Alco Pillow Manufacturing Company considers a variety of factors. Which one of the following is least likely to concern this buyer? a) Does the quality of the goods meet company specifications? b) Does the supplier consistently deliver on time? c) Does the supplier also sell to my competitors? d) Does the supplier offer the services required? e) Does the price meet company budget requirements?

does the supplier also sell to competitors?

T F The fourth stage in the business buying decision process is that of searching for products and suppliers

false; evaluate product and supplier performance

T F Wholesalers sell primarily to ultimate consumers

false; help producers get their products to customers

T F Institutional markets include state prisons

false; institutional markets include churches, some hospitals, fraternities and sororities, charitable organizations, and private colleges

All of the following describe the demand for business products except a) elastic. b) derived. c) joint. d) inelastic. e) fluctuating.

elastic

What are the four major categories of factors that influence business buying decisions? a) Environmental, organizational, interpersonal, and individual b) Environmental, organizational, psychological, and individual c) Environmental, psychological, individual, and technological d) Technological, organizational, environmental, and interpersonal e) Environmental, organizational, technological, and individual

environmental, organization, interpersonal, and individual

T F A fall in consumer demand for a product is likely to result in increased buying from suppliers as consumer goods producers replenish depleted inventories and gear up for the next surge in consumer demand

false

T F After finding out which industries purchase the major portion of an industry's output, the next step is to begin production

false

T F All companies, no matter what their size or market position, maintain only one buying center

false

T F Business customers are forced to satisfy personal goals in pursuits that lie outside their jobs

false

T F For business products, the concept of inelasticity of demand applies equally to industry demand for the product and to demand for an individual supplier

false

T F If a business product exceeds specifications, so much the better; the customer can then be assured of obtaining a minimum level of acceptability

false

T F In industries in which price changes occur frequently, demand fluctuations have practically been eliminated since buyers have become used to these changes and have learned to ignore them

false

T F In the long run, business demand becomes totally unrelated to consumer demand

false

T F Specific details regarding terms, credit arrangements, and technical assistance are worked out during the product specification stage of the buying decision process

false

T F The factors that influence business buying behavior are the same as those that influence consumer buying behavior

false

T F There is little or no difference between wholesalers' customers and retailers' customers

false

T F To obtain the names of specific potential customers, the business marketer is well advised to employ the services of a commercial data company, since this is both cheaper and faster than any other method

false

T F Reciprocal dealing is widespread because it is one of the few avenues not regulated by the FTC, and it facilitates optimal purchases

false; FTC regulates reciprocal practices

T F Price is of concern to a business marketer primarily because of its psychological impact on purchasing agents

false; because it influences operating costs and costs of goods sold

T F Ultimate consumers are generally more rational than business customers

false; business customers are generally more rational than ultimate consumers

T F Inspection refers to a purchasing method in which a representative unit is taken from a lot and evaluated, and the buying decision is based on the conclusions.

false; sampling refers to a purchasing method in which a representative unit is taken from a lot and evaluated, and the buying decision is based on the conclusions

T F The four categories of consumer markets are producer, reseller, government, and institutional

false; the four categories of business markets are producer, reseller, government, and institutional

T F Grocery stores and supermarkets are a part of producer markets

false; they are resellers

T F The five-stage business buying decision process is used primarily for routine, straight rebuy purchases

false; used entirely for new-task purchases

When certain consumer products are in high demand, producers might buy extra materials and equipment and when demand subsides, producers will cut back on their material purchases. This describes _____ demand. a) joint b) inelastic c) consumer d) fluctuating e) derived

fluctuating

Management at Readyfresh Dry Cleaners is concerned that it maintains a high level of service for its business accounts. How should the firm monitor the level of service these customers receive? a) Develop a code of service. b) Set service objectives. c) Formally survey customers. d) Specify service uniformity. e) Stress truthfulness with employees.

formally survey customers

Administrative assistants that control the flow of information to other people in the organization often play the _____ role in the buying center. a) gatekeeper b) user c) influencer d) buyer e) controller

gatekeeper

Barry Gluckman of WP International, a major marketer of word-processing software, calls the secretary of Renee Dorchette, director of purchasing for MMK, Inc. He sets up an appointment to discuss an upcoming purchase of software. The secretary plays the role of ___________ in this purchase decision. a) gatekeeper b) buyer c) decider d) buying center captain e) order giver

gatekeeper

Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV's. It also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states. Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual consumers are in the midwestern states, while dealers who sell to small business landscaping companies tend to be located in the northeastern states. Company executives are considering expansion of its distribution to markets in the midwest. When Precision Brake's sales team calls on tractor manufacturing companies, the first person they usually talk to is the receptionist. In this example, the receptionists would be considered to be ________, part of the buying center. a) gatekeepers b) influencers c) users d) buyers e) controllers

gatekeepers

The recently created Department of Homeland Defense is a member of the _____ market. a) regulatory b) reseller c) government d) producer e) institutional

government

Which type of business market tends to have the most complex buying procedures? a) Reseller b) Institutional c) Retailer d) Government e) Producer

government

As it places its order for truck tires with Michelin, South Side Industrial Supply realizes that it must also place an order for valve stems and balancing weights for the truck tires. Such business products are characterized as having ____________ demand. a) derived b) inelastic c) joint d) fluctuating e) higher

joint

Compared with consumer goods, marketers aiming at business customers a) do not need to select target markets. b) have an enormous amount of information available concerning potential customers. c) have more difficulty in determining where their customers are located. d) are restricted in the types of promotion they can use. e) have more difficulty in estimating customers' purchase potentials.

have an enormous amount of information available concerning potential customers

Demand for business products is also known as ______ demand. a) derived b) corporate c) business buying d) manufacturing e) industrial

industrial

Input-output analysis is most likely to yield what type of information? a) Number of employees that a firm has b) Industries that purchase the major portion of an industry's output c) Kinds of returns a firm is getting on its equipment investments d) Type of inventory turnover that is characteristic of a firm e) Kinds of variables that would be used to segment the target market

industries that purchase the major portion of an industry's output

Demand for a business product is ___________ if a price increase or decrease will not significantly affect that demand. a) elastic b) inelastic c) derived d) joint e) separate

inelastic

In placing a tire order with Michelin, South Side Industrial Supply finds that the truck tires it is ordering have increased $37.50 in price since the last order. South Side proceeds with the order, confident that it can pass on the price increase to future customers. This is an example of business products having ___________ demand. a) derived b) inelastic c) joint d) fluctuating e) higher

inelastic

The student senate at your university has been asked to give input on the purchase of new computers for campus computer labs. In this instance, the student senate would be acting as a(n) ______. a) buyer. b) gatekeeper. c) user. d) influencer. e) decider.

influencer

Collin Roberts of Roberts Construction is planning to buy a piece of used earth-moving equipment. He would most likely base his purchase decision on ___________ of the alternative machines. a) descriptions b) inspections c) a sampling d) specifications e) reputations

inspections

Churches, charitable organizations, and private colleges are considered _____ buyers. a) corporate b) government c) institutional d) producer e) nonprofit

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. a) producer b) consumer c) reseller d) institutional e) government

institutional

Which one of the following countries will not be included in the data presented in the new industry classification system that is replacing the SIC? a) Mexico b) Canada c) United States d) Japan

japan

T F Feedback acquired during the fifth stage of the business buying decision process is kept on file but not used as a reference for future business purchase decisions

jfalse

A disadvantage of reciprocity is that it can lead to a) a price war. b) higher promotional costs. c) more competitive firms entering the industry. d) less-than-optimal purchases for the buyer. e) longer periods of negotiation.

less-than-optional purchases for the buyer

Anderson Distribution Company has purchased 15 forklifts over the past two years. As it plans to place its next order for another five machines, management wonders if additional features may be needed in order to handle changes in the product lines it carries. For Anderson, these new forklifts represent a ___________ purchase. a) new-task b) repetitive c) straight rebuy d) repetitive order e) modified rebuy

modified rebuy

When the requirements associated with a new-task purchase are changed the second or third time, this is called a ___________ purchase. a) modified rebuy b) continued new-task c) contractual d) straight rebuy e) negotiated rebuy

modified rebuy

Most business purchases can be classified as belonging to one of three types: a) delinquent, repetitive, or delivered. b) repetitive, new-task, or modified rebuy. c) modified rebuy, new-task, or straight rebuy. d) delinquent, new-task, or reciprocal. e) rebuy, reciprocal, or delayed.

modified rebuy, new-task rebuy, or straight rebuy

St. Jude's Hospital decides to redo its kitchen with new flooring, cabinets, counters, and appliances. The hospital compiles a description of the project and then asks sellers to submit bids. After determining the most attractive bids, the hospital will then work with two or three companies to determine who will get the contract. This is an example of using ______ for a purchase decision. a) sampling b) negotiation c) inspection d) elimination e) description

negotiation

Perry Supply's sales and sales force have continued to expand. Now, the firm plans to add a fleet of company cars as part of its sales compensation package. For Perry Supply, these vehicles would represent a ____________ purchase. a) modified rebuy b) straight rebuy c) new-task d) reevaluated e) repetitive

new-task

Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods, and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun negotiations with their sales representatives. 110. What type of business purchase is Samsung undertaking? a) Modified rebuy b) Straight rebuy c) New-task d) Straight purchase e) New rebuy

new-task

When a business is making its initial purchase of an item to be used to perform a new job, it is known as a _________ purchase. a) straight rebuy b) reciprocal c) delayed d) new-task e) modified rebuy

new-task

All of the following are important concerns of business customers except a) achieving a specific level of quality in the products offered to target markets. b) obtaining a level of quality that meets specifications. c) obtaining products that exceed specifications to ensure the best possible product performance. d) obtaining products for which the quality level is consistent. e) supporting customers with services they expect.

obtaining products that exceed specifications to ensure the best possible product performance

T F When the major component of an item experiences a price increase, the demand for the item may become more elastic

true

Which of the following statements about business buying is false? a) Business marketers prefer not to sell to customers who place small orders. b) Business marketers must often sell their products in large quantities to make profits. c) Most business purchases are made by committee. d) Business purchases are usually made on the basis of contracts. e) Orders in business markets tend to be smaller than those placed in consumer markets.

orders in business markets tend to be smaller than those placed in consumer markets

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. a) environmental b) organizational c) interpersonal d) individual e) demographic

organizational

Institutional markets are a) intermediaries who resell goods to make a profit. b) federal and state government units. c) state or local government units. d) consumers who buy products for their own use. e) organizations that seek nonbusiness goals.

organizations that seek nonbusiness goals

Raython Hardware and Thames Industrial Supplier have worked closely for many years and have a mutually beneficial relationship in which Raython provides all of Thames's hardware needs in a timely manner. Raython and Thames's relationship could be best characterized as a(n) a) reciprocity agreement. b) partnership. c) intra-organizational group. d) alliance. e) tying arrangement.

partnership

Many suppliers and their customers invest time and resources to build and maintain mutually beneficial relationships which are often called a) partnerships. b) co-ops. c) monopolies. d) reciprocity. e) alliances.

partnerships

Individual influencing factors refer to a) relationships among those in the firm's buying center. b) uncontrollable environmental forces. c) the power an individual controls in the buying center. d) personal characteristics of individuals in the buying center. e) activities of suppliers.

personal characteristics of individuals in the buying center

Product specifications are a) physical characteristics and level of quality. b) types of services that are provided with the product. c) financing available for the product. d) types of competitors offering similar products. e) product return policies.

physical characteristics and level of quality

Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods, and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun negotiations with their sales representatives. Which of the following groups should Samsung not include in its buying center for the new equipment? a) Purchasing agents at Samsung b) Eventual users within Samsung c) Potential future Samsung customers d) Gatekeepers within Samsung e) Senior managers at Samsung

potential future samsung customers

Inelastic demand in business markets refers to a situation where a) demand for a given product fluctuates very little over time. b) price increases or decreases will not significantly change demand for a given product. c) demand for a given product fluctuates significantly over time. d) demand for one product depends heavily on the demand for another product. e) supply for a given product cannot keep pace with the demand for it.

price increases or decreases will not significantly change demand for a given product

An accountant who purchases software for maintaining clients' books is an example of a buyer in a(n) ___________ market. a) consumer b) producer c) reseller d) government e) institutional

producer

Individuals and business organizations that purchase products for the purpose of making a profit either by using the products to produce other products or by using them in their operations are classified as ___________ markets. a) consumer b) institutional c) producer d) government e) reseller

producer

Motorola buys silicone which is used in its chip-making process. Motorola produces microchips for use within a wide variety of products for other firms, such as Ford, GM and Samsung. Motorola is a buyer in a _____ market. a) producer b) government c) reseller d) construction e) institutional

producer

Business markets are typically divided into four categories. These categories are a) retailers, wholesalers, services, and nonprofit firms. b) producer, manufacturer, reseller, and government. c) producer, reseller, government, and institutional. d) manufacturer, wholesaler, retailer, and services. e) reseller, retailer, government, and institutional.

producer, reseller, government, and institutional

After deciding to order replacement parts for aging machinery, the buyer for a construction company examines catalogs and trade publications looking for these parts. The buyer is at which stage in the business buying decision process? a) Problem recognition b) Product specification c) Product-supplier search and evaluation d) Product-supplier selection e) Product-supplier post-evaluation

product-supplier search and evaluation

A practice in which two businesses agree to buy from each other is a) a new task purchase. b) a straight rebuy. c) a modified rebuy. d) reciprocity. e) a straight purchase.

reciprocity

Bob Denton of Denton Pest Control buys equipment from a supplier because that supplier hires him to spray the warehouse for insects periodically. This practice is known as a) cost-benefit analysis. b) cooperative selling. c) reciprocity. d) supplier agreement. e) modified rebuy purchase.

reciprocity

Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods, and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun negotiations with their sales representatives. What was the first step of the buying decision process that Samsung went through when looking for the quasi-assembly pods? a) Searching for products and suppliers b) Selecting and ordering the most appropriate product c) Recognizing the problem or need d) Establishing product specifications e) Evaluating the product relative to specifications

recognizing the problem or need

The stages of the business buying decision process, in order, are a) recognizing the problem, establishing product specifications, searching for products and evaluating possible suppliers, selecting suppliers and products, and evaluating performance. b) recognizing the problem, searching for products and evaluating possible suppliers, selecting suppliers and products, establishing product specifications, and evaluating performance. c) recognizing the problem, selecting suppliers and products, evaluating performance, establishing product specifications, and searching for substitute products. d) establishing product specifications, recognizing the problem, searching for products, evaluating possible products and suppliers, selecting suppliers and products, and evaluating performance. e) establishing product specifications, searching for products, selecting suppliers and products, evaluating performance, recognizing the problem, and evaluating possible products and suppliers.

recognizing the problem, establishing product specification, searching for products and evaluating possible suppliers, selecting suppliers and products, and evaluating performance

In business markets, individuals or groups purchase products for one of three purposes. These purposes are a) resale, wholesale, and direct use. b) wholesale, direct use, and use in producing other products. c) resale, wholesale, and use in producing other products. d) resale, direct use in producing other products, and use in general daily operations. e) use in general daily operations, wholesale, and resale.

resale, direct use in producing other products, and use in general daily operations

The three purposes for which individuals or groups can use products in order for it to be considered a business market are a) use in daily operations, end consumption, and resale. b) direct use in producing other products, company travel, and end consumption. c) resale, use in daily operations, and direct use in producing other products. d) governmental, institutional, and reseller purposes. e) making other products, selling to other businesses, making component parts

resale, use in daily operations, and direct use in producing other products

Individuals and business organizations that buy finished goods and resell them to make a profit without changing the physical characteristics of the product are classified as ___________ markets. a) consumer b) institutional c) producer d) government e) reseller

reseller

Mike's Roadside Market buys produce from area farmers, marks the merchandise at a price that includes some profit, and then sells the fruit and vegetables to the people in and around Centerville. Mike's would be classified as part of a ___________ market. a) consumer b) producer c) government d) reseller e) wholesaler

reseller

Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV's. It also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states. Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual consumers are in the midwestern states, while dealers who sell to small business landscaping companies tend to be located in the northeastern states. Company executives are considering expansion of its distribution to markets in the midwest. 114. When Precision Brake sells to the individual dealers, they would be considered which of the following business types? a) Producer b) Reseller c) Government d) Institutional e) Covert

reseller

Retailers like Target and Kmart are considered to be members of which business market? a) Reseller b) Customer c) Producer d) Institutional e) Services

reseller

Snappy Tools, Inc., purchases hammers, bolts, and other hardware items from a variety of manufacturers and sells them to hardware stores at a price that includes a profit for Snappy Tools, Inc. The company would be part of what type of business market? a) Reseller b) Producer c) Consumer d) Government e) Supply

reseller

Kroger Grocery Store is an example of a reseller. Which of the following factors concerning reseller purchase decisions is false? a) Resellers are concerned with the level of demand for the product. b) Resellers are not concerned with how much space the product takes up as long as it has a high price. c) Resellers want producers to be able to supply adequate quantities of the product. d) Resellers are concerned with the availability of technical and promotional assistance from the producer. e) Resellers are concerned with the markup percentage they can get on the product.

resellers are not concerned with how much space the product takes up as long as it has a high price

Because retailers have to be concerned with product selection, price, and space, they often evaluate products on the basis of a) their markup. b) sales per square foot of selling area. c) how many of the product they can fit in a certain amount of space. d) profit per dollar of selling price. e) the reliability of the supplier.

sales per square foot of selling area

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? a) Description b) Inspection c) Sampling d) Negotiation e) Selection

sampling

A representative product taken from a lot or batch, evaluated, and purchased refers to a) homogeneous selection. b) description. c) trust. d) negotiated inspection. e) sampling.

sampling

Which method of business buying is necessary when products are highly homogeneous and examination of each item is not feasible? a) Negotiation b) Sampling c) Description d) Inspection e) Homogeneous selection

sampling

The third stage in the business buying decision process is to a) evaluate product specifications to solve the problem. b) evaluate products relative to specifications. c) select and order the most appropriate product. d) evaluate product and supplier performance. e) search for products and suppliers.

search for products and suppliers

The state of Montana is preparing to buy a large quantity of frozen orange juice for use in a large school district. Citrus Sweet, Inc. is in the citrus juice business but has never sold to the government market. To have a chance at getting this order, Citrus Sweet's first step must be to get her firm to a) make a presentation appointment with the state. b) quote prices to the purchasing department. c) advertise in the capital city. d) negotiate with the state. e) secure a slot on the list of qualified bidders.

secure a slot on the list of qualified bidders

_________ is(are) a major threat to the sales success of jointly demanded products. a) Price changes b) Shortages c) Economic instability d) Inventory buildup e) Proliferation of brands

shortages

An organization that decides to buy all of a certain part from the same company is using a) single-supplier purchasing. b) multiple sourcing. c) same vendor analysis. d) straight rebuy. e) sole sourcing.

sole sourcing

In its purchase of desktop business computers, Albertson's asked that potential suppliers provide information only on units with 4.0 gigabytes of memory. As Albertson's management evaluates this purchase, it finds that 4.0 gigabytes are 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? a) Searching b) Specification development c) Alternative evaluation d) Selection e) Performance evaluation

specification

Volkswagen purchases upholstery for the interiors of its vehicles from various suppliers. This upholstery must have a set of characteristics that is expressed by Volkswagen. This set is called a) descriptions. b) product features. c) criterion. d) purchase requests. e) specifications.

specifications

Ben Davideau is assigned by his sales manager to come up with the names and addresses of twenty firms in his territory that have some potential for using sizable quantities of his firm's products. Wanting to be as efficient as possible, Ben looks in a) Sales & Marketing Management. b) an SIC listing. c) the Census of Business. d) the Census of Manufacturers. e) Standard & Poor's Register.

standard & poor's register

A representative from Coca-Cola stops by at a local fast-food restaurant once a month to inquire how much soft drink syrup the store will need. The restaurant's orders are an example of which type of business purchase? a) New-task b) Modified rebuy c) Straight rebuy d) Bid e) Negotiated

straight rebuy

Safeway Supermarkets recently placed an order with the Kahn Corporation. Safeway has ordered these same products before under the same terms of sale. What type of purchase does this situation represent? a) New-task b) Repetitive c) Institutional d) Straight rebuy e) Modified rebuy

straight rebuy

When a business routinely purchases the same product with similar terms of sale, the purchase is called a a) new-task. b) repetitive purchase. c) straight rebuy. d) modified rebuy. e) standard order.

straight rebuy

88. The group of people within a business who are involved in making business buying decisions is referred to as a) the new-task team. b) negotiators. c) purchasing agents. d) deciders. e) the buying center.

the buying center

A friend of yours starts his own business. He would like to expand his client base to include the government, but he believes his small business would be ignored. Based on your knowledge from the text, you tell him a) that he's absolutely right, the government doesn't deal with small businesses. b) although the government will deal with small businesses, he will never make a profit off a government contract. c) that any government, federal, state, or local would laugh at the size of his business. d) the government rarely considers new suppliers when making purchasing decisions. e) the government buys products from all sizes of business, but there is some red tape.

the government buys products from all sizes of business, but there is some red tape

T F Vendor analysis is a formal, systematic evaluation of current and potential vendors that focuses on a variety of dimensions including price, product quality, delivery service, product availability, and overall company reliability

true

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? a) The government will request bids from all companies on its qualified bidder list. b) It will contact whatever company made the last jets and have them develop the new ones. c) Ads will be placed in the top five circulated U.S. newspapers for a company to produce the jets. d) The government will select a few firms and enter into negotiations with them until the contract is awarded. e) The contract will go to the first company that submits a reasonable bid for the desired jets.

the government will select a few firms and enter into negotiations with them until the contract is awarded

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. a) how many different suppliers they use b) how many parts can fail c) controlling when shipments will arrive d) the percentage of defects allowed e) how long the parts should last

the percentage of defects allowed

Which of the following would be considered an institutional buyer? a) The University of Illinois b) The Environmental Protection Agency c) Apple Computers d) The United Way e) City of Greenville

the united way

T F A new-task purchase is one in which the business makes an initial purchase of a new item

true

T F All three NAFTA countries will convert to the NAICS over the next few years

true

T F An example of a business market would be farmers

true

T F Business customers generally seek to obtain detailed information about a product before purchasing it

true

T F Business purchasing agents may indirectly contribute to the satisfaction of their own personal needs by helping their firms achieve organizational objectives

true

T F Buyers in producer markets purchase either raw materials or semifinished products

true

T F Government markets, although complicated in their requirements, can be very lucrative

true

T F In some cases, the types of services offered by a supplier may constitute a primary advantage over suppliers of similar products.

true

T F In the buying decision process, one of the activities included in the search for products and suppliers is examining catalogs and trade publications

true

T F Industrial classification systems allow marketers to divide business customers into groups based mainly on the types of goods and services provided.

true

T F Industrial demand derives from consumer demand

true

T F On-time delivery is crucial to a business customer, since a late delivery may hold up a production line or cause the firm to lose sales.

true

T F Problem recognition can be stimulated by external sources, such as trade shows or sales representatives

true

T F Raw materials are especially affected by joint demand.

true

T F Reseller markets consist of intermediaries that buy finished goods and resell them for profit.

true

T F Retailers purchase products and resell them to final consumers

true

T F Sometimes initial demand for a business product will drop following a price cut if buyers believe that further price reductions are forthcoming

true

T F The North American Industry Classification System includes all three NAFTA partners.

true

T F The demand for many business products is inelastic at the industry level.

true

T F The increase in government purchases has resulted partly from the increase in the number of services provided by the government

true

T F The owner of a trucking business, who buys gasoline from the nearby service station for the company trucks, is a part of a business market

true

T F Value analysis focuses primarily on the examination of the cost of products relative to design, quality, and materials used.

true

T F 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

true

Analysis of business input-output data by the federal government allows the government to have a better understanding of the a) cash flows that exist among industries. b) raw materials and labor required to produce a given product. c) amount of reinvestment that different industries use. d) types of industries that purchase particular products. e) growth projections for a given industry.

types of industries that purchase particular products

Christy Bridgman is considering the purchase of a new fax machine for her real estate office. She is considering a machine that doesn't have as many functions but is available at a considerably lower price than her current machine. She is engaged in ___________ analysis. a) vendor b) downsizing c) strategic d) value e) profit

value

During the search for products and evaluating possible suppliers stage of the business buying decision process, marketers sometimes use _________ analysis to examine the quality, design, materials, and possibly item reduction in order to acquire the product in the most cost-effective way. a) cost b) value c) profit d) strategic e) SWOT

value

___________ analysis is a systematic evaluation of current and potential suppliers that focuses on many dimensions including price, product quality, delivery service, product dependability, and overall company reliability. a) Value b) Vendor c) Buying center d) Strategic e) Cost

vendor