MARK Chp 7

NAICS is an industry classification system used by most nations of the world.

False As its name indicates, NAICS (North American Industry Classification System) has been adopted only by Mexico, Canada, and the United States.

Although customer service has in the past been an important factor in business buyer-seller relationships, its importance has been waning in the last decade.

False Business marketers are increasingly recognizing the importance of customer service.

Because formal committees are often established to purchase business products, members of buying centers can be readily identified on formal organizational charts.

False Buying centers do not appear on formal organizational charts.

For a product to be called a business product, it must be used to manufacture other products, become part of another product, or facilitate the normal operations of a firm.

True

If Ford purchased the same number of brakes from NUCAP on a regular basis, it would be participating in a straight rebuy

True

The role of gatekeeper may be filled by a receptionist.

True

The single largest customer in the world is the U.S. federal government.

True

Unlike consumer product channels of distribution, which usually have one or more intermediaries, channels of distribution for business products are often direct.

True

Shimano sells the fishing and golfing equipment it manufactures to sporting goods stores, which in turn sell the equipment to anglers and golfers. Shimano is engaged in business marketing.

True Business marketing is the marketing of goods and services to individuals and organizations for purposes other than personal consumption. Shimano sells to a reseller that is not purchasing for its personal consumption.

The emergence of the Internet has made buying and selling in the business market a process that is only efficient for the largest producer to pursue.

False Even the smallest businesses are finding they are able to compete successfully with their largest competitors as a result of the Internet.

A keiretsu is an example of how companies can develop into a network of interlocking corporate affiliates.

True

Any firm that purchases goods and services to make a profit by using them to produce other goods is part of the producer segment of the business market.

True

Consumable items that do not become part of the final product are called supplies.

True

Imagine 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

a. 7432 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

_____ is the bargaining between buyers and sellers on product specifications, delivery dates, payment terms, and other pricing matters and is commonplace in business marketing. a. Negotiation b. Need mediation c. Customerization d. Purchase arbitration e. Disintermediation

a. Negotiation Negotiating is common in business marketing.

Which of the following statements does NOT describe the business market? a. Organizational 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.

a. Organizational buying decisions are usually made independently by a purchasing agent while consumer buying decisions are made jointly. Organizational buying decisions usually involve many more people than a consumer purchase.

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

a. buying center The roles in the buying center include initiator, influencers/evaluators, gatekeepers, decider, purchaser, and users.

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

a. customer service Customer service has become the focus, rather than products or other aspects of the marketing mix, for successful marketing strategies.

_____ 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

b. Supplies MRO stands for maintenance, repair, or operating supplies.

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

b. amae Amae is the feeling of nurturing concern for, and dependence on, another, and reciprocity and personal relationships contribute to amae. Keiretsu is a network of interlocking corporate affiliates.

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

b. convenience goods The types of business products are major equipment (installations), accessory equipment, raw materials, component parts, processed materials, supplies, and business services.

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

b. is direct Direct channels, where manufacturers market directly to users, are much more common in business markets than in consumer markets.

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 vice-president 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

d. refers to all those organizational members who become involved in the purchasing process Membership and influence in a buying center vary from company to company. There is no formal buying center structure.

Businesses that buy finished goods and sell and distribute them for a profit are called: a. inventory carriers b. producers c. distribution networks d. resellers e. business facilitators

d. resellers The reseller market includes retail and wholesale businesses that buy finished goods and resell them for a profit.

A routine purchasing situation in which the purchaser is not looking for new information or at other suppliers is called a: a. modified rebuy b. value buy c. synergistic buy d. straight rebuy e. make-or-buy

d. straight rebuy Purchasing contracts are commonly used

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

d. the North American Industry Classification System NAICS codes enhance companies' marketing efforts. developed by North American Free Trade Agreement partners

_____ 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

e. Stickiness 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.

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

e. be much more geographically concentrated Over one-half of all U.S. business consumers are concentrated in just seven of the fifty states.

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

e. component parts

Another commonly used term for accessory equipment is installations.

False Another commonly used term for major equipment is installations.

OEM stands for operationally efficient marketing.

False OEM stands for original equipment manufacturer.

Individual producers of raw materials have great flexibility in pricing their products.

False Prices of raw materials are set by the market, and individual producers have little pricing flexibility.

While consumer and business markets differ in many ways, the volatility of demand for products is about the same for each type of market.

False The demand for business products tends to be more unstable than the demand for consumer products.

The first two digits of a NAICS code designate an industry group, such as fiber, yarn, and thread mills.

False The first two digits designate a major economic sector such as agriculture or manufacturing.

The government sector (federal, state and local) is a minor segment of the business market

False The government is a major segment of the business market.

The reseller market is the same as the retailer market.

False The reseller market includes both retailers and wholesalers.

The Internet has eliminated the need for distributors.

False This has not occurred although many experts thought it would. Relationships with knowledgeable distributors have remained important.

If DuPont runs advertisements encouraging people to buy clothing that contains Lycra (a DuPont product), this would be an attempt to influence secondary demand.

False This is an attempt to influence derived demand.

A decline in the availability of tungsten will slow production of light filaments, which will in turn reduce the demand for light bulbs. This is an example of fluctuating demand.

False This question describes joint demand. Joint demand occurs when two or more items are used together in a final product.

Items that are ready for assembly and that retain their identities when incorporated into another product are called component parts.

True

Most business marketers emphasize personal selling as their primary communications tool.

True

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

a. accessory equipment

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

a. decider

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 and is often called the _____ market. a. institution b. OEM c. service d. provider e. reseller

a. institution Institutions such as schools, churches, and hospitals have service or activity goals, but not profit goals, yet are an important business market.

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

a. purchase volume

DHL maintains a strategic alliance with UPS because it has confidence in UPS's reliability and integrity. This condition is referred to as: a. trust b. tomo c. commitment d. amae e. reciprocity

a. trust Trust is the condition that exists when one partner has confidence in an exchange partner's reliability and integrity.

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

a. type of strategic alliance commonly found in Japan A keiretsu is a network of interlocking corporate affiliates in Japan.

All of the following are current roles of the Internet in business marketing EXCEPT: a. reduce costs b. eliminate distributors c. build partnerships and alliances d. build and support branding e. integrate online and traditional media

b. eliminate distributors The Internet has not eliminated the need for distributors. Disintermediation (elimination of intermediaries) has occurred less frequently than was expected.

Business buyers use a variety of criteria to evaluate alternative products and suppliers. The three most important criteria, in order of importance, are usually: 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

b. quality, service, and price Quality is the most important criterion, followed by service and price.

_____ 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

c. Business marketing

_____ 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

c. Personal selling Business sales tend to be large in dollar amounts and quantities and may require negotiation and thus may rely heavily on the salesperson's ability to communicate and work with the customer.

A small retailer hired an accountant to run its payroll and pay its taxes. The accountant provided the retailer with: a. OEMs b. processed services c. business services d. accessory services e. service supplies

c. business services Business services functions performed by outside providers.

PAS Systems has developed a new product--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. After seeing a prototype brought back by one of its employees from a highway safety convention, the Georgia Governor's Office of Highway Safety decided to equip every DUI officer with one. In this example, the individual who attended the convention had the roles of _____ in the buying center. a. buyer and decider b. decider and user c. gatekeeper and influencer d. initiator and decider e. purchaser and gatekeeper

c. gatekeeper and influencer As an influencer, the person brought the flashlight to the attention of his or her office. As a gatekeeper, the person determined whether to show the flashlight or keep the information private.

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

c. inelastic When demand for a product is inelastic, an increase or decrease in the price of the product will not significantly affect demand for the product.

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

c. joint

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

c. original equipment manufacturers Original equipment manufacturers (OEMs) include all individuals and businesses that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.

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

c. processed materials

A cooperative agreement between business firms is a: a. shared capital contract b. global partner development strategy c. strategic alliance d. joint contract e. comarketing effort

c. strategic alliance

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

d. derived The demand for business products is called derived demand because organizations buy products to be used in producing their customers' products. Derived demand for a business product comes from the original consumer demand.

The _____ is the member of the buying center who regulates the flow of information. a. decider b. influencer c. purchaser d. gatekeeper e. user

d. gatekeeper

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

d. identify potential new customers NAICS data, when compared from year to year, can pinpoint which industries are growing and, hopefully, identify market opportunities.

A _____ buying 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

d. modified rebuy A modified rebuy is a situation where the purchaser wants some change in the original good or service.

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, 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

d. modified rebuy Axel already had PCs, they just decided to make a switch to Apple, which is an example of a modified rebuy.

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

d. multiplier effect 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.

_____ 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

d. new buy purchase of a product or service when a new demand arises

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

d. producer

Texas Instruments has developed a detailed Values and Ethics Statement and Code of Business Conduct. Why did they choose to create this? a. Because it makes TI look good b. TI's suppliers will only buy from them if they have this statement c. U. S. law requires a code of ethics d. Consumers demand ethical practices e. A Code of Ethics helps guide buyers and sellers and overall helps the company to follow ethical practices

e. A Code of Ethics helps guide buyers and sellers and overall helps the company to follow ethical practices Ethics can be the standard of behavior in which a company is judged. Having a Code of Ethics can help guide a Company.

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

e. installations

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

e. practicing reciprocity Reciprocity is the practice of business purchasers choosing to buy form their own customers.

Unprocessed extractive or agricultural products, such as copper, peanuts, soybean, bauxite, fruits, ore, etc., that become part of finished products are examples of: a. supplies b. OEM parts c. component parts d. processed materials e. raw materials

e. raw materials Raw materials are unprocessed extractive or agricultural products.

Which of the following means that a firm believes that 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

e. relationship commitment