Chapter 7 "Test your Knowledge"
Situations where price increases or decreases do not alter the demand for a product are known as _____ demand.
Inelastic
_______ markets are defined as organizations with charitable, educational, community, or other nonbusiness goals.
Institutional
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.
Which of the following is a disadvantage of reciprocity?
can result in less-than-optimal purchases for the buyer.
An electrician who purchases light switches for installation in a client's new construction project is an example of a(n) _______ market.
Producer
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
The search and evaluation of possible products and suppliers is the _____ step in the business buying decision process.
3rd
Which of the following would be classified as an institutional buyer?
American Cancer society
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
_____ refer to the group of people within a business who are involved in making business buying decisions.
Buying Centers
Which of the following countries is not included in the North American Industry Classification System (NAICS)?
China
The North American Industry Classification System (NAICS) _____.
Contains the most up-to-date information for the NAFTA partners.
Which of the following is not a type of demand for business products?
Dependent
______ demand is defined as demand for business products that stems from demand for consumer products.
Derived
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.
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.
False
After identifying a group of potential customers by industry and location, the next step is to begin production.
False
Business purchasing decisions are typically made by:
Firm's buying center
Which of the following is an example of a limitation of the North American Industry Classification System (NAICS)?
Ford Motor Company maintains its own distribution system and frequently ships supplies and/or finished vehicles around the globe to other Ford Motor Company locations. The NAICS may double count this transfer of products which affects the data quality and accuracy.
The _______ business market is characterized as having the most complex procedures when purchasing products or services.
Government
When the County Sherriff's office purchases laptop computers for use in the deputy vehicles, the purchase would be considered:
Governments purchase
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
The majority (more than 90%) of B2B buyers use _____________ to gather research before making a purchase.
Internet
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 _______ 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
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
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
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)_______ 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
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
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
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
The _____ method of business buying entails evaluating a portion of the product on the assumption that its characteristics represent the entire lot.
Sampling
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
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
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
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.
Glendale High School would be an example of an institutional market.
True
Value analysis focuses primarily on the examination of the cost of products relative to design, quality, and materials used.
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.
True
The buying center would like to include which of the following entities?
Users
_______ 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
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
Firms that purchase products from manufacturers and resell the products to other firms in the distribution system are known as:
Wholesalers
If demand for a business product is inelastic:
a price increase or decrease will not significantly alter demand for the item.
What is the second stage of the business buying decision process?
develop product specifications
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
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
Sororities and fraternities on college or university campuses who make purchases for goods or services utilized in their daily operations are considered:
institutional markets
What are the three types of business purchases?
new task, modified rebuy, and straight rebuy.
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
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.
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
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
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.
