Deck 6: Understanding Organizations As Customers

Question 1

When JCPMedia buys paper for JCPenney newspaper inserts, it considers suppliers' forest management and other sustainability practices. JCPMedia buyers consider these as part of the process to

A) fulfill profit responsibilities.
B) formally evaluate paper supplier capabilities.
C) eliminate the need for online purchasing.
D) shorten the value chain.
E) fulfill the auditing role.

Answer 1

B

Question 2

Which of the following is a service business within the industrial market?

A) construction
B) mining
C) insurance
D) government
E) farming

Answer 2

C

Question 3

The services market sells diverse services such as legal advice, auto repair, and dry cleaning, and this market represents 75 percent of all industrial firms. Which of the following is another such service firm?

A) communication
B) wholesalers
C) retailers
D) government units
E) educational institutions

Answer 3

A

Question 4

________ comprise the highest percentage of firms in industrial markets.

A) Manufacturing firms
B) Construction firms
C) Agricultural firms
D) Mining companies
E) Service companies

Question 5

Which of the following types of firms are in the industrial market?

A) retailing
B) fisheries
C) wholesaling
D) state governments
E) federal regulatory agencies

Question 6

Which of these statements regarding organizational buyers is most accurate?

A) Wholesalers and retailers resell the goods they buy without reprocessing them.
B) Wholesalers and retailers alter the goods they sell to meet the specific needs of their customers prior to resale.
C) Manufacturers purchase processed goods and resell them to suppliers who in turn resell them to ultimate consumers.
D) Ultimate consumers can be considered organizational buyers when they purchase in large quantities.
E) Government agency purchases are more similar to ultimate consumer purchases than they are to wholesalers and retailers.

Question 7

Manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that buy goods and services for their own use or for resale are referred to as

A) multinational buyers.
B) resellers.
C) organizational buyers.
D) ultimate consumers.
E) institutional buyers.

Question 8

A firm that reprocesses a product or service it buys before selling the product again to the next buyer is referred to as

A) an industrial firm.
B) a reseller firm.
C) a government agency.
D) a wholesaler.
E) a retailer.

Question 9

Purchasing paper for JCPMedia is one example of

A) organizational buying.
B) online buying.
C) on-time delivery.
D) derived demand.
E) cooperative selling.

Question 10

JCPenney looks at several capabilities when selecting a paper supplier. These organizational buying criteria include on-time delivery, the availability, quality and quantity of selected grades of paper, forestry management and sustainable practices, and price. This examination would be done during the ________ stage of the organizational buying decision process.

A) procurement analysis
B) break-even analysis
C) purchase decision
D) information search
E) alternative evaluation

Question 11

Organizational buyers are

A) wholesalers, retailers, and service companies that buy goods and services exclusively for resale.
B) any organization that buys products and services for their own use or for resale.
C) not-for-profit organizations that buy goods and services for their own use.
D) firms that typically buy physical goods and resell them again without any reprocessing.
E) all buyers in a nation, including ultimate consumers.

Question 12

Which of the following organizational buyers purchases raw materials and parts to reprocess into the finished goods they sell?

A) retailers
B) wholesalers
C) agents
D) manufacturers
E) ultimate consumers

Question 13

The marketing of goods and services to companies, governments, or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others is referred to as

A) integrated marketing.
B) institutional marketing.
C) business-to-business marketing.
D) reseller marketing.
E) organizational marketing.

Question 14

Organizational buyers include manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that

A) purchase exclusively from one supplier.
B) are exempt from state and local taxes.
C) sell directly to ultimate consumers.
D) sell goods and services for their own use.
E) buy products and services for their own use or for resale.

Question 15

Organizational buyers are divided into three markets, which are

A) industrial, wholesaler, and retailer.
B) industrial, retailer, and government.
C) retailer, manufacturer, and government.
D) industrial, government, and ultimate consumer.
E) industrial, reseller, and government.

Question 16

Which of the following exemplifies an organizational buyer?

A) A local baker buys sugar at the grocery store to make cookies with his children at home.
B) A dentist buys a new couch for her apartment.
C) An architect hires an Uber to take him to the airport for a vacation.
D) The owner of an office building contracts with a service to provide overnight janitorial services for it.
E) The mayor rents a tuxedo to wear to his daughter's wedding.

Question 17

Business-to-business marketing refers to

A) the marketing of goods to companies, governments, or ultimate consumers for use in the creation of goods and services.
B) the marketing of products to not-for-profit organizations at a reduced fee or nominal cost for use in the creation of goods and services that they can produce and market to others.
C) the marketing of products and services to companies, governments, or not-for-profit organizations for use in the creation of products that they can produce and market to others.
D) the marketing of services in the area of intellectual property such as legal, financial, or creative consulting.
E) the marketing of an idea to create interest or generate goodwill, not just for an individual brand but also for an entire industry or product class.

Question 18

All of the following are organizational buyers except which?

A) industrial firms
B) government agencies
C) ultimate consumers
D) resellers
E) wholesalers

Question 19

Mining companies, farms, transportation, and legal services are all examples of companies in the

A) consumer market
B) cooperative market.
C) reseller market.
D) industrial market.
E) government market.

Question 20

An industrial firm

A) is one that is independently owned and takes title to the merchandise it sells.
B) buys physical goods and resells them again without any reprocessing.
C) deals exclusively with federal, state, and local governments.
D) in some way reprocesses a product or service it buys before selling it again to the next buyer.
E) only produces a product, not a service.

Question 21

The NAICS provides common industry definitions for

A) Canada, the United Kingdom, and the United States.
B) North America, Asia, and Europe.
C) North America, Central America, and South America.
D) Canada, England, and Australia.
E) Canada, Mexico, and the United States.

Question 22

Federal, state, and local agencies that buy products and services for the constituents they serve are referred to as

A) industrial markets.
B) reseller markets.
C) consumer markets.
D) government units.
E) global markets.

Question 23

Archer Daniels Midland Co. (ADM) is the world's largest cocoa-bean processor. It buys cocoa beans and converts them into cocoa powder and cocoa butter, which it then sells to companies like Hershey's that manufacture consumer products containing chocolate. ADM is operating in ________ market.

A) a consumer
B) a government
C) an industrial
D) a processor
E) a reseller

Question 24

The acronym NAICS stands for

A) National Association of Industrial Compliance Standards.
B) National Association of Industrial Communication Systems.
C) North American Industrial Communication Standards.
D) North American Industry Classification System.
E) North Atlantic Industrial Classification System.

Question 25

The City of Denver contracts with Solid Waste Management to provide trash collection services for its citizens. The city is operating as

A) a government unit.
B) an industrial market.
C) a business market.
D) a consumer market.
E) a service provider.

Question 26

The North American Industry Classification System (NAICS)

A) provides common industry definitions for North America, Central America, and South America to measure economic activity in the Western Hemisphere.
B) provides common industry definitions between Canada and the United States to measure economic activity and reduce barriers of trade for cross-border firms.
C) provides a classification system for products that is consistent worldwide.
D) provides a dealer network for products across North America, Central America, and South America.
E) provides common industry definitions for Canada, Mexico, and the United States to measure economic activity in these countries.

Question 27

European Style Furniture (ESF), headquartered in New York, acquires fine furniture from several high-quality manufacturers in Europe and enjoys exclusive distribution rights from them to sell to furniture stores throughout the United States. In this context, ESF is most likely classified as

A) a producer.
B) a reseller.
C) a service provider.
D) a government agency.
E) an industrial firm.

Question 28

Wholesalers and retailers that buy physical products and resell them without any reprocessing are referred to as

A) industrial firms.
B) reseller firms.
C) government agencies.
D) consumer product firms.
E) nonprofit firms.

Question 29

Keystone Foods, which invented the individual quick freeze process for beef, provides McDonald's with millions of pounds of chicken, beef, and fish annually for use in its restaurants. The firm sources the animal proteins from farms and processes them in a variety of ways, such as breading or freezing, before selling them to McDonald's. Keystone is operating in ________ market.

A) a heavy goods
B) a government
C) a service
D) an industrial
E) a reseller

Question 30

The North American Industry Classification System (NAICS) designates industries with a numerical code in a defined structure. A six-digit coding system is used. The first two digits designate

A) a country of origin.
B) an industry group.
C) a specific industry.
D) an individual country-level national industry.
E) a sector of the economy.

Question 31

Corning, Inc., which transforms an exotic blend of materials to create optical fiber capable of carrying much of the telephone traffic in the United States on a single strand, is operating in ________ market.

A) a consumer
B) a government
C) a service
D) a reseller
E) an industrial

Question 32

Liberty Medical Supply is a home delivery service that sells diabetes testing supplies, prescription drugs, and other supplies directly to consumers to assist them in the management of their health-related conditions. Since Liberty Medical does not make any changes to the supplies that it obtains from manufacturers, it would most likely be classified as

A) an industrial service provider.
B) a health care manufacturer.
C) an industrial firm.
D) a reseller.
E) a government agency.

Question 33

When the General Services Administration (GSA), an agency of the federal government, purchased 116 Chevy Volts from General Motors for its vehicle fleet, it was operating as

A) an industrial market.
B) a business market.
C) a consumer market.
D) a government unit.
E) a service provider.

Question 34

When Louisiana State University buys new laptops for its faculty, it is operating as

A) an industrial market.
B) a business market.
C) a government unit.
D) a consumer market.
E) a service provider.

Question 35

The NAICS groups economic activity to permit studies of

A) multi-language advertising.
B) market share, demand, or import competition.
C) growth potential in emerging markets.
D) best practices for manufacturers.
E) job outsourcing and trade flow impacts.

Question 36

Graham-Field Health Products makes hospital beds and wheelchairs from the component parts and materials it buys. It sells these manufactured products to hospitals, nursing homes, and retailers of health care products. Graham-Field Health Products operates in ________ market.

A) a consumer
B) a government
C) a service
D) an industrial
E) a reseller

Question 37

In terms of organizational markets, Amazon.com, Office Depot, and JCPenney would most likely be classified as

A) government units.
B) resellers.
C) manufacturers.
D) wholesalers.
E) industrial firms.

Question 38

1-800 Contacts is based in Draper, Utah, and sells contact lenses manufactured by other well-known companies, including Johnson & Johnson Vision Care, Ciba Vision, Bausch & Lomb, and CooperVision. It would most likely be classified as

A) an industrial service provider.
B) a health care provider.
C) a reseller.
D) an industrial firm.
E) a government agency.

Question 39

Among organizational markets, the reseller market includes

A) manufacturers.
B) logistics and supply chain providers.
C) government agencies.
D) end-user service providers.
E) retailers and wholesalers.

Question 40

The system that provides common industry definitions for Canada, Mexico, and the United States is referred to as the

A) Standard Industrial Code System (SICS).
B) United Nations Central Product Classification System (UNCPCS).
C) National Codes of Industry System (NCIS).
D) North American Industry Classification System (NAICS).
E) Federal System of International Organizations (FSIO).

Question 41

The North American Industry Classification System (NAICS) designates industries with a numerical code in a defined structure. A six-digit coding system is used. The third digit designates

A) an industry subsector.
B) an industry group.
C) a specific industry.
D) an individual country-level national industry.
E) a sector of the economy.

Question 42

Swiss specialty chemical company Ciba is the primary producer of the chemical triclosan, the antibacterial agent in many household products such as liquid soap. Consumers may have heard about research suggesting environmental and health risks associated with the cumulative effects of antibacterial agents. Changing consumer purchases provide an example of ________ demand for Ciba's triclosan product.

A) applied
B) unitized
C) industrial
D) derived
E) consumer

Question 43

Airbus manufactures commercial aircraft that it sells to a variety of airlines worldwide. Still, demand for its products often depends on rates of air travel among consumers. Demand for Airbus products is referred to as ________ demand.

A) unitized
B) reseller
C) applied
D) implied
E) derived

Question 44

During late summer and early fall, there is a large demand for containers in Asia that are used to ship consumer products from Asia to the United States in time for the holiday selling season. The demand for these containers is referred to as ________ demand.

A) unitized
B) derived
C) reseller
D) applied
E) implied

Question 45

Because orders in organizational buying are typically much larger than in consumer buying, buyers must often ________ when the order is above a specific amount, such as $5,000.

A) pay estimated sales taxes in advance
B) move up the time required to execute a purchase agreement
C) get competitive bids from at least three prospective suppliers
D) forgo the purchase because senior management is unlikely to approve it
E) create separate orders in amounts less than a certain threshold

Question 46

Important buying process characteristics in organizational buying behavior include which of the following?

A) Few large transactions are made over the Internet due to concerns of industrial espionage.
B) Negotiations, purchases, and delivery occur in real time at an accelerated rate.
C) There are often reciprocal arrangements and negotiations between buyers and sellers.
D) Most purchases are made through government-licensed negotiators.
E) Direct selling to organizational buyers is rare because it is cost-prohibitive.

Question 47

Important market characteristics in organizational buying behavior include which of the following?

A) Organizational buying behavior is basically the same as consumer buying behavior since individuals are involved in both processes.
B) Demand for industrial products is elastic instead of inelastic.
C) Demand for industrial products and services is derived.
D) Purchase orders are much more frequent and they are usually small.
E) Forecasting is not as important in organizational buying as in consumer buying.

Question 48

Derived demand means the demand for industrial products and services is driven by, or derived from, the

A) NAICS statistical models.
B) gross national product.
C) demand for consumer products and services.
D) demand for industrial products in other categories or markets.
E) demand for government products and services.

Question 49

Important product or service characteristics in organizational buying include which of the following?

A) A heavy emphasis is placed on loyalty programs and rebates.
B) Direct selling to organizational buyers is rare.
C) A fixed, nonnegotiable price is the norm.
D) Many of the products and services are technical in nature.
E) Personal relationships are preferred to online buying over the Internet.

Question 50

Concert Staging Co. provides the stage, roof system, lighting, and sound for outdoor concerts and theatrical events. The number of concert and theater events sponsored by various organizations determines how many times the company is hired to provide its services, which often depends on consumer willingness to buy event tickets. Demand for the services provided by Concert Staging Co. is considered

A) derived.
B) unitized.
C) industrial.
D) applied.
E) reseller.

Question 51

South Cape Ostrich Tanning (SCOT) is a producer of fine ostrich leathers, which are sold to manufacturers that make a variety of products from shoes to car interiors. Demand for SCOT's leather is a result of consumer interest in products such as Via La Moda handbags made from this exotic and expensive leather. SCOT has ________ demand for its product.

A) derived
B) unitized
C) industrial
D) applied
E) reseller

Question 52

The demand for industrial products and services that is driven by demand for consumer products and services is referred to as

A) secondary marketing.
B) derived demand.
C) reciprocal supply.
D) demand elasticity
E) sequential demand.

Question 53

Derived demand is

A) a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price.
B) the demand for industrial products and services that is driven by the demand for consumer products and services.
C) the relationship between total revenue and total cost to determine profitability at various levels of output.
D) the point on a demand curve where supply and demand intersect.
E) the percentage change in quantity demanded relative to a percentage change in price.

Question 54

The North American Industry Classification System (NAICS) designates industries with a numerical code in a defined structure. A six-digit coding system is used. The fifth digit designates

A) an industry subsector.
B) an industry group.
C) a specific industry.
D) an individual country-level national industry.
E) a sector of the economy.

Question 55

Spruceland Millworks in Canada makes wood pallets for transporting and storing new appliances such as stoves, freezers, and refrigerators. The demand for Spruceland pallets would be classified as

A) reactive demand, which is tied to primary economic drivers like the construction industry.
B) unitary demand, which is tied to the average income level for Spruceland and its competitors.
C) derived demand, which is tied to the sales of appliances.
D) inelastic demand, which is tied to the cost of the components of the pallets.
E) elastic demand, which is tied to the cost of the components of the pallets.

Question 56

Important characteristics in organizational buying include which of the following?

A) Many of the goods purchased are raw and semifinished.
B) A heavy emphasis is placed on maintaining standardization to keep costs down.
C) Coupons and contests are the most frequent forms of promotion.
D) A fixed, nonnegotiable price is the norm.
E) Personal relationships are preferred to online buying over the Internet.

Question 57

Which of the following statements about marketing mix characteristics in organizational buying behavior is most accurate?

A) Few large transactions are made over the Internet.
B) The actual buyer retains all of the influence in the buying decision.
C) Advertising is very simplistic in nature.
D) Direct selling to organizational buyers is the rule.
E) Only finished goods need a developed marketing mix; resellers need worry just about the transaction.

Question 58

In the organizational buying process, heavy emphasis is placed on which product or service characteristics?

A) delivery time, technical assistance, and postsale service
B) low price, buyer incentives, and extended contracts
C) buyer incentives, technical assistance, and exclusive contracts
D) quantity discounts, delivery time, and exclusive contracts
E) low price, buyer incentives, and postsale service

Question 59

All of the following statements about the purchase involved in organizational buying are true except which?

A) The length of time required to arrive at a purchase agreement can vary with size of purchase.
B) The dollar value of a single purchase made by an organization often runs into thousands or millions of dollars.
C) The size of purchase impacts who participates in the purchase decision.
D) The size of purchase impacts who makes the final decision.
E) The size of the purchase is typically smaller than it is in consumer buying but it is done more frequently.

Question 60

Important market characteristics in organizational buying behavior include which of the following?

A) large markets but orders become progressively smaller over time
B) diminishing international opportunities as more firms enter the market
C) many customers placing progressively larger orders over time
D) fewer customers but with larger orders
E) a market that functions independently of consumer demand

Question 61

The American Red Cross provides disaster relief, among many other services. As a nonprofit organization, its primary buying objective is to

A) increase profits through reducing costs.
B) increase profits through increasing donations.
C) diversify its services mix to survive an economic downturn.
D) meet the needs of those affected by disasters or other issues.
E) maintain purchase levels to support its suppliers.

Question 62

The primary reason companies have placed an emphasis on buying from minority- and women-owned suppliers and vendors is

A) new federal government regulations require it.
B) they can help a firm meet or exceed its objectives in sales, profits, or customer satisfaction.
C) it is a socially responsible action expected of leading organizations.
D) it can attract new target markets.
E) these companies will work harder for less money.

Question 63

When the Deere & Company employs engineers who work full-time with the company's suppliers to improve their efficiency and quality and reduce their costs, it is practicing

A) buyer development.
B) make-buy decisions.
C) supply partnerships.
D) supplier development.
E) directive purchasing.

Question 64

The buying objective for nonprofit firms and government agencies is usually to

A) meet the needs of the groups they serve.
B) increase profits through reducing costs.
C) increase profits through increasing revenues.
D) maintain profits through reducing costs and increasing revenues.
E) reduce profits through reducing costs and reducing revenues.

Question 65

Which of the following characterizes organizational buyer-seller relationships?

A) Purchases are typically made with few to no negotiations.
B) Purchases are usually of small dollar values.
C) Long-term contracts are often prevalent.
D) Reciprocal arrangements are prohibited by the federal government.
E) Delivery schedules are largely irrelevant.

Question 66

Organizational buying criteria are

A) the restrictions placed on potential solutions to a problem in a purchase decision.
B) the specific qualifications of a potential customer based upon past performance, reliability, and consistency regarding the purchase of an organization's offerings.
C) the qualifications of the supplier's products and services based on recommendations from competitors.
D) the objective attributes of the supplier's products and services and the capabilities of the supplier itself.
E) the factors that an ultimate consumer would consider that represent both the objective attributes of a brand and the subjective ones to compare different products and brands.

Question 67

There are seven commonly used organizational buying criteria. One of them is

A) warranty and claim policies.
B) loyalty.
C) longevity
D) adaptability.
E) responsive communication.

Question 68

Supplier development refers to

A) the effort of suppliers to shape buyers' needs and stimulate demand among ultimate consumers.
B) the practice of dividing large orders among several suppliers rather than a single one to avoid possible manufacturing delays due to bad weather, plant mishaps, union issues, etc.
C) the deliberate effort by organizational buyers to build relationships that shape suppliers' products, services, and capabilities to fit a buyer's needs and those of its customers.
D) the practice of establishing a close relationship with one supplier rather than many to ensure loyalty and preferential treatment when filling exceptionally large orders.
E) the shift of a firm from supplier to manufacturer when repeated experience with a product and excellent buyer/seller relationships make the change both feasible and profitable.

Question 69

The objective attributes of the supplier's products and services and the capabilities of the supplier itself are collectively referred to as

A) the supplier consideration set.
B) derived demand factors.
C) evaluative criteria.
D) performance metrics.
E) organizational buying criteria.

Question 70

Which of the following characterizes organizational buyer-seller relationships?

A) Purchases are often made after lengthy or complex negotiations.
B) Purchases are usually of small dollar values.
C) Short-term contracts are often prevalent.
D) Reciprocal arrangements are illegal.
E) Delivery schedules are less important than production capacity.

Question 71

There are seven commonly used organizational buying criteria. One of them is

A) flexibility.
B) technical capability.
C) adherence to government regulation.
D) senior management directives.
E) consumer awareness.

Question 72

Firms marketing consumer products or services often try to reach thousands or millions of individuals or households. Firms selling to organizations

A) try to reach tens of millions of wholesalers, retailers, and government units.
B) are restricted to far fewer buyers.
C) hope to obtain similar numbers of business customers, or even more.
D) do not have customers, per se.
E) also must sell to ultimate consumers because of the market potential.

Question 73

The primary organizational buying objective for business firms is to

A) create an atmosphere of inclusiveness.
B) help smaller companies stay in business.
C) increase the efficiency of its buyers.
D) help the firm increase profitability.
E) turn inventory.

Question 74

Many companies have broadened their buying objectives to include an emphasis on

A) purchasing from as many vendors as possible to avoid component shortfalls.
B) purchasing from start-up firms to grow the economy.
C) diversifying their product lines and brand extensions to reduce the risk of failure for any one item.
D) pricing freezes to maintain consistent quantities demanded from consumers.
E) proactively purchasing from women- and minority-owned suppliers and vendors.

Question 75

A business firm buys products and services for one main reason, which is to

A) increase profitability.
B) beat its competitors.
C) satisfy the needs of its suppliers.
D) employ people.
E) maintain updated inventory.

Question 76

Each year, DiversityInc publishes a list of companies recognized for their workplace and ________ diversity practices.

A) government
B) customer
C) board of directors
D) supplier
E) stockholder

Question 77

The existence of reciprocal arrangements, the long-term contracts, and the buyer-seller relationships that evolve into supply partnerships are all examples of

A) illegal activities that are a common weakness of organizational buying.
B) illegal activities that result from collusion between buyers and sellers.
C) activities that are strictly governed by the NAICS.
D) the nature of relationships between buyers and sellers in organizational buying.
E) activities that result from extreme competition between manufacturers when there are too few suppliers.

Question 78

To be a Walmart supplier, a firm must be able to deliver its products to Walmart's distribution centers within a 16-minute window. If the driver arrives before or after the scheduled window, the supplier will be turned away and fined. Walmart's insistence on choosing a supplier based upon its ability to provide on-time delivery is an example of

A) a supplier value dimension.
B) a derived demand factor.
C) an evaluative criterion.
D) an external performance measure.
E) an organizational buying criterion.

Question 79

Organizational buying criteria serve the same purpose as ________ criteria used by consumers.

A) consideration
B) evaluative
C) decision
D) alternative
E) prepurchase

Question 80

The deliberate effort by organizational buyers to build relationships that shape suppliers' products, services, and capabilities to fit a buyer's needs and those of its customers is referred to as

A) buyer development.
B) a supply partnership.
C) a make-buy decision.
D) supplier development.
E) buyer-seller reciprocity.