Deck 9: Organizational Consumers

Question 1

Which statement concerning organizational consumers is NOT correct?

A) They purchase goods and services for further production.
B) They purchase goods and services for use in operations.
C) They purchase goods and services for personal use.
D) They purchase goods and services for resale to others.

Answer 1

They purchase goods and services for personal use.

Question 2

Which is NOT an organizational consumer?

A) Wholesaler
B) Retailer
C) Government
D) Final consumer

Answer 2

Final consumer

Question 3

Firms dealing with organizational consumers are engaged in

A) systems selling. .
B) institutional marketing.
C) value analysis
D) industrial marketing.

Answer 3

industrial marketing.

Question 4

A firm shifting work that was formerly done in-house to another firm is an example of

A) systems selling.
B) institutional marketing.
C) value analysis.
D) outsourcing.

Question 5

The major differences between organizational and final consumers are due to the

A) use of bargaining and the reliance on product specifications.
B) size of the buyer and the size of the seller.
C) nature of purchases and the nature of the market.
D) sophistication of the buyer and the seller.

Question 6

When organizational consumers employ multiple-buying responsibility, they

A) utilize two or more employees in decision making for complex or expensive purchases.
B) base purchases on subsequent demand for finished goods and services.
C) compare the costs versus the benefits of alternatives.
D) assess the strengths and weaknesses of current and new suppliers.

Question 7

The costs and benefits of alternative materials, components, designs, or processes are evaluated by organizational consumers in

A) competitive evaluation.
B) profit-based planning.
C) value analysis.
D) vendor analysis.

Question 8

What technique are organizational consumers using when they seek answers to such questions as: "Can substitute goods or services perform a function more efficiently?" and "Would a more costly component lower annual operating costs?"

A) Profit-based planning
B) Value analysis
C) Vendor analysis
D) Competitive analysis

Question 9

Organizational consumers evaluate suppliers in terms of merchandise quality, customer service, and reliability in which process?

A) Customer analysis
B) Value analysis
C) Vendor analysis
D) Sales analysis

Question 10

Which of these questions is posed by vendor analysis?

A) Is the motor self-lubricating?
B) Can a standardized part replace a customized part?
C) Can plastic pipe replace brass plumbing fittings in an industrial pump?
D) Can General Electric deliver motors within three days of an order?

Question 11

Which statement concerning leasing is NOT correct?

A) Aircraft, computers, and trucks are commonly leased.
B) Organizations of all sizes often lease equipment.
C) Worldwide use of leasing is increasing at a rapid pace.
D) Final consumers are not involved with leasing.

Question 12

An organizational buyer selects a seller on the basis of terms and conditions of purchase outlined by competing sellers. The buyer is using which process?

A) Value analysis
B) Vendor analysis
C) Competitive bidding
D) Systems selling

Question 13

Competitive bidding is used primarily to

A) secure quantity discounts from buyers.
B) allow competing sellers to participate in setting prices.
C) ensure fairness in purchasing.
D) aid sellers in meeting their contractual obligations.

Question 14

In competitive bidding situations, prices are set through

A) sellers independently submitting price quotations.
B) sellers collectively submitting price quotations.
C) negotiation between the buyer and potential sellers.
D) government intervention.

Question 15

Which concept states that changes in wholesale sales can be directly traced to final consumer demand?

A) Derived demand
B) Systems selling
C) Reciprocity
D) Institutionalization

Question 16

Which concept suggests that small changes in final consumer demand can generate large fluctuations in organizational consumers' demand?

A) Relationship marketing
B) The accelerator principle
C) Reciprocity
D) Systems selling

Question 17

Which statement about the accelerator principle is NOT correct?

A) Organizational consumer demand is more volatile than final consumer demand.
B) A small change in final consumer demand generally yields a large change in the organizational consumer demand.
C) A change in final consumer demand is generally a multiple of the change in organizational consumer demand.
D) Final consumer demand affects several layers of organizational consumers.

Question 18

Single-source accountability is a major advantage with

A) competitive bidding.
B) industrial marketing.
C) reciprocity.
D) systems selling.

Question 19

When organizational consumers select suppliers who agree to purchase goods and services, as well as sell them, they are involved with

A) team selling.
B) systems selling.
C) reciprocity.
D) derived demand.

Question 20

Which organizational consumer buying practice is the most likely to restrain trade?

A) Systems selling
B) Reciprocity
C) Competitive bidding
D) Vendor analysis

Question 21

The North American Industry Classification System (NAICS)

A) replaces the Standard Industrial Classification (SIC).
B) does not cover retail trade.
C) does not cover wholesale trade.
D) does not cover foreign organizational consumers.

Question 22

Which statement concerning the North American Industry Classification System (NAICS) is NOT correct?

A) The NAICS is the official classification system of the United States, Canada, and Mexico.
B) The NAICS can be used to derive information about most nonprofit consumers.
C) Substantial government and commercial data is available on an NAICS basis.
D) NAICS data can be used in end-use analysis.

Question 23

In end-use analysis,

A) sales to final consumers are studied to determine derived demand.
B) sales to channel members are studied to determine the accelerator multiplier.
C) a firm may decide to produce a product rather than purchase it from an unaffiliated seller.
D) a seller determines the proportion of its sales that are made to organizational consumers in different industries.

Question 24

End-use analysis enables a firm to

A) compute its overall sales forecast.
B) locate geographic areas that account for a large proportion of its total business.
C) study the purchase behavior of final consumers.
D) study the purchase behavior of governmental units.

Question 25

The major difference between two- and three-digit North American Industry Classification System (NAICS) codes is based on the

A) location of the firm: domestic or foreign.
B) size of the industry: small or large.
C) level of specificity.
D) currency of the data.

Question 26

Which statement concerning wholesalers is NOT correct?

A) Wholesalers buy or handle merchandise and its subsequent resale to organizational users, retailers, and other wholesalers.
B) Wholesalers do not sell significant quantities to final consumers.
C) Total wholesaler sales exceed $3 trillion.
D) Wholesalers generally eagerly welcome new products.

Question 27

Which statement most clearly defines the role of retailers?

A) Retailers buy or handle merchandise and its subsequent resale to organizational users, wholesalers, and other retailers.
B) Retailers buy or handle goods and services for sale (resale) to the final (ultimate) consumer.
C) Retailers operate in the public interest.
D) Retailers produce products for resale to other consumers.

Question 28

Retailers are generally more concerned than wholesalers about what factor?

A) Purchase terms
B) Merchandise availability
C) Location of facilities
D) Customer service

Question 29

A slotting fee represents a fee paid to a retailer for

A) its providing shelf space.
B) allocating advertising time and space.
C) arranging physical distribution.
D) giving superior customer service.

Question 30

A manufacturer of private-label products does NOT have to perform marketing functions relating to

A) pricing.
B) packaging.
C) branding.
D) physical distribution.

Question 31

Which statement about government as a consumer is NOT correct?

A) Federal, state, and local government expenditures equal $3 trillion annually.
B) Data on all U.S. government expenditures are compiled by the Census Bureau.
C) There is little assistance given by governmental units to assist small firms seeking government contracts.
D) North American Industry Classification System (NAICS) codes exist for governmental units.

Question 32

The federal government aids businesses by providing reference data and technical reports on contracts through its

A) Government Procurement Centers.
B) Small Business Utilization Centers.
C) Contract Negotiation Centers.
D) Business Service Centers.

Question 33

There are no separate North American Industry Classification System (NAICS) code designations for

A) manufacturers.
B) government.
C) wholesalers.
D) nonprofit institutions.

Question 34

Item availability, seller reliability, consistency of quality, and timeliness of deliveries

A) are related to an organizational consumer's decision process.
B) are constraints on purchases.
C) depend on an organization's buying structure.
D) are examples of organizational buying goals.

Question 35

An advantage of an organizational customer's dealing with many suppliers (instead of buying exclusively from just one supplier) is that

A) communications between the organization's customers and its suppliers is enhanced.
B) quantity discounts are maximized.
C) there is increased price and service competition.
D) shipments from suppliers are better coordinated.

Question 36

The level of formality and specialization used in the purchase process refers to an organization's

A) buying structure.
B) buying objectives.
C) purchase constraints.
D) exclusivity of its buying arrangements.

Question 37

An organizational consumer's buying structure is likely to be formal when the firm is

A) diversified.
B) organized on a general basis.
C) independently owned.
D) financially limited.

Question 38

The General Services Administration (GSA) is the federal government office responsible for

A) maintaining the North American Industry Classification System (NAICS).
B) issuing technical reports on contracts and contracting procedures.
C) enforcing laws relating to reciprocity.
D) centralized procurement and coordination of purchases.

Question 39

The major constraint on purchases by retailers, wholesalers, and manufacturers (but not on government purchases) is

A) cash flow.
B) open-to-buy.
C) derived demand.
D) competition.

Question 40

The major constraint on purchases by government consumers is

A) budgetary approval.
B) General Services Administration standards that have to be met.
C) systems selling.
D) the requirement for competitive bidding.

Question 41

Which is NOT a key component of the organizational consumer's decision process?

A) Conflict resolution
B) The buying process
C) Expectations
D) The buying organization

Question 42

The perceived potential of alternative suppliers and brands to satisfy buyer objectives is part of which stage of the organizational consumer's decision process?

A) Expectations
B) Conflict resolution
C) Situational factors
D) Buying process

Question 43

A product-specific buying factor leading to joint decisions is

A) low perceived risk.
B) low time pressure.
C) high centralization.
D) small firm size.

Question 44

Problem solving, persuasion, bargaining, and politicking occur during which phase of organizational consumer decision making?

A) Conflict resolution
B) The buying process
C) Feedback
D) Situational analysis

Question 45

Which is the optimal method for resolving conflicts in the organizational consumer's decision process?

A) Problem solving
B) Persuasion
C) Bargaining
D) Competitive bidding

Question 46

Which illustrates the use of persuasion as a means of conflict resolution in organizational marketing?

A) Members agree to support each other in different situations.
B) Members agree to secure further information before making a decision.
C) After each member of a team presents his or her reasons why a particular supplier or brand should be chosen, a decision is reached.
D) Members seek to convince outside parties and superiors to back their positions and then seek to win at power plays.

Question 47

The least desirable method for resolving conflicts in the organizational consumer's decision process is

A) persuasion.
B) bargaining.
C) politicking.
D) reciprocity.

Question 48

A machine breakdown and an internal strike are examples of what aspect of the organization consumer's decision process?

A) Autonomous decision making
B) Situational factors
C) Company-specific buying factors
D) Conflict resolution

Question 49

The modified-rebuy purchase process for organizational consumers is similar to what process for final consumers?

A) Extended decision making
B) Joint decision making
C) Limited decision making
D) Routine decision making

Question 50

Reordering, not decision making, characterizes which type of organizational consumer purchase?

A) Modified rebuy
B) Straight rebuy
C) New task
D) Limited rebuy

Question 51

Which of these is NOT an example of industrial marketing?

A) The rental of sheets to hospitals
B) The sale of household furnishings to a major department store chain
C) The leasing of personal computers to a university
D) The sale of computer supplies to a hobbyist

Question 52

Which of these is a difference between organizational consumers and final consumers that is due to the nature of the purchases themselves?

A) The impact of derived demand
B) The impact of cyclical fluctuations
C) The use of shorter distribution channels
D) The use of specifications and technical data

Question 53

Which of these is a difference between organizational consumers and final consumers that is due to the nature of the market?

A) The use of leasing
B) The use of vendor analysis
C) The impact of derived demand
D) The use of value analysis

Question 54

Multiple-buying responsibility by organizational consumers is comparable to what process in final consumer marketing?

A) Brand loyalty
B) Joint decision making
C) Limited decision making
D) High-involvement purchasing

Question 55

Negotiations for a new factory location involve decision making by a team comprised of accounting, finance, production, marketing, real estate, and legal personnel. This process involves

A) multiple-buying responsibility.
B) team selling.
C) systems selling.
D) negotiated purchasing.

Question 56

To reduce costs, a faucet manufacturer is considering replacing part of its brass assembly with plastic. The plastic is not only less costly to purchase, but also heats up less during usage. The faucet manufacturer is involved with

A) multiple-buying responsibility.
B) vendor analysis.
C) negotiation.
D) value analysis.

Question 57

The Following Questions are linked to this scenario: A major room air-conditioner manufacturer uses various techniques in its organizational marketing activities. It is currently concerned with its purchasing practices for thermostats, a component material used to regulate temperature. While thermostats are relatively inexpensive, a defective unit costs the manufacturer $70 to replace in a customer's home.

-Which of these questions involves value analysis for the air conditioner manufacturer?

A) What is vendor A's average delivery speed?
B) What is a manufacturer's delivery reliability?
C) What is a supplier's average defect rate?
D) Can a standardized thermostat be substituted for a custom-made part?

Question 58

The Following Questions are linked to this scenario: A major room air-conditioner manufacturer uses various techniques in its organizational marketing activities. It is currently concerned with its purchasing practices for thermostats, a component material used to regulate temperature. While thermostats are relatively inexpensive, a defective unit costs the manufacturer $70 to replace in a customer's home.

-The air-conditioner manufacturer plans to evaluate three suppliers on the basis of product quality (initial defect rate on delivery and defect rate during the warranty period), prices (initial price and credit terms), and customer service (technical support and delivery speed). The air-conditioner manufacturer is involved with

A) vendor analysis.
B) value analysis.
C) multiple-buying responsibility.
D) systems selling.

Question 59

Higher prices yield more profit, but have a smaller chance of gaining a contract. This is a major principle of

A) competitive bidding.
B) reciprocity.
C) systems selling.
D) multiple-buying responsibility.

Question 60

A large organizational consumer reminds a seller that it accounts for 60 percent of a supplier's sales. It also states that it has the resources to produce the part itself, if the supplier is inflexible as to price. The customer is using which technique?

A) Systems selling
B) Competitive bidding
C) Negotiation
D) Reciprocity

Question 61

A computer chip manufacturer provides a promotional allowance to its organizational customers. The allowance covers half the cost of the manufacturers' advertising providing that the manufacturer mentions the name of the chip manufacturer in all advertising. The promotional allowance demonstrates

A) value analysis.
B) vendor analysis.
C) derived demand.
D) reciprocity.

Question 62

According to the concept of derived demand, sales of resin used to manufacture plastic are most influenced by

A) final consumers.
B) retailers.
C) wholesalers.
D) suppliers.

Question 63

Decreased demand for computer ZIP disks by final consumers decreases dealers' demand for disks, disk makers' demand for plastic disk housings, and housing makers' demand for raw materials. Which practice is most clearly illustrated in this example?

A) Reciprocity
B) The domino effect
C) The accelerator principle
D) Derived demand

Question 64

Which concept is a logical extension of derived demand?

A) Reciprocity
B) The domino effect
C) The accelerator principle
D) Second-level derived demand

Question 65

An economic analysis suggests that each 1 percent increase in air travel results in a 3 percent increase in the demand for aircraft. Which concept does this link most clearly represent?

A) Reciprocity
B) Second-level derived demand
C) The accelerator principle
D) The domino effect

Question 66

Purchasing agents and cost accountants are examples of

A) end-use analysts.
B) systems selling.
C) vendor analysts.
D) systems analysts.

Question 67

A manufacturer of commercial copying machines supplies paper, toner, and service contracts. The manufacturer engages in

A) systems selling.
B) extended decision making.
C) vendor analysis.
D) end-use analysis.

Question 68

A key advantage to an organizational consumer's buying from a supplier that uses systems selling is the

A) increased competition for components from alternate suppliers.
B) availability of generous credit/leasing terms.
C) single-source accountability in the event of system failure.
D) reciprocal orders placed by the supplier.

Question 69

A key potential disadvantage for a vendor involved with systems selling is

A) lower interest in the product grouping by distributors.
B) a blurred image by potential buyers.
C) the increased investment required in producing and marketing a broad product grouping.
D) compatibility difficulties due to use of components from competing manufacturers.

Question 70

A truck manufacturer pressures its tire suppliers to purchase trucks from the firm. It hints that future tire purchases are contingent on a major truck order. This practice illustrates

A) multiple-buying responsibility.
B) reciprocity.
C) derived demand in action.
D) systems selling.

Question 71

A special case of reciprocity is known as

A) negotiation.
B) countertrade.
C) derived demand.
D) systems selling.

Question 72

The North American Industry Classification System (NAICS) enables a vendor to

A) identify major customers by geographic area.
B) study the buying behavior of specific industrial companies.
C) learn about the demographics (size, growth rates, and geographic concentration) of major organizational customers.
D) forecast sales by industry grouping.

Question 73

In performing end-use analysis, a firm needs to first determine the

A) total assets of all its customers.
B) total sales of each customer
C) North American Industry Classification System (NAICS) code for each customer.
D) geographic area of concentration of each customer.

Question 74

End-use analysis reveals that 60 percent of a firm's sales are made to lumber and wood products manufacturers (which are predicted to have a 3 percent annual growth rate) and 40 percent are made to furniture and fixture manufacturers (which are predicted to have a 1 percent annual growth rate). The company's overall sales forecast would indicate a sales increase of

A) 1.0 percent.
B) 2.4 percent.
C) 3.0 percent.
D) 4.0 percent.

Question 75

Which concept is most closely related to end-use analysis?

A) Reciprocity
B) Derived demand
C) Multiple-buying responsibility
D) Systems selling

Question 76

Which of the following is NOT an example of wholesaling?

A) The sale of medical equipment to a private clinic
B) The sale of Coach belts to final consumers in a Coach factory outlet
C) The leasing of an aircraft to a major airline
D) The sale of Coach belts to a department store chain

Question 77

In which situation would a retailer most likely charge a manufacturer a slotting fee?

A) The retailer is a small independent grocery store.
B) The manufacturer's product has the highest market share in the region.
C) The manufacturer's product is new.
D) The manufacturer only supplies private-label merchandise for a large grocery chain.

Question 78

Which statement concerning the government as a consumer is correct?

A) Government purchases often involve bureaucratic procedures.
B) The federal government accounts for 20 percent of all government spending.
C) Statistics on federal government expenditures are reported in Government Finances.
D) Few government purchases involve standard products that are offered to traditional customers.

Question 79

Which statement concerning nonprofit institutions as consumers is NOT correct?

A) Nonprofit institutions do not seek financial profits.
B) Most universities and public hospitals are nonprofit institutions.
C) North American Industry Classification System (NAICS) codes do not exist for any nonprofit organization.
D) There are no separate NAICS codes for nonprofit versus profit-oriented firms.

Question 80

Which of these is NOT a general buying objective for all organizational consumers?

A) Seller reliability
B) Good terms (low prices)
C) Further saleability
D) Consistent quality