Deck 5: Understanding Organizational Markets and Buying Behavior

Question 1

High mutual interdependence encourages the development and maintenance of long-term relationships and alliances between buyers and sellers.

Answer 1

True

Question 2

The demand for industrial goods and services is derived from the demand for consumer goods and services.

Answer 2

True

Question 3

A crucial factor that distinguishes organizational markets from consumer markets is the method in which products are purchased.

Answer 3

True

Question 4

Short-term purchasing contracts enables an organization to concentrate on its purchases with one or a few suppliers,reduce transaction costs,and gain scale economies through quantity discounts and the like.

Question 5

Organizational buyers evaluate alternative suppliers and their offerings by using a set of choice criteria reflecting the desired benefits.

Question 6

Gatekeepers provide information for evaluating alternative products and suppliers.

Question 7

A straight rebuy involves purchasing a common product or service the organization has bought many times before.

Question 8

Value analysis is the first step in the organizational decision-making process for new-task purchases.

Question 9

The way specific organizational purchase decisions are made vary with the firm's past experience and other aspects of the buying situation.

Question 10

Value analysis maximizes procurement costs.

Question 11

The relative influence of the purchasing manager is lesser when reordering items the firm has purchased in the past than when buying a new product.

Question 12

Industrial buyers respond only to economic arguments.

Question 13

In the organizational purchasing process,the people who must use or work with the product or service purchased are referred to as the buyers.

Question 14

Reciprocity occurs when an organization favors a supplier that is also a customer or potential customer for the organization's own products or services.

Question 15

Compared to consumer markets,organizational markets are characterized by closer buyer-seller relationships.

Question 16

Technology has changed organizational purchasing over the past decade by facilitating logistical alliances involving the sharing of sales and inventory data and computerized reordering.

Question 17

Organizational buyers,when compared with buyers of consumer goods,are greater in number.

Question 18

At the most basic level,marketers need to answer the same set of questions about organizational markets as about consumer markets in order to develop a solid foundation for their marketing plans.

Question 19

A modified rebuy occurs when buying centers are forced to look for alternative products because the organization's needs have changed.

Question 20

Requirements planning governs the purchase of raw materials and fabricating components as well as supplies and major installations.

Question 21

Organizational buyers purchase goods and services for:

A)further production,for use in operations and for resale.
B)further production,but not for operations or resale.
C)production and operations,but not for resale.
D)production and for resale,but not for operations.

Question 22

The supplier's qualifications,past performance,and reputation become critical determinants of the success of the marketing effort in case of services.

Question 23

The demand for industrial goods and services is:

A)less cyclical than consumer goods and services.
B)more likely to be affected by price changes in the short run than consumer goods.
C)less erratic than consumer goods and services.
D)derived from the demand for consumer goods and services.

Question 24

A firm is more likely to trust and develop a long-term commitment to a supplier when that supplier makes dedicated,customer-specific investments.

Question 25

Compared to markets for consumer goods,organizational markets:

A)are subject to multiple buying influences and have a close buyer-seller relationship.
B)have weaker buyer-seller relationships as they are subject to multiple buying influences.
C)compensate for lack of buying specialization with close buyer-seller relationships.
D)are less apt to buy on specification given the multiple buying influences.

Question 26

High-caliber,well-trained salespeople are critically important in the marketing of installations.

Question 27

Comparing market demographics,organizational buyers,when compared with buyers of consumer goods,are:

A)more in number.
B)less likely to use buying spcialists.
C)geographically concentrated.
D)less likely to buy goods on specifications.

Question 28

In the context of organizational market,"users" are the people in the organization who:

A)provide information for evaluating alternative products and suppliers.
B)control the flow of information to other people in the purchasing process.
C)often utilize or work with the product or service purchased.
D)have the authority to make a final purchase decision.

Question 29

Operating supplies do not become a part of the buyer's product or service,nor are they used directly in producing it.

Question 30

Business services provide special expertise to facilitate ongoing operations.

Question 31

Personal selling,either by the producer's or a distributor's salesforce,is the only important promotional method for accessory equipment.

Question 32

Most standard marketing strategies and tools are equally effective for both business organizations and governmental purchasing processes.

Question 33

Component parts and materials are major capital goods used to produce final product,but are not part of the final product.

Question 34

Government organizations tend to require less documentation and paperwork from their suppliers compared to the business organizations.

Question 35

Trucks and hand tools fall under the category of operating supplies.

Question 36

________ accurately exemplifies the derived nature of industrial demand.

A)Decline in beef consumption because of the movement of health-conscious consumers toward poultry products.
B)A reduction in demand for feed grains because of a decline in beef consumption.
C)Increase in industrial demand throughout the economy because of advanced production technology.
D)Decrease in paper prices because of excess timber production in the Northwest.

Question 37

Distribution channels for natural materials tend to have many middlemen.

Question 38

Ocean Co.is a manufacturer of electronic goods that always purchases its raw materials from Edge Suppliers.Ocean Co's demand for Edge's metals and glasses increases with the increase in the demand of television sets from its clients and decreases with its decrease.This shows that _____ tends to be relatively erratic and cyclical.

A)new-task buying
B)modified rebuying
C)derived demand
D)direct selling

Question 39

Lavenderin,a garment manufacturing company,purchases all its cotton and other raw materials from various suppliers.Lavender is an example of an _____.

A)organizational customer
B)ultimate consumer
C)intermediary
D)individual customer

Question 40

Price is rarely the critical decision variable for operating supplies purchases.

Question 41

In the context of organizational market,which of the following statements best describes influencers?

A)They provide information for evaluating alternative products and suppliers.
B)They have the authority to contact suppliers and negotiate the purchase transaction in most organizations.
C)They control the flow of information to other people in the purchasing process.
D)They are the people in the organization who must use or work with the product or service purchaseD.

Question 42

A straight rebuy:

A)occurs when an organization faces a new and unique need or problem,one in which buying center members have little or no experience.
B)occurs when purchased goods have to be returned or exchanged because the organization's needs have changed.
C)involves purchasing a common product or service the organization has bought many times before.
D)involves purchasing products that are somewhat different from,but extensions of,products previously purchaseD.

Question 43

A modified rebuy typically involves:

A)an organization realizing a new and unique need or problem.
B)purchasing a common product or service the organization has bought many times before.
C)comparison of alternative products and services with the current product and vendor.
D)controlling of the flow of information to other people in the purchasing process.

Question 44

In the context of organizational market,technical experts from various departments of a firm who help determine which specifications and criteria to use in making the purchase decisions are known as:

A)deciders.
B)ultimate consumers.
C)influencers.
D)gatekeepers.

Question 45

The situation in which a company favors a supplier that is also a customer for that company is termed as _____.

A)cross-purchasing
B)reciprocity
C)computing
D)direct selling

Question 46

Due to the lack of experience of the buying center in case of ________,the buying center tends to view the supplier's reputation as a critical factor,and generally choose a well-known and respected supplier to reduce the risk of making a poor decision.

A)dealing with an ultimate consumer
B)new-task buying
C)straight rebuy
D)buying a common service

Question 47

Value analysis refers to the:

A)systematic appraisal of an item's design,quality,and performance requirements.
B)assessment of the value of the product compared to comparable products on the market.
C)appraisal of the value of the business unit in terms of its contribution to the corporation.
D)comparison of the worth of publicly traded company stock to the book value of the company.

Question 48

In markets characterized by complex and uncertain technical environments,such as where competing technologies are emerging simultaneously,as in the networking software industry,customers are:

A)more likely to keep their options open by spreading their purchases across multiple suppliers.
B)more likely to develop a long-term orientation toward a single supplier.
C)more likely to continue with their original supplier,even if their product is losing ground as the industry standard.
D)more likely to buy goods and services only for their own personal use and consumption.

Question 49

If Wal-Mart agrees to share sales information with Coca-Cola for the purpose of keeping stocks replenished,they would be creating a(n):

A)just in time system.
B)supply chain management alliance.
C)annual requirements contract.
D)reciprocity arrangement.

Question 50

In the context of organizational market,individuals who controls the flow of information to other people in the purchasing process is referred to as:

A)deciders.
B)buyers.
C)users.
D)gatekeepers.

Question 51

In the context of the purchase decision-making process,requirements planning consists of:

A)performing a value analysis on suppliers.
B)engaging in an in-depth investigation before qualifying a firm as a potential supplier.
C)attempting to forecast future requirements of the firm so as to plan their purchases in advance.
D)determining how best to advertise a company's product.

Question 52

Swansa,a garment manufacturing company,was not satisfied with the cotton provided by a particular supplier.Their material did not meet the company's quality standards.Eventually they terminated their contract with the former supplier and started buying cotton from a new supplier.This is an example of a_____.

A)straight rebuy
B)modified rebuy
C)new-task buy
D)direct buy

Question 53

An appropriate example of reciprocity would be:

A)an agreement by a personal computer manufacturer to buy components from a source that agrees,in turn,to buy the manufacturer's computers.
B)an agreement by a forest products firm to buy chemical products in bulk,if the price of the products are reduced.
C)the equal commitment by two firms to a joint venture,in which the profits are equally divided.
D)the lowering of trade barriers in equal amounts by two countries trading together.

Question 54

Buyers' auctions are most akin to a _____ situation.

A)straight rebuy
B)modified rebuy
C)new-task buying
D)reciprocity

Question 55

The buying center:

A)comprises of several people from different departments who participate in the organizational purchasing process.
B)comprises of only those people in the firm who would be using the goods or services purchased by the firm.
C)is a separately staffed department in large organizations involved only in the purchase of goods and services for the company.
D)is a platform where buyers and sellers congregate and take decisions regarding their future transactions.

Question 56

A miner working for a mining company requests the purchasing agent of the company to buy a particular brand of high powered LED mining helmets as it would help him to work more efficiently.The miner belongs to the category of _____ in the organizational purchasing process.

A)deciders
B)gatekeepers
C)users
D)buyers

Question 57

A sales report from a top salesperson points out that a major competitor has added a new,more expensive feature to one of its products and that several of his top customers have stopped buying their products as they lack in this new feature.Which stage of the purchase decision-making process does this situation most accurately represent?

A)Value analysis
B)Vendor analysis
C)Problem recognition
D)Purchase decision

Question 58

In the context of organizational market,the buyer is usually referred to as the:

A)purchasing agent.
B)ultimate consumer.
C)purchasing influencer.
D)gatekeeper.

Question 59

An annual requirements contract:

A)is an inventory check of an organization's supplies at the end of the fiscal year.
B)is an individual spot contract on the open market.
C)is a buyer's obligation to fill a buyer's need for a product consistently over a year
D)is a buyer's responsibility to list out the requirements that a buyer should provide over an year.

Question 60

Which of the following is the last step of the purchase decision-making process?

A)Purchase decision
B)Evaluation and selection of suppliers
C)Postpurchase evaluation and feedback
D)Make-or-buy decisions

Question 61

Chrysler Corporation purchases plastic that is to be used ro make dashboards for its vehicles.This plastic is an example of a(n)_____.

A)accessory equipment
B)installation
C)business service
D)component material

Question 62

All of the following are examples of business service providers EXCEPT:

A)ad agencies.
B)equipment manufacturers.
C)marketing research firms.
D)accounting agencies.

Question 63

Give an example of a supply chain management alliance and explain how it might be beneficial.

Question 64

The difference between installations and accessory equipments is that:

A)installations include industrial machines and tools that manufacturers use to carry out their operations.
B)installations cannot determine the scale of operations of the firms that buy and use them.
C)installations are finished goods that facilitate production of a final product.
D)installations are finished goods that facilitate repair,maintenance,and ongoing operations.

Question 65

List the major categories of industrial goods and services.

Question 66

What effects are likely to be expected when implementing a just-in-time inventory system to an assembly-line type of manufacturer?

Question 67

Discuss how the government's purchasing processes differ from that of a business organization.

Question 68

What are the motivations behind the purchases made by organizational buyers? Why is organizational demand referred to as derived demand?

Question 69

Discuss the demand characteristics and market demographics of the typical organizational market compared to the typical consumer market.

Question 70

Identify and describe the five major participants in the organizational purchasing process.

Question 71

Component parts and materials are regarded as:

A)finished goods that facilitate production of a final product.
B)processed goods that become a portion of a final product.
C)finished goods that facilitate repair,maintenance,and ongoing operations.
D)major capital goods that are used to produce the final product,but not being part of the final product.

Question 72

Buildings and major capital equipment that manufacturers use to conduct their operations are examples of:

A)component parts.
B)accessory equipments.
C)business services.
D)installations.

Question 73

The _____ system eliminates inventories at the customer's manufacturing site,which requires the timely delivery of 100 percent quality (zero-defect)products.

A)customer relationship management
B)total quality management
C)just-in-time management
D)requirements chain management

Question 74

In the context of industrial goods,lumber and iron ore are examples of _____ .

A)operating supplies
B)raw materials
C)business services
D)accessory equipment

Question 75

In the context of industrial goods,which of the following is true for installations?

A)It refers to relatively unprocessed goods that become a portion of the final product.
B)They are capital goods used to produce final products,but are not part of the final products.
C)Farm products and lumber are examples of installations.
D)They are processed goods that are used to produce final products and they become a portion of the products.

Question 76

Which of the following statements is NOT true regarding purchasing process in government markets?

A)It requires more documentation and paperwork from suppliers because their spending decisions are subject to public review.
B)Suppliers complain about excessive bureaucracy,costly paperwork,and red tape in this process.
C)Requires suppliers to submit bids,and contracts are usually awarded to the lowest bidder who meets the minimum standards specified in the contract.
D)Comparative advertising or personal sales demonstrations have great impact on purchase decisions.

Question 77

Compare the buyer-seller relationships between organizational markets and consumer markets?

Question 78

Component materials differ from raw materials in that component materials are considered as:

A)processed goods in the final product.
B)not being part of the final product.
C)finished goods.
D)major capital goods.

Question 79

Which of the following is true in the context of operating supplies?

A)They become a part of the buyer's product or service,
B)They are not used directly in manufacturing a product.
C)They are usually high-priced items purchased once in a while.
D)A lot of emphasis is placed on brand loyalty while taking marketing decisions.

Question 80

In the context of buying tasks,discuss a straight rebuy.