Deck 7: Analyzing Business Markets

Question 1

Explain how fluctuating demand impacts business markets differently from consumer markets.

Answer 1

The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce additional output. Economists refer to this as the acceleration effect.

Question 2

The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others.

Answer 2

True

Question 3

Business markets have several characteristics that contrast sharply with those of consumer markets. Name and briefly characterize five of those characteristics.

Answer 3

The characteristics of business markets as compared to consumer markets are:
• fewer, larger buyers
• close supplier-customer relationship
• professional purchasing
• multiple buying influences
• multiple sales calls
• derived demand
• inelastic demand
• fluctuating demand
• geographically concentrated buyers
• direct purchasing
See chapter section for brief characterizations.

Question 4

Which of the following is true for business marketers?

A) They deal with more and larger buyers than consumer marketers.
B) They deal with more and smaller buyers than consumer marketers.
C) They deal with fewer and larger buyers than consumer marketers.
D) They deal with fewer and smaller buyers than consumer marketers.
E) They deal with the same kind of buyers as consumer marketers.

Question 5

Shoe manufacturers are not going to buy much more leather if the price of leather falls, nor will they buy much less leather if the price rises, unless they can find satisfactory substitutes. This is an example of ________.

A) inelastic demand
B) direct purchasing
C) the acceleration effect
D) a modified rebuy
E) a straight rebuy

Question 6

The business market is essentially the same market as the consumer market.

Question 7

The demand for business goods is ultimately derived from the demand for raw materials.

Question 8

An increase in the demand for plant and equipment can lead to a much larger increase in consumer demand. This is known as the acceleration effect.

Question 9

Commoditization strengthens customer loyalty.

Question 10

Which of the following is a challenge in which business marketers differ from consumer marketers?

A) understanding deep customer needs in new ways
B) identifying new opportunities for organic business growth
C) geographically concentrated buyers
D) calculating better marketing performance and accountability metrics
E) competing and growing in global markets, particularly China

Question 11

Pittsburgh-based Consol Energy's coal business largely depends on orders from utilities and steel companies which, in turn, depend on broader economic demand from consumers for electricity and steel-based products like automobiles and appliances because of ________.

A) fluctuating demand
B) derived demand
C) professional purchasing
D) multiple buying influences
E) multiple sales calls

Question 12

Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

Question 13

Sometimes a rise of only 10 percent in consumer demand can cause as much as a 200 percent rise in business demand for products for the next period. This is an example of ________.

A) inelastic demand
B) direct purchasing
C) fluctuating demand
D) derived demand
E) a straight rebuy

Question 14

The total demand for many business goods and services is inelastic; that is, not greatly affected by price changes.

Question 15

The ________ market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others.

A) business
B) consumer
C) e-commerce
D) global
E) domestic

Question 16

Given the highly competitive nature of business-to-business markets, the biggest enemy to marketers here is commoditization.

Question 17

The business marketer normally deals with far fewer, large buyers than does the consumer marketer.

Question 18

Business buyers often select suppliers who also buy from them.

Question 19

________ refers to the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

A) Marketing channels
B) Organizational buying
C) Corporate retailing
D) Brand auditing
E) Inventory control

Question 20

How can a marketer overcome the negative effects of commoditization?

A) convince target consumers that the firm's products are as good as those of competitors
B) convince target consumers that price is irrelevant in determining quality
C) convince target consumers that the firm's products are different from those of competitors
D) convince target customers that buying the highest-priced product is no guarantee of quality
E) convince target customers that all the products in the market are equivalent

Question 21

Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects such as dams or pipelines.

Question 22

In the straight rebuy, "out-suppliers" try to get a small order and then enlarge their purchase share over time.

Question 23

The demand for business goods is ultimately derived from the demand for ________.

A) raw materials
B) consumer goods
C) services
D) business solutions
E) e-commerce

Question 24

The purchasing department buys office supplies on a routine basis from a pre-approved list of suppliers. This type of purchase is classified as a ________.

A) straight rebuy
B) modified rebuy
C) new task
D) secondary purchase
E) procure-to-pay

Question 25

The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. List the major industries that make up the business market.

Question 26

The business buyer makes the fewest decisions in the straight rebuy situation and the most in the new-task situation.

Question 27

Most business buyers reject what is called systems buying from one seller.

Question 28

If you decided to go into the systems contracting business, which of the following categories would constitute your main area of expertise?

A) computer applications
B) database management
C) manufacturing
D) promotion management
E) MRO (maintenance, repair, operating) supplies

Question 29

Jason Riggs' company is considered to be an in-supplier for a lawn mower manufacturer. However, recently the lawn mower company has put out a memo to in- and out-suppliers indicating that it would like to change product specifications and delivery schedules. Which of the following buying situations is most likely to be in operation given this data?

A) straight rebuy
B) single rebuy
C) rakeback rebuy
D) system buy
E) modified rebuy

Question 30

Kenilworth Inc. is shifting from its rented four-room office to a standalone office building owned by the company itself. This can be classified as a ________.

A) modified rebuy
B) regular buy
C) straight rebuy
D) new rebuy
E) new task

Question 31

Explain the concept of derived demand.

Question 32

The total demand for many business goods and services is only minimally affected by price changes. Thus, this demand is ________.

A) derived
B) fluctuating
C) accelerated
D) multiple
E) inelastic

Question 33

The business buyer has to make the fewest decisions when involved in a ________.

A) modified rebuy
B) regular buy
C) straight rebuy
D) new rebuy
E) new task

Question 34

Ultimately, the amount of steel sold to General Motors depends on the consumers' demand for GM cars and trucks. From the standpoint of the steel manufacturer, which of the following demand forms is most pertinent?

A) derived demand
B) inelastic demand
C) geographic demand
D) relational demand
E) static demand

Question 35

Define organizational buying.

Question 36

Sellers benefit from systems contracting through lower operating costs as a result of steady demand and reduced paperwork.

Question 37

According to Webster and Wind, businesspeople are buying ________.

A) products
B) solutions to the organization's economic and strategic problem
C) solutions to their own need for achievement and reward
D) A & C
E) B & C

Question 38

In a ________ purchasing situation, the buyer wants to make some change to existing product specifications, prices, delivery requirements, or other terms.

A) new rebuy
B) regular buy
C) straight rebuy
D) modified rebuy
E) new task

Question 39

A given percentage increase in consumer demand can lead to a larger percentage increase in the demand for plant and equipment necessary to produce the additional output. Economists refer to this as ________.

A) derived demand
B) inelastic demand
C) the acceleration effect
D) a straight rebuy
E) the sales cycle

Question 40

The buyer in a straight rebuy usually changes product specifications, prices, delivery requirements, or other terms.

Question 41

In which of the following is a person performing the role of an influencer?

A) Dan decides on the product requirements and makes the final choice of suppliers.
B) Luke has the authority to pick out the supplier and negotiate the terms of purchase.
C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives.
D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG.
E) Dana authorizes the actions of the deciders and buyers in LKG.

Question 42

In the purchasing decision process, the ________ are those who request that something be purchased. They may be users or others in the organization.

A) users
B) initiators
C) influencers
D) deciders
E) approvers

Question 43

Which of the following is true about industrial buying decisions?

A) They are purely rational.
B) They are purely emotional.
C) They service both the organization's and the individual's needs.
D) Top executives are never insecure about buying products.
E) Individual needs legitimate the buying process and its outcomes.

Question 44

If you were a purchasing agent facing a modified rebuy situation, how would you describe that situation?

Question 45

In the purchasing decision process, the ________ are those who have the power to prevent sellers or information from reaching members of the buying center.

A) approvers
B) buyers
C) initiators
D) gatekeepers
E) deciders

Question 46

When purchasing disposable surgical gowns, Mercy Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the operating-room administrator performs the role of the ________.

A) gatekeeper
B) initiator
C) user
D) decider
E) influencer

Question 47

Describe the practices of systems buying and systems contracting.

Question 48

In the purchasing decision process, the major role of ________ is in selecting vendors and negotiating.

A) gatekeepers
B) buyers
C) initiators
D) approvers
E) deciders

Question 49

A prime contractor provides a turnkey solution, so-called because the buyer only has to turn one key to get the job done.

Question 50

Which of the following is true about buying centers?

A) One person may play multiple roles.
B) Several people can occupy the same role.
C) A buying center typically has five or six members.
D) A buying center can have dozens of members.
E) All of the above are true.

Question 51

If you performed the role of the ________ in a buying center, you would be the person that has the power to prevent sellers or information from reaching other members of the buying center.

A) initiator
B) influencer
C) decider
D) gatekeeper
E) approver

Question 52

In which of the following is a person performing the role of an approver?

A) Dan decides on the product requirements and makes the final choice of suppliers.
B) Luke has the authority to pick out the supplier and negotiate the terms of purchase.
C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives.
D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG.
E) Dana authorizes the actions of the deciders and buyers in LKG.

Question 53

What are the three different types of buying situations faced by a typical business buyer?

Question 54

In systems buying, the US government often solicits bids from prime contractors. What do prime contractors do?

Question 55

Illustrate the differences between a straight rebuy, a modified rebuy, and a new-task purchase.

Question 56

________ is composed of all parties who participate in the purchasing decision-making process and share common goals and risks associated with their decisions.

A) The buying center
B) The marketing sales team
C) Strategic management
D) Engineering support
E) The logistics center

Question 57

When purchasing disposable surgical gowns, Mercy Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the surgeons perform the role of the ________.

A) decider
B) initiator
C) user
D) gatekeeper
E) buyer

Question 58

Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects. Competition for these projects is fierce. What are the main areas of competition for these project engineering firms?

Question 59

Which type of buying situation would be preferred if the management wants to minimize decision-making time and effort.

Question 60

Timken achieved record revenue despite a recession by ________.

A) shifting attention into heavy processing, aerospace and defense industries
B) shifting attention into the auto industry
C) lowering prices on bearings for a tractor manufacturer's medium-sized tractors
D) avoiding sales of high priced bearings for large tractors
E) all of the above

Question 61

According to Patrick J. Robinson, the eight stages in the business buying-decision process are known as ________.

A) buyphases
B) buybacks
C) buyouts
D) buyables
E) buyoffs

Question 62

What is the composition of the buying center?

Question 63

________ occurs when customers are given a perspective or point of view that allows the firm to "put its best foot forward."

A) Gatekeeping
B) Commoditization
C) Framing
D) Rebuying
E) Bartering

Question 64

"Toughies" are old school buyers who pit sellers against one another.

Question 65

Newer, more strategically oriented purchasing departments have a mission. Which of the following most accurately describes that mission?

A) Make the most profit possible and remain independent of entanglements.
B) Approach every purchasing opportunity as means to create interdependency.
C) Seek the best value from fewer and better suppliers.
D) Outsource the supply function.
E) Abandon all strategies except for systems selling and buying.

Question 66

The buying center is where consumers go to purchase their goods and services.

Question 67

Influencers influence the buying decision by helping define specifications and providing information for evaluating alternatives.

Question 68

In which of the following is a person performing the role of a gatekeeper?

A) Dan decides on the product requirements and makes the final choice of suppliers.
B) Luke has the authority to pick out the supplier and negotiate the terms of purchase.
C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives.
D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG.
E) Dana authorizes the actions of the deciders and buyers in LKG.

Question 69

List the seven roles of people in a buying center.

Question 70

People who authorize the proposed actions of deciders or buyers are initiators.

Question 71

In the buying center, several people can occupy a given role such as user or influencer, and one person may play multiple roles.

Question 72

With respect to the buying center, approvers are people who have the power to prevent sellers or information from reaching members of the buying center.

Question 73

Small sellers concentrate on multilevel in-depth selling instead of reaching the key buying influencers.

Question 74

Which of the following is true about the buying center?

A) In a buying center, one person cannot play more than one role.
B) A typical buying center has a maximum of five or six members.
C) A buying center consists of only mid-level managers and below.
D) It is the decision-making unit of a buying organization.
E) Gatekeepers in a buying center are people who authorize the proposed actions of deciders or buyers.

Question 75

Patrick J. Robinson and his associates have identified eight stages in the business buying-decision process. This model is called the ________ framework.

A) buygrid
B) buying/selling
C) seller-centered
D) commercial
E) buy-analysis

Question 76

Initiators are those who authorize the proposed action of deciders or buyers.

Question 77

List the seven roles played by members of a buying center.

Question 78

Which of the following is a step in the straight rebuy buyclass?

A) problem recognition
B) general need description
C) product specification
D) supplier search
E) proposal solicitation

Question 79

If you were an upper-level marketing executive of a large seller of trucks, which of the following strategies would be most appropriate in reaching buying center targets?

A) Concentrate on key buying influencers.
B) Use multilevel in-depth selling.
C) Use trade-based promotions.
D) Concentrate sales efforts on the support staff.
E) Move all operations to the Internet.

Question 80

Small sellers should first concentrate their marketing efforts on reaching ________.

A) approvers
B) initiators
C) influencers
D) users
E) initiators