Deck 14: Products and Services for Businesses

Question 1

One of the ways that an industrial firm should manage the inherent volatility of the industrial sector is by increasing advertising expenditure during booms.

Answer 1

False

Question 2

Industrial demand is unaffected by changes in consumer demand.

Answer 2

False

Question 3

In Rostow's five-stage model of economic development, countries in Stage 5 (the age of mass consumption) are mostly service economies.

Answer 3

True

Question 4

For firms producing products and services for industrial markets, the chief reason for venturing abroad is the prospect of high profits with no risk.

Question 5

One of the interrelated trends that spurred the demand for technologically advanced products was the disintegration of the Soviet empire.

Question 6

Managers need to understand the concept of derived demand, particularly when they are selling capital equipment and big-ticket industrial services.

Question 7

A product whose design reflects the needs and expectations of the buyer-no more, no less-is a quality product.

Question 8

In Stage 1 (the traditional society) of Rostow's five-stage model of economic development, the most important industrial demand is labor.

Question 9

A country can leap several stages of economic development by using technology as economic leverage.

Question 10

The degree of economic development of a country can be used as a rough measure of the country's industrial market.

Question 11

A product that exceeds performance expectations can also be considered to be of poor quality.

Question 12

Good quality as interpreted by a highly industrialized market is the same as that interpreted by standards of a less industrialized nation.

Question 13

The ISO 9000 certification guarantees that each product or service produced by a company is of the highest quality.

Question 14

The most significant environmental factor affecting the international market for industrial goods and services is the degree of standardization.

Question 15

The U.S. Department of Commerce has mandated that all U.S. government purchases use the metric system.

Question 16

Derived demand can be defined as demand that is not dependent on another source.

Question 17

The adoption of universal quality standards would mean that the perceptions of industrial product quality would also be standardized.

Question 18

While countries have standards for products produced within its borders, there are no such standards that are applicable to imported goods.

Question 19

The single most important difference between consumer and industrial marketing is the cyclical swings in demand inherent in the latter.

Question 20

The lack of common standards for manufacturing highly specialized equipment is a problem in international sales of industrial products.

Question 21

Industrial markets differ from consumer markets in that

A) the demand for industrial goods is more volatile than the demand for consumer goods.
B) the market for industrial goods is insignificant in comparison to the market for consumer goods.
C) industrial goods are marketed domestically whereas consumer goods are marketed internationally.
D) industrial products are always more expensive than consumer products.
E) industrial products use the same level of technology for all products making it appropriate for all countries whereas consumer goods need to be customized for each market.

Question 22

Mai is a new international sales representative for an industrial supply company that is focusing heavily on technology as a selling feature. She will learn that this strategy

A) will be a key selling feature in all markets.
B) will have the most impact in developing countries.
C) may not be appropriate for all countries.
D) will not make a big difference in the global market.
E) can be easily overcome by competitors.

Question 23

What is perhaps the most significant environmental factor affecting the international market for industrial goods and services?

A) the foreign exchange market
B) political conditions
C) the degree of industrialization
D) the level of domestic competition
E) global warming

Question 24

For many industrial products, the revenue from associated services exceeds the revenue from the products themselves.

Question 25

Trade shows serve a much more important role in the U.S. than in other countries.

Question 26

What can be used as a measure to manage volatility in industrial demand?

A) maintaining a narrow product line
B) reducing prices during booms
C) reducing advertising expenditures during booms
D) focusing on market share as a strategic goal
E) avoiding investment in foreign high-yield financial instruments

Question 27

What is a reason for marketing industrial goods abroad that does NOT necessarily apply to consumer goods?

A) bypassing import tariffs
B) avoiding sales tax
C) reducing the volatility of demand
D) acquiring ISO certification
E) acquiring ACSI certification

Question 28

A manufacturer who does not provide after-sales services and support could also be forgoing the opportunity of participating in a lucrative aftermarket.

Question 29

What factor increases the volatility in demand in industrial markets?

A) Professional buyers in the industrial market tend to act in concert.
B) The demand for industrial goods is independent of changes in economic development.
C) Small, noncyclical swings in demand are inherent in industrial markets.
D) Experienced purchasers tend to make buying decisions independently.
E) The demand for industrial goods is highly inelastic.

Question 30

Relationship marketing shifts the focus away from price to service and long-term benefits.

Question 31

What statement is true in industrial markets?

A) Demand is nonvolatile by nature.
B) Markets are unaffected by derived demand.
C) Industrial sellers tend to have small numbers of customers upon which they are more dependent.
D) Sales of industrial goods are stable and do not fluctuate.
E) Professional buyers tend to undertake dissimilar investment actions to achieve the same goal.

Question 32

The sales of industrial goods are driven by the buyer's need to make profits.

Question 33

For international users of heavy construction equipment, the manufacturer's country of origin is of primary importance in purchasing construction equipment.

Question 34

To receive ISO 9000 certification, a company requests a certifying body to conduct a registration assessment.

Question 35

Communism is the most serious threat to the continued expansion of international services trade.

Question 36

A company website is the most important vehicle for selling industrial products, reaching prospective B2B customers, and marketing in most countries.

Question 37

In difficult economic and political circumstances or otherwise, online trade shows are a more than adequate substitute for physical trade shows or trade fairs.

Question 38

For managers selling capital equipment and big-ticket industrial services, understanding the concept of ________ is absolutely fundamental to their success.

A) availability heuristic
B) bank effect
C) Baskerville effect
D) derived demand
E) catapult demand

Question 39

Derived demand can be defined as demand that is

A) independent of price.
B) independent of consumer wants and needs.
C) dependent on another source.
D) highly volatile.
E) highly responsive to factors other than price.

Question 40

Why do German and Japanese firms generally do better than U.S. firms when it comes to managing volatility?

A) Their emphasis is on beating competitors.
B) They value employees and stability more highly.
C) They maintain limited product lines.
D) They reduce prices faster and raise advertising expenditures during booms.
E) They consider market share to be a strategic goal.

Question 41

What does the perception of quality depend on?

A) government specifications
B) the customer
C) universal quality standards
D) the manufacturer's specifications
E) standardization

Question 42

An important dimension of quality is how well the product

A) meets the specific needs of the buyer.
B) exceeds competitors' products.
C) conforms to manufacturer's specifications.
D) alters the marketing landscape.
E) saves time and labor.

Question 43

What is possibly the best indicator of a country's ability to use technology to leap several stages of economic development in a very short time?

A) the quality of the educational system
B) the size of the population
C) the general economic environment
D) the size and growth rate of the market
E) the level of government regulations

Question 44

Buyers in country X prefer to use the older, cheaper version of Firm A's product although it is bulkier and less user-friendly. Buyers in country Y, however, prefer to use the newer, lightweight version for its new user interface. Which statement is the most accurate conclusion from the given information?

A) Firm A needs to revamp its after-sales services.
B) The sales of industrial goods are higher in country X than in country Y.
C) The perception of quality can differ across countries.
D) Country X is a highly industrialized nation.
E) Country Y has a lower average income level compared to country X.

Question 45

If a country is in Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development, it purchases most of its highest-technology products and services from ________ suppliers.

A) Stage 4
B) Stage 3
C) Stage 5
D) Stage 1
E) Stage 2

Question 46

The Global Harmonization Task Force is an international effort that is attempting to

A) coordinate standards for several international industrial sectors.
B) promote free trade among developing and developed nations.
C) equalize wages among countries.
D) increase double testing of goods and services.
E) equalize the perception of quality across countries.

Question 47

A country has reached a level of economic development where the manufacturing of both semidurable and nondurable consumer goods has just begun. Also, the goods demanded relate to equipment and supplies to support manufacturing. In which stage of Rostow's five-stage model of economic growth does the country fit?

A) the traditional society
B) drive to maturity
C) preconditions for takeoff
D) takeoff
E) the age of mass consumption

Question 48

The industrialized economies in the ________ stage of Rostow's five-stage model of economic development focus more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services.

A) traditional society
B) drive to maturity
C) preconditions to takeoff
D) age of mass consumption
E) takeoff

Question 49

Russia and Eastern European countries fit in which stage of Rostow's five-stage model of economic growth?

A) the traditional society
B) drive to maturity
C) preconditions for takeoff
D) the age of mass consumption
E) takeoff

Question 50

Which trend spurs demand for technologically advanced products in the world?

A) an increase in the size of the global unskilled labor force
B) large fiscal deficits in developed nations
C) expanding economic and industrial growth in Asia
D) the increase in the average age in Europe
E) the opening of the Trans-Arctic route

Question 51

What is characteristic of Stage 2 of Rostow's five-stage model of economic growth?

A) Industrial demand is mainly associated with natural resources extraction.
B) The goods demanded relate to equipment and supplies to support manufacturing.
C) The focus is more on low-cost manufacturing of a variety of consumer and some industrial goods.
D) The focus is on design activities and the development of manufacturing techniques.
E) Infrastructure development is a primary need.

Question 52

What is the first stage of Rostow's five-stage model of economic development?

A) the traditional society
B) drive to maturity
C) preconditions for takeoff
D) takeoff
E) the age of mass consumption

Question 53

Which statement is true of universal standards in the sale of international products?

A) The idea of universal standards is being resisted in developing countries.
B) Firms that adhere to universal standards find the costs to be greater than the benefits.
C) The international market for industrial goods uses the imperial system as a universal standard.
D) All governments mandate universal standards.
E) The lack of universal standards limits the expansion of industries.

Question 54

Which trend will expand demand for industrial goods and business services in Latin America?

A) the increase of import tariff by 70 percent
B) the adoption of Marxist-socialist policies
C) the privatization of state-owned enterprises
D) the increased use of labor in place of capital in production
E) the decline of economic growth in Asia

Question 55

In which stage of Rostow's five-stage model of economic growth do industrialized economies such as Korea and the Czech Republic fit?

A) preconditions to takeoff
B) takeoff
C) traditional society
D) drive to maturity
E) the age of mass consumption

Question 56

In Stage 1 of Rostow's five-stage model of economic development,

A) the economy is primarily driven by the production of services.
B) the most important industrial demand relates to natural resources extraction.
C) infrastructure development is a primary requirement in the economy.
D) manufacturing of both semidurable and nondurable consumer goods has begun.
E) the focus is on low-cost manufacturing of a variety of consumer and some industrial goods.

Question 57

Which country is designated as being in Stage 2 of Rostow's five-stage model of economic growth?

A) Russia
B) Germany
C) South Korea
D) Czech Republic
E) Vietnam

Question 58

In which stage of Rostow's five-stage model of economic growth do highly-industrialized countries like Japan and Germany fit?

A) traditional society
B) preconditions to takeoff
C) takeoff
D) drive to maturity
E) the age of mass consumption

Question 59

The process of total quality management (TQM) starts with

A) providing all customers with technologically advanced products.
B) signing trade agreements with developed countries.
C) involving customers in the product development process.
D) reducing the time taken for the product to reach the market.
E) marketing the products at trade shows and fairs.

Question 60

Country X is most likely to be in the age of mass consumption according to Rostow's five-stage model of economic development if

A) its economy is primarily driven by natural resource extraction.
B) the economy is moving away from agriculture and toward manufacturing.
C) the economy is driven by low-cost manufacturing.
D) it is primarily a service economy.
E) its economy is primarily agrarian.

Question 61

The American Customer Satisfaction Index (ACSI) focuses on

A) differentiating a product based on its quality.
B) rating a company's quality based on its leadership, strategic planning, and customer and market focus.
C) the audit of a company's business processes in order to ensure quality.
D) quality as perceived by product and service users.
E) the creation of a quality control system that can meet published quality standards.

Question 62

For most consumer services firms, the mode of entry into a foreign market is licensing, franchising, strategic alliances, or direct. This is usually done because

A) services are highly differentiated.
B) services produced cannot be added to inventory.
C) the creation and consumption of services cannot be separated.
D) the inputs used vary to a great extent.
E) services usually do not have any intrinsic value that can be converted into a tangible form.

Question 63

________ is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology.

A) Promotional pricing
B) Product innovation
C) Capacity utilization efficiency
D) Customer training
E) Warranty

Question 64

Many suppliers are adopting ISO 9000 standards because

A) they can acquire the certification at no extra cost.
B) governments mandate ISO certification for all product categories.
C) they want to be perceived as being environmentally friendly.
D) the WTO expects international suppliers to conform to ISO standards.
E) their buyers require them to be ISO 9000 registered.

Question 65

The ISO 9000 certification allows a company to

A) hedge its risk from currency fluctuations.
B) bypass all international trade barriers.
C) diversify into other product lines.
D) differentiate it from its competitors.
E) provide after-sales services.

Question 66

The ________ measures customers' satisfaction and perceptions of quality of a representative sample of America's goods and services.

A) ISO 9000
B) ICE
C) Net Promoter Score (NPS)
D) American Customer Satisfaction Index (ACSI)
E) American Price Index (API)

Question 67

In the case of cellular phones, the physical product is practically given away to gain the phone services contract. This could be because

A) cellular phone companies do not view market share as a strategic goal.
B) the cost of production of cellular phones is very low.
C) the revenues from associated services exceed the revenues from the cellular phones.
D) the margins on after-sales services for cellular phones is low.
E) consumers sometimes buy a variety of services that are not associated with products.

Question 68

Firms that sell industrial goods in international markets should focus on after-sales services because these services

A) are almost always more profitable than the actual sale of the goods themselves.
B) require high levels of investment in training and development.
C) ensure that the firm's goods are not liable to lawsuits.
D) cost the firm almost nothing.
E) cannot be outsourced to other companies and must be provided by the firm itself.

Question 69

The U.S. Congress and businesses have been resisting conversion to the metric system because they fear

A) market competition from international firms already using the metric system.
B) consumer backlash and the substitution of international products.
C) it will promote standardization.
D) workers will not understand the system.
E) it will be too costly to implement.

Question 70

Some business services have intrinsic value that can be embodied in some tangible form; they can be produced in one country and exported to another. An example is

A) language schools.
B) in-flight services on an airplane.
C) operating an automatic teller machine.
D) data processing services.
E) physicians' services.

Question 71

Which of the following countries is not officially on the metric system?

A) Liberia
B) Japan
C) Saudi Arabia
D) Mexico
E) China

Question 72

ISO 9000 concerns the

A) cost-effectiveness of the production of a good.
B) registration and certification of a manufacturer's quality system.
C) profitability of a production line.
D) ability of a company's computer system to adapt to SAP, a business management software.
E) marketing and promotional strategies of a firm.

Question 73

What statement about ISO 9000 certification is true?

A) It does not require a registration assessment.
B) It is generally voluntary except for certain regulated products.
C) It requires an annual complete assessment for recertification.
D) It measures customers' satisfaction and perceptions of quality of a representative sample.
E) It guarantees that a manufacturer produces a "quality" product or service.

Question 74

________ certification is considered to be an important competitive marketing tool in Europe.

A) ISO 9000
B) ICE
C) ACSI
D) AERA
E) NCME

Question 75

A U.S. manufacturing firm lost a big contract in Qatar because it provided pipes that were three yards long and the specifications called for three meters. In this case, the U.S. firm failed to recognize the importance of

A) ISO 9000 standards.
B) U.S. manufacturing guidelines.
C) the EU Product Liability Directive.
D) the American Customer Satisfaction Index.
E) using the metric system.

Question 76

What is true of the ISO 9000 standards?

A) The ISO 9000 standards apply to specific products.
B) The ISO 9000s guarantee that a manufacturer produces a "quality" product or service.
C) The ISO 9000 series describes eight quality system models.
D) The ISO 9000 standards are a certification of the quality control system that a company has in place.
E) The ISO 9000s were originally designed by the International Organization for Quality in the United States.

Question 77

What is driving a strong level of interest in the ISO 9000 certification?

A) government regulations
B) marketplace requirements
C) environmental regulations
D) trade tariff requirements
E) protectionism restrictions

Question 78

What is true of business services?

A) Most business services companies enter international markets to service their local clients abroad.
B) Services are intangible and so cannot be produced in one country and exported to another.
C) The removal of trade barriers poses a serious threat to the continued expansion of international services trade.
D) Firms should avoid providing after-sales services as the costs do not justify the benefits.
E) The perception of quality of a business service depends solely on the average per capita income of the buyer's country.

Question 79

Alcare Advertising has just signed a contract with Miramar cosmetics company to create ads for Miramar's products. Miramar wants Alcare to come up with creative ideas for its recent expansion into South Asian markets of India and Indonesia. In order to accommodate Miramar, Alcare has now opened offices in two Indian cities and one Indonesian city. In this context, Alcare is a

A) head hunter.
B) client follower.
C) bargain hunter.
D) bet padder.
E) risk avoider.

Question 80

The lack of universal standards in the industrial goods market

A) increases the price of raw materials.
B) gives each firm a competitive edge.
C) increases the level of consumer satisfaction.
D) reduces the price of the final goods.
E) increases the cost of doing business.