Question 1

There was a spike in the sales of the new iPhone. This resulted in an even larger increase in demand for the machinery and equipment needed to manufacture the iPhones. What is this a result of?

Accepted Answer

The multiplier effect explains how an increase in one economic activity (like the sales of a new iPhone) leads to a larger increase in other economic activities (such as the demand for machinery and equipment needed to manufacture the iPhones). This effect demonstrates how initial increases in spending lead to further increases in economic activity and demand.

Question 2

Which of the following pairs of products best illustrates the concept of joint demand?

Accepted Answer

Joint demand occurs when two products are used together, such that the demand for one product is directly linked to the demand for the other. A grandfather clock pendulum and a grandfather clock case are complementary goods, as the pendulum is essential for the functioning of the clock, illustrating joint demand.

Question 3

A company that installs and maintains signs along major highways has a truck equipped with a 50-metre crane that is capable of lifting up to 15 tons. The company's accountant depreciated the value of the vehicle over several years. What type of business product is the truck with a crane?

Accepted Answer

The truck with a crane is a major equipment as it is used as a main or central asset in the company's business operations. It is not a component part, which is a smaller part of a larger product, nor is it a processed material or a fabricating item.

Question 4

Pruitt sells embroidery machines used to embroider logos, names, and other designs on shirts, caps, umbrellas, etc., to people in the personalization business. The machines range in price from $39,000 to $75,000. He wants to stimulate business among some of his customers who cannot afford to buy his embroidery machines, but whose businesses would benefit from the use of one. Which of the following actions is most appropriate in this example?

Accepted Answer

Developing leasing options for business customers would enable those who cannot afford to buy the machines to still use them in their businesses. This would stimulate business among those who otherwise would not be able to purchase the machines outright, while also providing Pruitt with a new revenue stream through leasing fees. Full and complete reciprocity and managing derived demand are not relevant to this situation, and a straight-rebuy ordering system is not suitable since customers may not have the funds to make a direct purchase.

Question 5

Which of the following is the best example of major equipment?

Accepted Answer

Major equipment refers to large, durable machines or structures that are essential for conducting business or performing tasks. A baseball stadium is a significant and expensive structure that requires heavy machinery, construction equipment, and specialized materials to build, maintain, and operate. Choices B, C, and D do not fit the definition of major equipment as they are not large or specialized structures that are crucial for business operations.

Question 6

Which of the following is the best example of accessory equipment?

Accepted Answer

Accessory equipment refers to the equipment used in production or office activities that is not directly involved in the production process. A store display rack is a good example of accessory equipment as it is used to display products in a retail store but is not directly involved in the production process. A parking lot, car batteries, and a river barge are not examples of accessory equipment as they are either not used in production or are directly involved in the production process.

Question 7

Why is it important that marketers understand the classification of the business product they are selling?

Accepted Answer

Understanding the classification of the business product is important for marketers because promotion and distribution strategies tend to vary depending upon the type of product. Different products require different marketing efforts and strategies, and understanding the classification helps marketers make informed decisions about the best way to sell the product.

Question 8

Commonplace in business marketing, what is the term for the bargaining between buyers and sellers on product specifications, delivery dates, payment terms, and other pricing matters?

Accepted Answer

Negotiation is the term commonly used to refer to the bargaining process between buyers and sellers on various pricing matters, including product specifications, delivery dates, payment terms, and more. Mediation, customerization, and purchase arbitration are not commonly used terms here.

Question 9

What is the benefit of having fewer customers in business markets in comparison with consumer markets?

Accepted Answer

Having fewer customers in business markets can make it easier to identify prospective buyers. This is because there are typically fewer businesses in a given industry or geographic area than there are individual consumers. As a result, B2B marketers can focus their efforts on a smaller number of potential customers and tailor their messaging and offerings to meet their specific needs. This can help to improve the efficiency and effectiveness of their marketing efforts.

Question 10

Caterpillar, the manufacturer of earthmoving equipment, uses completed drivetrains, drivetrain components, electrohydraulic components and systems, cooling systems, and undercarriage track systems produced by other organizations in its manufacturing process. What is Caterpillar an example of?

Accepted Answer

Caterpillar is an example of an original equipment manufacturer (OEM) which uses components and systems produced by other organizations in its manufacturing process.

Question 11

What is the term for finished items ready for assembly or products that need very little processing before they become a part of some other product?

Accepted Answer

Component parts are finished items that can be easily assembled with other parts to make a final product, therefore needing very little processing.

Question 12

Because they are shown as expenses on the yearly accounting statements, what are firearms, computers, printers, fax machines, and patrol vehicles for a police department?

Accepted Answer

Firearms, computers, printers, fax machines, and patrol vehicles are all accessory equipment for a police department. They are not component parts or supplies, and while they may be considered mobile installations, the term "accessory equipment" is more specific to their purpose and use within the department. Additionally, as they are not purchased frequently and are expected to last for several years, they are shown as expenses on the yearly accounting statements.

Question 13

Which of the following occurs when a bakery decides to buy its office supplies from a company that regularly buys muffins and pastries for its employees?

Accepted Answer

Reciprocity refers to a situation where a buyer and a seller agree to do business with each other because they have a relationship in which both parties benefit. In this case, the bakery and the office supply company have a reciprocal relationship as the office supply company buys muffins and pastries from the bakery, and the bakery buys its office supplies from the office supply company.

Question 14

Creative Graphics has just moved into a new building. The owner wants to landscape the front of the building and build an employee picnic area on the side. When looking for a landscaper, the owner looked no further than his own customer list. He chose to use the services of a landscaper that had hired Creative Graphics to print a recent promotional brochure. The purchase by Creative Graphics is which of the following?

Accepted Answer

This is a normal business practice called reciprocity, where one business chooses to use the services of another business that has previously used their services. It is not an example of nested demand or an illegal influence, and there is no indication that the decision was unethical by all standards.

Question 15

Parking garages, $500,000 printing presses, privately owned warehouses, and oil-well drilling platforms are depreciated over time rather than expensed in the year they are purchased. How are these classified?

Accepted Answer

These items are considered major equipment, as they are long-term and expensive assets used in the operation of a business that provide benefits for multiple years. Depreciation allows for the cost of these assets to be spread over their useful lives.

Question 16

Tommy ran a warehouse selling nuts and bolts to car mechanics. After his own car broke down, Tommy decided to use a mechanic called Raymond. Raymond actually happened to be one of Tommy's customers at the warehouse. What is this an example of?

Accepted Answer

This is an example of reciprocity, as Tommy is now using Raymond's mechanic services after Raymond has been a customer of Tommy's warehouse.

Question 17

What characteristics do buyers in business markets exhibit?

Accepted Answer

Business buyers are typically more geographically concentrated than consumers, as they are often looking for suppliers who can provide goods and services in a specific local area. Choices A, B, and D are incorrect. Business buyers, like all buyers, are sensitive to price, may be located throughout the world, and can be involved in numerous negotiations depending on their needs.

Question 18

Which of the following customers are NOT served by business marketers?

Accepted Answer

Business marketers generally do not serve private (individual) consumers, as they focus on serving other businesses and organizations.

Question 19

Pammi was looking for a new car. She has heard that the Car Mecca was the place to go. Many car companies including Ford, Volkswagen, Honda, and Toyota all sell at the Car Mecca. What is this an example of in the business market?

Accepted Answer

This is an example of geographic concentration, as multiple car companies have chosen to sell their products in one centralized location (the Car Mecca).

Question 20

Because they are not expensive, have short useful lives, and are frequently purchased from local distributors, how are store mannequins, notebook computers, fax machines, and grocery carts typically classified?

Accepted Answer

Store mannequins, notebook computers, fax machines, and grocery carts are classified as accessory equipment because they are not expensive, have short useful lives, and are frequently purchased from local distributors. Accessory equipment is a type of capital asset that supports the operation of a business or organization but is not directly involved in the production process.

Quiz 7: Business Marketing