Deck 8: Business Markets and Buying Behavior

Question 1

In business markets, individuals or groups purchase products for one of three purposes. These purposes are

A)resale, wholesale, and direct use.
B)wholesale, direct use, and use in producing other products.
C)resale, wholesale, and use in producing other products.
D)resale, direct use in producing other products, and use in general daily operations.
E)use in general daily operations, wholesale, and resale.

Answer 1

D

Question 2

Compare and contrast the three major types of purchases made by business customers.

Answer 2

Most business purchases are one of three types: new-task, straight rebuy, or modified rebuy. Each type is subject to different influences and thus requires business marketers to modify their selling approaches accordingly. For a new-task purchase, an organization makes an initial purchase of an item to be used to perform a new job or solve a new problem. A new-task purchase may require development of product and vendor specifications and procedures for future product purchases. A straight rebuy purchase occurs when buyers purchase the same products routinely under approximately the same terms of sale. Buyers require little information for routine purchase decisions and tend to use familiar suppliers that have provided satisfactory service and products in the past. For a modified rebuy purchase, a new-task purchase is altered after two or three orders, or requirements associated with a straight rebuy purchase are modified. A business buyer might seek faster delivery, lower prices, or a different quality level of product specifications.

Question 3

What factors affect the purchase method that business customers choose?

Answer 3

Although no two business buyers do their jobs the same way, most use one or more of the following purchase methods: description, inspection, sampling, and negotiation. The most straightforward is description. When products are standardized and graded according to certain characteristics such as size, shape, weight, and color, a business buyer may be able to purchase simply by describing or specifying quantity, grade, and other attributes. Certain products, such as industrial equipment, used vehicles, and buildings, have unique characteristics and may vary with regard to condition. Depending on how they were used and for how long, two products may be in very different conditions, even if they look identical on paper. Consequently, business buyers of such products should base purchase decisions on inspection. Sampling entails evaluating a portion of the product on the assumption that its characteristics represent the entire lot. This method is appropriate when the product is homogeneous-for instance, grain-and examining the entire lot is not physically or economically feasible. Some purchases by businesses are based on negotiated contracts. In certain instances, buyers describe exactly what they need and ask sellers to submit bids. They then negotiate with the suppliers that submit the most attractive bids. This approach is generally used for very large or expensive purchases, such as commercial vehicles. This is frequently how government departments conduct business. A buyer and seller might negotiate a contract that specifies a base price and provides for the payment of additional costs and fees. These contracts are most commonly used for one-time projects such as buildings, capital equipment, and special projects.

Question 4

In what ways can an industrial classification system be used by business marketers to analyze target markets?

Question 5

How do individual factors affect the business buying decision process?

Question 6

Compare and contrast the consumer buying decision process and the business buying decision process.

Question 7

What are the four major types of business markets, and what are the characteristics of each?

Question 8

Discuss the differences between business and consumer transactions.

Question 9

Individuals and business organizations that purchase products for the purpose of making a profit either by using the products to produce other products or by using them in their operations are classified as ____ markets.

A)consumer
B)institutional
C)producer
D)government
E)reseller

Question 10

Describe the various stages of the business buying decision process.

Question 11

Business markets are typically divided into four categories. These categories are

A)retailers, wholesalers, services, and nonprofit firms.
B)producer, manufacturer, reseller, and government.
C)producer, reseller, government, and institutional.
D)manufacturer, wholesaler, retailer, and services.
E)reseller, retailer, government, and institutional.

Question 12

The three purposes for which individuals or groups can use products in order for it to be considered a business market are

A)use in daily operations, end consumption, and resale.
B)direct use in producing other products, company travel, and end consumption.
C)resale, use in daily operations, and direct use in producing other products.
D)governmental, institutional, and reseller purposes.
E)making other products, selling to other businesses, making component parts.

Question 13

Explain how purchase decisions for business products may be influenced by persons in a buying center.

Question 14

What are the major advantages of the North American Industry Classification System (NAICS) compared to the Standard Industrial Classification (SIC) system?

Question 15

Demand for business products can be characterized in four ways; describe these four characteristics and compare and contrast their attributes.

Question 16

When Hunter Ceiling Fans buys electrical wire for use in producing its ceiling fans, Hunter is part of what type of market for electrical wire?

A)Resale
B)Wholesale
C)Customer
D)Consumer
E)Business

Question 17

Discuss how interpersonal factors influence the business buying decision process.

Question 18

An accountant who purchases software for maintaining clients' books is an example of a buyer in a(n) ____ market.

A)consumer
B)producer
C)reseller
D)government
E)institutional

Question 19

In what ways do environmental factors affect the business buying decision process?

Question 20

What are some of the major concerns of business customers in making purchase decisions?

Question 21

Motorola buys silicone which is used in its chip-making process. Motorola produces microchips for use within a wide variety of products for other firms, such as Ford, GM and Samsung. Motorola is a buyer in a(n) ____ market.

A)producer
B)government
C)reseller
D)construction
E)institutional

Question 22

Pi Delta Mu sorority purchases food in bulk to feed its members living in the house. This means it is part of a(n) ____ market.

A)producer
B)consumer
C)reseller
D)institutional
E)government

Question 23

Mike's Roadside Market buys produce from area farmers, marks the merchandise at a price that includes some profit, and then sells the fruit and vegetables to the people in and around Centerville. Mike's would be classified as part of a ____ market.

A)consumer
B)producer
C)government
D)reseller
E)wholesaler

Question 24

Which of the following statements about reseller markets is false?

A)Resellers are concerned with the level of demand for the product.
B)Resellers are not concerned with how much space the product takes up as long as it has a high price.
C)Resellers want producers to be able to supply adequate quantities of the product.
D)Resellers are concerned with the availability of technical and promotional assistance from the producer.
E)Resellers are concerned with the markup percentage they can get on the product.

Question 25

Which of the following would be considered an institutional buyer?

A)The University of Illinois
B)The Environmental Protection Agency
C)Apple Computers
D)The United Way
E)City of Greenville

Question 26

Because retailers have to be concerned with product selection, price, and space, they often evaluate products on the basis of

A)their markup.
B)sales per square foot of selling area.
C)how many of the product they can fit in a certain amount of space.
D)profit per dollar of selling price.
E)the reliability of the supplier.

Question 27

What are the two ways governments make purchases?

A)Cash or credit
B)Contracting previous suppliers and bids
C)Bids and negotiated contracts
D)Lottery system and contract negotiations
E)Request for new purchases and recurring orders

Question 28

Institutional markets are

A)intermediaries who resell goods to make a profit.
B)federal and state government units.
C)state or local government units.
D)consumers who buy products for their own use.
E)organizations that seek nonbusiness goals.

Question 29

A friend of yours starts his own business. He would like to expand his client base to include the government, but he believes his small business would be ignored. Based on your knowledge from the text, you tell him

A)that he's absolutely right, the government doesn't deal with small businesses.
B)although the government will deal with small businesses, he will never make a profit off a government contract.
C)that any government, federal, state, or local would laugh at the size of his business.
D)the government rarely considers new suppliers when making purchasing decisions.
E)the government buys products from all sizes of business, but there is some red tape.

Question 30

The government decides to purchase a new fleet of fighter jets for the U.S. Air Force. What type of buying procedure is the government most likely to use?

A)The government will request bids from all companies on its qualified bidder list.
B)It will contact whatever company made the last jets and have them develop the new ones.
C)Ads will be placed in the top five circulated U.S. newspapers for a company to produce the jets.
D)The government will select a few firms and enter into negotiations with them until the contract is awarded.
E)The contract will go to the first company that submits a reasonable bid for the desired jets.

Question 31

When the city of Chicago buys iPads for its restaurant inspectors to use during their visits, the purchase from Apple would be considered​

A)a regulatory sale.
B)a reseller purchase.
C)a government purchase.
D)a producer purchase.
E)an institutional sale.

Question 32

When charitable organizations such as the American Cancer Society, Second Harvest Foodbank, and the Red Cross make purchases for goods and services to use in their daily operations, they would be considered to be _______ buyers.

A)corporate
B)government
C)institutional
D)producer
E)nonprofit

Question 33

Snappy Tools, Inc., purchases hammers, bolts, and other hardware items from a variety of manufacturers and sells them to hardware stores at a price that includes a profit for Snappy Tools, Inc. The company would be part of what type of business market?

A)Reseller
B)Producer
C)Consumer
D)Government
E)Supply

Question 34

The state of Montana is preparing to buy a large quantity of frozen orange juice for use in a large school district. Citrus Sweet, Inc. is in the citrus juice business but has never sold to the government market. To have a chance at getting this order, Citrus Sweet's first step must be to get her firm to

A)make a presentation appointment with the state.
B)quote prices to the purchasing department.
C)advertise in the capital city.
D)negotiate with the state.
E)secure a slot on the list of qualified bidders.

Question 35

Retailers like Target and Kmart are considered to be members of which business market?

A)Reseller
B)Customer
C)Producer
D)Institutional
E)Services

Question 36

____ buy products from manufacturers and then resell the products to other firms in the distribution system.

A)Retailers
B)Producers
C)Distributors
D)Warehouses
E)Wholesalers

Question 37

About what percentage of the annual U.S. gross domestic product is government spending?

A)2 percent
B)10 percent
C)20 percent
D)40 percent
E)50 percent

Question 38

Which type of business market tends to have the most complex buying procedures?

A)Reseller
B)Institutional
C)Retailer
D)Government
E)Producer

Question 39

What is a primary difference between business and consumer buyers?

A)Consumer buyers require more product information than business buyers.
B)Business purchases are made by one individual whereas families make consumer purchases together.
C)Repeat sales are more common with consumer buyers than business buyers.
D)Consumers primarily buy inexpensive items; businesses only buy expensive items.
E)Business buyers generally make larger orders than consumer buyers.

Question 40

Individuals and business organizations that buy finished goods and resell them to make a profit without changing the physical characteristics of the product are classified as ____ markets.

A)consumer
B)institutional
C)producer
D)government
E)reseller

Question 41

Volkswagen purchases upholstery for the interiors of its vehicles from various suppliers. This upholstery must have a set of characteristics that is expressed by Volkswagen. This set is called

A)descriptions.
B)product features.
C)criterion.
D)purchase requests.
E)specifications.

Question 42

Raython Hardware and Thames Industrial Supplier have worked closely for many years and have a mutually beneficial relationship in which Raython provides all of Thames's hardware needs in a timely manner. Raython and Thames's relationship could be best characterized as a(n)

A)reciprocity agreement.
B)partnership.
C)intra-organizational group.
D)alliance.
E)tying arrangement.

Question 43

Jason owns a small landscaping business called GreenScapes. When buying a new pickup truck for his landscaping business, Jason negotiated with Palmetto Dodge, a dealer, with the agreement that GreenScapes would be the service company Palmetto Dodge used for all of its landscaping needs. This is an example of

A)a new task purchase.
B)a straight rebuy.
C)a modified rebuy.
D)reciprocity.
E)a straight purchase.

Question 44

Which of the following statements about business buying is false?

A)Business marketers prefer not to sell to customers who place small orders.
B)Business marketers must often sell their products in large quantities to make profits.
C)Most business purchases are made by committee.
D)Business purchases are usually made on the basis of contracts.
E)Orders in business markets tend to be smaller than those placed in consumer markets.

Question 45

Many suppliers and their customers invest time and resources to build and maintain mutually beneficial relationships which are often called

A)partnerships.
B)co-ops.
C)monopolies.
D)reciprocity.
E)alliances.

Question 46

Which method of business buying is most likely to be used when the products being purchased are standardized based on certain characteristics?

A)Homogeneous selection
B)Inspection
C)Description
D)Sampling
E)Negotiation

Question 47

A representative product taken from a lot or batch, evaluated, and purchased refers to

A)homogeneous selection.
B)description.
C)trust.
D)negotiated inspection.
E)sampling.

Question 48

Which of the following is true with respect to buyers in business markets?

A)Business buyers always act rationally when making purchases for their company.
B)Business customers tend to be less informed about the products they purchase than consumer buyers.
C)Business customers demand detailed information about a product's functional features and technical specifications.
D)Business customers are no different than buyers in consumer markets.
E)Business customers tend to buy products from their friends and contacts with business suppliers.

Question 49

St. Jude's Hospital decides to redo its kitchen with new flooring, cabinets, counters, and appliances. The hospital compiles a description of the project and then asks sellers to submit bids. After determining the most attractive bids, the hospital will then work with two or three companies to determine who will get the contract. This is an example of using ____ for a purchase decision.

A)sampling
B)negotiation
C)inspection
D)elimination
E)description

Question 50

Which method of business buying is necessary when products are highly homogeneous and examination of each item is not feasible?

A)Negotiation
B)Sampling
C)Description
D)Inspection
E)Homogeneous selection

Question 51

Management at Readyfresh Dry Cleaners is concerned that it maintains a high level of service for its business accounts. How should the firm monitor the level of service these customers receive?

A)Develop a code of service.
B)Set service objectives.
C)Formally survey customers.
D)Specify service uniformity.
E)Stress truthfulness with employees.

Question 52

Most businesses try to control the level of quality in the parts they buy from suppliers. Most firms develop standards for ____ in order to achieve their quality goals.

A)how many different suppliers they use
B)how many parts can fail
C)controlling when shipments will arrive
D)the percentage of defects allowed
E)how long the parts should last

Question 53

A Pillsbury mill in Utah buys grain from growers in the western region. The purchasing agent for Pillsbury will most likely use which buying method?

A)Description
B)Inspection
C)Sampling
D)Negotiation
E)Selection

Question 54

When buying materials, the purchasing agent for Alco Pillow Manufacturing Company considers a variety of factors. Which one of the following is least likely to concern this buyer?

A)Does the quality of the goods meet company specifications?
B)Does the supplier consistently deliver on time?
C)Does the supplier also sell to my competitors?
D)Does the supplier offer the services required?
E)Does the price meet company budget requirements?

Question 55

A disadvantage of reciprocity is that it can lead to

A)a price war.
B)higher promotional costs.
C)more competitive firms entering the industry.
D)less-than-optimal purchases for the buyer.
E)longer periods of negotiation.

Question 56

Bob Denton of Denton Pest Control buys equipment from Allied Tools because Allied hires him to spray its warehouse for insects periodically. This practice is an example of

A)cost-benefit trading.
B)cooperative selling.
C)reciprocity.
D)supplier agreements.
E)modified rebuy purchase.

Question 57

Product specifications are best described as

A)physical characteristics and level of quality.
B)descriptions of a product.
C)numbers of quality inspections required.
D)comparisons to similar products.
E)defective product return policies.

Question 58

All of the following are important concerns of business customers except

A)achieving a specific level of quality in the products offered to target markets.
B)obtaining a level of quality that meets specifications.
C)obtaining products that exceed specifications to ensure the best possible product performance.
D)obtaining products for which the quality level is consistent.
E)supporting customers with services they expect.

Question 59

Which of the following products is most likely to be purchased on the basis of contract negotiation?

A)Eggs
B)Office supplies
C)Used cars
D)A custom-made bulldozer
E)Wheat

Question 60

Collin Roberts of Roberts Construction is planning to buy a piece of used earth-moving equipment. He would most likely base his purchase decision on ____ of the alternative machines.

A)descriptions
B)inspections
C)a sampling
D)specifications
E)reputations

Question 61

Demand for a business product is ____ when two or more items are used in combination to produce a product.

A)inelastic
B)joint
C)fluctuating
D)derived
E)partnered

Question 62

When a business is making its initial purchase of an item to be used to perform a new job, it is known as a ____ purchase.

A)straight rebuy
B)reciprocal
C)delayed
D)new-task
E)modified rebuy

Question 63

Inelastic demand simply means that

A)buyers will not make a modified rebuy purchase.
B)demand depends on how many items are purchased.
C)a price increase or decrease will not significantly change the demand for an item.
D)when price goes up, demand goes down.
E)when supply is reduced, the price will increase.

Question 64

When certain consumer products are in high demand, producers might buy extra materials and equipment and when demand subsides, producers will cut back on their material purchases. This describes ____ demand.

A)joint
B)inelastic
C)consumer
D)fluctuating
E)elastic

Question 65

All of the following describe the demand for business products except

A)elastic.
B)derived.
C)joint.
D)inelastic.
E)fluctuating.

Question 66

Christoff's Lawn & Lot is a small business that provides landscaping and grass cutting services in the spring and summer. Christoff's usually contracts with customers on an annual basis, with the terms set out at the beginning of the season. This year, the area experienced a significant amount of rain, causing the grass to grow more quickly. Christoff's was required to cut the grass every time it grew 2 inches, and no matter how many times it needed cutting, the customer paid the same monthly amount based on the original contract. The price of gas has now grown by 35% causing Christoff's to pay more for their supplies. The demand for gas despite its price represents ________ demand for Christoff's Lawn & Lot.

A)elastic
B)inelastic
C)derived
D)joint
E)separate

Question 67

Safeway Supermarkets recently placed an order with the Kahn Corporation for hotdogs. The typical weekly order is for 10 cases; however, since the upcoming weekend includes a holiday, this time Safeway is ordering 100 cases of hotdogs. Safeway orders this product on a regular basis. What type of purchase does this week's purchase represent?

A)New-task
B)Repetitive
C)Institutional
D)Straight rebuy
E)Modified rebuy

Question 68

Perry Supply's sales and sales force have continued to expand. Now, the firm plans to add a fleet of company cars as part of its sales compensation package. For Perry Supply, these vehicles would represent a ____ purchase.

A)modified rebuy
B)straight rebuy
C)new-task
D)reevaluated
E)repetitive

Question 69

Anderson Distribution Company has purchased 15 forklifts over the past two years. As it plans to place its next order for another five machines, management wonders if additional features may be needed in order to handle changes in the product lines it carries. For Anderson, these new forklifts represent a ____ purchase.

A)new-task
B)repetitive
C)straight rebuy
D)repetitive order
E)modified rebuy

Question 70

King Auto Supply sells car and truck parts, as well as tire replacement and balancing services. As King places its order for truck tires with Michelin, it must also place an order for valve stems and balancing weights for the tires. Such business products are characterized as having ____ demand.

A)derived
B)inelastic
C)joint
D)fluctuating
E)higher

Question 71

Inelastic demand in business markets refers to a situation where

A)demand for a given product fluctuates very little over time.
B)price increases or decreases will not significantly change demand for a given product.
C)demand for a given product fluctuates significantly over time.
D)demand for one product depends heavily on the demand for another product.
E)supply for a given product cannot keep pace with the demand for it.

Question 72

Demand for business products is also known as ____ demand.

A)derived
B)corporate
C)business buying
D)manufacturing
E)industrial

Question 73

Most business purchases can be classified as belonging to one of three types:

A)delinquent, repetitive, or delivered.
B)repetitive, new-task, or modified rebuy.
C)modified rebuy, new-task, or straight rebuy.
D)delinquent, new-task, or reciprocal.
E)rebuy, reciprocal, or delayed.

Question 74

Goodyear is a manufacturer and marketer of tires for new passenger cars. In recent years, the company's business has declined because of the overall decrease in consumer demand for new cars. In this case, the demand for Goodyear's tire products is said to be ____ since it depends on the demand for new cars.

A)inelastic
B)fluctuating
C)derived
D)elastic
E)nonderived

Question 75

A representative from Coca-Cola stops by at a local fast-food restaurant once a month to inquire how much soft drink syrup the store will need. The restaurant's orders are an example of which type of business purchase?

A)New-task
B)Modified rebuy
C)Straight rebuy
D)Bid
E)Negotiated

Question 76

The United States Navy purchases uniforms from a single supplier. For the last twenty-five years, the trousers purchased from this supplier have not changed and have been bought every six months, in seven different sizes. This example is called a

A)new-product purchase..
B)repetitive purchase.
C)straight rebuy.
D)modified rebuy.
E)standard order.

Question 77

In placing a tire order with Michelin, South Side Industrial Supply finds that the truck tires it is ordering have increased $37.50 in price since the last order. South Side proceeds with the order, confident that it can pass on the price increase to future customers. This is an example of business products having ____ demand.

A)derived
B)inelastic
C)joint
D)fluctuating
E)higher

Question 78

The Eagle Pawn Company is a regional business that owns seven pawn stores in the Houston area. The owners of Eagle Pawn have recently purchased a new software system designed to better track their inventory. Now that they have had the system for a couple of months, they have decided to upgrade to a newer version. The original purchase is an example of a(an) ________, while the current purchase will be a(an) _____.

A)new task; modified rebuy
B)new task; continued new-task
C)contractual; modified rebuy
D)new task; straight rebuy
E)negotiated task; modified rebuy

Question 79

The fact that business customers purchase products to be used directly or indirectly in the production of goods and services to satisfy customers' needs means that demand for business products is

A)joint.
B)economically stable.
C)derived.
D)inelastic.
E)more fluctuating.

Question 80

Demand for business products is characterized as derived. From what is the demand derived?

A)Industrial demand
B)Modified demand
C)Demand for consumer products
D)Future product demand
E)The business cycle