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Chapter 01 (p. 6) Business marketers do NOT sell to: Other companies Government bodies Institutions Service suppliers E. Individual consumers (p. 7) Increasingly, organizational survival depends upon firms being: a. Individual-driven B. Market-driven Ideology-driven Product-driven Sales...
Chapter 01 (p. 6) Business marketers do NOT sell to: Other companies Government bodies Institutions Service suppliers E. Individual consumers (p. 7) Increasingly, organizational survival depends upon firms being: a. Individual-driven B. Market-driven Ideology-driven Product-driven Sales-driven (p. 7) Being means that customer satisfaction and operational efficiency are the order of the day for every department and individual employee or associate. Product-driven Profit-driven Technology-driven D. Market-driven e. Sales-driven (p. 7) means that at many organizations, individuals with complementary expertise and skills work in teams to constantly strive to serve organizational customers better, to innovate and to develop the means to approach new institutional markets. Product-driven Profit-driven Technology-driven Market-driven e. Sales-driven (p. 7) Which of the following is NOT a valid reason for studying business marketing? The magnitude of business marketing Business marketing is unique One type of marketing does not fit all situations It is an exciting area of study It is the same as consumer marketing (p. 9) All the following are ways in which business marketing differs from consumer marketing EXCEPT: Its distribution channels are shorter and more direct It emphasizes personal selling and negotiation C. The Web is not integrated It employs "unique" promotional strategies It requires knowledge of the customer's customer (p. 9) BASF sells fibers direct to Dupont for the manufacture of carpet and through distributors to smaller companies. This example shows that business marketing is characterized by compared to consumer marketing. Shorter distribution channels Marketing research Greater web integration Consumption Lesser emphasis on personal selling (p. 9) BASF salespeople work directly with fire departments to sell the latest fire-fighting chemicals and ensure that they are used properly. This example shows that business marketing is characterized by compared to consumer marketing. a. Longer distribution channels Greater emphasis on personal selling Varying buyer-seller relationships Greater web integration Consumption (p. 9) Which of the following statements about buyer-seller relationships in business marketing is TRUE? Strong personal and business relationships between buyer and seller are extremely rare Close personal relationships exist between buyer and seller in all industries Personal selling is never an important element of the marketing mix Companies rarely enter into long-term contracts as the opportunity cost of mistakes is high E. Many companies focus on building relationships that enable buyers and sellers to plan jointly (p. 10) In business marketing, large customer size and use of direct channels increase the importance of: Advertising Distribution C. Negotiation Packaging Production (p. 10) These members of an organization are specifically responsible for coordinating their company's efforts at satisfying their customers. Salespeople Middle managers Supervisors Human resource personnel First-line managers (p. 10) In terms of personal selling, which of the following statements is TRUE? a. A business cannot be successful through personally getting to know each individual and coordinating the sales-purchase process Complex buying procedures involving many members of the buying organization require personal selling Multiple personal relationships can strengthen organizational relationships and these relationships are the responsibility of the manager A customer's size and a direct channel do not affect the importance of negotiation Large orders sold directly by the manufacturer to the user increase the likelihood of negotiation because changes can be made in place and promotion (p. 11) Why is the demand for business products dependent ultimately on individual consumers? Because individual consumers are larger than business customers Because individuals within organizations purchase for personal consumption and consumers do not Because business markets consume products in the process of making other products Because the buyers of business products are the final consumers Because of the emphasis on personal selling for business products (p. 13) When a company purchases a product or service to be included in its own final product, the company is called a(n) Reseller User Institution Original equipment manufacturer e. Industrial distributor (p. 13) Resellers include all of the following EXCEPT: Wholesalers Dealers C. Government agencies Brokers Industrial distributors (p. 13) All the following types of customers purchase products for consumption EXCEPT: A. Brokers Original equipment manufacturers Hospitals Universities Users (p. 13) OEMs are BEST described as: a. End users B. Companies that consume Government agencies Firms that resell a product without making any changes Institutions (p. 13) When purchasing products/services to be consumed in support of the firm's operation, the firm is BEST described as a(n): User Institution Reseller Government agency Wholesaler (p. 13) Users are similar to final consumers in that: a. They purchase products to include in their own final product Satisfaction is determined through consumption They are primarily influenced by advertising The impact upon profit is not important They incorporate their purchases into their final product (p. 13) Identify the largest single purchaser of products and services in the United States. Wal-Mart Defense department Government Financial institutions Steel industry (p. 13-14) In the United States: The state governments are the single largest consumers The government does not use any product it buys The purchasing processes used by the government are simple and easy to sell to The federal government is the only government customer E. The federal government is the country's largest single landlord (p. 14) Government agencies tend to have complex purchasing processes because purchasing is: Limited to military goods Solely designed to produce profits Solely for their own use D. Often designed to accomplish social objectives e. Largely influenced by negotiation (p. 14) Policies designed to encourage the growth of minority- or women-owned businesses as well as small businesses are examples of policies that influence government purchasing. A. Social objective Environmental objective Economic objective Business objective Protectionist (p. 14) Which of following business customers provide services similar to those delivered by wholesalers and retailers of consumer goods? OEMs Government agencies Institutions Private contractors E. Industrial distributors (p. 15) In business markets, products are generally classified on the basis of: Price Durability C. Type of purchaser and reason for purchase Size and weight of product Type of promotion employed (p. 15) Gold purchased by AT&T for use in the manufacture of telecommunications equipment would be BEST described as a(n): Raw material Facilitating supply Manufactured material Component part MRO (p. 15) Which of the following product types has been transformed from the raw material and requires further processing before use? a. OEM Manufactured material Component part Capital equipment MRO (p. 15) Raw materials A. Are sold to OEMs for use in the products they manufacture Are parts assembled into the final product without further transformation Facilitate a firm's achievement of its objectives, but are not part of the final product Are also called installations Are products sold to users for use in the company's operations (p. 15) Parts that may be assembled into a final product without further processing are BEST described as: Capital equipment Manufactured materials Raw materials MROs E. OEM parts (p. 15) Sometimes, a company purchases OEM parts and assembles these to make a component for installation into the final product by another company. The component may then be called a(n) Facilitating product Manufactured material Installation D. Subassembly e. MRO item (p. 15) Gates Controls may purchase plastic casing, a component part, from Plastech and parts from Metric Devices and then put these components together into a tachometer that is sold to GM. GM would then put the tachometer into its cars or trucks. GM may refer to the part as a(n) A. Assembly Manufactured material Accessory equipment Capital equipment MRO item (p. 15) Computers used to facilitate the company's achievement of its objectives, but not part of the final product would be BEST described as: OEM parts Component parts C. Accessory equipment Raw materials Subassembly (p. 15) Large, expensive items used in the production process are BEST classified as: A. Capital equipment OEMs Accessory equipment MROs Manufactured materials (p. 15) Overhead cranes, blast furnaces, industrial robots and other manufacturing equipment as well as forklifts, road graters and other heavy construction machinery are examples of MRO items Maintenance products Manufactured materials Accessory equipment E. Capital equipment (p. 15) What is an important difference between accessory and capital equipment when it comes to marketing the equipment to users? a. Accessory equipment is part of the organization's final product while capital equipment facilitates the organization's activities B. Capital equipment is much more expensive and its purchase may involve more members of the organization than purchase of accessory equipment Accessory equipment demand is derived from the demand for consumer products Marketing requirements for accessory equipment are different as more members of the organization must be reached by marketing efforts Capital equipment is ordered on a more regular basis than accessory equipment (p. 15) Products purchased for use in the firm's operations are usually called: OEM parts Capital goods Accessory equipments D. MRO items e. Component parts (p. 15) The hiring of an advertising agency would be BEST descried as the purchase of a(n): a. Operating supply B. Facilitating service Component part MRO Accessory (p. 15) Facilitating products: A. Aid the company's achievement of its objectives, but are not part of the final product Are parts assembled into the final product without further transformation Include raw and manufactured materials, component parts or OEM parts and assemblies Are parts assembled to make a component for installation into the final product by another company Are parts assembled into the final product without further transformation (p. 15) Facilitating supplies: Are also called OEM products Refer to products sold to users for use in the company's final product Are materials processed only to the point required for economic handling and distribution Are parts assembled into the final product without further transformation E. Support company efforts but are not part of the final product (p. 16) Janitorial products, painting contractors who paint the buildings, plumbing services and heating and air conditioning services fall under: MRO items Repair services C. Maintenance products Capital equipment Accessory equipment (p. 16) A key raw material for technology-driven companies is: a. MRO item Personnel Steel Accessory equipment Location (p. 16-17) Compared to individual consumers, business customers: Have less stringent standards for judging a vendor Are more in number Are more likely to be geographically concentrated Have lower purchasing power Are less important to the financial success of the business marketer (p. 17) Compared to the typical household buying, the organizational purchasing process: Involves lesser number of people Rarely involves checks and controls Arises from implicit negotiation, expertise and habit Is more complex e. Uses crude cost accounting systems and cash flow management (p. 19) Business marketers must recognize that the demand for their products and services is demand, which means that demand for their products and services results from the demand for their customers' products and services. A. Derived Concentrated Limited Direct Conditional (p. 19) Typically, business marketers face: Hypothetical demand Highly elastic demand C. Derived demand Latent demand Primary demand (p. 19) As one moves further away from the consumer market, derived demand can cause wide swings in demand, called a. Inelasticity B. Volatility Make-or-buy Deficiency Dissolution (p. 20) The percentage change in sales relative to the percentage change in price is: Volatile demand Market demand Final demand D. Demand elasticity e. Price elasticity (p. 20) Industrial products having no substitutes typically face: A. Inelastic demand Volatile demand Elastic demand Stable demand Unitary demand (p. 22) All of the following are part of the marketing mix EXCEPT: Product Promotion Place D. Process e. Price (p. 22) Marketing is a process by which the marketer creates: Derived demand Vision C. Value Volatility Service (p. 22) Value a. Is equivalent to profit for a seller Is the perception of how much the buyer benefited beyond what was invested in a product Is the reason why an organization is created Is based on some general need that has been identified in the market Is the recognition of a need and the means to satisfy it (p. 22) Value is equivalent to for the buyer. Product Price Profit Distribution Cost (p. 23) is something that provides incremental value when compared to other offerings. A. Competitive advantage Value chain Volatility Demand elasticity Derived demand (p. 23) The system of value creation is also known as: Organizational value Quality process A value chain Competitive advantage Core competency (p. 23) Marketing is BEST described as a(n) process. Sales Profit-maximizing Cost-minimizing Integrative e. Internal Chapter 02 The Character of Business Marketing (p. 32) Transactional exchange, also called , is severely limited by technical complexity, exacting buyer standards and a variety of dependencies between buyer and seller that arise from the exchange. A. Discrete markets Bond markets Stock markets Derivative markets OTC markets Difficulty: Hard (p. 32) Which of the following statements about transactional exchange is FALSE? Presently, the prevalence of transactional exchange is severely limited by exacting buyer standards Many products have a level of complexity and significance in the creation of value that are poorly served by transactional exchange The benefits of transactional exchange might be improved on by using additional means to coordinate activities between customers and suppliers Transactional exchange has a limited range of effectiveness E. In a transactional exchange, buyers are at a disadvantage due to low-cost inputs Difficulty: Hard (p. 33) Proactively planning and coordinating the flows of products, services and information among firms cooperating to create and deliver value to end users is the focus of: Relational contracts Strategic partnerships Corporate relationships Supply chain management e. Vertical integration Difficulty: Medium (p. 33) Global competition has created all of the following except a(n): Greater focus on accountability in marketing efforts Insistence for greater effectiveness in marketing efforts Invigorated quest for operational efficiency Drive to eliminate any waste Greater isolation between firms culturally separated Difficulty: Easy (p. 36) Some business marketers choose not to sell to government agencies because: a. Government agencies do not have enough challenging work B. The paperwork is too thick and the margins too thin Agencies simply use their purchasing muscle to push inventories up the supply chain Contracts or technical ties bond the parties to the ongoing exchange and large penalties are involved The expected follow-up business may be large Difficulty: Medium (p. 37) All of the following statements about transactional relationships are true EXCEPT: The identity of the parties is hardly relevant Performance is practically immediate Trading terms are simple and clear D. They require lengthy, comprehensive communications between parties e. Money is traded for easily measured commodities Difficulty: Medium (p. 37) According to the text, an auction implies that the buyer is primarily concerned with: a. Quality B. Price Delivery Technology Reputation Difficulty: Medium (p. 37) Which of the following is a limitation of online auctions? A. Many products and services cannot be fully specified Products and services do not meet standards of delivery and quality Low savings for purchasers Inability to send business to the most-efficient suppliers They are usually held for sub quality and old products Difficulty: Medium (p. 37) According to the text, the value of any system depends: On the creation of long-running relationships with all comers Only on the communication content between transacting parties On the identity of the vendors and users Only on the user's personal expertise and deft problem solving E. On the depth and quality of ongoing support given by the vendor Difficulty: Hard (p. 37) These software suites assist marketer efforts to collect and store accessible data on each account; evaluate customer, program and product performance; and support the development of customized services to maximize the long-run profitability of each account. Relational database systems JIT systems Supply chain management systems D. CRM systems e. Delivery systems Difficulty: Medium (p. 38) This results only when BOTH parties have mutual interests in maintaining an ongoing exchange. A standard assessment A safeguarded relationship C. A strategic partnership A transactional partnership Dependence balancing Difficulty: Easy (p. 38) Many of the strategic partnerships that characterize business markets have been sparked by , a management process of renewed dedication to customer satisfaction and efficiency. A. "The quality revolution" "Complexity management" "Decision-making units" "The value chain" "Environmental engineering" Difficulty: Medium (p. 38) OEM buyers have worked with suppliers of component parts and materials to eliminate costly inventories and frequent handling costs by establishing: Transaction costs Relational contracts Social relationships Safeguarded relationships E. JIT relationships Difficulty: Hard (p. 40) All the following are reasons for buyers frequently turning to supply partnerships EXCEPT: Costly safety stocks High return rates Numerous reorders Inefficiencies in the production process E. Short lead times Difficulty: Medium (p. 41) Using , a company can evaluate relationships on a relative basis against outside norms provided by trade associations or consulting companies. a. Internal assessment B. External measures Trade unions Internal reviews White papers Difficulty: Easy (p. 41) In terms of external measures, which of the following statements is TRUE? A company can evaluate relationships on a relative basis against external norms provided by consulting companies Comparing sales and market penetration rates between agents in similar creates dissonance in agency relationships Although agencies are autonomous businesses and are paid a standard commission on sales, most do not participate in manufacturer training programs They cannot be used to critically evaluate the direction of sustained business relationships They are unable to compare relationships based on an external standard or profile derived from other relationships Difficulty: Medium (p. 42) The BEST analogy for a good strategic relationship is a(n): a. Social group Courtship and marriage Association of convenience Economic arrangement Union of opposites Difficulty: Medium (p. 43) In the stage of the relationship development process, buyer and seller independently consider the other as an exchange partner. A. Awareness Commitment Exploration Expansion Contractual Difficulty: Easy (p. 43) In this stage of the relationship development process, there is no interaction between the buyer and seller, but unilateral considerations of potential partners. Exploration Commitment C. Awareness Expansion Contractual Difficulty: Easy (p. 43) Which of these phases is typically the first phase of the relationship development process? Commitment Exploration Contractual Expansion E. Awareness Difficulty: Medium (p. 43) Interaction between the parties occurs for the first time during which stage of the relationship development process? A. Exploration Contractual Commitment Expansion Awareness Difficulty: Medium (p. 43) Which of these observations is TRUE of the exploration stage of the relationship development process? Unilateral considerations of potential partners Buyer and seller independently consider the other as an exchange partner A fragile relationship Interaction yields net payoffs in excess of some minimum level Association moves to enlarging rewards and the scope of exchange Difficulty: Medium (p. 43) In the stage of the relationship development process, one party has made a successful request for adjustment and starts to seek more from current rather than alternative partners. Exploration Commitment Awareness Expansion e. Contractual Difficulty: Medium (p. 43) The stage of the relationship development process is marked by partners adapting and resolving disputes internally in order to sustain the relationship. Awareness Exploration Expansion Contractual Commitment Difficulty: Medium (p. 44) Which term refers to the degree to which the interaction between buyer and seller yields them net payoffs in excess of some minimum level? a. Commitment B. Attraction Elasticity Expansion Reciprocity Difficulty: Medium (p. 44) As partners communicate and begin to bargain over the distribution of their obligations, rewards and costs, any concession made by one party is expected to be met by some form of by the other. A. Reciprocation Unilateral concession Demand Payment Association Difficulty: Medium (p. 45) The ability of one organization, Alpha, to get another organization, Beta, to do what it would not do otherwise, which is derived from Beta's dependence on Alpha for valued resources like status and economic rewards that are not easily obtained elsewhere is called: Attraction Concession Adjustment D. Power e. Justice Difficulty: Medium (p. 45) The rendering of what is merited or due is the anticipated outcome of: A. Justice Power Norms Negotiation Pressure Difficulty: Easy (p. 45) Standards of behavior for the parties, the guidelines by which the parties interact, are called: a. Values B. Norms Attitudes Habits Mores Difficulty: Easy (p. 46) The most important expectation underlying the creation and maintenance of ongoing exchange relationships is: Profit Sales results Effort Communication E. Trust Difficulty: Medium (p. 46) The belief that a party's word or promise is reliable and a party will fulfill his/her obligations in an exchange relationship is termed: a. Power Trust Value Hope Honesty Difficulty: Medium (p. 46) Account development, cross-selling and up-selling are manifestations of the: A. Expansion phase Awareness stage Exploration stage Commitment phase Contractual stage Difficulty: Medium (p. 46) As a firm , it spins off internal functions to an outside provider. Negotiates Cooperates Outsources Explores Diversifies Difficulty: Medium (p. 46) The essence of the expansion phase is: A. Increasing dependence between exchange partners A decrease in the need for communication An increase in the need for communication The final establishment of a permanent relationship The creation of norms Difficulty: Medium (p. 46-47) The formation of a development team representing key members of all firms involved in the value chain is covered in the: Release to tool Distribution channel Distribution contract Presource agreement e. Source agreement Difficulty: Medium (p. 47) The "Release to Tool" agreement is: a. A formal, legal contract to purchase a definite volume within a specified time B. Evidenced by a contract to purchase a specified quantity over a period of time at an agreed-upon price The last phase of the commitment stage Unique to manufacturing firms The formation of a development team consisting of representatives from various areas such as technical centers Difficulty: Medium (p. 48) The lasting desire to maintain or preserve a valuable, important relationship is a: Contract Norm Behavior Distribution pledge E. Commitment Difficulty: Easy (p. 48) This phase of the relationship development process is characterized by the parties' exchanging of significant resources. Exploration Attraction C. Commitment Expansion Reciprocation Difficulty: Medium (p. 48) In the commitment phase, A. Buyer and seller may exchange employees in order to fully identify with the trading partner The association moves from one of testing and probing to one of enlarging rewards and the scope of exchange The supplier may collect information about product specifications, buying process and the like at the prospective customer The parties probe and test each other and initial purchases can take place The interaction between buyer and seller yields them net payoffs in excess of some minimum level Difficulty: Medium (p. 48) The termination of an advanced relationship is accomplished through: A. Dissolution Arbitration Dissemination Outsourcing Internal review Difficulty: Easy (p. 49) encompasses all formal efforts to obtain evidence of supplier capabilities and commitment. a. Presourcing agreements B. Supplier verification Outsourcing notification Release to Tool Vertical integration Difficulty: Easy (p. 50) involves cultivating relationships with other exchange partners in order to reduce the risks associated with relying on a single supplier. Outsourcing Vertical integration Reciprocation D. Dependence balancing e. A relational contract Difficulty: Medium (p. 51) do not try to bring every future contingency up for consideration in the present, but establish means of continuous planning, adjusting and resolving conflicts. Relational contracts JIT systems Safeguarded relationships Strategic partnerships Transactional relationships Difficulty: Medium (p. 51) Relational contracts a. Ensures continuity in a relationship because suppliers are now hierarchically connected employees Can establish procedures or structures for planning to ensure ongoing effective exchange Are formal efforts to obtain evidence of supplier capabilities and commitment Are contracts to purchase a specified quantity over a period of time at an agreed-upon price Precipitates the formation of a development team consisting of representatives from various areas such as manufacturing, purchasing and technical centers Difficulty: Medium (p. 51) Which of the following provides the "strongest bond" and ensures continuity in buyer/seller relationships? Relational contracts Rolling contracts Vertical integration Presource Agreements Release-to-Tool Agreements Difficulty: Medium (p. 51) Bringing a function or technology within the boundary of the firm is: a. Valence B. Vertical integration Supply chain management Company orientation Formalization Difficulty: Medium (p. 51) In vertical integration, A. Employees work in an environment of formal rules, authority, reporting structures and special responsibilities A buyer reduces its dependence on the supplier by cultivating relationships with other exchange partners There is variation in delivery and parts performance Entails stretching the supplier coordination and management resources across two partners Formal efforts are made to obtain evidence of supplier capabilities and commitment Difficulty: Medium (p. 51) Firms make a strategic choice to use distributors or their own sales force, outside research agencies or their own research department, third-party logistical services or their own traffic department, contract suppliers or inhouse manufacturing and much more in: Horizontal integration Safeguarded relationships Corporate relationships D. Vertical integration e. Dependence balancing (p. 52) What is the downside of vertical integration? Many products have a level of complexity and significance in the creation of value that are poorly served by vertical integration There is technical complexity, exacting buyer standards and a variety of dependencies between buyer and seller It swells fixed costs and may not well duplicate the motivation of owners of independent businesses Many products and services, like complex components, engineering services or system installations, cannot be fully specified It does not recognize the dynamics of decision making by the cross-functional work teams, which are becoming common at large firms (p. 53) According to the text, which of the following business relationships is MOST like a marriage? Corporations Associations Sole proprietorships Partnerships e. Networks (p. 53) A trading association supported principally by social bonds and habit is a: Transactional relationship Safeguarded relationship Corporate relationship Strategic partnership Social relationship (p. 54) Safeguard relationships may be based on any/all of the following except: A. Social bonds Formal contracts Structural ties Technical ties Financial "penalties" for nonperformance (p. 54) Contracts may have large penalties for termination and detailed procedures for resolving conflicts and adjusting to new working environments in: a. Social relationships Safeguarded relationships Corporate relationships Strategic partnerships Transactional relationships (p. 54) relationships are exchanges safeguarded by ownership or vertical integration. Safeguarded Social Corporate Strategic Transactional (p. 54) Most business marketers agree that the MOST significant development in network thinking has been in the area of: Relational contracts Vertical integration C. Supply chain management Social contracts Structural relationships Chapter 03 The Purchasing Function (p. 64) The concept of shipping products such that they arrive at the customer's location exactly when needed is called: JIT EDI EOQ SRM ESI Difficulty: Easy (p. 65) Suppliers schedule their own manufacturing based on the shipment needs of their customers under: a. JIT systems Concurrent manufacturing systems EDI systems Value analysis Complexity management (p. 65) Which of the following statements about concurrent manufacturing is FALSE? Concurrent manufacturing means that the supplier can keep inventory costs down In concurrent manufacturing, suppliers schedule their own manufacturing based on the shipment needs of their customers JIT and concurrent manufacturing can only be used by suppliers of component parts An important technological development that enabled many firms to use JIT was EDI In order for suppliers to reduce their costs, they are turning to concurrent manufacturing (p. 65) An important technological development that enabled many firms to use JIT was: EOQ ESI MRO SRM E. EDI Difficulty: Medium (p. 65) The use of electronic transmission of data between buyer and seller to order and maintain product inventory is: Electronic funds transfer Electronic lockbox Wholesale lockbox D. Electronic data interchange e. Electronic marketing Difficulty: Easy (p. 66) The total amount expended in order to own a product or use a service is: A. Total cost of ownership Economic order quantity Supply chain management Make to stock Sunk cost Difficulty: Easy (p. 66) Outsourcing: a. Always sends jobs overseas Means buying from another firm Does not affect the purchasing department Is the total amount expended in order to own a service Rarely reduces the firm's costs Difficulty: Medium (p. 66) The quantity that minimizes BOTH ordering and storing costs is called: JIT EDI EOQ SRM ESI Difficulty: Easy (p. 67) The practice of purchasing larger quantities than are currently needed because the discount is greater than the carrying costs is called: JIT Adversarial purchasing Supply chain management Forward buying e. EOQ (p. 67) Forward buying is usually an unintended negative consequence of a(n) A. Poor pricing decision Adversarial purchasing Demand uncertainty Make-or-buy decision Modified rebuy Difficulty: Medium (p. 67) Which of the following is an effective response to the problem of forward buying? To have several vendors for each product To evaluate potential suppliers and their offerings To secure volume discounts To provide an adequate supply of the right product or service at the best possible price To separate the order quantity from the shipping quantity through an annual contract (p. 67) Which of the following is a method of comparing the benefit, function and cost of materials, components and work processes? A. Value analysis Outsourcing Quality function deployment SWOT analysis Conceptual map (p. 67) Identify the process of identifying links among components that raise costs if any changes are made. Value analysis SWOT analysis Supplier relationship management D. Complexity management e. Supply chain management Difficulty: Medium (p. 68) Which of the following statements about adversarial purchasing philosophy is TRUE? Buyers operating under this philosophy seek out the best suppliers and then work to develop close relationships It seeks to maximize the benefits of collaboration between the buyer and a few suppliers It means to have several vendors for each product It occurs when a company selects one supplier to satisfy all needs in a given area It is to have the right product available when needed, in the right quantity and at the right quality, all for the lowest total cost Difficulty: Medium (p. 68) seeks to maximize the benefits of collaboration between the buyer and a few suppliers. Strategic sourcing Adversarial purchasing Single sourcing Partnership purchasing e. Outsourcing (p. 69) Single sourcing: Always implies a long-term collaborative relationship Cannot occur in an adversarial setting C. Without partnering can prove risky Occurs when a firm selects many suppliers to satisfy all needs in a given area Invariably reduces costs Difficulty: Hard (p. 70) suggests that people go through a series of steps when making a decision, beginning with problem recognition. a. Complexity management B. The buy-phase model Forward buying The multiattribute model Value analysis Difficulty: Hard (p. 71) According to the buy-phase model, what is the first step in the buying process? a. Definition of the product-type needed B. Recognition of a need Development of detailed specifications Search for qualified suppliers Acquisition and analysis of proposals Difficulty: Medium (p. 71) According to the buy-phase model, the last step in the buying process is: Evaluation of proposals and selection of a supplier Selection of an order procedure Acquisition and analysis of proposals D. Evaluation of product performance e. Search for qualified suppliers Difficulty: Medium (p. 71) Buy-class refers to: A. The type of buying decision, based on the experience of the buyer with a purchase of a particular product or service The series of steps people go through when making a decision, beginning with problem recognition Searching for and evaluating alternatives and selecting a solution which is then implemented and evaluated Defining the type of product the organization needs Acquisition and analysis of proposals, receiving and reviewing bids from each contractor Difficulty: Medium (p. 71) The complete buying process is ONLY followed in the purchase of: Repurchased products Straight rebuys Modified rebuys D. New buys e. Component products Difficulty: Medium (p. 71) Which of the following types of purchases require the LEAST buying-process "steps" to complete? Modified rebuys Component parts C. Straight rebuys Delayed purchases Reciprocal purchases (p. 71) Straight rebuys: A. Mean repurchasing regularly Imply a partnership Imply a strong relationship Imply products or services never purchased before Require the most buying-process steps to complete Difficulty: Medium (p. 72) Modified rebuys: Mean repurchasing regularly Imply products or services never purchased before C. May involve need recognition, an evaluation of suppliers and a decision Need recognition and placing an order Imply the buyer has no experience with the product or service Difficulty: Medium (p. 72) What is the difference between a modified rebuy and a new buy? The product performance The evaluation of a particular part The buyer's experience in buying a particular product or service The number of steps involved in making a purchase E. The amount and type of information that must be collected before a purchase Difficulty: Hard (p. 72) Modified rebuys occur due to all the following reasons EXCEPT: a. Changing prices B. A product or service needs to be bought again automatically Dissatisfaction with the performance of a supplier and/or the product A change in the personnel involved Changing technology that improves product performance and requires reevaluation of vendors and their offerings Difficulty: Hard (p. 72) Out-suppliers: Do not compete with in-suppliers in any buying situation Are suppliers whose products are ordered automatically in a straight rebuy Are not considered in a modified rebuy D. Are suppliers whose products are not considered in a straight rebuy e. Are almost always denied the opportunity to earn the business Difficulty: Medium (p. 72) In-suppliers: a. Do not have an opportunity to earn business in a modified rebuy B. Are suppliers whose products are ordered automatically in a straight rebuy Do not have to prove the value of their offering Are suppliers whose products are not considered in a straight rebuy Do not compete with out-suppliers in any buying situation Difficulty: Hard (p. 72) According to the buy-grid theory, a. A lot of information is required for a straight rebuy B. More information is needed by the buyer to make a new buy than when making a modified rebuy More information is needed by the buyer to make a modified rebuy and a straight rebuy than for a new buy More information is needed by the buyer to make a new buy and a straight rebuy than for a modified rebuy More information is needed by the buyer to make a modified rebuy than when making a new buy Difficulty: Hard (p. 73) "Comparison advertising" is MOST likely for a. Straight rebuys Modified rebuys Promotional rebuys New task buys Spot buys Difficulty: Medium (p. 73) Which of the following statements about a new task buy is TRUE? Promotion includes customer site demonstrations and hospitality events at trade shows Selling involves protecting relationships with current customers with plant tours, special trade-in pricing and other offers All steps of the buying process are taken with emphasis on product definition and development of product specifications Selling includes anticipating or responding quickly to changes in customer needs Comparison advertising is used to show differences between the firm's product and similar products Difficulty: Hard (p. 73) Which of the following statements about modified rebuy is TRUE? Advertising is detailed and educational All steps of the buying process are taken There is more emphasis on product definition and development of product specifications Selling includes anticipating or responding quickly to changes in customer needs e. Promotion involves offering free trials or demonstrations at the customer's site Difficulty: Hard (p. 73) Which of the following statements about straight rebuy is TRUE? There is more emphasis on search and evaluation of suppliers than product definition Selling includes anticipating or responding quickly to changes in customer needs All steps of the buying process are taken with emphasis on product definition and development of product specifications Promotion includes offering free trials or demonstrations at the customer's site Reminder advertising is used to build image for company Difficulty: Hard (p. 73) Reminder advertising is MOST likely to be featured in: New task buying Modified rebuys Promotional rebuys D. Straight rebuys e. Spot buying Difficulty: Hard (p. 74) The model is based on the idea that people compare products across features, weighted by importance. A. Multiattribute Buy-grid Buy-phase Five forces Hierarchy-of-effects Difficulty: Medium (p. 76) Identify the incorrect statement about SRIP. Companies with high performance on SRIPs advertise their high ratings to attract more business It first identifies events or problems with supplier service C. Buyers recognize that the quality of service is not reflected in the total cost of acquisition Buyers evaluate suppliers for elevation to partner or preferred supplier status The SRIP procedure provides only supplier performance information Difficulty: Hard (p. 77) The process of designing and managing supply networks to optimize operational and organization performance is: a. Compliance program B. Strategic sourcing Complexity management Outsourcing Benchmarking Difficulty: Medium (p. 77) The integration of supply processes from end user through original suppliers that provide products, services and information that adds value for customers is: Preferred supplier systems Strategic sourcing Benchmarking Demand planning E. Supply chain management Difficulty: Medium (p. 77) This is a strategy of attempting to influence demand for products and services made by a company so that the supply chain can be managed most efficiently. A. Demand planning JIT Supply chain management Benchmarking Complexity management Difficulty: Easy (p. 79) Outsourcing: Always "exports" jobs Is limited to contracting out a complete service Diverts the firm from its core business D. Is the process of finding another organization to supply products previously created in-house e. Is a strategy of attempting to influence demand for products made by a company so that the supply chain can be managed most efficiently Difficulty: Hard (p. 79) Early supplier involvement: a. Is a strategy of attempting to influence demand for products made by a firm so that the supply chain can be managed most efficiently B. Is an outsourcing strategy whereby companies use suppliers to help design new products or processes Is defined as the process of designing and managing supply networks to optimize operational and organization performance Means the suppliers schedule their own manufacturing based on the shipment needs of their customers Is to have several vendors for each product in order to increase competition for the buyer's business Difficulty: Hard (p. 79) Make-or-buy is: A method of comparing the benefit, function and cost of materials, components and work processes One outsourcing strategy whereby companies use suppliers to help design new products A strategy of attempting to influence demand for products and services Buying in larger than required quantities, when the discount is greater than the carrying costs E. A comparison of the value created internally versus if created by someone else Difficulty: Medium (p. 80) This involves the use of computer models to identify the most valuable suppliers and to identify purchasing opportunities. Supply chain management Strategic sourcing C. Supplier relationship management Value analysis Electronic data interchange Difficulty: Medium (p. 80) Cross-functional sourcing teams typically: A. Develop cost-reduction strategies, create sourcing strategies and handle other purchasing functions, many times in global servicing situations Identify links among components that raise costs if any changes are made Develop methods of comparing the benefit, function and cost of materials, components and work processes Seek to maximize the benefits of collaboration between the buyer and a few suppliers Help companies make decisions about where to locate a plant or who to employ Difficulty: Hard (p. 81) Some purchasing areas require permanent cross-functional teams. A distributor of gas and welding equipment has a team that focuses on supplier relationships; this team includes a marketing manager to represent customers. What is the MOST likely factor that leads to a successful cross-functional purchasing team in this case? Top-level commitment Communication Appropriate leadership D. Continuity e. Embracing diversity Difficulty: Easy (p. 81) Successful teams not only have different functional areas represented, but also different races, backgrounds and even corporate philosophies. Properly harnessed, the resulting tension can result in surprising creativity. This best illustrates which factor that leads to successful cross-functional purchasing teams? a. Continuity B. Embracing diversity Communication Appropriate leadership Top-level commitment Difficulty: Easy (p. 82) Minority set-asides: Are programs designed to advance affirmative action programs for women, minorities and the handicapped Require general contractors and other major suppliers to allocate a certain percentage of the total contract to minority-owned subcontractors Are programs where purchasers must be in compliance with federal guidelines in order to be eligible to supply the government Are systems that first identify events or problems with supplier service E. Are programs designed to encourage the development and growth of minority-owned businesses Difficulty: Medium (p. 82) Which is the largest single buying agency in the federal government, accounting for an estimated 80 percent of all government purchases? The Department of Labor The Department of State C. The Department of Defense The Department of Energy The Department of Commerce (p. 83) What is the purpose of the DLA? A. To secure volume discounts by buying for all of the military such items as copiers, office supplies and office furniture To induce general contractors and other major suppliers to allocate a certain percentage of the total contract to minority-owned subcontractors To enable purchasers to be in compliance with federal guidelines in order to be eligible to supply the government To ship products such that they arrive at the customer's location exactly when needed To design and manage supply networks to optimize operational and organization performance (p. 83) The GSA: Has the expertise necessary to make all kinds of purchases Always make the final purchase Gets involved in all nondefense buying D. Negotiates the price to be charged the government e. Is the only supplier for the military (p. 84) A(n) means that if it costs a firm more to build an item than it thought, the firm has to cover the higher costs. A. Fixed-price agreement Cost-plus contract Nondisclosure agreement Economic order quantity Caveat emptor (p. 84) Company A can agree to a , which means that Company A will reimburse Company B for all of its costs plus a certain percentage for Company B's profit. Caveat emptor Fixed-price agreement Nondisclosure agreement Economic order quantity E. Cost-plus contract (p. 84) Which of the following statements about selling to governments is FALSE? A. It always results in increased prices and margins It can be a difficult process It is made complex by the number of regulations involved It can take much longer than selling to corporations It requires significantly more paperwork (p. 86) are moral codes of conduct, rules for how someone should operate that can be followed as situations demand. Functions Values Norms Beliefs E. Ethics (p. 88) Buyers are often asked to sign , which means that they will not share any information about the new products with anyone who has not also signed such an agreement. a. Non-compete clauses B. Nondisclosure agreements Cost-plus contracts Fixed-price agreements Progress payment contracts Chapter 04 Organizational Buyer Behavior (p. 96) Which of the following statements regarding business marketing is TRUE? A. The buying determinants model offers a framework for combining buyers into groups There is a competitive advantage to be gained in selling the way vendors want buyers to buy Business marketing comes down to only personal selling Business marketing fundamentally represents only the individual dealing with each individual decision process The buying determinants model recognizes selling patterns that enable marketing managers to create marketing strategies Difficulty: Medium (p. 96) Globalization is a trend that has been facilitated by factors such as free-trade policies and technology. Market Individual Organizational D. Environmental e. Demographic Difficulty: Easy (p. 97) In Egypt, Islamic values of honor and family loyalty often guide buyer behavior. This best illustrates the fact that buyer behavior is influenced by: a. Technology B. Cultural values Government's actions Economical factors Religious beliefs Difficulty: Easy (p. 97) Which of the following statements about market factors is FALSE? Market factors include the number and relative size of competitors Market factors are the characteristics of the market that influence buyer behavior Relative size of buyers can make an impact on buying behavior The number of competitors can be affected by the availability of substitutes E. Organizational markets are relatively large in terms of the number of customers Difficulty: Medium (p. 98) Corporate experience is a(n): Market characteristic Individual characteristic Demographic characteristic D. Organizational characteristic e. Environmental characteristic Difficulty: Medium (p. 98) Reward-measurement systems are a set of factors that influence buyer behavior. Market Demographic Organizational Environmental Individual Difficulty: Medium (p. 98) In terms of individual factors, which of the following statements is NOT true? They include demographic factors that influence an individual's buying behavior They include psychographic factors that influence an individual's buying behavior They include age, education, and title or organizational level of the buyer They include the size of the company, profitability, and corporate culture e. They can be psychological factors such as the propensity to take risks Difficulty: Hard (p. 98) Role theory: Enables us to examine markets for patterns in buying behavior Describes behavior as a result of combined effects of organizational, individual, environmental, and market factors States that buyers go through a choice process to arrive at decisions on how they will buy D. Suggests that people behave within a set of norms of others due to the role in which they have been placed e. Recognizes that extrinsic rewards are a function of the reward/measurement systems of the organization Difficulty: Easy (p. 99) When more than one person is involved in making a purchase decision, the group of participants in the company are called the: Advocates Assessment center C. Buying center Administered channels Net buying influences Difficulty: Medium (p. 99) In organizational buying, the starts the purchase process by recognizing the need. a. Controller B. Initiator Influencer Gatekeeper Purchasing agent Difficulty: Easy (p. 99) In terms of the buying center roles, the person who sets the budget for the purchase is the: A. Controller Influencer Gatekeeper Purchasing agent Decision maker Difficulty: Easy (p. 99) If the decision maker tells a subordinate to order another box of copier paper, then the subordinate is the for that purchase. User Influencer Gatekeeper Controller E. Purchasing agent Difficulty: Medium (p. 99) Individuals who seek to affect the decision maker's final decision through which products are best suited to solve the organization's needs and who can also affect the evaluation of the organization's needs are referred to as: Users Gatekeepers C. Influencers Decision makers Purchasing agents Difficulty: Medium (p. 99) In terms of the buying center roles, are the people who control information into and out of the buying group or between members of the group. Influencers Purchasing agents Decision makers Users E. Gatekeepers Difficulty: Medium (p. 99) Secretaries are most likely to function as , when they screen telephone calls for their boss. a. Purchasing agents B. Gatekeepers Initiators Controllers Decision makers Difficulty: Medium (p. 99) Ron is an engineer working in Affinity Technology Group Inc., a provider of consumer financial services. He is the primary contact for his company with vendors, AND controls all of the information, deciding what to pass along to others in the decision-making process. The result is that Ron is able to slant perceptions of the vendors by choosing which information is passed along, and the final decision reflects his own personal preferences. In terms of the buying center, Ron is a(n): a. Purchasing agent B. Gatekeeper Decision maker User Controller Difficulty: Medium (p. 99) In terms of the buying center, which of the following statement is INACCURATE? A. A buying center means that a committee is formed, with individuals designated as a gatekeeper, influencer, etc Cross-functional sourcing teams are formal examples of buying centers and are growing in use The buying center is a changing, complex, and informal group Initiators may not be involved again once they've set the purchase in motion Initiators may also act as influencers and as gatekeepers Difficulty: Hard (p. 100) One characteristic of buying centers is that members come and go. This characteristic is called: Vertical dimension Company orientation Formalization D. Time fragmentation e. Horizontal dimension Difficulty: Medium (p. 101) Decision-making time is more likely to be lengthened, when buying centers: Have a few personnel who are experienced in making purchase decisions Have many personnel who are experienced in making purchase decisions C. Are composed of many personnel who are inexperienced in making purchase decisions Have only one experienced person making purchase decisions Are small in size Difficulty: Easy (p. 101) In terms of the buying center, vertical dimensions refer to: The probability of an outcome and the importance or cost associated with the outcome The latitude that a buying center member has in choosing how to go about making the purchase The degree to which purchasing tasks and roles are defined The number of departments involved in making a decision E. How many layers of management are involved Difficulty: Medium (p. 101) In terms of the buying center, horizontal dimensions imply: A. How many departments are involved How many layers of management are involved The degree to which purchasing tasks and roles are defined The latitude that a buying center member has in choosing how to go about making the purchase The probability of an outcome and the importance or cost associated with the outcome Difficulty: Medium (p. 102) Which of the following is a challenge specific to marketers operating within wide buying centers? a. Needs and purchasing motivations vary greatly B. Many different people must be reached in order to accomplish a sale Company policies and procedures may limit the choice of buying activities The terms of payment are not important Length of time taken in the decision-making process Difficulty: Hard (p. 102) What is the key challenge for highly fragmented buying centers? Length of time taken in the decision-making process Company policies and procedures may limit the choice of buying activities The costs of reaching people D. Needs and purchasing motivations vary greatly e. Many different people must be reached in order to accomplish a sale Difficulty: Hard (p. 102) Which of the following can help a marketer understand the relationship between the vertical dimension of the buying center and who needs what? A. Benefit stack Instrumentality Decile report Data mining Conceptual map Difficulty: Hard (p. 102) The degree to which purchasing tasks and roles are defined by written documents describing procedures and policies is: Centralization Instrumentality Decentralization Valence E. Formalization Difficulty: Medium (p. 102) Formalization: Is the degree to which the individual works to achieve personal benefit Is based on how much and how well buyers do certain tasks C. Affects the latitude that a buying center member has in choosing how to go about making the purchase Is the degree to which the individual works to achieve benefit for the company Can be thought of in terms of the probability of an outcome and the cost associated with the outcome Difficulty: Medium (p. 104) A low-risk decision is one: a. Where the outcome is of high important B. With a high probability of a positive outcome Where the outcome itself is not at all important With a low probability of a positive outcome With a high probability of a negative outcome Difficulty: Medium (p. 104) The risk associated with the cost of a new product and with the potential for lost revenue if the product breaks down or does not perform as advertised is: Demand risk Performance risk Social risk D. Financial risk e. Environmental risk Difficulty: Easy (p. 104) If a piece of equipment breaks down while under warranty and the breakdown does not slow down production, risk would be realized. A. Performance Financial Performance and financial Social Environmental Difficulty: Medium (p. 104) Social risk is: Highly correlated with financial risk Associated with the cost of the new product The risk that the product will not perform as intended The risk associated with the potential for lost revenue if a product breaks down E. Risk that the purchase will not meet the approval of an important reference group Difficulty: Medium (p. 105) Commercial sources of information for buyers include: Articles in trade publications Word-of-mouth from colleagues within the organization Professional associates D. Product manuals e. Consultants Difficulty: Medium (p. 105) Which of the following is a noncommercial source of information for buyers? a. Advertisements B. Articles in trade publications Brochures Personal selling Product manuals Difficulty: Medium (p. 105) Buyers collect information to reduce risk. In terms of the sources of information, which of the following statements is TRUE? Commercial sources are relied on more heavily than are noncommercial sources Personal sources are more widely used early in the process Compared to personal sources, impersonal sources grow in importance over the course of the decision D. Buyers constantly review noncommercial and commercial sources, even when no purchase is imminent e. Commercial sources are those sources outside the control of the marketer Difficulty: Hard (p. 105
