International College of Beijing

Lesson 5 – Weekly Individual Exercise (Class Activity)

1. Answer True/False

1. SAP is a German software company that helps businesses automate their finance and
management systems.

2. Mining, manufacturing, banking, and distribution services are all considered part of the
business market.

3. Characteristics of business markets include; there are more buyers and larger buyers.

4. In selling to the government, the contract is always awarded to the lowest bidder.

5. A new supplier is least likely to make a sale to a prospect involved in the straight-rebuy
situation.

6. A “straight rebuy” is a more complex process than a “new task” because the firm is limited to
an approved list of vendors.

7. A secretary who prevents salespersons from contacting users or deciders is playing a

gatekeeper role.

8. The business buying process begins with precipitation, product specification, supplier search
and commitment .

9. When responding to a request for a written proposal, a business marketer should remember the
document is primarily a technical document explaining the features of the product.

10. In the negotiation process, if the potential supplier is faced with the lower price of a
competitor, he or she should always lower his/her price.

Multiple Choice Questions

1. The business market differs from the consumer market in that __________.
a. more mass media are used to communicate with the business market
b. it is a much larger market with many more buyers than the consumer market
c. it is a much smaller market in dollar volume than the consumer market
d. it acquires goods or services in order to use them for another purpose, as opposed to acquiring
goods or services for personal consumption

2. Organizational buying is __________.

a. the process by which organizations recognize their needs for goods and services
b. a way a company can produce a greater variety of high-quality products at lower cost, in less
time, with less labor
c. the decision-making process by which organizations establish and satisfy their needs for goods
and services
d. the practice of establishing of strategic partnerships between manufacturers and their suppliers
International College of Beijing
Lesson 5 – Weekly Individual Exercise (Class Activity)

3. The __________ consists of all of the organizations that acquire goods and services used in the
production of other products or services that are sold, rented, or supplied to other customers.
a. business market
b. institutional market
c. consumer market
d. government market

4. All of the following are major industries making up the business market EXCEPT:
a. agriculture, forestry, fisheries.
b. manufacturing, mining.
c. construction, transportation.
d. governments, institutions.

5. Business buying behavior differs from consumer buying behavior in that __________.
a. the buyers for the business market are typically more geographically dispersed than those for
the consumer market and the demand for products and services in the consumer market is
unaffected by price fluctuations
b. fewer people typically participate in or influence business buying decisions than in the
consumer market
c. businesses buy products to accomplish a single goal, which varies by industry and business
d. the demand for business goods and services is derived from consumers’ final demand

6. Business buyers _________.

a. are geographically as diverse as consumers
b. tend to be geographically concentrated with over half of them in seven states
c. are largely concentrated in the southwestern United States
d. tend to be found in smaller communities and rural areas in the Midwest
e. use geographical dispersion to keep shipping costs low

7. 3M has developed a new type of plastic film used for shipping security. It is more durable than
any other form of film on the market. The first year after the product was introduced its sales
totaled $435 million. Analysts have predicted an annual growth of 30 percent as businesses like
transportation companies discover how well the film protects their products. Because the demand
for the new 3M film is dependent on the demand for the products transported within it, the
demand for the film is __________.
a. derived
b. inelastic
c. routine
d. elastic

8. The buying department for a nursing home is informed the price of the ibuprofen used for
patient medication has increased by 15 percent. He orders a new supply anyway because he
knows he can pass the increase on to the clients. This is an example of business products having
__________ demand.
A. routine
b. inelastic
c. volatile
d. accelerated
International College of Beijing
Lesson 5 – Weekly Individual Exercise (Class Activity)

9. Which of the following buying situations would represent the purchase of office supplies such
as reams of computer and copier paper, and computer DVDR?
a. straight rebuy
b. modified rebuy
c. routine rebuy
d. direct purchase

10. The __________ is a situation in which the buyer wants to modify product specifications,
prices, delivery requirements, or other terms.
a. straight rebuy
b. direct purchase
c. modified rebuy
d. reciprocal buy

11.Ping Leung is a produce buyer for Hongxing, a large food supplier. He is buying apples,
banana, pears and so on for producing soft drinks. He orders the same number and quality of
these fruits as before but notices that his supplier’s prices have increased slightly. If prices from
his usual produce supplier continue to rise, you can expect Ping to engage in a __________.
a. straight rebuy
b. direct purchase
c. modified rebuy
d. new task buy

12. Which of the following has the most influence in straight rebuy and modified rebuy situations
in a multinational corporation?
a. finance department
b. purchasing agents
c. administrative personnel
d. engineering department

13. The _________ is composed of “all those individuals and groups who participate in the
purchasing decision-making process, who share some common goals and the risks arising from
the decisions.”
a. buying center
b. initiating team
c. purchasing division
d. influencing center

14. In the buying center, __________ are people who request that something be purchased,
including users or others.
a. initiators
b. influencers
c. deciders
d. approvers

15. Office manager Billie has signatory authority for organizational purchases under $2,500. She
delegates the task of finding five new acceptable fax machines to a trusted subordinate, Jules. If
International College of Beijing
Lesson 5 – Weekly Individual Exercise (Class Activity)

Billie does not involve herself further in the buying process, other than to sign off on what Jules
presents to her, her role is limited to that of __________.
a. gatekeeper
b. decider
c. influencer
d. approver

Short questions
1. Explain how the governmental procurement process differs from the business market purchase
process.

Answer:
Government organizations are major buyers of goods and services. Government
organizations typically require suppliers to submit bids and normally they award the
contract to the lowest bidder. Governments will also buy on a negotiated contract basis,
primarily in the case of complex projects involving major R&D costs and risks and in
cases where there is little competition. Government organizations tend to favor domestic
suppliers over foreign ones. Because their spending decisions are subject to public
review, government organizations require considerable paperwork from suppliers. Just
as companies provide government agencies with guidelines on how best to purchase and
use their products, governments provide would-be suppliers with detailed guidelines
describing how to sell to the government.

2. Rhet and Julie Raymond had a larger-than-average crop of mangos last year. They decided to
make some extra jars of Julie’s mother’s mango chutney to see if they could sell it at a local crafts
fair. Response was very promising and demand was strong. Now Julie and Rhet own a company
that produces gourmet chutneys under the brand name Exoti-Sauce. Working at the company now
are Rhet, Julie, her mother Mandalee, and Rhet and Julie’s nephew Bert who makes deliveries
and does the heavy lifting and cleaning. Rhet is in charge of marketing and helps out in the
kitchen. There are also a number of part-time workers. A salesperson wants to sell them a bottle-
labeling system that will speed up production by 200 percent. It costs about $12,500. In a short
essay, discuss how each of the company’s full-time employees might assume various roles in the
buying center.

Answer:
Students’ answers to this question will vary, but the following are some possible
answers.

a) Julie knows how much work it is to glue on labels—so she would definitely be an
initiator. She would also by the same logic be a user. Because the decision is jointly
made, she would be an influencer to convince the others and a decider, an approver, and
a buyer as part owner of the company. She could take the role of gatekeeper if she knew
of a cheaper system but decided not to tell the others about it.
International College of Beijing
Lesson 5 – Weekly Individual Exercise (Class Activity)

b) Rhet is not involved in the production part, but as part owner of the company, he
would take the roles of decider, approver, and buyer. He could take the role of gatekeeper
if he refused to let the salesperson present any other equipment that might be useful in
the Exoti-Sauce kitchen.

c) Mandalee also knows how much work it is to place the labels—so she would definitely
take the roles of initiator and user. Even though she has no ownership rights, she would
also act as an influencer. She could act as a gatekeeper if she knew the building currently
used by Exoti-Sauce was not big enough to hold the system where it could be used
efficiently.

d) Bert is not involved in the production of chutneys except to help clean. Depending on
how easy the new system is to clean, he could be an influencer. He would most likely
play no other roles.