DISCUSSION QUESTIONS

1. Identify, describe, and give examples of the four major types of business markets.

Producer markets are individuals and business organizations that purchase products
to make profits by using them to produce other products or using them in their
operations.
 Buyers of raw materials, as well as purchasers of semi-finished and finished
items, used to make other products.
 Broad array of industries, including agriculture, forestry, fisheries, mining,
construction, transportation, communication, and utilities.
 Chemical plants are part of producer market because they produce goods
that organizations purchase to use as ingredients in the production of other
goods.

Reseller markets are intermediaries, such as wholesalers and retailers, which buy
finished goods and resell them for a profit. Aside from making alternations, resellers
do not change the physical characteristics of the products they handle. Except for
items producers sell directly to customers, all products sold to customer markets are
first sold to reseller markets.
 Wholesalers purchase products for resale to retailers, other wholesalers,
producers, governments, and institutions.
 Retailers purchase products and resell them to final customers. Walmart, the
Kroger Co., Costco, Walgreen Co., and the Home Depot Inc. are examples of
retailers in the United States.

Government markets are federal, state, county, or local governments that buy goods
and services to support their internal operations and provide products to their
constituencies.
 Spend billions of dollars annually for a wide range of goods and services, from
office supplies and health-care services to vehicles, heavy equipment, and
weapons to support their internal operations and provide citizens with such
products as highways, education, water service, energy, and national
defense.

Institutional markets are organizations with charitable, educational, community, or

other nonbusiness goals.
 Members include churches, come hospitals, fraternities and sororities,
charitable organizations, and private colleges.

2. What are the commonly used methods of business buying?

 Description: the most straightforward, as the business buyer may be able to

purchase simply by describing or specifying quantity, grade, and other
attributes of products that are standardized and graded according to certain
characteristics such as size, shape, weight, and color.
  Inspection: certain products 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 when they look identical
on paper.

 Sampling: evaluating on a portion of the product on the assumption that its

characteristics represent the entire lot, suitable for homogenous products.

 Negotiation: based on negotiated contracts, buyers describe exactly what

they need and ask sellers to submit bids.

3. Why do buyers involved in straight rebuy purchases require less information than
those making new-task purchases?

As straight rebuy purchases buyers purchase the same products routinely under
approximately the same terms of sale, they require little information for routine
purchase decisions and tend to use familiar suppliers that have provided satisfactory
service and products in the past.

4. Identify the stages of the business buying decision process. How is this decision
process used when making straight rebuys?

1. Recognize problem: may arise under a variety of circumstances, for

instance, when machines malfunction or a firm modifies an existing
product or introduces a new one.
2. Develop product specifications to solve problem: requires that buying
center participants assess the problem or need and determine what is
necessary to resolve or satisfy it.
3. Search for and evaluate possible products and suppliers: may involve
looking in company files and trade directories, contacting suppliers for
information, soliciting proposals from known vendors, and examining
various online and print publications.
4. Select the product and supplier and order product: when the buyer
selects and uses several suppliers, the process is known as multiple
sourcing. Meanwhile, when only one supplier is needed, it is called sole
sourcing.
5. Evaluate product and supplier performance: comparing it with
specifications.

When making straight rebuys, several but not all stages are used. For
instance, a buyer can start in stage 3, as they already knew what products
they need. They only need to search for higher quality, lower price
products and suppliers. Stage 4 and stage 5 is still used.
CASE 8.2

1. Why is GE’s involvement with the Olympics a good way to show that the company
understands the primary concerns of business customers?

The concerns toward the business can be shown as GE involved with the Olympics.
By investing in outlets, business can ensure they are aware of interest of customers.
In the article, GE’s marketers demonstrate the company’s technical capabilities and
social responsibility by providing a wide range of goods and services for the Olympic
games. It means that GE were aware about how important social responsibility is,
especially for popularity and through providing goods and services. It also works on
maintaining good reputation.

2. How does derived demand apply to the demand for passenger-jet engines? What are
the implications for GE’s marketing efforts?

High demand means people are interested in one thing and want to purchase for the
goods or services. In this case, the more people want to fly means there is a high
demand for jet engines. GE is implying that more people want to fly, and the
marketing effort implication is through the people’s interest which is jet engines.

3. In which stage of the business buying decision process is GE’s reputation likely to
have the most influence on a railroad that is considering the purchase of new
locomotives?

As GE is still considering the purchase of new locomotives, it will be at stage 3

(search for and evaluate possible products and suppliers). The most influenced
factor will probably be the environmental factor, as there will be lower demand for
diesel engines. They will try to be competitive with other sources of locomotive
products.