Marketing 12th Edition Kerin Test Bank Download

Chapter 06 - Master Test Bank
Test Bank for Marketing 12th Edition Kerin Hartley

Rudelius 0077861035 9780077861032
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CHAPTER 6: MASTER TEST BANK

UNDERSTANDING ORGANIZATIONS AS CUSTOMERS
Test Item Table by Major Section of the Chapter and Bloom’s Level of Learning
Bloom’s Level of Learning (LL)

Major Section Level 1 Level 2 Level 3
of the Chapter Knowledge Comprehension Application
(Knows Basic (Understands Concepts (Applies
Terms & Facts) & Principles) Principles)
Chapter Opener: 1 2, 3, 4, 5
JCPenney
(pp. 138-139)
The Nature and 6, 7, 8, 9, 10, 17, 18, 11, 12, 13, 14, 15, 19, 20, 21, 22, 16, 26, 27, 28, 29,
Size of 30, 31, 37 23, 24, 25, 42 32, 33, 34, 35, 36,
Organizational 271 38, 39, 40, 41, 43,
Markets 44
(pp. 140-141)
Measuring 45, 46, 47, 48, 49 50, 51, 52, 53, 54, 55, 56, 57, 58, 65, 66, 67
Domestic and 272 59, 60, 61, 62, 63, 64
Global Industrial, 273
Reseller, and
Government
Markets
(pp. 141-142)
6-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Characteristics of 75, 76, 77, 96, 97, 107, 68, 69, 70, 71, 72, 73, 74, 86, 87, 78, 79, 80, 81, 82,
Organizational 108, 112, 113, 120, 88, 89, 90, 91, 92, 94, 95, 98, 99, 83, 84, 85, 93, 106,
Buying 121, 127, 128, 129, 100, 101, 102, 103, 104, 105, 109, 111, 119, 125, 126,
(pp. 143-149) 131, 135, 140, 141, 110, 114, 115, 116, 117, 118, 122, 133, 134, 139, 148,
142, 143, 144, 150, 123, 124, 130, 132, 136, 137, 138, 149, 153, 154, 157,
152, 155, 156, 158, 145, 146, 147, 151, 177, 178, 179, 160, 161, 165, 167,
159, 162, 163, 164, 180, 181, 182, 183, 184, 187, 188, 168, 169, 170, 171,
166, 172, 173, 174, 193, 194, 195, 199, 200, 201 185, 189, 190, 196,
175, 176, 186, 191, 192 274, 275, 276 197, 198
277 278, 279
Charting the 202, 203, 207, 209, 204, 205, 206, 208, 211, 215, 212, 213, 229, 237
Organizational 210, 214, 216, 219, 217, 218, 220, 221, 222, 223,
Buying Process 224, 225, 230, 233 226, 227, 228, 231, 232, 234,
(pp. 149-152) 280, 281 235, 236
Online Buying in 240, 241, 242, 243, 238, 239, 244, 245, 246, 247, 250
Organizational 251, 253, 254, 259, 260 248, 249, 252, 255, 256, 257,
Markets 283 258, 261, 262, 263, 264, 265, 266
(pp. 153-155) 282
Video Case 6: Trek 267, 268, 269, 270
(pp. 157-159)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
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Education.

Test Item Table by Learning Objective and Bloom’s Level of Learning
Bloom’s Level of Learning (LL)

Level 1 Level 2 Level 3
Learning Objective
Knowledge Comprehension Application
(LO) (Knows Basic (Understands (Applies
Terms & Facts) Concepts & Principles)
Principles)
LO 6-1 Distinguish among 1, 6, 7, 8, 9, 10, 17, 11, 12, 13, 14, 15, 19, 20, 16, 26, 27, 28, 29, 32,
industrial, reseller, 18, 30, 31, 37, 45, 21, 22, 23, 24, 25, 42, 50, 33, 34, 35, 36, 38, 39,
and government 46, 47, 48, 49 51, 52, 53, 54, 55, 56, 57, 40, 41, 43, 44, 65, 66,
organizational 272 58, 59, 60, 61, 62, 63, 64, 67
267
markets.
271, 273
(pp. 106-108)
LO 6-2 Describe the key 75, 76, 77, 96, 97, 2, 3, 4, 68, 69, 70, 71, 72, 78, 79, 80, 81, 82, 83,
characteristics of 107, 108, 112, 113, 73, 74, 86, 87, 88, 89, 90, 84, 85, 93, 106, 111,
organizational 120, 121, 128, 129, 91, 92, 94, 95, 98, 99, 119, 125, 126, 127,
buying that make it 131, 135 100, 101, 102, 103, 104, 133, 134, 139
105, 109, 110, 114, 115,
different from
116, 117, 118, 122, 123,
consumer buying. 124, 130, 132, 136, 137,
(pp. 108-113) 138, 268
274, 275
LO 6-3 Explain how 140, 141, 142, 143, 5, 145, 146, 147, 151, 148, 149, 153, 154,
buying centers and 144, 150, 152, 155, 177, 178, 179, 180, 181, 157, 160, 161, 165,
buying situations 156, 158, 159, 162, 182, 183, 184, 187, 188, 167, 168, 169, 170,
influence 163, 164, 166, 172, 193, 194, 195, 199, 200, 171, 185, 189, 190,
173, 174, 175, 176, 201, 204, 205, 206, 208, 196, 197, 198, 212,
organizational
186, 191, 192, 202, 211, 215, 217, 218, 220, 213, 229, 237
purchasing. 203, 207, 209, 210, 221, 222, 223, 226, 227, 278, 279
(pp. 113-115) 214, 216, 219, 224, 228, 231, 232, 234, 235,
225, 230, 233 236, 269, 270
277, 280, 281 276
LO 6-4 Recognize the 240, 241, 242, 243, 238, 239, 244, 245, 246, 250
importance and 251, 253, 254, 259, 247, 248, 249, 252, 253,
nature of online 260 255, 256, 257, 258, 261,
buying in 283 262, 263, 264, 265, 266
industrial, reseller, 282
and government
organizational
markets.
(pp. 116-118)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
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Education.

MULTIPLE CHOICE QUESTIONS
6-1 CHAPTER OPENER: JCPENNEY KNOWLEDGE
According to the textbook, JCPenney buys paper for which of the following medium(a)?
a. in-store signage
b. special advertising inserts in magazines such as Cosmopolitan
c. newspaper inserts and direct mail pieces
d. annual and 10K reports
e. point-of-purchase displays
Answer: c Page(s): 138 LO: 6-1 AACSB: Analytic QD: Easy

Rationale: JCPenney buys paper for use in its newspaper inserts and direct mail pieces.
6-2 CHAPTER OPENER: JCPENNEY COMPREHENSION
The size and number of JCPenney direct mail pieces like catalogs that are designed and mailed to
consumers would determine how much paper JCPenney needs to buy. This is an example of
__________.
a. derived demand
b. reciprocity
c. a tying agreement
d. derived supply
e. elastic supply
Answer: a Page(s): 143 LO: 6-2 AACSB: Analytic QD: Medium

Rationale: Derived demand means that the demand for industrial products and services (the
paper for JCPenney catalogs) is driven by, or derived from, demand for consumer products and
services (the demand for direct mail pieces like JCPenney catalogs, which is determined by the
size—number of pages—and number of JCPenney catalogs produced and mailed).
When JCPenney buys paper, it considers suppliers’ forest management and other sustainability
practices. For JCPenney, these are important
a. profit responsibilities.
b. organizational buying criteria.
c. ecological mandates.
d. legal authorities.
e. buying center roles.
Answer: b Page(s): 144-145 LO: 6-2 AACSB: Analytic QD: Medium
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Education.
Rationale: Organizational buying criteria are the objective attributes of the supplier’s products
and services and the capabilities of the supplier itself. These criteria serve the same purpose as
the evaluative criteria used by consumers and described in Chapter 5.
Kim Nagele, the senior sourcing manager at JCPenney, purchases tons of publication paper
annually at a cost of hundreds of millions of dollars. As described and inferred in the textbook,
Mr. Nagele performs all of the following roles in the JCPenney buying center EXCEPT:
a. user
b. gatekeeper
c. influencer
d. buyer
e. decider

Rationale: As senior sourcing manager at JCPenney, Kim Nagele assumes (1) the influencer
role, helping to define the specifications of the paper that is bought; (2) the buyer role, having the
formal authority and responsibility to select the supplier and negotiate the terms of the contract;
(3) the decider role, having the formal power to select and/or approve the supplier that receives
the contract given the dollar value involved; and (4) the gatekeeper role, controlling, to some
degree, the flow of information within the buying center—purchasing, marketing production and
support, and senior JCPenney marketing personnel. Kim Nagele would NOT assume the user
role for the paper.
JCPenney looks at several capabilities when selecting a paper supplier. These organizational
buying criteria include on-time delivery, the availability, quality and quantity of selected grades
of paper, the firm’s forestry management and sustainable practices, and price. This examination
would be done during the __________ stage of the organizational buying decision process.
a. procurement analysis
b. break-even analysis
c. purchase decision
d. information search
e. alternative evaluation
Answer: e Page(s): 150-151 LO: 6-3 AACSB: Analytic QD: Medium

Rationale: JCPenney looks at several capabilities when selecting a paper supplier. These
organizational buying criteria include on-time delivery, the availability, quality and quantity of
selected grades of paper, the firm’s forestry management and sustainable practices, and price.
This examination would be done during the alternative evaluation stage of the organizational
buying decision process.
6-6 BUSINESS MARKETING KNOWLEDGE
The marketing of goods and services to companies, governments, or not-for-profit organizations

for use in the creation of goods and services that they can produce and market to others, is
referred to as __________.
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Education.
a. integrated marketing
b. institutional marketing
c. business marketing
d. reseller marketing
e. organizational marketing

Rationale: Key term definition—business marketing.
Business marketing refers to

a. the marketing of goods to companies, governments, or ultimate consumers for use in the
creation of goods and services.
b. the marketing of products and services to not-for-profit organizations at a reduced fee or
nominal cost for use in the creation of goods and services that they can produce and market to
others.
c. the marketing of goods and services to companies, governments, or not-for-profit
organizations for use in the creation of goods and services that they can produce and market
to others.
d. the marketing of services in the area of intellectual property such as legal, financial, or
creative consulting.
e. the marketing of an idea to create interest or generate goodwill, not just for an individual
brand but also for an entire industry or product class.

Rationale: Key term definition—business marketing.
A business market is also referred to as

a. a transactional market.
b. a corporate market.
c. organizational buyers.
d. a reseller market.
e. an industrial market.
Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

Rationale: Key term definition—business marketing. There are about 7.5 million firms in the
industrial, or business, market.
6-9 ORGANIZATIONAL BUYERS KNOWLEDGE
Manufacturers, wholesalers, retailers, and government agencies that buy goods and services for
their own use or for resale are referred to as
a. multinational buyers.
b. resellers.
c. organizational buyers.
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Education.
d. ultimate consumers.
e. institutional buyers.

Rationale: Key term definition—organizational buyers.
6-10 ORGANIZATIONAL BUYERS KNOWLEDGE
Organizational buyers refer to

a. manufacturers, wholesalers, retailers, and government agencies that buy goods and services
exclusively for resale.
b. manufacturers, wholesalers, retailers, and government agencies that buy goods and services
for their own use or for resale.
c. manufacturers, wholesalers, retailers, and government agencies that buy goods and services
exclusively for their own use.
d. firms that buy physical goods and resell them again without any reprocessing.
e. firms that in some way reprocess a good or service they buy before selling it again to the next
buyer.
Answer: b Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

Rationale: Key term definition—organizational buyers.
6-11 ORGANIZATIONAL BUYERS COMPREHENSION
Organizational buyers include manufacturers, wholesalers, retailers, and government agencies

that
a. purchase exclusively from one supplier.
b. are exempt from state and local taxes.
c. sell directly to ultimate consumers.
d. sell goods and services for their own use.
e. buy goods and services for their own use or for resale.
Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

Rationale: Organizational buyers are those manufacturers, wholesalers, retailers, and government
agencies that buy goods and services for their own use or for resale.
Which of the following organizational buyers purchases raw materials and parts to reprocess into
the finished goods they sell?
a. retailers
b. wholesalers
c. agents
d. manufacturers
e. ultimate consumers
Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium
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Education.
Rationale: Manufacturers buy raw materials and parts that they reprocess into the finished
products they sell. Wholesalers and retailers resell finished products without reprocessing them.
Manufacturers’ agents sell the finished products for manufacturers without taking title to the
goods. Ultimate consumers are the final users of the goods and services.
Which of these statements regarding organizational buyers is MOST ACCURATE?

a. Wholesalers and retailers resell the goods they buy without reprocessing them.
b. Wholesalers and retailers alter the goods they sell to meet the specific needs of their
customers prior to resale.
c. Manufacturers purchase processed goods and resell them to suppliers who in turn resell them
to ultimate consumers.
d. Ultimate consumers can be considered organizational buyers when they purchase in large
quantities.
e. Government agency purchases are more similar to ultimate consumer purchases than they are
to wholesalers and retailers.

Rationale: Manufacturers buy raw materials and parts that they reprocess into the finished goods
they sell. Wholesalers and retailers resell finished goods without reprocessing them.
Manufacturers’ agents sell the finished goods for manufacturers without taking title to the goods.
Ultimate consumers are the final users of the goods and services.
All of the following are organizational buyers EXCEPT:

a. industrial firms.
b. government units.
c. ultimate consumers.
d. resellers.
e. wholesalers.
Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

Rationale: Organizational buyers consist of manufacturers, wholesalers, retailers, and
government agencies that buy goods and services for their own use or for resale.
Organizational buyers can be divided into three different markets, which are
a. industrial, wholesaler, and retailer.
b. industrial, retailer, and government.
c. retailer, manufacturer, and government.
d. industrial, government, and ultimate consumer.
e. industrial, reseller, and government.
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Education.
Rationale: Organizational buyers are divided into three different markets: (1) industrial, (2)
reseller, and (3) government.
6-16 ORGANIZATIONAL BUYERS APPLICATION
Which of the following represents an organizational buyer?

a. A local baker buys sugar at the grocery store to make cookies with his children at home.
b. A dentist buys a new LG SmartTV 55-inch 3D OLED HDTV for her den.
c. Mr. Langley hires a housecleaning service to clean his apartment.
d. The owner of a fried chicken restaurant hires a snow removal service to keep the parking lot
clear.
e. The city mayor rents a tuxedo to wear to his daughter’s wedding.
Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Hard

Rationale: Organizational buyers are those manufacturers, wholesalers, retailers, and government
agencies that buy products and services for their own use or for resale. Organizational buyers
include all buyers in a nation except ultimate consumers. Only the owner of a fried chicken
restaurant is an organizational buyer; all other alternatives involve purchases by ultimate
consumers for their personal use.
6-17 INDUSTRIAL FIRMS KNOWLEDGE
An industrial firm
a. is one that is independently owned and takes title to the merchandise it sells.
b. buys physical goods and resells them again without any reprocessing.
c. deals exclusively with federal, state, and local governments.
d. in some way reprocesses a product or service it buys before selling it again to the next buyer.
e. only produces a product, not a service.
Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

Rationale: Text term definition—industrial firms.
6-18 INDUSTRIAL FIRMS KNOWLEDGE
A firm that reprocesses a product or service it buys before selling the product again to the next
buyer is referred to as a(n)
a. industrial firm.
b. reseller firm.
c. government agency.
d. wholesaler.
e. retailer.
Answer: a Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

Rationale: Text term definition—industrial firms.
6-19 INDUSTRIAL MARKETS COMPREHENSION
6-9
Education.
Mining companies, farms, financial services, and fisheries are all examples of
a. consumer markets.
b. cooperative markets.
c. reseller markets.
d. industrial markets.
e. government markets.

Rationale: Industrial (business) markets include mining companies, farms, financial services, and
fisheries, among others.
Which of the following types of firms comprises an industrial market?

a. retailing
b. transportation
c. wholesaling
d. state governments
e. federal regulatory agencies
Answer: b Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

Rationale: Industrial firms can sell physical products like mining, manufacturing, construction,
and farming or can provide services like finance, insurance, and transportation.
Which of the following is a service business within the industrial market?

a. construction
b. mining
c. insurance
d. government
e. farming

Rationale: The services market sells diverse services such as legal advice, auto repair, and
financial services, such as banking, insurance, and discount brokerages.
__________ comprise the highest percentage of firms in industrial markets.

a. Manufacturing firms
b. Construction firms
c. Agricultural firms
d. Mining companies
e. Service companies

Rationale: Companies that primarily sell physical products represent 25 percent of all industrial
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Education.
firms. Service companies represent about 75 percent of all industrial firms.
The services market sells diverse services such as legal advice, auto repair, and dry cleaning.
Along with __________, insurance, and real estate businesses, and transportation, communication
and public utility firms, and not for profit, these firms represent about 75 percent of all industrial
firms.
a. finance
b. wholesalers
c. retailers
d. government units
e. educational institutions

Rationale: The services market sells diverse services such as legal advice, auto repair, and dry
cleaning. Along with finance, insurance, and real estate businesses, and transportation,
communication, public utility firms, and not-for-profit organizations, service companies represent
about 75 percent of all industrial firms.
The services market sells diverse services such as legal advice, auto repair, and dry cleaning.
Along with finance, insurance, real estate businesses, and __________, communication and
public utility firms, as well as not-for-profit organizations, these firms represent about 75 percent
of all industrial firms.
a. wholesalers
b. transportation
c. retailers
d. government units
e. educational institutions

communication, public utility firms, and not-for-profit organizations, service companies represent
The services market sells diverse services such as legal advice, auto repair, and dry cleaning;
along with finance, insurance, and real estate businesses, and transportation, __________ and
public utility firms, and not-for-profit organizations, these firms represent about 75 percent of all
industrial firms.
a. wholesaling
b. retailing
c. government units
d. communication
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Education.
e. manufacturing

communication, public utility firms, and not-for-profit organizations; service companies represent
6-26 INDUSTRIAL MARKETS APPLICATION
Archer Daniels Midland Co. (ADM) is the world’s largest cocoa-bean processor. It buys cocoa
beans and converts them into cocoa powder and cocoa butter, which it then sells to companies
like Hershey’s that manufacture consumer products containing chocolate. ADM is operating in
a(n) __________ market.
a. consumer
b. government
c. service
d. reseller
e. industrial
Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Hard

Rationale: Business marketing organizations operating in an industrial market buy a good or
service, reprocess it, and then sell it to another buyer. In this instance, ADM buys cocoa beans,
reprocesses them, and then resells them to consumer package goods manufacturers like
Hershey’s.
Mile High Frozen Foods is a distributor for McDonalds. It also bakes the buns used by
McDonalds in several states. It purchases flour, yeast, and sesame seeds, manufactures the buns,
and then ships them to McDonalds’ stores. Mile High Frozen Foods is operating in a(n)
__________ market.
a. consumer
b. government
c. industrial
d. service
e. reseller
Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Hard

Rationale: Marketing organizations operating in an industrial market buy a good or service,
reprocess it, and then sell it to another buyer. In this case, the company buys flour, yeast, sesame
seeds, and other required ingredients, manufactures buns, and sells them to McDonalds.
Keystone Foods, which invented the individual quick freeze process for beef, provides
McDonald’s with millions of pounds of chicken, beef, and fish annually for use in its restaurants.
The firm sources the animal proteins from farms and processes them in a variety of ways, such as
6-12
Education.
breading or freezing, before selling them to McDonald’s. Keystone is operating in a(n)
__________ market.
a. consumer
b. government
c. service
d. industrial
e. reseller

Rationale: Marketing organizations operating in an industrial market buy a product or service,
reprocess it, and then sell it to another buyer. In this case, the company acquires animal proteins
from farms, processes them, and sells them to McDonald’s.
Graham-Field Health Products makes hospital beds and wheelchairs from the component parts
and materials it buys. It sells these manufactured products to hospitals, nursing homes, and
retailers of health care products. Graham-Field Health Products operates in a(n) __________
market.
a. consumer
b. government
c. service
d. industrial
e. reseller

Rationale: Marketing organizations operating in an industrial market buy a product or service,
reprocess it, and then sell it to another buyer. In this case, the firm buys the mattresses, wheels,
metal component parts, etc., makes wheelchairs and hospital beds, and then sells them to
hospitals, nursing homes, and retailers of health care products.
6-30 RESELLER MARKETS KNOWLEDGE
Wholesalers and retailers that buy physical products and resell them without any reprocessing are
referred to as
a. industrial firms.
b. reseller firms.
c. government agencies.
d. consumer product firms.
e. nonprofit firms.

Rationale: Text term definition—resellers.
6-31 RESELLER MARKETS KNOWLEDGE
The reseller market includes

a. manufacturers.
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Education.
b. logistics and supply chain providers.
c. government agencies.
d. end-user service providers.
e. retailers and wholesalers.

Rationale: Text term definition—resellers.
6-32 RESELLER MARKETS APPLICATION
European Style Furniture (ESF), headquartered in New York, acquires fine furniture from several
high quality manufacturers in Europe and enjoys exclusive distribution rights from them to sell to
furniture stores throughout the U.S. In this context, ESF is MOST LIKELY classified as a
a. producer.
b. reseller.
c. service provider.
d. government agency.
e. industrial firm.
Answer: b Page(s): 140 LO: 6-1 AACSB: Analytic QD: Hard

Rationale: Resellers are wholesalers and retailers who buy physical products and resell them
again without any reprocessing. Here, ESF is a wholesaler because it sells to other stores that
will sell to retailers, who in turn sell to consumers.
Itex Corporation, a marketer of Photostat products used in the graphic arts field, buys photo
sensitized paper from Eastman Kodak Company, packages it with the Photostat brand name, and
sells it directly to amateur photographers. In this context, Itex Corporation is MOST LIKELY
classified as a
a. manufacturer.
b. reseller.
c. service provider.
d. government agency.
e. industrial firm.

again without any reprocessing. Repackaging, such as what Itex does with photosensitive paper,
does not constitute reprocessing. Technically, Itex is a retailer, not a wholesaler since it sells the
paper directly to ultimate consumers, not to other retail outlets, such as Ritz Camera.
Apex Therapeutic buys medical supplies and services from a variety of suppliers for people with
hemophilia and other related blood diseases. When Apex sells directly to a person who is a
hemophiliac, it would MOST LIKELY be classified as a(n) __________.
a. industrial service provider
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Education.
b. healthcare manufacturer.
c. reseller
d. industrial firm
e. government agency

again without any reprocessing. In this case, when Apex Therapeutic sells directly to
hemophiliacs, the firm is acting as a reseller, and in particular, a retailer.
Liberty Medical Supply is a home delivery service that sells diabetes testing supplies, prescription
drugs, and other supplies directly to consumers to assist them in the management of their health-
related conditions. Since Liberty Medical does not make any changes to the supplies that it
obtains from manufacturers, it would MOST LIKELY be classified as a(n) __________.
a. industrial service provider
b. health care manufacturer
c. industrial firm
d. reseller
e. government agency

again without any reprocessing. In this case, when Liberty Medical sells directly to diabetics and
other ultimate consumers, the firm is acting as a reseller, and in particular, a retailer.
In terms of organizational buyers, Amazon.com, Lands’ End, and JCPenney would MOST
LIKELY classified as __________.
a. government units
b. resellers
c. manufacturers
d. wholesalers
e. industrial firms

again without any reprocessing.
6-37 GOVERNMENT MARKETS KNOWLEDGE
Federal, state, and local agencies that buy products and services for the constituents they serve are
referred to as
a. industrial markets.
b. reseller markets.
c. consumer markets.
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Education.
d. government units.
e. global markets.

Rationale: Text term definition—government units.
6-38 GOVERNMENT MARKETS APPLICATION
When Louisiana State University buys new laptops for its faculty, it is operating as a(n)
a. industrial market.
b. business market.
c. government unit.
d. consumer market.
e. service provider.

Rationale: Government units are federal, state (such as a state university), and local agencies that
buy products and services for the constituents they serve.
When the Federal Aviation Administration (FAA) purchases radars for 22 major air traffic
control centers in the U.S., it is operating as a(n)
a. government unit.
b. industrial market.
c. business market.
d. consumer market.
Answer: a Page(s): 141 LO: 6-1 AACSB: Analytic QD: Hard

Rationale: Government units are federal (like the FAA), state, and local agencies that buy goods
and services for the constituents they serve.
When the General Services Administration (GSA), an agency of the federal government,
purchased 116 Chevy Volts from General Motors for its vehicle fleet, it was operating as a(n)
a. industrial market.
b. business market.
c. consumer market.
d. government unit.

Rationale: Government units are federal, state, and local agencies that buy products and services
for the constituents they serve.
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Education.
The City of Denver contracts with Solid Waste Management to provide trash collection services
for its citizens. The city is operating as a(n)
a. government unit.
b. industrial market.
c. business market.
d. consumer market.

Rationale: Government units are federal, state, and local (like the City of Denver) agencies that
buy products and services for the constituents they serve.
6-42 GLOBAL ORGANIZATIONAL MARKETS COMPREHENSION
International trade statistics indicate the largest exporting industries in the United States focus on
__________.
a. ultimate consumers
b. organizational buyers
c. governmental agencies
d. domestic consumers
e. foreign consumers

Rationale: International trade statistics indicate that the largest exporting industries in the United
States focus on organizational buyers, not ultimate customers.
6-43 GLOBAL ORGANIZATIONAL MARKETS APPLICATION
U.S.-based Pratt & Whitney sells aircraft engines to Europe’s Airbus S.A.S., which in turn sells
passenger airplanes to Japan Airlines that flies businesspeople around the world. This is an
example of
a. the product life cycle.
b. reseller dynamics.
c. a global organizational market.
d. ISO 9000.
e. the business cycle.

Rationale: Industrial, reseller, and government markets exist on a global scale. The majority of
world trade involves exchange relationships that span the globe.
6-44 GLOBAL ORGANIZATIONAL MARKETS APPLICATION
Amtrak, the U.S. passenger train service, purchases train cars from Siemens, a German
manufacturing company. This purchase is an example of
a. the product life cycle.
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b. global organizational markets.
c. market dynamics.
d. reciprocity.
e. supplier development.

Rationale: Industrial, reseller, and government markets exist on a global scale. The majority of
world trade involves exchange relationships that span the globe.
6-45 NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM KNOWLEDGE
The system that provides common industry definitions for Canada, Mexico, and the United
States, which makes it easier to measure economic activity in the three member countries of the
North American Free Trade Agreement (NAFTA), is referred to as the
a. Standard Industrial Code System (SICS).
b. United Nations Central Product Classification System (UNCPCS).
c. National Codes of Industry System (NCIS).
d. North American Industry Classification System (NAICS).
e. Federal System of International Organizations (FSIO).

Rationale: Key term definition—North American Industry Classification System (NAICS).
The North American Industry Classification System (NAICS)

a. provides common industry definitions for North America, Central America, and South
America to measure economic activity in the Western Hemisphere.
b. provides common industry definitions between Canada and the United States to measure
economic activity and reduce barriers of trade for cross-border firms.
c. provides a classification system for products and services that is consistent worldwide.
d. provides a classification system for products and services that is consistent across North
America, Central America, and South America to measure economic activity in the Western
Hemisphere.
e. provides common industry definitions for Canada, Mexico, and the United States to measure
economic activity in the three member countries.

Rationale: Key term definition—North American Industry Classification System (NAICS).
The North American Industry Classification System (NAICS) provides common industry
definitions to facilitate the measurement of economic activity for the member countries of the
a. European Union (EU).
b. United Nations (UN).
c. North American Free Trade Agreement (NAFTA).
d. North Atlantic Treaty Organization (NATO).
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e. World Trade Organization (WTO).

Rationale: The North American Industry Classification System (NAICS) provides common
industry definitions for Canada, Mexico, and the United States, which makes it easier to measure
economic activity in the three member countries of the North American Free Trade Agreement
(NAFTA).
NAICS Logo
The acronym of the NAICS logo above stands for

a. National Association of Industrial Compliance Standards.
b. National Association of Industrial Communication Systems.
c. North American Industrial Communication Standards.
d. North American Industry Classification System.
e. North Atlantic Industrial Classification System.

Rationale: The acronym of the NAICS logo above stands for the North American Industry
Classification System (NAICS).
The NAICS, whose logo is shown above, provides common industry definitions for
a. Canada, England, and the United States.
b. North America, Asia, and Europe.
c. North America, Central America, and South America.
d. Canada, England, Australia.
e. Canada, Mexico, and the United States.
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Rationale: The North American Industry Classification System (NAICS) provides common
industry definitions for Canada, Mexico, and the United States.
6-50 NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM COMPREHENSION
The NAICS is consistent with the International Standard Industrial Classification of All
Economic Activities, which is published by the __________ to facilitate measurement of global
economic activity.
a. United Nations (UN)
b. European Union (EU)
c. International Standards Organization (ISO)
d. North American Free Trade Agreement (NAFTA)
e. North American Product Classification System (NAPCS)

Rationale: The NAICS is consistent with the International Standard Industrial Classification of
All Economic Activities published by the United Nations (UN).
Which of the following statements about the North American Industry Classification System
(NAICS) is MOST ACCURATE?
a. After being used for more than 50 years, the NAICS was replaced by the Standard Industrial
Classification (SIC) system.
b. The NAICS permits comparability across countries but does not accurately measure new or
emerging industries.
c. One drawback to the NAICS is that its industry classifications are inconsistent with the
International Standards Organization (ISO).
d. The NAICS groups economic activity to permit studies of market share, demand for goods
and services, import competition in domestic markets, and similar studies.
e. The NAICS is a five-digit code that allows comparison of industries even when information
is limited.
Answer: d Page(s): 141-142 LO: 6-1 AACSB: Analytic QD: Medium

Rationale: NAICS replaced the SIC system, a version of which has been in place for more than
50 years. The SIC neither permits comparability across countries nor accurately measures new or
emerging industries. The NAICS is consistent with the International Standard Industrial
Classification of All Economic Activities published by the UN. The NAICS groups economic
activity to permit studies of market share, demand for goods and services, and similar studies.
The six-digit codes help identify specific U.S. national industries.
The North American Industry Classification System (NAICS) system designates industries with a
numerical code in a defined structure. A six-digit coding system is used. The first two digits
designate a(n)
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a. subsector of the economy.
b. industry group.
c. specific industry.
d. individual country-level national industry.
e. sector of the economy.

Rationale: The first two digits designate a sector of the economy, the third digit designates an
industry subsector, the fourth digit represents an industry group, the fifth designates a specific
industry, and the sixth digit designates individual country-level national industries. See Figure 6-
1 in the textbook.
numerical code in a defined structure. A six-digit coding system is used. The third digit
designates a(n)
a. industry subsector.
b. industry group.

1 in the textbook.
numerical code in a defined structure. A six-digit coding system is used. The fourth digit
designates a(n)
b. industry group.

1 in the textbook.
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numerical code in a defined structure. A six-digit coding system is used. The fifth digit
designates a(n)
b. industry group.

Rationale The first two digits designate a sector of the economy, the third digit designates an
1 in the textbook.
numerical code in a defined structure. A six-digit coding system is used. The sixth digit
designates a(n)
b. industry group.

Rationale The first two digits designate a sector of the economy, the third digit designates an
1 in the textbook.
The North American Industry Classification System (NAICS) permits a firm to

a. find the NAICS codes of its present customers and then obtain NAICS-coded lists for similar
firms.
b. learn the names of the purchasing agents of all prospective customers.
c. sell to any company within North America as long as it is not a monopoly.
d. engage in benchmarking with companies manufacturing and/or marketing similar products.
e. conduct an industry-wide SWOT analysis to determine internal strengths and weaknesses and
external opportunities and threats of current and prospective competitors.

Rationale: The North American Industry Classification System (NAICS) permits a firm to find
the NAICS codes of its present customers and then obtain NAICS-coded lists for similar firms.

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A disadvantage of the North American Industry Classification System (NAICS) is that

a. it only lists the top ten firms in any particular industry.
b. it is too difficult and confusing to read.
c. it only covers organizations with sales in excess of (US) $1 million.
d. it makes it possible to find how the firm’s customers are coded.
e. five-digit national industry codes are not always available for all three countries.

Rationale: A limitation of NAICS is that five-digit national industry codes are not available for
all three countries because the respective governments will not reveal data when too few
organizations exist in a category.
Figure 6-1
Based on Figure 6-1 above, what is the MOST LIKELY industry sector represented by NAICS
code 51?
a. manufacturing
b. fisheries
c. information
d. publishing
e. retailing

Rationale: Figure 6-1 in the textbook presents an abbreviated breakdown within the information
industries sector (code 51) to illustrate the NAICS classification scheme.
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Based on Figure 6-1 above, what is the NAICS code for cable and other subscription
programming?
a. 511
b. 5152
c. 51512
d. 51520
e. 511515

industries sector (code 51) to illustrate the NAICS classification scheme. Cable and other
subscription programming are represented by NAICS code 5152.
In the breakdown for the NAICS code based on Figure 6-1 above, “A” represents the
a. two-digit industry sector code.
b. three-digit industry subsector code.
c. four-digit industry group code.
d. five-digit industry code.
e. six-digit U.S. national industry code.

industries sector (code 51) to illustrate the NAICS classification scheme. The first three digits
designate the industry subsector. See Figure 6-1 in the textbook.
In the breakdown for the NAICS code based on Figure 6-1 above, “B” represents the

industries sector (code 51) to illustrate the NAICS classification scheme. “B” represents the four-
digit industry group code. See Figure 6-1 in the textbook.
In the breakdown for the NAICS code based on Figure 6-1 above, “C” represents the
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industries sector (code 51) to illustrate the NAICS classification scheme. ”C” represents the five-
digit industry code. See Figure 6-1 in the textbook.
In the breakdown for the NAICS code based on Figure 6-1 above, “D” represents the

industries sector (code 51) to illustrate the NAICS classification scheme. ”D” represents the six-
digit U.S. national industry code. See Figure 6-1 in the textbook.
6-65 NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM APPLICATION
Unfortunately, the NAICS system will not allow marketing managers to gather information about
a. import competition in domestic markets.
b. geographic distribution of industries.
c. market share in a pure competition environment.
d. demand for products and services.
e. data on industries that are oligopolies.

Rationale: A limitation of NAICS is that five-digit national industry codes are not available for
organizations exist in a category (as would be the case with an oligopoly).
You are the research director of a major marketing research consulting firm. You need to select
an NAICS code that gives you the most detail about the competitors in a client’s industry, which
operate in Canada, Mexico, and the U.S. Which of the following levels of classification would
provide the greatest detail about the firms within this industry?
a. Code 51
b. Code 517
c. Code 5172
d. Code 51721
e. Code 517212

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Rationale: A five-digit NAICS classification would give the most detail about numbers,
locations, and sizes of a client’s competitors. Alternative “e” contains a six-digit code. Six-digit
national industry codes are not available for all three countries because the respective
governments will not reveal data when too few organizations exist in a category. See Figure 6-1
in the textbook.
How might a marketing manager for a manufacturer of turboprop engines, used in private jet
planes, use the NAICS to help her with marketing planning?
a. Record the NAICS numbers for each of her firm’s best customers and then obtain lists of
companies with the same NAICS numbers.
b. Go to a library and find the NAICS numbers for all government units—federal, state, and
local.
c. Identify all NAICS numbers that reflect the classifications of her firm’s customers and
compare them to previous SIC codes.
d. Poll her field sales organization to see if her company’s sales representatives know what
NAICS numbers mean.
e. Forgo using the NAICS system because it has recently been replaced by the SIC system,
which is more useful in this scenario.

Rationale: Although the NAICS does have its limitations, it is extremely useful for analyzing
and segmenting target customers as described in alternative “a.”
6-68 CHARACTERISTICS OF ORGANIZATIONAL BUYING COMPREHENSION
Important market characteristics in organizational buying behavior include which of the

following?
a. unlimited markets but orders become progressively smaller over time
b. diminishing international opportunities as more firms enter the market
c. many customers placing progressively larger orders over time
d. fewer customers but with larger orders
e. a market that functions independently of consumer demand

Rationale: The market characteristics for organizational buying are that demand for industrial
products and services is derived, and few customers typically exist, and their purchase orders are
large. See Figure 6-2 in the textbook.
Important market characteristics in organizational buying behavior include which of the

following?
a. Organizational buying behavior is similar to consumer buying behavior since individuals are
involved in both processes.
b. Demand for industrial products is elastic instead of inelastic.
c. Demand for industrial products and services is derived.
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d. Purchase orders much more frequent but they are usually small.
e. Forecasting is not as important in organizational buying as in consumer buying.

Rationale: The market characteristics for organizational buying are that demand for industrial
products and services is derived, and few customers typically exist, and their purchase orders are
large. See Figure 6-2 in the textbook.
Important product or service characteristics in organizational buying include which of the

following?
a. A heavy emphasis is placed on loyalty programs and rebates.
b. Direct selling to organizational buyers is rare.
c. A fixed, nonnegotiable price is the norm.
d. Many of the goods purchased are raw and semifinished.
e. Personal relationships are preferred to online buying over the Internet.

Rationale: There are several key characteristics or dimensions of product and service
characteristics in organizational buying. These include: (1) products or services that are technical
in nature and purchased on the basis of specifications; (2) many of the goods purchased are raw
and semifinished; and (3) heavy emphasis is placed on delivery time, technical assistance, and
postsale service. See Figure 6-2 in the textbook.
Important product or service characteristics in organizational buying include which of the

following?
a. Products or services that are technical in nature and purchased on the basis of specifications.
b. A heavy emphasis is placed on delivery time, technical assistance, and postsale service.
c. Direct selling to organizational buyers is rare.
d. A fixed, nonnegotiable price is the norm.
e. Personal relationships are preferred to online buying over the Internet.

Rationale: There are several key characteristics or dimensions of product and service
characteristics in organizational buying. These include: (1) products or services that are technical
in nature and purchased on the basis of specifications; (2) many of the goods purchased are raw
and semifinished; and (3) heavy emphasis is placed on delivery time, technical assistance, and
postsale service. See Figure 6-2 in the textbook.
In the organizational buying process, important product or service characteristics include

a. delivery time, technical assistance, and postsale service.
b. low price, buyer incentives, and extended contracts.
c. buyer incentives, technical assistance, and exclusive contracts.
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d. quantity discounts, delivery time, and exclusive contracts.
e. low price, buyer incentives, and post-sale service.

Rationale: Product or service characteristics of organizational buying behavior include: (1)
products or services are technical in nature and purchased on the basis of specifications; (2) many
of the goods purchased are raw and semi-finished; and (3) heavy emphasis is placed on delivery
time, technical assistance, and postsale service. See Figure 6-2 in the textbook.
Important buying process characteristics in organizational buying behavior include which of the
following?
a. Few large transactions are made over the Internet due to concerns of industrial espionage.
b. Negotiations, purchases, and delivery occur in real time at an accelerated rate.
c. There are often reciprocal arrangements and negotiations between buyers and sellers.
d. Most purchases are made through government-licensed negotiators.
e. Direct selling to organizational buyers is rare because it is cost-prohibitive.

Rationale: There are several key characteristics or dimensions of the buying process: (1)
technically qualified and professional buyers follow established purchasing policies and
procedures; (2) buying objectives and criteria are typically spelled out, as are procedures for
evaluating sellers and their products or services; (3) there are multiple buying influences, and
multiple parties participating the purchase decisions; (4) there are reciprocal arrangements, and
negotiations between buyers and sellers are commonplace; and (5) online buying over the Internet
is widespread. See Figure 6-2 in the textbook.
Which of the following statements about marketing mix characteristics in organizational buying
behavior is MOST ACCURATE?
a. Few large transactions are made over the Internet.
b. The actual buyer retains all of the influence in the buying decision.
c. Advertising is very simplistic in nature.
d. Direct selling to organizational buyers is the rule.
e. Only finished goods are sold in this way.

Rationale: There are several key characteristics of the marketing mix in terms of organizational
buying: (1) direct selling to organizational buyers is the rule, and distribution is very important;
(2) advertising and other forms of promotion are technical in nature; and (3) price is often a
negotiated, evaluated as part of broader seller and product or service qualities, and frequently
affected by quantity discounts. See Figure 6-2 in the textbook.
6-75 DERIVED DEMAND KNOWLEDGE
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Education.
The demand for industrial products and services that is driven by demand for consumer products
and services is referred to as
a. derivative marketing.
b. derived demand.
c. derived supply.
d. demand elasticity.
e. sequential demand.

Rationale: Key term definition—derived demand.
Derived demand refers to

a. a graph relating the quantity sold and price, which shows the maximum number of units that
will be sold at a given price.
b. the demand for industrial products and services that is driven by the demand for consumer
products and services.
c. the relationship between total revenue and total cost to determine profitability at various
levels of output.
d. the point on a demand curve where supply and demand intersect.
e. the percentage change in quantity demanded relative to a percentage change in price.

Rationale: Key term definition—derived demand.
Derived demand means the demand for industrial products and services is driven by, or derived
from, the
a. NAICS statistical models.
b. gross national product.
c. demand for consumer products and services.
d. demand for other industrial products and services.
e. demand for government products and services.

Rationale: Derived demand is the demand for industrial products and services that is driven by
demand for consumer products and services.
6-78 DERIVED DEMAND APPLICATION
During late summer and early fall, there is a large demand for containers located in Asia that are
used to ship consumer products from Asia to the United States in time for the holiday selling
season. The demand for these containers is referred to as __________ demand.
a. unitized
b. derived
c. reseller
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d. applied
e. implied

Rationale: Derived demand means that the demand for industrial products and services is driven
by, or derived from, the demand for consumer products and services. The demand for containers
is driven by consumer demand in the U.S. for products manufactured in Asia.
Airbus manufactures commercial aircraft that it sells to a variety of airlines worldwide. Still,
demand for its products often depends on rates of air travel among consumers. Demand for
Airbus products is referred to as __________ demand.
a. unitized
b. reseller
c. applied
d. implied
e. derived

by, or derived from, the demand for consumer products and services. The demand for aircraft is
driven by consumer (e.g. business and vacation travelers) demand for air travel worldwide.
Spruceland Millworks in Canada makes wooden pallets for transporting and storing new
appliances such as stoves, freezers, and refrigerators. The demand for Spruceland pallets would
be classified as
a. reactive demand, which is tied to the sales of appliances, not the sale of the pallets.
b. unitary demand, which is tied to the sales of appliances.
c. derived demand, which is tied to the sales of appliances.
d. inelastic demand, which is tied to the cost of the components of the pallets.
e. elastic demand, which is tied to the cost of the components of the pallets.

by, or derived from, the demand for consumer products and services. The demand for the pallets
is driven by the sales of (the demand for) appliances.
Concert Staging Company provides the stage, the roof system, and the lighting and sound for
outdoor concerts and theatrical events. The firm is typically hired by the organization sponsoring
the event. When the economy slows down, consumers are more likely to save their money for a
rainy day rather than buy a concert or theater ticket. The number of concert and theater events
determines how many times the company is hired to provide its services. Demand for the
services provided by Concert Staging Company is a result of __________ demand.
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Education.
a. derived
b. unitized
c. industrial
d. applied
e. reseller

by, or derived from, the demand for consumer products and services. The demand for Concert
Staging Company services is driven by the demand for outdoor concerts and theatrical events,
which in turn is derived from the ticket sales for these entertainment activities.
Purchases of sodium fluoride by Procter & Gamble for use in the manufacture of Crest toothpaste
would be an example of __________ demand.
a. applied
b. unitized
c. industrial
d. derived
e. consumer

by, or derived from, demand for consumer products and services. Demand for the sodium
fluoride would be directly related to the consumer demand for Crest toothpaste.
South Cape Ostrich Tanning (SCOT) is a producer of fine ostrich leathers, which are sold to
manufacturers that make a variety of products from shoes to car interiors. Demand for SCOT’s
leather is a result of consumer interest in products like Via La Moda handbags made from this
exotic and expensive leather. SCOT has __________ demand for its product.
a. derived
b. unitized
c. industrial
d. applied
e. reseller

by, or derived from, the demand for consumer products and services. The demand for SCOT
ostrich leathers depends on the demand for shoes, car interiors, handbags, among other products.
Swiss specialty chemical company Ciba is the primary producer of the chemical triclosan, the
antibacterial agent in many household products like liquid soap. Consumers may have heard
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Education.
about research suggesting environmental and health risks associated with the cumulative effects
of antibacterial agents. Changing consumer purchases provide an example of __________
demand for Ciba’s triclosan product.
a. applied
b. unitized
c. industrial
d. derived
e. consumer

by, or derived from, demand for consumer products and services. Demand for the triclosan
would be directly related to the consumer demand for antibacterial soaps.
If there is a prolonged downturn in U.S. passenger air travel, a number of U.S. airlines would
very likely cancel some of their orders for new planes from Boeing and Airbus, among other
manufacturers. The relationship between passenger air travel and the demand for new planes is
referred to as
a. ultimate consumer demand.
b. derived demand.
c. manufacturer demand.
d. reseller demand.
e. the price-inelasticity of demand.

Rationale: Derived demand means that demand for industrial products and services is closely
linked to the demand for consumer products and services. In this case, a smaller demand for air
travel leads to a smaller demand for new planes.
6-86 SIZE OF ORDER COMPREHENSION
Because orders in organizational buying are typically much larger than in consumer buying,
buyers must often __________ when the order is above a specific amount, such as $5,000.
a. pay estimated sales taxes in advance
b. move up the time required to execute a purchase agreement
c. get competitive bids from at least three prospective suppliers
d. forgo the purchase because senior management is unlikely to approve it
e. forgo identifying the members of the supplying center and their roles in the selling process

Rationale: With so much money at stake, most organizations place constraints on their buyers in
the form of purchasing policies or procedures, such as obtaining competitive bids from at least
three prospective suppliers.
6-87 SIZE OF ORDER COMPREHENSION
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Education.
All of the following statements about the size of the purchase involved in organizational buying
are true EXCEPT:
a. the length of time required to arrive at a purchase agreement can vary.
b. the dollar value of a single purchase made by an organization often runs into thousands or
millions of dollars.
c. it impacts who participates in the purchase decision.
d. it impacts who makes the final decision.
e. the size of the purchase involved in organizational buying is occasionally much larger than
that in consumer buying.

Rationale: The size of the purchase involved in organizational buying is typically much larger
than that in consumer buying. The dollar value of a single purchase made by an organization
often runs into thousands or millions of dollars. With so much money at stake, most
organizations place constraints on their buyers in the form of purchasing policies or procedures.
Buyers must often get competitive bids from at least three prospective suppliers when the order is
above a specific amount. Knowing how order size affects buying practices is important in
determining who participates in the purchase decision and makes the final decision, and the
length of time required to arrive at a purchase agreement.
6-88 NUMBER OF POTENTIAL BUYERS COMPREHENSION
Firms selling consumer products or services often try to reach thousands or millions of
individuals or households. Firms selling to organizations
a. try to reach tens of millions of wholesalers, retailers, and government units.
b. are restricted to far fewer buyers.
c. hope to obtain similar numbers of business customers, or even more.
d. do not have customers, per se.
e. simultaneously purchase from organizational buyers and ultimate consumers.

Rationale: The number of potential buyers is much smaller in organizational buying situations.
6-89 ORGANIZATIONAL BUYING OBJECTIVES COMPREHENSION
An organization buys products and services for one main reason, which is to
a. achieve its own objectives.
b. beat its competitors.
c. satisfy the needs of its suppliers.
d. employ people.
e. maintain inventory.

Rationale: Organizations buy products and services for one main reason, which is to help them
achieve their own objectives.
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The primary organizational buying objective for business firms is to
a. create an atmosphere of inclusiveness.
b. help smaller companies stay in business.
c. increase the proficiency of its buyers.
d. help the firm achieve its objectives.
e. balance inventory.

Rationale: Organizations buy products and services for one main reason: to help them achieve
their objectives. For business firms, the buying objective is usually to increase profits through
reducing costs or increasing revenues.
The primary buying objective for business firms is usually to

a. increase profits through increasing costs and increasing revenues.
b. increase profits through reducing costs and decreasing revenues.
c. increase profits through reducing costs or increasing revenues.
d. maintain profits through reducing costs and increasing revenues.
e. reduce profits through reducing costs and reducing revenues.

Rationale: For business firms, the buying objective is usually to increase profits through
reducing costs or increasing revenues.
The primary objective for nonprofit firms and government agencies is usually to
a. meet the needs of the groups they serve.
b. increase profits through reducing costs.
c. increase profits through increasing revenues.
d. maintain profits through reducing costs and increasing revenues.
e. reduce profits through reducing costs and reducing revenues.

Rationale: For nonprofit firms and government agencies, the buying objective is usually to meet
the needs of the groups they serve.
6-93 ORGANIZATIONAL BUYING OBJECTIVES APPLICATION
The American Red Cross provides disaster relief, among many other services. As a nonprofit
organization, its primary objective is to __________.
a. increase profits through reducing costs
b. increase profits through increasing donations.
c. diversify its services mix to survive the continued economic downturn.
d. meet the needs of the groups they serve.
e. maintain profits through reducing costs and increasing donations.
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Education.
Answer: d Page(s): 144 LO: 6-2 AACSB: Diversity QD: Hard
Rationale: The objectives of nonprofit firms are usually to meet the needs of the groups they
serve.
Many companies have broadened their buying objectives to include an emphasis on

a. purchasing from as many vendors as possible to avoid component shortfalls.
b. purchasing from start-up firms to grow the economy.
c. diversifying their product lines and brand extensions to reduce the risk of failure for any one
item.
d. pricing freezes to maintain consistent quantities demanded from consumers.
e. proactively purchasing from minority-owned suppliers and vendors.
Answer: e Page(s): 144 LO: 6-2 AACSB: Diversity QD: Medium

Rationale: Many companies today have broadened their buying objectives to include an
emphasis on supplier diversity—buying from minority- and women-owned suppliers and
vendors.
The primary reason companies have placed an emphasis on buying from minority- and women-
owned suppliers and vendors is because
a. new federal government regulations require it.
b. they can help a firm meet or exceed its objectives in sales, profits, or customer satisfaction.
c. it is the socially responsible thing to do.
d. it can attract new target markets.
e. these companies will work harder for less money.
Answer: b Page(s): 144 LO: 6-2 AACSB: Diversity QD: Medium

Rationale: Many companies today have broadened their buying objectives to include an
emphasis on buying from minority- and women-owned suppliers and vendors because it has led
to increases in sales, profits, and/or customer satisfaction.
6-96 ORGANIZATIONAL BUYING CRITERIA KNOWLEDGE
The objective attributes of the supplier’s products and services and the capabilities of the supplier
itself are collectively referred to as
a. the supplier consideration set.
b. derived demand factors.
c. evaluative criteria.
d. performance metrics.
e. organizational buying criteria.
Answer: e Page(s): 144-145 LO: 6-2 AACSB: Diversity QD: Easy

Rationale: Key term definition—organizational buying criteria.
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Education.
6-97 ORGANIZATIONAL BUYING CRITERIA KNOWLEDGE
Organizational buying criteria refer to

a. the restrictions placed on potential solutions to a problem in a purchase decision.
b. the specific qualifications of a potential customer based upon past performance, reliability,
and consistency regarding the purchase of an organization’s offerings.
c. the subjective attributes of the supplier’s products and services and the capabilities of the
supplier itself.
d. the objective attributes of the supplier’s products and services and the capabilities of the
supplier itself.
e. the factors that an ultimate consumer would consider that represent both the objective
attributes of a brand and the subjective ones to compare different products and brands.
Answer: d Page(s): 144-145 LO: 6-2 AACSB: Analytic QD: Easy

Rationale: Key term definition—organizational buying criteria.
6-98 ORGANIZATIONAL BUYING CRITERIA COMPREHENSION
Organizational buying criteria serve the same purpose as __________ criteria used by consumers.
a. consideration
b. evaluative
c. decision
d. alternative
e. prepurchase

Rationale: Organizational buying criteria serve the same purpose as evaluative criteria used by
consumers.
There are seven commonly used organizational buying criteria. One of them is __________.
a. price
b. loyalty
c. flexibility
d. adaptability
e. consumer demand

Rationale: Organizational buying criteria include: (1) price; (2) ability to meet the quality
specifications required for the item; (3) ability to meet required delivery schedules; (4) technical
capability; (5) warranties and claim policies in the event of poor performance; (6) past
performance on previous contracts; and (7) production facilities and capacity.
a. flexibility
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b. ability to meet the quality specifications required for the item
c. adherence to government regulation
d. senior management directives
e. consumer demand

a. adaptability
b. consumer demand
c. ability to meet required delivery schedules
e. adherence to corporate social responsibility policies

a. consumer demand
b. longevity
c. promotional incentives
d. technical capability
e. senior management directives

a. consumer demand
b. promotional incentives
c. longevity
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e. warranties and claim policies

a. adherence to governmental policies
b. regulatory support
c. past performance on previous contracts
d. consumer demand


a. production facilities and capacity
b. consumer demand
c. flexibility
d. adherence to government policies

6-106 ORGANIZATIONAL BUYING CRITERIA APPLICATION
To be a Walmart supplier, a firm must be able to deliver its products to its distribution centers
within a 16-minute window. If the driver arrives before or after the scheduled window, the
supplier will be turned away and fined. Walmart’s insistence on choosing a supplier based upon
its ability to provide on-time delivery is an example of a(n)
a. supplier value dimension.
b. derived demand factor.
c. evaluative criterion.
d. external performance measure.
e. organizational buying criterion.
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Education.
Answer: e Page(s): 144-145 LO: 6-2 AACSB: Analytic QD: Hard

Rationale: The ability to meet required delivery schedules is an example of an organizational
buying criterion, which includes the capabilities of the supplier, such as its ability to provide on-
time delivery.
6-107 ISO 9000 KNOWLEDGE
The standards for the registration and certification of a manufacturer’s quality management and
assurance system based on an on-site audit of practices and procedures developed by the
International Standards Organization are referred to as
a. ISO 14000.
b. ICC 9000.
c. IS0 9000.
d. UN Order 9000
e. NAICS Rule 2013

Rationale: Key term definition—ISO 9000.
6-108 ISO 9000 KNOWLEDGE
ISO 9000 refers to the

a. standards for the registration and certification of a manufacturer’s quality management and
assurance system developed by the U.S. Department of Commerce.
b. International Safety Organization responsible for establishing international guidelines for
products designed for and targeted at children.
c. worldwide standards for environmental quality and green marketing practices developed by
the International Standards Organization.
d. standards for the registration and certification of a manufacturer’s quality management and
assurance system based on an on-site audit of practices and procedures developed by the
International Standards Organization.
e. 9,000 major product and industry classifications used in the WTO Product Classification
System.

Rationale: Key term definition—ISO 9000.
6-109 ISO 9000 COMPREHENSION
The primary purpose of ISO 9000 standards is to

a. worldwide standards for environmental quality and green marketing practices.
b. create standards for the registration and certification of a supplier’s quality management and
assurance system.
c. establish common definition for reciprocal trade agreements among members of the WTO.
d. develop the communication interfaces between computer networks and extranets for the
sharing of data.
e. establish an international code of ethics.
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Rationale: ISO 9000 registration and certification assures a manufacturer that its suppliers have
consistent quality in their manufacturing systems and products.
6-110 ISO 9000 COMPREHENSION
3M has over 80 percent of its worldwide manufacturing and service facilities that are ISO 9000
certified. This certification gives 3M confidence that
a. its suppliers’ manufacturing systems and products are of consistent quality as well.
b. suppliers will always fill 3M orders before those of other buyers.
c. suppliers will not engage in reciprocity agreements.
d. suppliers must also meet ISO 14000 requirements.
e. 3M will be financially compensated for any orders that fail to meet assigned criteria.

Rationale: ISO 9000 standards are standards for registration and certification of a manufacturer’s
quality management and assurance system based on an on-site audit of practices and procedures.
ISO 9000 registration and certification assures 3M that its suppliers have consistent quality in
their manufacturing systems and products.
6-111 ISO 9000 APPLICATION
An international company that wants indisputable proof that its suppliers maintain a high level of
quality management would ask the company to
a. apply for an ISO 9000 certification.
b. meet ISO 14000 requirements.
c. enter into a supplier alliance.
d. show how it is listed in the NAICS to prove its quality focus.
e. engage in reciprocity agreements.

Rationale: ISO 9000 standards are standards for registration and certification of a manufacturer’s
quality management and assurance system based on an on-site audit of practices and procedures.
ISO 9000 registration and certification assures a manufacturer that its suppliers have consistent
quality in their manufacturing systems and products.
6-112 SUPPLIER DEVELOPMENT KNOWLEDGE
The deliberate effort by organizational buyers to build relationships that shape suppliers’
products, services, and capabilities to fit a buyer’s needs and those of its customers is referred to
as
a. buyer development.
b. a supply partnership.
c. a make-buy decision.
d. supplier development.
e. buyer-seller reciprocity.
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Education.
Rationale: Key term definition—supplier development.
6-113 SUPPLIER DEVELOPMENT KNOWLEDGE
Supplier development refers to

a. the deliberate effort by suppliers to build relationships that shape buyers’ products, services,
and capabilities to fit both the buyer’s and seller’s needs, as well as the needs of ultimate
consumers.
b. the deliberate effort by organizational buyers to build relationships that shape suppliers’
products, services, and capabilities to fit a buyer’s needs and those of its customers.
c. the practice of dividing up large orders among several suppliers rather than a single one to
avoid possible manufacturing delays due to bad weather, plant mishaps, union issues, etc.
d. the practice of establishing a close relationship with one supplier rather than many to insure
loyalty and preferential treatment when filling exceptionally large orders.
e. the shift of a firm from that of supplier to one of manufacturer when repeated experience with
a product and excellent buyer/seller relationships make the shift both more feasible and
profitable.

Rationale: Key term definition—supplier development.
6-114 SUPPLIER DEVELOPMENT COMPREHENSION
When the John Deere Company employs engineers who work full-time with the company’s
suppliers to improve their efficiency and quality and reduce their costs, it is practicing
a. buyer development.
b. make-buy decisions.
c. supply partnerships.
d. supplier development.
e. directive purchasing.

Rationale: When the John Deere Company employs 94 engineers who work full-time with the
company’s suppliers to improve their efficiency and quality and reduce their costs, it is practicing
supplier development. The engineers are even called supplier-development engineers.
6-115 BUYER-SELLER RELATIONSHIPS COMPREHENSION
Which of the following characterizes organizational buyer-seller relationships?

a. Purchases are often made after lengthy or complex negotiations.
b. Purchases are usually of small dollar values.
c. Short-term contracts are often prevalent.
d. Reciprocal arrangements are illegal.
e. Delivery schedules are less important than production capacity.

Rationale: Organizational buying is more likely to involve complex negotiations concerning
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Education.
delivery schedules, price, technical specifications, warranties, and claim policies. These
negotiations also can last for an extended period of time. Reciprocal arrangements also exist in
organizational buying. Long-term contracts are also prevalent. In some cases, buyer-seller
relationships evolve into supply partnerships.

a. Purchases are often made after brief negotiations.
b. Purchases are usually of small dollar values.
c. Long-term contracts are often prevalent.
d. Reciprocal arrangements are prohibited by the federal government.
e. Delivery schedules are largely irrelevant.


a. Purchases are often made after brief negotiations if any.
b. Supply partnerships may eventually develop.
c. Short-term contracts are often prevalent.
d. Reciprocal arrangements provide the most flexibility to buyer and seller.
e. Delivery schedules are less important than production capacity.

The existence of reciprocal arrangements, long-term contracts, and in some cases, buyer-seller
relationships that evolve into supply partnerships, are all examples of
a. illegal activities that are a common weakness of organizational buying.
b. illegal activities that result from collusion between buyers and sellers.
c. activities that are strictly governed by the NAICS.
d. activities that can result from relationships between buyers and sellers in organizational
buying.
e. activities that result from extreme competition between manufacturers when there are too few
suppliers.
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Education.

6-119 BUYER-SELLER RELATIONSHIPS APPLICATION
Merrill Lynch and Thompson Financial had a three-year, $1 billion project that put workstations
on the desks of 25,000 of Merrill Lynch’s brokers. These machines put the world of investing
information at brokers’ fingertips. Thompson, the supplier, was obligated to not only deliver
technology and services on time and on budget, but also constantly improve customer-satisfaction
levels among Merrill’s brokers and customers. This is an example of
a. a reciprocity agreement.
b. exclusive dealing.
c. supplier alliance.
d. a buyer-seller relationship.
e. a tying arrangement.

Rationale: A distinction between organizational and consumer buying behavior lies in the nature
of the relationship between organizational buyers and suppliers. Specifically, organizational
buying is more likely to involve complex and lengthy negotiation concerning delivery schedules,
price, technical specifications, warranties, and claim policies. Long-term relationships are also
prevalent.
6-120 RECIPROCITY KNOWLEDGE
An industrial buying practice in which two organizations agree to purchase each other’s products
and services is referred to as __________.
a. a tying arrangement
b. exclusive dealing
c. reciprocity
d. a supply partnership
e. noncompetitive bidding

Rationale: Key term definition—-reciprocity.
6-121 RECIPROCITY KNOWLEDGE
In a buyer-seller relationship, reciprocity refers to

a. the practice whereby a seller requires the purchaser of one product to buy another item in the
line.
b. an industrial buying practice in which two organizations, in this case a manufacturer and a
supplier, agree to purchase each other’s products and services.
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c. an arrangement a manufacturer makes with a reseller to only handle its products and not those
of competitors.
d. the illegal practice of refusing to purchase a seller’s products unless the seller agrees not to
purchase that product or any similar products from any other buyer.
e. when a supplier requires a buyer purchasing some of its products to also buy others.

Rationale: Key term definition—reciprocity. Alternative “a” is the definition of a tying
arrangement. Alternative “c” is the definition of exclusive dealing. Alternative “d” is the
definition of a requirement contract. Alternative “e” is the definition of exclusive dealing but
from a supplier’s perspective.
6-122 RECIPROCITY COMPREHENSION
The practice of __________, which can affect the normal operation of the free market and limit
the flexibility of buyers, is occasionally addressed in the ethics codes of companies or their
purchasing policies.
a. tying agreements
b. just-in-time procurement
c. quid pro quo
d. supply partnerships
e. reciprocity

Rationale: Reciprocity is an industrial buying practice in which two organizations agree to
purchase each other’s products and services. It is frowned upon by the U.S. Justice Department
because it restricts the normal operation of the free market.
Although not strictly illegal, the U.S. Justice Department frowns on reciprocity because the
practice
a. gives an unfair advantage to smaller companies.
b. gives an unfair advantage to larger corporations.
c. reduces the amount of taxes paid by the parties involved.
d. restricts the normal operation of the free market.
e. encourages free trade.

purchase each other’s products and services. The U.S. Justice Department disapproves of
reciprocal buying because it restricts the normal operation of the free market. However, the
practice exists.
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Education.
Although the U.S. Justice Department frowns on __________ because it restricts the normal
operation of a free market, it is still legal for two companies to buy one another’s products as long
as there is no coercion involved.
a. reciprocity
b. tying agreements
c. just-in-time procurement
d. quid pro quo
e. supply partnerships

purchase each other’s products and services. The U.S. Justice Department disapproves of
reciprocal buying because it restricts the normal operation of the free market. However, the
practice exists.
6-125 RECIPROCITY APPLICATION
A study on ethical practices in purchasing found that smaller firms frequently make agreements
with other organizations to purchase each other’s products and services. This practice is referred
to as
a. exclusive dealing.
b. supply partnerships.
c. reciprocity.
d. strategic alliances.
e. tying arrangements.

purchase each other’s products and services.
6-126 RECIPROCITY APPLICATION
If General Motors (GM) purchases Borg-Warner transmissions, and Borg-Warner buys trucks and
cars from GM, they would be demonstrating which type of buyer-seller interaction?
a. exclusive dealing
b. supply partnerships
c. tying arrangements
d. noncompetitive bidding
e. reciprocity

purchase each other’s products and services.
6-127 SUPPLY PARTNERSHIP KNOWLEDGE
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Education.
A __________ exists when a buyer and its supplier adopt mutually beneficial objectives, policies,
and procedures for the purpose of lowering the cost or increasing the value of products and
services delivered to the ultimate consumer.
a. supplier development agreement
b. reciprocal arrangement
c. shareholder relationship
d. supply partnership
e. strategic alliance

Rationale: Key term definition—supply partnership.
A relationship that exists when a buyer and its supplier adopt mutually beneficial objectives,
policies, and procedures for the purpose of lowering the cost or increasing the value of products
and services delivered to the ultimate consumer is referred to as a __________.
a. supply partnership
b. supplier development agreement
c. reciprocal arrangement
d. shareholder relationship
e. strategic alliance

A supply partnership refers to

a. an arrangement a manufacturer makes with a reseller to handle only its products and not those
of competitors.
b. the illegal practice of refusing to purchase a seller’s products unless the seller agrees not to
purchase that product or any similar products from any other buyer.
c. when a supplier requires a buyer purchasing some products from it to also buy others.
d. a relationship that exists when a buyer and its supplier adopt mutually beneficial objectives,
policies, and procedures for the purpose of lowering the cost of or increasing the value of
products and services delivered to the ultimate consumer.
e. the practice whereby a seller requires the purchaser of one product to also buy another item in
the line.

Rationale: Key term definition—supply partnership. Alternative “a” is the definition of
exclusive dealing. Alternative “b” is the definition of a requirement contract. Alternative “c” is
the definition of exclusive dealing but from a supplier’s perspective. Alternative “e” is the
definition of a tying arrangement.
6-130 SUPPLY PARTNERSHIP COMPREHENSION
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Education.
A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives,
policies, and procedures for the purpose of
a. putting competitors of both buyers and sellers out of business.
b. lowering costs and increasing profits for the supplier.
c. lowering costs or increasing value of products or services to the ultimate consumer.
d. creating a single channel of distribution.
e. creating an exclusionary relationship from all other buyers and sellers.

6-131 MARKETING MATTERS KNOWLEDGE
Milso Manufacturing markets __________ in partnership with its customers.

a. motors
b. braking systems
c. transmissions
d. seats
e. customized wheels

Rationale: Milso Manufacturing markets seating solutions in partnership with its customers.
6-132 MARKETING MATTERS COMPREHENSION
Milso Manufacturing emphasizes

a. signing lifetime contracts with suppliers to demonstrate its loyalty to them.
b. supplier partnerships when designing products for its customers.
c. reciprocity arrangements with its customers so that each can maximize profit.
d. cobranding as a form of supply partnerships with customers.
e. extending healthcare benefits to its suppliers’ employees as a result of the Affordable Care
Act.

Rationale: Milso Manufacturing involves its customers like Harley-Davidson in the new-product
development process to build mutually beneficial, long-term, supply partnership relationships.
6-133 SUPPLY PARTNERSHIP APPLICATION
Apple, Inc. custom orders the manufacture of microprocessors for its iMac, iPhone, and iPad. For
example, Intel makes chips for the iMac and Samsung produces Apple-designed chips for the
iPhone and iPad. These two suppliers in turn rely on components from their own subcontracted
suppliers. The suppliers involved in making and delivering microprocessors have adopted
mutually beneficial objectives and strategies that ultimately give Apple’s customers value for
their money. Apple’s method of doing business this way is an example of a(n)
a. symbiotic partnership.
b. make-buy decision.
c. reciprocal agreement.
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Education.
d. supply partnership.
e. exclusive dealing.

Rationale: A supply partnership exists when a buyer and its supplier adopt mutually beneficial
objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of
6-134 SUPPLY PARTNERSHIPS APPLICATION
Recently, Walmart asked that Procter & Gamble (P&G) link its computerized cash register
scanning equipment and direct electronic ordering and replenishing systems to all of its stores.
This way, Walmart can tell P&G what merchandise it needs to replenish, along with how much,
when, and to which store to deliver it on a daily basis. From this description, Walmart is engaged
in __________.
a. ISO 9000 certification.
b. ISO 14000 certification.
c. a supply partnership.
d. sustainable development.
e. cause marketing.

Rationale: A supply partnership exists when a buyer and its supplier adopt mutually beneficial
objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of
6-135 SUSTAINABLE PROCUREMENT KNOWLEDGE
Purchasing that aims to integrate environmental considerations into all stages of an organization’s
buying process with the goal of reducing the impact on human health and the physical
environment is referred to as
a. ecological procurement.
b. sustainable procurement.
c. green marketing.
d. supplier partnership.
e. stakeholder procurement.
Answer: b Page(s): 147 LO: 6-2 AACSB: Ethics QD: Easy

Rationale: Text term definition—sustainable procurement.
6-136 SUSTAINABLE PROCUREMENT COMPREHENSION
Because more and more companies are concerned with the depletion of natural resources, supply
partnerships often include provisions for
a. green marketing.
b. regulatory exemptions.
c. stakeholder procurement.
d. ecological procurement.
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Education.
e. sustainable procurement.
Answer: e Page(s): 147 LO: 6-2 AACSB: Ethics QD: Medium

Rationale: Sustainable procurement aims to integrate environmental considerations into all
stages of an organization’s buying process with the goal of reducing the impact on human health
and the physical environment.
6-137 MAKING RESPONSIBLE DECISIONS COMPREHENSION
Starbucks purchases from coffee growers located in more than 20 countries. Starbucks: (1) pays
the coffee farmers a fair price for the beans; (2) the coffee is grown in an ecologically sound
manner; and (3) Starbucks invests in the farming communities where the coffees are produced.
This is an example of
a. green marketing.
b. ISO 14000 certification.
c. sustainable procurement.
e. cause marketing.
Answer: c Page(s): 147 LO: 6-2 AACSB: Ethics QD: Medium

Rationale: Starbucks is a pioneer and worldwide leader in sustainable procurement.
6-138 MAKING RESPONSIBLE DECISIONS COMPREHENSION
Starbucks is using its purchasing power to continue its quest to reduce its energy usage.
Recently, the company announced plans to replace all of the traditional incandescent and halogen
bulbs in its stores worldwide with more efficient light emitting diode (LED) bulbs—a move the
company claims will enable it to cut energy consumption in its stores by up to 7%. Starbucks
would be considered a leader in
a. ISO 9000 certification.
b. sustainable procurement.
c. cause marketing.
e. sustainable development.
Answer: b Page(s): 147 LO: 6-2 AACSB: Ethics QD: Medium

Rationale: Starbucks is a pioneer and worldwide leader in sustainable procurement.
6-139 SUSTAINABLE PROCUREMENT APPLICATION
Recently, Matt Kistler, a senior vice-president at Walmart, claimed the company was making
progress on achieving three major goals: (1) to be supplied by 100% renewable energy; (2) to
create zero-waste; and (3) to increase the sale of renewably-produced products. Walmart is
focusing on
a. practicing ecological procurement.
b. complying with government regulations.
c. engaging in cause marketing.
d. using sustainable procurement.
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Education.
e. meeting ISO 9000 standards.
Answer: d Page(s): 147 LO: 6-2 AACSB: Ethics QD: Hard

Rationale: Walmart is focusing on sustainable procurement with the goal to be supplied by 100%
renewable energy.
6-140 BUYING CENTER KNOWLEDGE
The group of people within an organization who participate in the buying process and share
common goals, risks, and knowledge important to a purchase decision is referred to as the
a. gatekeeper.
b. buying center.
c. purchasing department.
d. procurement committee.
e. acquisition office.

Rationale: Key term definition—buying center.
A buying center refers to

a. an online trading community that brings together buyers and supplier organizations to make
possible the real time exchange of information, money, products, and services.
b. the department within a firm responsible for the logistics of placing, tracking, and delivering
orders to other departments within the firm.
c. the department within a firm responsible for the logistics of placing, tracking, and delivering
orders to ultimate consumers.
d. the group of people within an organization who participate in the buying process and share
common goals, risks, and knowledge important to a purchase decision.
e. the department within a firm that allows purchases to be made from a centralized location
from multiple vendors at the same time.

The term __________ is used to identify a group of people within an organization who participate
in the buying process and share common goals, risks, and knowledge important to a purchase
decision.
a. procurement committee
b. purchasing department
c. buying center
d. gatekeepers
e. acquisition office

6-50
Education.
Several people often participate in the organizational buying process. Called a __________,
these people share common goals, risks, and knowledge important to a purchase decision.
a. buying center
b. buying cohort
c. sustainable procurement committee
d. stakeholder group
e. purchasing department

6-144 BUYING COMMITTEE KNOWLEDGE
Large multistore chain retailers such as Macy’s, Safeway, and Target use a highly formalized
buying center that is referred to as a(n)
a. ad hoc committee.
b. buying committee.
c. merchandise procurement center.
d. purchasing department.
e. purchasing control system.

Rationale: Text term definition—buying committee.
6-145 BUYING COMMITTEE COMPREHENSION
Most large multistore chain resellers use __________ that are highly formalized to arrive at
buying decisions.
a. buying committees
b. merchandise procurement centers
c. sustainable procurement committees
d. stakeholder groups
e. purchasing divisions

Rationale: For most large multistore chain resellers, such as Macy’s, 7-Eleven convenience
stores, Target, or Safeway, the buying center is highly formalized and is called a buying
committee.
6-146 BUYING CENTER COMPREHENSION
6-51
Education.
Marketers need to understand their firms’ buying centers. A series of questions can be used to
facilitate this process. Which of the following questions would be the LEAST USEFUL when
trying to understand the operations of a buying center?
a. “Which individuals are in the buying center for the product or service?”
b. “What is the relative influence of each member of the group?”
c. “What are the buying criteria of each member?”
d. “How does each member of the group perceive our company, our products and services, and
our salespeople?”
e. “What criteria were used to select the members of the buying center?”

Rationale: The importance of the buying center requires that a firm marketing to many industrial
firms and government units understand the structure, technical and business functions
represented, and behavior of these groups. One researcher suggests that the four questions listed
in alternatives “a,” “b,” “c,” and “d” provide guidance in understanding the buying center.
Which of the following statements MOST LIKELY describes the people in the buying center of
a medium-sized manufacturing plant?
a. The composition of the buying center remains constant over long periods of time.
b. The buying center avoids cross-functional teams whenever possible.
c. The composition of the buying center depends on the specific item being purchased.
d. The purchasing manager is an occasional member of the buying center.
e. Most government units use a formal buying center to arrive at buying decisions.

Rationale: The composition of the buying center changes as the item that is to be purchased
changes. Although a buyer or purchasing manager is almost always a member of the buying
center, individuals from other functional areas are included, depending on what is to be
purchased. Cross-functional teams are often used when the purchased item is to become part of a
manufactured product.
6-148 BUYING CENTER APPLICATION
In an effort to make better and more efficient purchase decisions, the Ford Motor Company forms
loosely organized groups of people who work together on purchase decisions. The people
included in these groups change depending on the purchase situation and may include key
personnel from various departments, including research and development, finance, marketing,
shipping, and sales. Such a loosely organized group of people within an organization who are
involved in the purchase decision is called an organizational
a. selling committee.
b. sustainable procurement department.
c. purchasing unit.
d. buying center.
e. buying committee.

Rationale: Organizations face a variety of purchase decisions—some routine and some complex.
6-52
Education.
For those purchase decisions that are complex, many organizations include a variety of people
from various departments within the organization in the buying decision. The members of the
group change depending on the purchase situation, and so the buying center is loosely organized.
Members of the buying center share common goals, risks, and knowledge or experiences relevant
to the purchase decision.
6-149 BUYING CENTER APPLICATION
To lower costs and reduce manufacturing time, Michelin has people work together on important
purchases. These people include individuals in the roles of buyers, deciders, gatekeepers, and
others, as needed. This type of cross-functional group is known as a(n)
a. purchasing committee.
b. sustainable procurement panel.
c. buying center.
d. supply partnership.
e. purchasing task force.

Rationale: A buying center consists of a group of people in an organization who participate in
the buying process and share common goals, risks, and knowledge important to a purchase
decision. Buying centers may include a cross-functional group, especially if the items are key
components to be included in a final manufactured product. And this group may consist of
people with varying roles in the purchase decision process.
6-150 BUYING CENTER ROLES KNOWLEDGE
All of the following are roles in a buying center EXCEPT:

a. specifiers.
b. deciders.
c. buyers.
d. influencers.
e. users.

Rationale: Five specific roles that an individual in a buying center can play include users,
influencers, buyers, deciders, and gatekeepers.
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Education.
Buying Center Photo
6-151 BUYING CENTER ROLES COMPREHENSION
As shown in buying center photo above, an organization’s buying center includes individuals who
can play one or more of the following roles EXCEPT:
a. gatekeepers.
b. deciders.
c. buyers.
d. product champions.
e. influencers.

Rationale: Five specific roles that an individual in a buying center can play include users,
influencers, buyers, deciders, and gatekeepers.
6-152 BUYING CENTER ROLES: USERS KNOWLEDGE
The people in the organization who actually use the product or service are referred to as
__________, which is one role in the buying center.
a. consumers
b. deciders
c. buyers
d. influencers
e. users

Rationale: Text term definition—users.
6-153 BUYING CENTER ROLES: USERS APPLICATION
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Education.
As the salesperson for West Plains Band Saw talked to a group from Conner Industries, he
overheard one of the men on the production line saying, “This band saw has a 36-inch wheel that
could really save us time, and with its adjustable height, it can be operated by someone tall like
me and by some of our shorter workers. I bet this will speed up my production time by 30
percent. Why don’t we order this band saw?” The person the salesperson heard giving input has
which buying center role?
a. purchasing agent
b. decider
c. buyer
d. user
e. motivator

Rationale: Users are the people in the organization who would actually use the band saw and can
appreciate its features.
6-154 BUYING CENTER ROLES: USERS APPLICATION
Becca, an office manager for a small construction company, met with representatives from Xerox
and Minolta, along with the President and the accountant, to compare options for a new copier for
the office. Since she made most of the copies, Becca wanted to see the features of the machines,
though her boss would have to approve the final purchase. Becca has what role in the buying
center?
a. purchasing agent
b. decider
c. buyer
d. user
e. motivator

Rationale: Users are the people in the organization who would actually use the copier and can
appreciate its features.
6-155 BUYING CENTER ROLES: INFLUENCERS KNOWLEDGE
In a buying center, __________ affect the buying decision, usually by helping define the
specifications for what is bought.
a. gatekeepers
b. deciders
c. buyers
d. influencers
e. users

Rationale: Text term definition—influencers.
6-156 BUYING CENTER ROLES: INFLUENCERS KNOWLEDGE
6-55
Education.
Within the buying center, influencers are people who
a. have the formal authority and responsibility to select the supplier and negotiate the terms of
the contract.
b. control the flow of information in the buying center.
c. affect the buying decision usually by helping define the specifications for what is bought.
d. have the formal or informal power to select or approve the supplier that receives the contract.
e. actually use and evaluate the product or service.

Rationale: Text term definition—influencers.
6-157 BUYING CENTER ROLES: INFLUENCERS APPLICATION
A computer company salesperson invites the IT managers of its top ten customers (in terms of
dollar sales) to view a demonstration of the firm’s new product line, so the salesperson can obtain
their opinions regarding various options and configurations that could be offered. These IT
managers are MOST LIKELY to be the __________ of their organizations’ buying centers.
a. gatekeepers
b. influencers
c. reciprocity arrangers
d. buyers
e. users

Rationale: Influencers affect the buying decision, usually by helping define the specifications for
what is to be bought.
6-158 BUYING CENTER ROLES: BUYERS KNOWLEDGE
In a buying center, __________ have formal authority and responsibility to select the supplier and
negotiate the terms of a contract.
a. buyers
b. gatekeepers
c. deciders
d. influencers
e. users

Rationale: Text term definition—buyers.
6-159 BUYING CENTER ROLES: BUYERS KNOWLEDGE
The people in the buying center who have the authority to select a supplier and negotiate the
terms of the contract are referred to as
a. gatekeepers.
b. deciders.
c. influencers.
d. users.
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e. buyers.

Rationale: Text term definition—buyers.
6-160 BUYING CENTER ROLES: BUYERS APPLICATION
The purchasing manager of Ingram Printing has selected HP as the supplier of its new high-speed
printer and negotiated the terms of the contract. The purchasing manager is the __________ for
Ingram.
a. user
b. gatekeeper
c. influencer
d. buyer
e. decider

Rationale: Buyers have formal authority and responsibility to select the supplier and negotiate
the terms of the contract.
6-161 BUYING CENTER ROLES: BUYERS APPLICATION
The person who assumed the __________ role in the buying center shook the salesperson’s hand
and said, “Ms. Hron, we would like to accept your bid. I’ll expect 48 boxes of ring shank nails to
be delivered by November 8th, and we will pay the agreed-upon price of $21.74 per box.”
a. gatekeeper
b. broker
c. buyer
d. influencer
e. user

Rationale: Buyers have the formal authority and responsibility to select the supplier and
negotiate the terms of the contract.
6-162 BUYING CENTER ROLES: DECIDERS KNOWLEDGE
In a buying center, __________ have the formal or informal power to select or approve the
supplier that receives the contract.
a. gatekeepers
b. deciders
c. buyers
d. influencers
e. users

Rationale: Text term definition—deciders.
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Within the buying center, deciders are people who

a. have the formal authority and responsibility to select the supplier and negotiate the terms of
the contract.
b. control the flow of information in the buying center.
c. have the formal or informal power to select or approve the supplier that receives the contract.
d. affect the buying decision usually by helping define the specifications for what is bought.
e. actually use and evaluate the product or service.

Rationale: Text term definition—deciders.
For routine orders, the decider is usually

a. the buyer or purchasing manager.
b. the CEO.
c. the COO.
d. the head of R&D.
e. the customer.

Rationale: For routine orders, the decider is usually the buyer or purchasing manager.
6-165 BUYING CENTER ROLES: DECIDERS APPLICATION
An IT engineer specifies the type of “shopping cart” to be used on the company’s new website.
The engineer also chooses the supplier who receives the contract to provide the software. In the
buying center, this person is the __________.
a. gatekeeper
b. decider
c. broker
d. influencer
e. user

Rationale: Deciders have the formal or informal power to select or approve the supplier who
receives the contract.
6-166 BUYING CENTER ROLES: GATEKEEPERS KNOWLEDGE
People who control the flow of information in the buying center, such as technical experts and
secretaries, can keep salespeople and information from reaching others in the buying center and
are referred to as __________.
a. deciders
b. obstructionists
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c. gatekeepers
d. power-brokers
e. influencers

Rationale: Text term definition—gatekeepers.
6-167 BUYING CENTER ROLES: GATEKEEPERS APPLICATION
A sales representative for a pharmaceutical company visits the doctor’s office, hoping to explain
a new drug to the doctor. However, the office receptionist explains that the doctor is with
patients and will not be able to see the sales rep. The receptionist is acting as a(n) __________.
a. user
b. influencer
c. buyer
d. decider
e. gatekeeper

Rationale: A gatekeeper controls the flow of information in the buying center. Purchasing
personnel, technical experts, and secretaries can all keep salespeople or information from
reaching people performing the other four roles. The receptionist could facilitate or hinder the
flow of information to and from the doctor and would not otherwise be involved in selecting
drugs to prescribe to patients.
June Golden is part of the buying center for a large manufacturer. Her field of expertise is
logistics and she is responsible for choosing transportation providers for the company. A sales
representative for Yellow Roadway (a very large trucking firm) regularly buys June’s secretary
lunch. The representative does this because she views the secretary as a(n) __________ and
wants to be sure that information about her company reaches June.
a. gatekeeper
b. decider
c. influencer
d. obstructionist
e. power-broker

Rationale: Gatekeepers control the flow of information to others in the buying center.
Purchasing personnel, technical experts, and secretaries can all keep salespeople or information
from reaching people performing the other four roles.
Jason, an administrative assistant, made several telephone calls and received product literature
from several firms for the recarpeting of the construction company’s office. Just prior to the
meeting to discuss the project, Jason gave Ben these brochures. Ben, one of the project
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managers, threw a couple brochures into a waste basket before the meeting started. He told Jason
that those companies sold inferior carpet products. Jason was acting in what role in the buying
center?
a. gatekeeper
b. decider
c. influencer
d. obstructionist
e. power-broker

from reaching people performing the other four roles. Ben played the role of decider.
Tracy is part of the buying center for a large manufacturer. Her field of expertise is logistics and
she is responsible for choosing transportation providers for the company. A sales representative
for Yellow Roadway (a very large trucking firm) calls on Tracy; however, her administrative
assistant thinks he is quite rude and announces that Tracy is not available. The administrative
assistant is acting in the role of __________ for the buying center.
a. gatekeeper
b. decider
c. buyer
d. influencer
e. user

from reaching people performing the other four roles.
6-171 BUYING CENTER ROLES APPLICATION
Mark manages a small family-owned amusement park. He believes the park can increase its
profits if its owners will buy three food concession trailers. Mark has contacted three dealers of
such trailers, which come fully customized to user specifications. After receiving three bids,
Mark concluded that Century Industries has the best price. He will present only the Century
Industries information to the family tomorrow. What buying center roles does Mark perform?
a. gatekeeper and buyer
b. decider and gatekeeper
c. buyer and decider
d. influencer and buyer
e. influencer, gatekeeper, and decider

Rationale: The family is the buyer, otherwise Mark would not need to present his research to
them. This is not a routine buying decision, so Mark has chosen the supplier (decider) as well as
trying to convince (influencer) the family to approve his selection. Because he is presenting bids
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from no other companies, Mark is also assuming the role of gatekeeper.
6-172 BUY CLASSES KNOWLEDGE
Researchers who have studied organizational buying identify three types of buying situations,
called __________, which include new buy, modified rebuy, and straight rebuy.
a. purchase criteria
b. buy classes
c. buying centers
d. consideration sets
e. purchase hierarchies

Rationale: Key term definition—buy classes.
Organizations face three specific kinds of buying situations. They are new buy, straight rebuy,
and modified rebuy. Collectively, these situations are referred to as
a. industrial buying behavior.
b. reseller buying behavior.
c. buy classes.
d. purchase criteria.
e. consideration sets.

The three types of organizational buy classes are

a. industrial, reseller, and government.
b. consumer products, industrial goods, and services.
c. users, influencers, and deciders.
d. straight purchase, barter, and countertrade.
e. new buy, straight rebuy, and modified rebuy.

Buy classes refer to the three types of organizational buying situations:

a. buy, lease, and rent.
b. new buy, make, and reprocess.
c. manufacturing contracts, consulting contracts, service contracts.
d. new buy, straight rebuy, and modified rebuy.
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e. new buy, refurbish, and used buy.

6-176 NEW BUY KNOWLEDGE
The buying situation where an organization is a first-time buyer of the product or service is
referred to as a
a. initial buy.
b. new buy.
c. preliminary buy.
d. straight rebuy.
e. modified rebuy.

Rationale: Text term definition—new buy.
6-177 NEW BUY COMPREHENSION
A buy class situation affects buying center tendencies in different ways. If there are many people
involved, the problem definition is uncertain, and the time required for a decision is long, the buy
class situation is MOST LIKELY a
a. standard buy.
b. straight rebuy.
c. conditional rebuy.
d. modified rebuy.
e. new buy.

Rationale: In a new buy situation, the people involved are many, the decision time is long, the
problem definition is uncertain, the buying objective is to find a good solution, the suppliers
considered are both new and present, and the buying influence includes technical and operating
personnel. See Figure 6-3 in the textbook.
involved, the problem definition is uncertain, and the buying objective is to find a good solution,
the buy class situation is MOST LIKELY a
a. modified buy.
b. straight rebuy.
d. new buy.
e. standard buy.

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involved, the problem definition is uncertain, and the buying influence comes from technical or
operating personnel, the buy class situation is MOST LIKELY a
a. conditional buy.
b. straight rebuy.
c. new buy.
d. modified rebuy.
e. standard buy.
Answer: c Page(s): 148-149 LO: 6-3 AACSB: Analytic QD: Medium

involved, both new and present suppliers are considered, and the buying objective is a good
solution, the buy class situation is MOST LIKELY a
a. modified buy.
b. new buy.
c. straight rebuy.
d. make-buy.
e. standard buy.

If a purchase is a new buy for a manufacturer, the seller should expect

a. specifications to be changed many times before the buy is completed.
b. a lot of conflict.
c. many people to be involved in the purchase decision.
d. to have to do some favors for the decision-makers.
e. to avoid making concessions or compromises.
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Rationale: If the purchase is a new buy for the manufacturer, you should expect many people to
be involved in the purchase decision. See Figure 6-3 in the textbook.
If a purchase is a new buy for a manufacturer, the seller should

a. expect a long time for a buying decision to be reached.
b. neutralize a lot of conflict.
c. expect specifications to be changed several times before the buy is completed.
d. expect to have to do some favors for the decision makers.
e. avoid making concessions or compromises.
Answer: a Page(s): 148-149 LO: 6-3 AACSB: Analytic QD: Medium

Rationale: If the purchase is a new buy for the manufacturer, you should expect a long time for a
buying decision to be reached. See Figure 6-3 in the textbook.
If a purchase is a new buy for a manufacturer, the seller should expect

a. specifications to be changed many times before the buy is completed.
b. a lot of conflict.
c. to focus on a good solution to the problem for the buyer.
d. to have to do some favors for the decision-makers.
e. to avoid making concessions or compromises.

Rationale: If the purchase is a new buy for the manufacturer, you should be prepared to focus on
a good solution to the problem for the buyer. See Figure 6-3 in the textbook.
If a purchase is a new buy for a manufacturer, the seller should expect to

a. have to do some favors for the decision makers.
b. anticipate a great deal of conflict.
c. accommodate unlimited specification change before the buy is completed.
d. work with technical personnel.
e. avoid making concessions or compromises.

Rationale: If the purchase is a new buy for the manufacturer, you should work with technical
6-185 NEW BUY APPLICATION
At the weekly meeting for Choice Hotels, the marketing manager said, “We need an inexpensive
creative way to increase awareness of our hotels among people who travel by automobile. To do
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that, I want to find some new media that the other hotel chains are not using.” The purchase of
this new media for the hotel chains’ advertising would be an example of a
a. new buy.
b. straight rebuy.
c. converted rebuy.
d. modified rebuy.
e. initial buy.
Answer: a Page(s): 148-149 LO: 6-3 AACSB: Analytic QD: Hard

Rationale: In a new buy situation the organization is a first time buyer of the product or
service—in this case, a new and different advertising medium. This involves greater potential
risk in purchase.
6-186 STRAIGHT REBUY KNOWLEDGE
A reorder of an existing product or service from a list of acceptable suppliers is referred to as a

a. new buy.
b. straight rebuy.
c. modified rebuy.
d. standard reorder.
e. make-buy.

Rationale: Text term definition—straight rebuy.
6-187 STRAIGHT REBUY COMPREHENSION
A buy class situation affects buying center tendencies in different ways. If there is one person
involved, the time required for a decision is short, and the problem definition is well-defined, the
buy class situation is MOST LIKELY a
a. new buy.
b. straight rebuy.
d. modified rebuy.
e. standard buy.

Rationale: A straight rebuy has one person involved, the decision time is short, the problem
definition is well-defined, the buying objective is a low-priced supplier, present suppliers are the
ones considered, and the purchasing agent has the buying influence. See Figure 6-3 in the
textbook.
6-188 STRAIGHT REBUY COMPREHENSION
A buy class situation affects buying center tendencies in different ways. If there is one person
involved, the problem definition is well-defined, and the buying objective is to find the low-
priced supplier, the buy class situation is MOST LIKELY a
a. new buy.
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b. modified rebuy.
d. straight rebuy.
e. standard reorder.

Rationale: A straight rebuy has one person involved, the decision time is short, the problem
definition is well-defined, the buying objective is a low-priced supplier, present suppliers are the
ones considered, and the purchasing agent has the buying influence. See Figure 6-3 in the
textbook.
6-189 STRAIGHT REBUY APPLICATION
The assistant heard his supervisor in the supply room yell, “Call Crate & Barrel—we need
another case of its coffee mugs for the conference next week.” The supervisor was asking the
assistant to make a
a. new buy.
b. straight rebuy.
c. modified rebuy.
d. make-buy.

Rationale: In a straight rebuy situation, the buyer or purchasing manager reorders an existing
product or service from the list of acceptable suppliers. Office supplies and maintenance services
are often straight rebuys.
6-190 STRAIGHT REBUY APPLICATION
The department secretary orders pens, copy paper, and printer ink cartridges for the department
from the Corporate Express catalog nearly every month. This is an example of a
a. new buy.
b. straight rebuy.
c. modified rebuy.
d. make-buy.

Rationale: In a straight rebuy situation, the buyer or purchasing manager reorders an existing
product or service from the list of acceptable suppliers. Office supplies and maintenance services
are often straight rebuys.
6-191 MODIFIED REBUY KNOWLEDGE
The buying situation where users, influencers, or deciders want to change product specifications,
price, delivery schedule, or supplier for an item that is largely the same as what was previously
purchased is referred to as a
a. secondary buy.
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b. straight rebuy.
c. modified rebuy.
d. adapted buy.
e. remake buy.

Rationale: Text term definition—modified rebuy.
6-192 MODIFIED REBUY KNOWLEDGE
In a __________ situation, users, influencers, or deciders in the buying center want to change
product specifications, price, delivery schedule, or suppliers, though the product is largely the
same.
a. derived buy
b. straight rebuy
c. make-buy
d. rebuy class
e. modified rebuy

Rationale: Text term definition—modified rebuy.
6-193 MODIFIED REBUY COMPREHENSION
A buy class situation affects buying center tendencies in different ways. If there are two or three
people involved, the time required for a decision is moderate, and the problem definition has only
minor modifications, the buy class situation is MOST LIKELY a
a. new buy.
b. straight rebuy.
d. modified rebuy.

Rationale: In a modified rebuy, two or three people are involved, the decision time is moderate,
the problem definition is one with minor modifications, the buying objective is the low-priced
supplier, the present suppliers are those considered, and the buying influence is the purchasing
agent and others. See Figure 6-3 in the textbook.
people involved, the problem definition has only minor modifications, and the buying objective is
the low-priced supplier, the buy class situation is MOST LIKELY a
a. new buy.
b. modified rebuy.
d. straight rebuy.
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people involved, the time required for a decision is moderate, and only present suppliers are
considered, the buy class situation is MOST LIKELY a
a. new buy.
b. straight rebuy.
c. modified rebuy.
d. conditional rebuy.

6-196 MODIFIED REBUY APPLICATION
The office of SFX Entertainment, a talent promoter, needs a new fax machine that will print at
three seconds a page (instead of five seconds per page like the one it is using now) and has both
local and network printing capabilities. The purchase of a replacement fax machine would be an
example of a
a. new buy.
b. straight rebuy.
c. make-buy.
d. modified rebuy.

Rationale: In a modified rebuy situation, the users, influencers, or deciders want to change the
product specifications, price, delivery schedule, or supplier.
A university’s marketing department typically purchases backpacks with its logo embroidered on
them for all incoming freshmen. This year, because they’ve heard complaints, marketing
managers want to buy similar backpacks but want to find one that is a little more durable. This is
an example of a
a. new buy.
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b. straight rebuy.
c. make-buy.
d. modified rebuy.

Rationale: In a modified rebuy situation, the users, influencers, or deciders want to change the
product specifications, price, delivery schedule, or supplier.
A software company has changed and updated its logo. It now needs to order new letterhead and
business cards. This purchase would be a
a. modified rebuy.
b. straight rebuy.
c. new buy.
d. standard reorder.
e. class buy.

Rationale: In a modified rebuy situation, members of the organization’s buying center seek to
change some element of the purchase—product, the price, delivery schedule, or supplier. This
would be a modified rebuy because the university is purchasing the same stationery and business
cards but with a new logo.
6-199 STRAIGHT OR MODIFIED REBUY COMPREHENSION
A straight rebuy is a(n) __________ while a modified rebuy is a(n) __________.

a. exchange; resale
b. routine reorder; exchange
c. first-time order; routine reorder
d. changed order; first-time order
e. routine reorder; changed order

Rationale: A straight rebuy involves a buyer or purchasing manager reordering an existing
product or service. A modified rebuy involves the users, influencers, or deciders in the buying
center changing the product specifications, price, delivery schedule, or supplier.
If a purchase is a straight or modified rebuy for a manufacturer, the seller would most likely
emphasize a competitive price and __________ in meetings with the purchasing agent.
a. nationwide distribution
b. a reliable supply
c. funds for advertising
d. a quality product
e. a great brand name
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Rationale: If a purchase is a straight or modified rebuy, a supplier might emphasize a
competitive price and a reliable supply in meetings with the purchasing agent.
If a purchase is a straight or modified rebuy for a manufacturer, the seller should emphasize a
reliable supply and __________ in meetings with the purchasing agent.
a. a competitive price
b. nationwide distribution
c. available advertising money
d. quality product
e. a great brand name

Rationale: If a purchase is a straight or modified rebuy, you might emphasize a competitive price
and a reliable supply in meetings with the purchasing agent.
6-202 ORGANIZATIONAL BUYING BEHAVIOR KNOWLEDGE
The decision-making process that organizations use to establish the need for products and
services and identify, evaluate, and choose among alternative brands and suppliers is referred to
as
a. the consumer purchase decision process.
b. the industrial purchase procedure.
c. organizational buying behavior.
d. the offering purchase framework.
e. the sustainable procurement process.

Rationale: Key term definition—organizational buying behavior.
6-203 ORGANIZATIONAL BUYING BEHAVIOR KNOWLEDGE
Organizational buying behavior refers to

a. the actions a person takes in purchasing and using products and services, including the mental
and social processes that come before and after these actions.
b. the decision-making process that organizations use to establish the need for products and
services and identify, evaluate, and choose among alternative brands and suppliers.
c. the determination of what to purchase and the quantity to purchase based upon derived
demand.
d. the determination of what to purchase and the quantity to purchase based upon the derived
supply.
e. the process that organizations use to purchase the raw materials and tools used in the
manufacturing of a product.

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Rationale: Key term definition—organizational buying behavior. Alternative “a” is the
definition of consumer behavior.
6-204 ORGANIZATIONAL BUYING BEHAVIOR COMPREHENSION
Organizational buying behavior is similar to consumer behavior in some ways and different in
others. One commonality is that both
a. use the same five stages in the purchase decision process.
b. use formal vendor rating when choosing among alternative brands.
c. are affected by derived demand.
d. have virtually unlimited options for suppliers.
e. rely on gatekeepers to control product information.

Rationale: There are important similarities and differences between consumer and organizational
buying behavior. The five stages of the organizational buying process also apply to consumer
buying. More individuals are involved, supplier capability becomes more important, and the
postpurchase evaluation behavior is more formalized when organizations buy. See Figure 6-4 in
the textbook.
6-205 ORGANIZATION BUYING PROCESS COMPREHENSION
Which of the following possible characteristics of consumer buying is LEAST LIKELY to enter
into an organizational buying decision?
a. comparison of product performance with expectations
b. purchase decisions based on the highest overall evaluation
c. alternatives evaluated on important criteria
d. information gathered from internal and external searches
e. problem recognition triggered by self-actualization motives

Rationale: Organizations buy products and services for one main reason, which is to help them
achieve their objectives. For business firms, the buying objective is usually to increase profits
through reducing costs or increasing revenues. Self-actualization is a personal, not organizational
motivator.
6-206 ORGANIZATIONAL BUYING BEHAVIOR COMPREHENSION
Organizational buying behavior is similar to consumer behavior in some ways and different in
others. One key difference is that in the organizational buying process,
a. only four stages are used.
b. fewer individuals are involved.
c. firms are not affected by derived demand.
d. the postpurchase evaluation behavior is more formalized.
e. there is less reliance on gatekeepers to control product information.

Rationale: There are important similarities and differences between consumer and organizational
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buying behavior. In the latter, more individuals are involved, supplier capability becomes more
important, and the postpurchase evaluation behavior is more formalized. See Figure 6-4 in the
textbook.
6-207 PROBLEM RECOGNITION KNOWLEDGE
The first stage in the organizational buying decision process is

a. information search.
b. antecedent states.
c. alternative evaluation.
d. purchase decision.
e. problem recognition.
Answer: e Page(s): 150-151 LO: 6-3 AACSB: Analytic QD: Easy

Rationale: The first stage of the organizational buying decision process is problem recognition.
See Figure 6-4 in the textbook.
6-208 PROBLEM RECOGNITION COMPREHENSION
The sales department’s identification of an improvement made to a competitor’s product would

occur during which stage of the organizational buying decision process?
a. information search
b. supplier search
c. alternative evaluation
d. problem recognition
e. purchase decision

Rationale: During the problem recognition stage, marketing research or employees such as
salespeople may identify problems.
6-209 MAKE-BUY DECISION KNOWLEDGE
An evaluation of whether components and assemblies will be purchased from outside suppliers or
built by the firm itself is referred to as a
a. modified rebuy.
c. new buy.
d. cost analysis.
e. buy class decision.

Rationale: Key term definition—make-buy decision.
6-210 MAKE-BUY DECISION KNOWLEDGE
A make-buy decision refers to

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a. the decision-making process that determines whether a product is sustainable.
b. the decision-making process to determine which manufacturer meets a firm’s evaluative
criteria for the production of a new component part or equipment.
c. an evaluation of whether components and assemblies will be purchased from outside
suppliers or built by the firm itself.
d. an evaluation of different suppliers to determine which one can fill an order without having to
make any changes to the original product while maintaining the same level of quality.
e. the decision-making process to determine which supplier can fill an order the fastest by a
specified time period.

Rationale: Key term definition—make-buy decision.
6-211 MAKE-BUY DECISION COMPREHENSION
The make-buy decision is typically made during which stage of the organizational buying
decision process?
b. supplier search
d. problem recognition
e. purchase decision

Rationale: During the problem recognition stage, an evaluation of whether components will be
purchased from outside supplies or built by the company (a “make-buy” decision) is necessary.
6-212 MAKE-BUY DECISION APPLICATION
Sales engineers from Siemens, a German manufacturer, have won a contract for a new space-
based telescope. They must now evaluate whether components and assemblies will be purchased
from outside suppliers or be built by Siemens itself. This aspect of the problem recognition stage
of the organizational buying decision process is known as a
a. cost analysis.
c. value analysis.
d. modified rebuy.
e. derived-demand decision.

Rationale: A make-buy decision is an evaluation of whether components and assemblies will be
purchased from outside suppliers or built by the firm itself.
6-213 MAKE-BUY DECISION APPLICATION
The decision by Maytag to purchase electric motors for its clothes dryers rather than to
manufacture them itself is the result of a(n)
a. value analysis.
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b. rebuy decision.
c. reciprocity agreement.
d. sensitivity analysis.
e. make-buy decision.

Rationale: A make-buy decision is an evaluation of whether components and assemblies will be
purchased from outside suppliers or built by the company itself. Members of the Maytag buying
center would likely meet to evaluate whether they should manufacture its own motors or purchase
them from another manufacturer.
6-214 INFORMATION SEARCH KNOWLEDGE
Once an organization passes through the problem recognition stage of the organizational buying
decision process, it reaches the __________ stage.
b. value analysis
d. purchase decision
e. behavioral learning
Answer: a Page(s): 150-151 LO: 6-3 AACSB: Analytic QD: Easy

Rationale: The second stage of the organizational buying decision process is information search.
6-215 INFORMATION SEARCH COMPREHENSION
At which stage of the organizational buying decision process would design and production
engineers draft specifications?
a. problem recognition
b. information search
e. value analysis

Rationale: Design and production engineers draft specifications for the product in the
information search stage of the organizational buying decision process. See Figure 6-4 in the
textbook.
6-216 VALUE ANALYSIS KNOWLEDGE
A systematic appraisal of the design, quality, and performance requirements of a product to

reduce purchasing costs is referred to as
a. cost analysis.
b. a make-buy decision.
c. value analysis.
d. procurement analysis.
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e. a buy class decision.

Rationale: Key term definition—value analysis.
6-217 VALUE ANALYSIS COMPREHENSION
After conducting a value analysis, a company is hopefully able to

a. identify product defects.
b. reduce purchasing costs.
c. increase product value.
d. calculate a customer’s lifetime value.
e. determine a fair but profitable price for purchased products.

Rationale: Value analysis is a systematic appraisal of the design, quality, and performance
requirements of the product to reduce purchasing costs.
6-218 VALUE ANALYSIS COMPREHENSION
Value analysis is a systematic appraisal of the design, quality, and performance of a product in
order to
a. maintain quality assurance.
b. offer the lowest possible price.
c. increase the price of the offering.
d. reduce purchasing costs.
e. ensure customer satisfaction.

Rationale: Value analysis is a systematic appraisal of the design, quality, and performance
requirements of the product to reduce purchasing costs.
6-219 ALTERNATIVE EVALUATION KNOWLEDGE
During the third stage of the organizational buying decision process, the organization engages in
a. information search.
b. postpurchase behavior.
c. alternative evaluation.
d. purchase decision.
e. problem recognition.
Answer: c Page(s): 150-151 LO: 6-3 AACSB: Analytic QD: Easy

Rationale: The third stage of the organizational buying decision process is alternative evaluation.
6-220 ALTERNATIVE EVALUATION COMPREHENSION
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At which stage of the organizational buying decision process would purchasing and engineering
personnel visit potential suppliers to assess their facilities?
d. postpurchase behavior

Rationale: In the alternative evaluation stage of the organizational buying decision process,
purchasing and engineering personnel visit with suppliers and assess facilities, capacity, quality
control, and financial status. See Figure 6-4 in the textbook.
personnel visit potential suppliers to assess their production capacity?
d. alternative evaluation
e. postpurchase behavior

personnel visit potential suppliers to assess their quality control?
a. alternative evaluation
b. problem recognition
c. information search

At which stage of the organizational buying decision process would purchasing assess the
financial status of potential suppliers?
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6-224 BIDDER’S LIST KNOWLEDGE
A list of firms believed to be qualified to supply a given item is referred to as a

a. bidder’s list.
b. make-buy list.
c. supplier’s sheet.
d. vendor-rating sheet.
e. e-marketplace.

Rationale: Key term definition—bidder’s list.
A bidder’s list refers to

a. a list of firms believed to be qualified to purchase a given item.
b. a list of firms believed to be qualified to supply a given item.
c. those firms that have expressed interest in supplying a specific item but have not yet been
approved.
d. a list of firms that have not yet expressed an interest in supplying a specific item to the firm.
e. a list of approved suppliers that have not yet been entered into the firm’s purchasing
databank.

Rationale: Key term definition—bidder’s list.
6-226 BIDDER’S LIST COMPREHENSION
Poor performance on a contract may result in a supplier’s name being dropped from the buying
organization’s
a. industry directory.
b. make-buy list.
c. vendor-rating sheet.
d. suppliers sheet.
e. bidder’s list.

Rationale: A bidder’s list is a list of firms believed to be qualified to purchase a given item.
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Performance on past contracts determines a supplier’s chances of being asked to bid on future
purchases, and poor performance may result in a supplier’s name being dropped from the bidder’s
list.
Firms selected from __________ are sent a quotation request from the purchasing agent
describing the desired quantity, delivery date(s), and specifications of the components or
assemblies.
a. the Yellow Pages
b. an industry directory, such as Hoover’s
c. a bidder’s list
d. a NAICS databank
e. a vendor-rating sheet

Rationale: A bidder’s list is a list of firms believed to be qualified to supply a given item. Firms
selected from the bidder’s list are sent a quotation request from the purchasing agent describing
the desired quantity, delivery date(s), and specifications of the components or assemblies.
The concept in organizational buying that corresponds most closely to a consumer’s consideration
set in the consumer purchase decision process is the
a. supplier index.
b. bidder’s directory.
c. selection set.
d. bidder’s list.
e. NAICS index.

Rationale: Consumers only consider brands in their consideration set; organizational buyers only
consider offers from suppliers on their bidder’s list.
6-229 BIDDER’S LIST APPLICATION
When selecting new basketball uniforms for the 30 NBA teams, Champion, Nike, Puma, Reebok,
Russell, and Starter sports apparel manufacturers were asked to submit quotes on how much each
would charge to provide these NBA teams with new uniforms. These qualified sports apparel
manufacturers were most likely comprised the NBA’s
a. reconsideration set.
b. evaluative criteria.
c. bidder’s list.
d. supply partners.
e. e-marketplace.

Rationale: A bidder’s list is a list of firms believed to be qualified to supply a given item.
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6-230 PURCHASE DECISION KNOWLEDGE
At which stage of the organizational buying decision process would a firm use key organizational
buying criteria such as price, quality, delivery time, and technical capability to select a supplier?
d. purchase review
Answer: c Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Easy
Rationale: At the purchase decision stage of the organizational buying decision process, the firm
selects its organizational buying criteria such as price, quality, delivery time, and technical
capability to select a supplier. Then they negotiate terms and award a contract. See Figure 6-4 in
the textbook.
6-231 PURCHASE DECISION COMPREHENSION
During the next-to-last stage of the organizational buying decision process, the organization
a. drafts specifications.
b. formally rates suppliers that were used.
c. evaluates supplier facilities.
d. awards the contract.
e. recognizes a need for change.
Answer: d Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Medium
Rationale: The fourth stage of the organizational buying decision process is the purchase
decision, during which a contract is awarded. See Figure 6-4 in the textbook.
6-232 PURCHASE DECISION COMPREHENSION
Which of the following is indicative of the purchase decision stage of the organizational buying
decision process?
a. The purchase decision is usually quick once the information search has been completed.
b. Even after the bid is submitted and even accepted, further negotiation is likely.
c. Even if several vendors make it onto the bidder’s list, ultimately only one supplier is chosen.
d. If a supplier on the bidder’s list is not selected, it is rarely told the reason(s) why it was
rejected.
e. Once an agreement has been formally reached, neither the buyer nor the seller is permitted to
make changes to the terms of the contract.
Answer: b Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Medium
Rationale: Unlike the short purchase stage in the consumer purchase decision process, the period
from supplier selection to order placement to product delivery can take several weeks or even
months. Even after bids for components and assemblies are submitted, further negotiation
concerning price, performance, and delivery terms is likely. Two or more suppliers of the same
item might be awarded. See Figure 6-4 in the textbook.
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6-233 POSTPURCHASE BEHAVIOR KNOWLEDGE
What is the last stage of the organizational buying decision process?

b. postpurchase behavior
e. purveyor review
Answer: b Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Easy
Rationale: The final stage of the organizational buying decision process is postpurchase
behavior. See Figure 6-4 in the textbook.
6-234 POSTPURCHASE BEHAVIOR COMPREHENSION
At which point of the organizational buying decision process would a firm use a formal vendor
rating system to evaluate the quality of the vendor’s product and customer service?
e. performance review
Rationale: The postpurchase evaluation of the organizational buying decision process is
formalized and sophisticated. All items purchased are examined in a formal product acceptance
process. The performance of the supplier is also monitored and recorded. Performance on past
contracts determines a supplier’s chances of being asked to bid on future purchases, and poor
performance may result in a supplier’s name being dropped from the bidder’s list. See Figure 6-4
in the textbook.
As in the consumer decision process, evaluation occurs in the organizational buying decision
process, but it is more formalized and often more sophisticated. All items purchased are
examined in a formal product acceptance process. The performance of the vendor is also
monitored and recorded. This evaluation occurs during the __________ stage.
b. supplier audit
e. performance review
Rationale: In the organizational buying decision process, the postpurchase evaluation is
formalized and sophisticated. All items purchased are examined in a formal product acceptance
process. The performance of the supplier is also monitored and recorded. Performance on past
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contracts determines a supplier’s chances of being asked to bid on future purchases, and poor
performance may result in a supplier’s name being dropped from the bidder’s list. See Figure 6-4
in the textbook.
Marketers who want to increase their chances of selling products and services to organizations
must understand its needs, get on its bidder’s list, find the right people in its buying center, and
ultimately
a. provide value to organizational buyers.
b. adapt the product or service to offer the lowest price possible.
c. beat out all other possible vendors.
d. sign a binding contract that prohibits changes to the product, time line, or quantities ordered.
e. establish an e-marketplace to conduct both traditional and reverse auctions.
Answer: a Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Medium
Rationale: Marketers who want to increase their chances of selling products and services to
organizations must: (1) understand the organization’s needs; (2) get on the right bidder’s list; (3)
find the right people in the buying center; and (4) provide value to organizational buyers.
6-237 POSTPURCHASE BEHAVIOR APPLICATION
General Electric manufactures electric motors for its clothes dryers. The firm uses a formal
vendor rating system to evaluate suppliers and notify those whose parts did not meet its quality
standards. If a supplier fails to correct the problem, GE will drop the firm as a future supplier.
Which stage in the organizational buying decision process would GE make this evaluation?
a. purchase decision stage
b. information search stage
c. postpurchase behavior stage
d. alternative evaluation stage
e. problem recognition stage
Answer: c Page(s): 150, 152 LO: 6-3 AACSB: Analytic QD: Hard
Rationale: A formal vendor rating system would be used in the postpurchase behavior stage of
the organizational buying decision process.
6-238 ONLINE BUYING IN ORGANIZATIONAL MARKETS COMPREHENSION
Business-to-business electronic commerce over the Internet

a. is nearly equivalent to consumer electronic commerce when measured by the total dollar
value of all online transactions.
b. is at least four times greater than consumer electronic commerce when measured by the total
dollar value of all online transactions.
c. has dramatically decreased since face-to-face communication between a firm’s salesforce and
its potential customers is so important.
d. is impossible to estimate since companies will not share information.
e. has never been popular since timely information is unavailable or deemed to be proprietary.
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Rationale: Organizational buyers account for 80 percent of the global dollar value of all online or
online transactions. So, consumer electronic commerce accounts for the other 20 percent. Thus,
organizational buying is four times greater than consumer e-commerce.
6-239 ONLINE BUYING IN ORGANIZATIONAL MARKETS COMPREHENSION
Online buying in organizational markets is prominent because Internet technology

a. allows companies to increase their innovation cycles.
b. substantially increases brand loyalty.
c. can convey timely information quickly.
d. narrows the potential customer base for many products.
e. totally eliminates marketing costs.

Rationale: Online buying in organizational markets is prominent for three major reasons: (1)
organizational buyers depend heavily on timely supplier information that describes product
availability, technical specifications, application uses, price, and delivery schedules; (2) this
technology has been shown to substantially reduce buyer order processing costs; and (3) business
marketers have found that Internet technology can reduce marketing costs, particularly sales and
advertising expense, and broaden their potential customer base for many types of products and
services.
6-240 E-MARKETPLACES KNOWLEDGE
Online trading communities that bring together buyers and supplier organizations to make
possible the real time exchange of information, money, products, and services are referred to as
a. webfronts.
b. iCommerce.
c. e-commerce marketspaces.
d. e-marketplaces.
e. X-changes.

Rationale: Key term definition—e-marketplaces.
E-Marketplaces refer to
a. virtual or holographic purchasing marketspaces that allow manufacturers to estimate demand
based upon different changes in environmental forces.
b. websites that allow consumers to make direct purchases from a manufacturer rather than
through a traditional retail outlet.
c. online trading communities that bring together buyers and supplier organizations to make
possible the real time exchange of information, money, products, and services.
d. computer simulations that allow manufacturers to estimate how much inventory to keep on
hand based upon different purchasing scenarios.
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e. a computer database co-sponsored by the U.S. Department of Commerce and the World
Trade Organization (WTO) that houses all public access records for the purpose of aiding
American and global businesses.

Rationale: Key term definition—e-marketplaces.
Another name for an e-marketplace is a(n)

a. e-hub.
b. E-place.
c. e-trade.
d. E-xchange.
e. 4NXchange.

Rationale: E-marketplaces go by a variety of names, including business-to-business (B2B)
exchanges and e-hubs, and make possible the real-time exchange of information, money,
products, and services.
Another name for an e-marketplace is a(n)

a. WebXChange.
b. WebMart.
c. 2B1 marketplace.
d. C2C market forum.
e. B2B exchange.

Rationale: E-marketplaces go by a variety of names, including business-to-business (B2B)
exchanges and e-hubs, and make possible the real-time exchange of information, money,
products, and services.
6-244 E-MARKETPLACES COMPREHENSION
E-marketplace can take two different formats, which are

a. bricks-and-mortar exchanges and clicks-and-mortar exchanges.
b. privately-owned trading communities and open-to-the-public trading communities.
c. networked exchanges or public trading communities.
d. independent trading communities or private exchanges.
e. public exchanges and networked exchanges.

Rationale: E-marketplaces can be independent trading communities or private exchanges.
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Small businesses benefit from independent __________ like Plastics Net, Hospital Network.com,
and Textile Web.
a. Webfronts
b. clicks-and-mortar
c. e-marketplaces
d. iMarkets
e. integrated markets

Rationale: Independent e-marketplaces act as a neutral third party and provide an Internet
technology trading platform and a centralized market that enable exchanges between buyers and
sellers. All of the examples cited in the question are independent e-marketplaces.
For e-marketplaces, large companies tend to favor __________ that link them with their network
of qualified suppliers and customers.
a. centralized markets
b. decentralized markets
c. private exchanges
d. segregated markets
e. independent trading communities

Rationale: Large companies tend to favor private exchanges that link them with their network of
qualified suppliers and customers. Private exchanges focus on streamlining a company’s
purchase transactions with its suppliers and customers.
Independent e-marketplaces act as a neutral third party, provide an Internet technology trading
platform, and provide a(n) __________ market that enable exchanges between buyers and sellers.
a. centralized
b. deconsolidated
c. segregated
d. integrated
e. noncompetitive

technology trading platform, and provide a centralized market that enable exchanges between
buyers and sellers.
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Which of the following statements about e-marketplaces that act as independent trading
communities is FALSE?
a. Independent trading communities allow buyers to easily comparable offerings between a
variety of sellers.
b. Independent trading communities consist of thousands of geographically dispersed buyers
and sellers.
c. Independent trading communities charge a fee for their service.
d. Independent trading communities are favored by large companies.
e. Independent trading communities operate in an environment where demand and supply
fluctuations cause volatile prices.

Rationale: E-marketplaces can be independent trading communities or private exchanges.
Independent e-marketplaces act as a neutral third party and provide an Internet technology trading
platform and a centralized market that enable exchanges between buyers and sellers. They charge
a fee for their service and exist in settings that have one or more of the following features: (1)
thousands of geographically dispersed buyers and sellers; (2) volatile prices caused by demand
and supply fluctuations; (3) time sensitivity due to perishable offerings and changing
technologies; and (4) easily comparable offerings between a variety of sellers. Large companies
tend to favor private exchanges.
Plastics Net, Hospital Network.com, Textile Web, and eBay Business are all examples of
a. Webfront operations.
b. clicks-and-mortar stores.
c. e-marketplaces.
d. iMarkets.
e. integrated markets.

technology trading platform and a centralized market that enable exchanges between buyers and
sellers. All of the examples cited in the question are independent e-marketplaces.
6-250 E-MARKETPLACES APPLICATION
In the construction industry, an independent trading community such as Buzzsaw.com or

Cephren.com enables a general contractor to manage and coordinate the many suppliers,
subcontractors, architects, and engineers necessary to complete a project. Buzzsaw.com and
Cephren.com are examples of
a. Webfronts.
b. Web chains.
c. X-changes.
d. e-syndicates.
e. e-marketplaces.

Rationale: E-marketplaces bring together buyers and supplier organizations to make possible the
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real-time exchange of information, money, products, and services. Buzzsaw.com and
Cephren.com bring together buyers and suppliers online.
6-251 MARKETING MATTERS KNOWLEDGE
The predominant person-to-person trading community in the world is

a. Facebook.
b. Amazon.
c. NASDAQ.
d. CraigsList.
e. eBay.

Rationale: eBay is the predominant person-to-person trading community in the world.
6-252 MARKETING MATTERS COMPREHENSION
eBay is the predominant person-to-person trading community in the world. eBay is an example
of a(n)
a. Webfront operation.
b. clicks-and-mortar store.
c. e-marketplace.
d. noncompetitive market.
e. integrated market.

Rationale: An e-marketplace brings together buyers and supplier organizations that make
possible the real-time exchange of information, money, products, and services. eBay offers a
trading platform for millions of small businesses in the United States and even greater numbers
around the world.
6-253 TRADITIONAL AUCTION KNOWLEDGE
When a seller puts an item up for sale and would-be buyers are invited to bid in competition with
each other, it is referred to as a(n) __________.
a. reverse auction
b. traditional auction
c. bidder’s war
d. e-auction
e. Webfront auction

Rationale: Key term definition—traditional auction.
6-254 TRADITIONAL AUCTION KNOWLEDGE
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When prospective buyers observe the bids of others and decide whether or not to increase the bid
price, it is called a(n)
a. forward auction.
b. reverse auction.
c. webfront auction.
d. traditional auction.
e. bidder’s war.

Rationale: In a traditional auction, a seller puts an item up for sale and would-be buyers are
invited to bid in competition with each other.
6-255 TRADITIONAL AUCTION COMPREHENSION
Dell, Inc. sells surplus, refurbished, or closeout computer merchandise at its dellauction.com
website to many buyers who bid competitively against one another. This is an example of a
a. traditional auction.
b. reverse auction.
c. bidder’s war.
d. I-auction.
e. Webfront auction.

Rationale: In a traditional auction, a seller (Dell) puts items up for sale (computers) and would-
be buyers are invited to bid in competition with each other.
Figure 6-6A
As shown in Figure 6-6A above, what type of online auction does one seller and many buyers
typify?
a. forward auction.
b. reverse auction.
c. traditional auction.
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d. vertical auction.
e. bidder’s war.

invited to bid in competition with each other. As more would-be buyers become involved, there
is an upward pressure on bid prices because bidding is sequential. The auction ends when a
single bidder remains and “wins” the item with its highest price. See Figure 6-6 in the textbook.
Which type of auction does Figure 6-6A above represent?

a. reverse auction
b. horizontal auction
c. vertical auction
d. diagonal auction
e. traditional auction

In Figure 6-6A above, as the number of buyers increases, the price

a. increases.
b. decreases.
c. stays the same.
d. has no relation to the number of buyers.
e. fluctuates depending on economic conditions.

6-259 REVERSE AUCTION KNOWLEDGE
In an e-marketplace, an online auction in which a buyer communicates a need for a product or

service and would-be suppliers are invited to bid in competition with each other is referred to as a
a. vertical auction.
b. reverse auction.
c. horizontal auction.
d. traditional auction.
e. reciprocal auction.
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Rationale: Key term definition—reverse auction.
6-260 REVERSE AUCTION KNOWLEDGE
A reverse auction refers to an online auction

a. where firms may sell their overstock—unused raw materials, packaging, and tools—to the
highest bidder.
b. in which a manufacturer offers to share its facilities, inventory, or services with other smaller
firms that are invited to bid in competition with each other.
c. in which a smaller manufacturer seeks to share the facilities, inventory, or services of a larger
firm, and invites those firms to bid in competition with each other.
d. in which a buyer communicates a need for a product or service and would-be suppliers are
invited to bid in competition with each other.
e. where firms seek to purchase other firms’ overstock—unused raw materials, packaging, and
tools—while trying to find the lowest price possible.

Rationale: Key term definition—reverse auction.
6-261 REVERSE AUCTION COMPREHENSION
Reverse auctions
a. are seller-initiated.
b. benefit the sellers significantly more than the buyers.
c. have an increasing number of buyers as the auction progresses.
d. put downward pressure on prices.
e. have many buyers.

Rationale: Like traditional auctions, bidding is sequential and prospective suppliers observe the
bids of others, but they decide whether or not to decrease the bid price. This puts downward
pressure on bid prices. See Figure 6-6 in the textbook.
Reverse auctions
a. are seller-initiated.
b. benefit the buyers significantly more than the sellers.
d. do not have sequential bidding.
e. have few sellers at the start of the auction.

Rationale: In a reverse auction, a buyer communicates a need for a product or service and would-
be suppliers are invited to bid in competition with each other. As more would-be suppliers
become involved, there is a downward pressure on bid prices because bidding is sequential. As
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the price rises, the number of sellers decline. See Figure 6-6 in the textbook.
Reverse auctions
a. are buyer-initiated.
b. benefit the sellers significantly more than the buyers.
d. do not allow sequential bidding.
e. have many buyers at the start of the auction.

Figure 6-6B
As shown in Figure 6-6B above, what type of online auction does one buyer and many sellers
typify?
a. forward auction.
b. reverse auction.
c. traditional auction.
d. vertical auction.
e. bidder’s war.

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Which type of auction does Figure 6-6B above represent?

a. traditional auction
b. vertical auction
c. reverse auction
d. horizontal auction
e. reciprocal auction

In Figure 6-6B above, as the number of sellers increases, the price

a. increases.
b. stays the same.
c. has no relation to the number of sellers.
d. decreases.
e. fluctuates depending on economic conditions.

6-267 VIDEO CASE 6: TREK COMPREHENSION
Which of the following statements about Trek Bicycles is FALSE?

a. Trek’s Eco Design initiative is an example of sustainable procurement.
b. Trek has an extensive product line of bicycles.
c. Trek has always been on the cutting edge, using the latest innovations in its designs.
d. Trek was an early sponsor of Lance Armstrong, who won the Tour de France seven straight
years.
e. Trek’s business model has evolved from manufacturing bicycles to marketing other two- and
four-wheeled vehicles, such as motorcycles and all terrain vehicles (ATVs).

Rationale: Trek’s mission has evolved, and today it is to “help the world use the bicycle as a
simple solution to complex problems.” In fact, its motto is “We believe in bikes.”
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Trek uses several organizational buying criteria to evaluate potential suppliers. These include all
of the following EXCEPT:
a. price.
b. environmental impact.
c. warranties and claim policies.
d. quality.
e. delivery capabilities.

Rationale: When potential suppliers are identified, Trek evaluates them based on four criteria—
quality, delivery capabilities, price, and environmental impact of their production process.
Warranties and claim policies are one of the seven organizational buying criteria cited in the
textbook, but this criterion is NOT used by Trek.
All of the following people are part of the Trek buying center EXCEPT:
a. the Trek product managers.
b. representatives from production.
c. representatives from research and development (R&D).
d. representatives from quality control.
e. a purchasing manager.

Rationale: The buying center is the group of individuals who are responsible for finding the best
suppliers and vendors for the organization’s purchases. At Trek the buying center consists of a
purchasing manager, buyers who identify domestic and international sources of materials and
components, and representatives from research and development, production, and quality control.
Michael Leighton, a Trek product manager who is NOT part of the Trek buying center, says,
“The communication between the product managers [like me] and the buying center is important.
“I work very closely with our buying centers [implying that he is NOT a part of them] to ensure
that we’re partnering with vendors who can supply reliable quality, and they are actually the ones
who, with our quality control team, go in and say, ‘Yes this vendor is building product to the
quality that meets Trek’s standards,’ and they also negotiate the pricing. Our buying center
domestically is a relatively small team of people and they are focused on specific components.”
When Trek orders a seat or saddle for one of its models that has a slightly different material for
the cover only but the other components are the same as existing saddles used on other bikes, this
purchase situation is known as a __________.
a. new buy
b. straight rebuy
c. standard reorder
d. modified rebuy
e. make-buy

Rationale: The purchase of saddle that has a “little bit” of different material for the cover but the
components are the same is a modified rebuy decision.
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SHORT ESSAY QUESTIONS
6-271 ORGANIZATIONAL MARKETS COMPREHENSION
Describe the three types of organizational markets and give examples of each.
Answer:
There are three types of organizational markets: (1) Industrial markets consist of industrial firms
that reprocess a product or service they buy before selling it again to the next buyer. (Examples:
mining, construction, insurance companies, and public utility firms). (2) Reseller markets are
composed of wholesalers and retailers who buy physical products and resell them again without
any reprocessing. (Examples: Sears, Walmart, and Target). (3) Government markets are
comprised of federal, state, and local agencies that buy goods and services for the constituents
they serve. (Examples: NASA, City of San Francisco, and New York City Police Department).
Page(s): 140-141 LO: 6-1 AACSB: Analytic QD: Medium
What is the North American Industry Classification System (NAICS)?
Answer:
The North American Industry Classification System (NAICS) designates industries with a
numerical code in a defined structure. The first two digits of the NAICS code designate an
industry sector of the economy. A third digit code signifies an industry subsector. Subsectors are
further divided into four-digit industry groups, five-digit industries, and six-digit country-specific
or national industries. The system provides common industry definitions for Canada, Mexico,
and the United States to facilitate the measurement of economic activity in the three member
countries of the North American Free Trade Agreement (NAFTA).
Page(s): 141-142 LO: 6-1 AACSB: Analytic QD: Easy
What is an important limitation of NAICS codes that inhibit their usefulness?
Answer:
The NAICS has an important limitation. Five-digit national industry codes are not available for
organizations exist in a category.
Page(s): 142 LO: 6-1 AACSB: Analytic QD: Medium

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What are the characteristics of the organizational buying process?
Answer:
Understanding the characteristics of organizational buying is essential in designing effective
marketing programs to reach these buyers. According to Figure 6-2 in the textbook, key
characteristics of organizational buying are: (1) Market characteristics, such as (a) derived
demand for industrial offerings, (b) few customers typically exist, and (c) the purchase orders are
large. (2) Product or service characteristics, such as (a) products or services are technical in
nature and purchased on the basis of specifications, (b) many of goods purchased are raw and
semifinished, and (c) there is a heavy emphasis placed on delivery time, technical assistance, and
postsale service. (3) Buying process characteristics, such as (a) technically qualified and
professional buyers who follow established purchasing policies and procedures, (b) buying
objectives and criteria are typically spelled out, as are procedures for evaluating sellers and their
products or services, (c) there are multiple buying influences and multiple parties participate in
purchase decisions, (d) there are reciprocal arrangements, and negotiation between buyers and
sellers is commonplace, and (e) online buying over the Internet is widespread. (4) Marketing mix
characteristics, such as (a) direct selling to organizational buyers is the rule, and distribution is
very important, (b) advertising and other forms of promotion are technical in nature, and (c) price
is often negotiated, evaluated as part of broader seller and product or service qualities, and
frequently affected by quantity discounts.
List seven organizational buying criteria.
Answer:
Key organizational buying criteria and an example of each include: (1) price; (2) quality
specifications; (3) delivery schedule; (4) technical capability; (5) warranties and claim policies;
(6) past performance; and (7) production facilities and capacity.
What is a buying center? In what type of business would a buying center MOST LIKELY be
found?
Answer:
A buying center is a group of individuals within an organization who participate in the buying
process. They share common goals, risks, and knowledge important to a purchase decision. One
would MOST LIKELY see a highly-formalized buying center, known as a buying committee, in
larger, multistore chain retailers such as Macy’s, 7-Eleven, Walmart, Safeway, and Target. In
addition, most industrial firms or government units use groups to arrive at buying decisions.
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6-277 BUYING CENTER ROLES KNOWLEDGE
Identify and describe the five roles an individual can play in a buying center.
Answer:
There are five roles an individual can play in a buying center: (1) Users, who actually use the
product or service; (2) Influencers, who help define the specifications for what is bought; (3)
Buyers, who have the formal authority and responsibility to select the supplier and negotiate the
terms of the contract; (4) Deciders, who have the formal or informal power to select or approve
the supplier; and (5) Gatekeepers, who control the flow of information in the buying center.
Page(s): 148 LO: 6-3 AACSB: Analytic QD: Easy
6-278 BUY CLASSES APPLICATION
What are the three types of organizational buying situations or buy classes? Give an example of
each.
Answer:
There are three types of buying situations: (1) Straight rebuy, simply reordering an existing
product of service from the list of acceptable suppliers (e.g., printer ink cartridges for an office).
(2) Modified rebuy, when the users, influencers, or deciders in the buying center want to change
the product’s specifications, price, delivery, schedule, or supplier (e.g., Ford wants a smaller
steering wheel for its new cars). (3) New buy, when the organization is a first time buyer of the
product of service (e.g., a computer company must purchase a new type of chip for its new line of
computers).
Page(s): 148 LO: 6-3 AACSB: Analytic QD: Hard
Figure 6-3
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6-279 BUY CLASSES APPLICATION
Figure 6-3 above summarizes how buy classes affect buying center tendencies in different ways.
Identify the buy-class situations “A,” “B,” and “C.”
Answer:
“A” is a new buy situation; “B” is a straight rebut situation; and “C” is a modified rebuy
situation. See Figure 6-3 in the textbook.
Page(s): 148-149 LO: 6-3 AACSB: Analytic QD: Hard
6-280 ORGANIZATIONAL BUYING PROCESS KNOWLEDGE
What are the five stages of the organizational buying process? Describe at least three differences
from the consumer buying process.
Answer:
The five stages of the organizational buying process are: problem recognition, information search,
alternative evaluation, purchase decision, and postpurchase behavior. Figure 6-4 in the textbook
reveals some key differences. Specifically, more individuals are involved, supplier capability
becomes more important, and the postpurchase evaluation behavior is more formal.
What is a bidder’s list?
Answer:
During the alternative evaluation stage of the buying process, a firm solicits bids from potential
suppliers. This involves selecting the names of vendors from a bidder’s list, which is a list of
firms believed to be qualified to supply a given item.
6-282 E-MARKETPLACE COMPREHENSION
Explain the differences between independent e-marketplaces and private exchanges.
Answer:
Both are forms of e-marketplaces. Independent e-marketplaces act as a neutral third-party and
provide an Internet technology trading platform and a centralized market that enable exchanges
between buyers and sellers. They charge a fee for their service and exist in settings that have one
or more of the following features: (1) thousands of geographically dispersed buyers and sellers;
(2) volatile prices caused by demand and supply fluctuation; (3) time sensitivity due to perishable
offerings and changing technologies; and (4) easily comparable offerings between a variety of
sellers. Independent e-marketplaces typically focus on a product or serve a particular industry
and offer small business buyers and sellers an economical way to expand their customer base and
reduce the cost of purchased products. Private exchanges focus on streamlining a company’s
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purchase transactions with its suppliers and customers. Like independent marketplaces, private
exchanges provide a technology trading platform and central market for buyer-seller interactions.
They are not a neutral third party, however, but represent the interests of their owners. Large
companies tend to favor private exchanges.
Page(s): 153-154 LO: 6-4 AACSB: Analytic QD: Medium
6-283 ONLINE AUCTIONS KNOWLEDGE
Differentiate between traditional and reverse auctions.
Answer:
In a traditional auction, there is one seller and many prospective buyers. A seller puts an item up
for sale and would-be buyers are invited to bid in competition with each other. As more would-
be buyers become involved, there is an upward pressure on bid prices because bidding is
sequential. Prospective buyers observe the bidding process and decide whether to increase the
bid price. The auction ends when a single buyer who is willing to pay the highest price remains.
In a reverse auction, there is one buyer and many sellers. A buyer communicates a need for a
product and invites potential suppliers to bid in competition with each other. As more
prospective suppliers become involved, there is a downward pressure on price. The auction ends
when a single supplier willing to offer the lowest price remains. See Figure 6-6 in the textbook.
Page(s): 154-155 LO: 6-4 AACSB: Analytic QD: Easy
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Chapter 06 - Master Test Bank

Test Bank for Marketing 12th Edition Kerin Hartley

Download full test bank at:

Download full solution manual at:

CHAPTER 6: MASTER TEST BANK

Bloom’s Level of Learning (LL)

CHAPTER 6: MASTER TEST BANK

Test Item Table by Learning Objective and Bloom’s Level of Learning

Bloom’s Level of Learning (LL)

CHAPTER 6: MASTER TEST BANK

MULTIPLE CHOICE QUESTIONS

6-1 CHAPTER OPENER: JCPENNEY KNOWLEDGE

Answer: c Page(s): 138 LO: 6-1 AACSB: Analytic QD: Easy

6-2 CHAPTER OPENER: JCPENNEY COMPREHENSION

Answer: a Page(s): 143 LO: 6-2 AACSB: Analytic QD: Medium

6-3 CHAPTER OPENER: JCPENNEY COMPREHENSION

Answer: b Page(s): 144-145 LO: 6-2 AACSB: Analytic QD: Medium

6-4 CHAPTER OPENER: JCPENNEY COMPREHENSION

Answer: a Page(s): 148 LO: 6-2 AACSB: Analytic QD: Medium

6-5 CHAPTER OPENER: JCPENNEY COMPREHENSION

Answer: e Page(s): 150-151 LO: 6-3 AACSB: Analytic QD: Medium

6-6 BUSINESS MARKETING KNOWLEDGE

The marketing of goods and services to companies, governments, or not-for-profit organizations

Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-7 BUSINESS MARKETING KNOWLEDGE

Business marketing refers to

Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-8 BUSINESS MARKETING KNOWLEDGE

A business market is also referred to as

Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-9 ORGANIZATIONAL BUYERS KNOWLEDGE

Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-10 ORGANIZATIONAL BUYERS KNOWLEDGE

Organizational buyers refer to

Answer: b Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-11 ORGANIZATIONAL BUYERS COMPREHENSION

Organizational buyers include manufacturers, wholesalers, retailers, and government agencies

Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-12 ORGANIZATIONAL BUYERS COMPREHENSION

Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-13 ORGANIZATIONAL BUYERS COMPREHENSION

Which of these statements regarding organizational buyers is MOST ACCURATE?

Answer: a Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-14 ORGANIZATIONAL BUYERS COMPREHENSION

All of the following are organizational buyers EXCEPT:

Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-15 ORGANIZATIONAL BUYERS COMPREHENSION

Answer: e Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-16 ORGANIZATIONAL BUYERS APPLICATION

Which of the following represents an organizational buyer?

Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Hard

6-17 INDUSTRIAL FIRMS KNOWLEDGE

Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-18 INDUSTRIAL FIRMS KNOWLEDGE

Answer: a Page(s): 140 LO: 6-1 AACSB: Analytic QD: Easy

6-19 INDUSTRIAL MARKETS COMPREHENSION

Answer: d Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-20 INDUSTRIAL MARKETS COMPREHENSION

Which of the following types of firms comprises an industrial market?

Answer: b Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-21 INDUSTRIAL MARKETS COMPREHENSION

Which of the following is a service business within the industrial market?

Answer: c Page(s): 140 LO: 6-1 AACSB: Analytic QD: Medium

6-22 INDUSTRIAL MARKETS COMPREHENSION