Solution Manual For Marketing 2018 19th Edition William M Pride o C Ferrell

Solution Manual for Marketing 2018, 19th Edition,
William M. Pride, O. C. Ferrell
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Solution Manual for Marketing 2018, 19th Edition, William M. Pride, O. C. Ferrell
CHAPTER 8
Business Markets and Buying Behavior
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource Location
Purpose and Perspective IRM, p. 150
Lecture Outline IRM, p. 151
Discussion Starters IRM, p. 158
Class Exercises IRM, p. 160
Semester Project IRM, p. 163
Answers to Developing Your Marketing Plan IRM, p. 164
Answers to Discussion and Review Questions IRM, p. 165
Comments on the Cases IRM, p. 167
Video Case 8.1 IRM, p. 167
Case 8.2 IRM, p. 168
Examination Questions: Essay Cognero
Examination Questions: Multiple-Choice Cognero
Examination Questions: True-False Cognero
PowerPoint Slides Instructor’s website
Note: Additional resources may be found on the accompanying student and instructor websites at
www.cengagebrain.com.
PURPOSE AND PERSPECTIVE

In this chapter, we look at business markets and business buying decision processes. We first discuss
various kinds of business markets and the types of buyers that comprise those markets. Next, we explore
several dimensions of business buying, such as the characteristics of transactions, attributes and concerns
of buyers, methods of buying, and distinctive features of demand for business products. We then examine
how business buying decisions are made and who makes the purchases. Finally, we consider how
businesses rely on technology and the Internet when marketing and building relationships with business
customers.
© 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Visit TestBankBell.com to get complete for all chapters

Chapter 8: Business Markets and Buying Behavior 151
LECTURE OUTLINE
I. Business Markets
A. A business market (also called a business-to-business or B2B market) consists of individuals,
organizations, or groups who purchase a specific kind of product for resale, direct use in
producing other products, or use in general daily operations.
1. Although marketing to businesses employs the same concepts as marketing to ultimate
consumers, there are structural and behavioral differences in business markets.
a. A business marketer must understand how its product affects other organizations in the
marketing channel, such as resellers and other manufacturers.
b. Business products can be technically complex and can have a sophisticated buyer-market.
However, markets can be as small as a few customers.
c. Business marketing is often based on long-term mutually profitable relationships across
members of the marketing channel based on cooperation, trust, and collaboration.
2. For most business marketers, the goal is to understand customer needs and provide a value-
added exchange that focuses on customer retention and relationship development.
B. Producer Markets
1. Producer markets are individuals and organizations which purchase products for the
purpose of making a profit by using these products to produce other products or by using
them within operations.
2. A wide range of industries make up producer markets, including agriculture, forestry,
fisheries, mining, construction, transportation, communication, and utilities see Table 8.1).
C. Reseller Markets
1. Reseller markets consist of intermediaries who buy finished goods and resell them for profit.
2. Resellers do not change the physical characteristics of the product except for occasional
minor alterations.
3. Wholesalers purchase products for resale to retailers, to other wholesalers, and to producers,
governments, and institutions.
4. Retailers purchase products for resale to final consumers.
5. When making purchase decisions, resellers consider several factors.
a. Level of demand to determine quantity and price levels
b. Amount of space required for the product
c. Suppliers’ ability to provide adequate quantities when and where wanted
d. Ease of order placement
e. Availability of technical assistance and training programs
f. A product’s capacity to complement or compete with products the reseller currently
handles
D. Government Markets
1. Government markets include federal, state, county, and local governments that buy goods
and services to support internal operations and provide products to their constituencies.
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152 Chapter 8: Business Markets and Buying Behavior
2. Complex buying procedures necessitated by the government’s public accountability deter

many organizations from selling to government agencies.
3. Government purchases are made through bids or negotiated contracts.
4. When buying complex products, the government often uses a negotiated contract under which
the government selects a few firms and negotiates terms.
E. Institutional Markets
1. Institutional markets are organizations with charitable, educational, community, or other
non-business goals; examples include churches, colleges, hospitals, and civic clubs.
2. Marketers may use special marketing activities to serve institutions because they have
different goals and fewer resources than other markets.
II. Using the North American Industry Classification System to Identify and Assess Business
Customers
A. The North American Industry Classification System (NAICS) is a single industry
classification system used by the United States, Canada, and Mexico to generate comparable
statistics among North American Free Trade Agreement (NAFTA) partners.
1. The NAICS classification is based on the types of production activities performed.
2. NAICS is similar to the International Standard Industrial Classification (ISIC) system
used in Europe and other parts of the world.
3. NAICS divides industrial activity into 20 sectors with 1,170 industry classifications (see
Table 8.2).
4. NAICS also provides more information about the service industry and high-tech
products.
5. Industry classification systems provide a consistent means of categorizing organizations
into groups based on such factors as the types of goods and services provided.
B. A marketer can take several approaches to determine the identities and locations of
organizations in specific groups.
1. One approach is to use state or commercial industrial directories, such as Standard and
Poor’s Register or Dun & Bradstreet’s Million Dollar Directory.
a. These publications contain information such as name, industrial classification,
address, telephone number, and annual sales.
b. Marketers can isolate business customers with industrial classification numbers,
determine locations, and develop lists of potential customers by desired geographic
area.
2. An organization may also employ the services of a commercial data service.
a. This type of service is more expedient, but more expensive.
b. A commercial data company can provide, for every company on an industrial
classification list, its name, location, sales volume, number of employees, types of
products handled, names of executive officers, and other pertinent information.
3. To estimate the purchase potential of business customers or groups of customers, a
marketer must find a relationship between the size of potential customers’ purchases and
a variable available in industrial classification data, such as the number of employees.
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III. Dimensions of Marketing to Business Customers

A. Characteristics of Transactions with Business Customers (see Figure 8.1)
1. Transactions between businesses tend to be much larger than individual consumer sales.
2. Suppliers often must sell products in large quantities to make profits; they prefer to sell to
customers who place large orders.
3. Some business purchases involve expensive items, such as computer systems, while others
require raw materials and component items that must be frequently replenished for use in
production.
4. Discussions and negotiations associated with business purchases can require considerable
marketing time and selling effort.
5. Purchasing decisions are often made by committee, orders are frequently large and expensive,
and products may be custom built.
6. Several people or departments in the purchasing organization may be involved.
7. Business customers look for solutions to reach their objectives. Therefore, suppliers need to
identify and promote their competencies to position their products so as to indicate how they
provide customer value.
8. Reciprocity is a practice whereby two organizations agree to buy from each other. It is
limited to situations where competition is not threatened.
B. Attributes of Business Customers
1. Business customers demand detailed information before buying to be sure products meet the
organization’s needs.
2. They seek psychological satisfaction from organizational advancement and financial rewards.
3. Agents who consistently exhibit rational business-buying behavior are likely to attain
personal goals. They perform in ways which help the organization achieve its objectives.
4. Today, many suppliers and their customers build and maintain mutually beneficial
relationships, sometimes called partnerships.
C. Primary Concerns of Business Customers
1. Price is very important to business customers.
a. Price influences operating cost and costs of goods sold, which in turn affects the selling
price and profit margin, and ultimately the organization’s ability to compete.
b. A business customer views price as the amount of investment necessary to obtain a
certain level of return or savings.
c. However, excellent service and product quality also enter into the decision. A product
with a higher price could yield lower operating costs for the buyer in terms of service and
quality.
2. Level of product quality is also of concern.
a. A product must meet specifications, which are written statements describing a product’s
necessary characteristics, standards of quality, and other information essential to
identifying the best supplier for the needed product.
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b. Obtaining a product which meets but does not exceed specifications is important to avoid
excess costs.
3. Business buyers value service.
a. Services offered by suppliers directly and indirectly influence customers’ costs, sales, and
profits.
b. Typical services that business customers desire from suppliers are market information,
inventory maintenance, on-time delivery, and repair services.
c. Often the mix of services is likely to be the major avenue through which a marketer can
gain a competitive advantage.
d. Typical services desired by consumers include market information, inventory
maintenance, on-time delivery, and repair services.
4. Quality of service is critical because customers have higher service expectations than ever.
a. Marketers should aim for uniformity of service, simplicity, truthfulness, and accuracy.
b. Firms should monitor customer service programs to ensure customers are happy and
therefore remain loyal to the firm.
5. Businesses are increasingly concerned about ethics and social responsibility.
a. Sustainability in particular is rising as a consideration among customers making
purchases. Improvement of environmental performance can indirectly improve financial
performance.
6. Finally, business customers are concerned about the costs of developing and maintaining
relationships with their suppliers.
D. Methods of Business Buying
1. Most business buyers use description, inspection, sampling, or negotiation purchase methods.
2. Description is commonly used when products are standardized to certain characteristics and
are graded according to these standards.
3. Inspection is necessary when items have unique characteristics and vary in condition.
4. Sampling occurs when one item is taken from a lot and is assumed to represent the
characteristics of the entire lot.
5. Negotiation of contracts may be executed through several means.
a. Buyers provide a general description of the desired item.
b. Sellers submit bids and the buyer negotiates terms with those who submit the most
attractive bids.
c. Contracts may specify a base price and provisions for payment of additional costs and
fees.
E. Types of Business Purchases
1. Most business purchases are one of three types: new-task purchase, straight rebuy, or
modified rebuy.
2. In a new-task purchase, the organization makes an initial purchase of an item to be used to
perform a new job or solve a new problem.
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a. A new-task purchase may require development of product specifications, vendor

specifications, and procedures for future purchases; the business buyer usually needs
much information.
b. If business buyers are satisfied with their new-task purchases, suppliers may be able to
sell buyers large quantities of them for many years.
3. A straight rebuy purchase is a routine purchase of the same products with approximately
the same contract terms.
a. For routine purchase decisions, buyers require little information and tend to use familiar
suppliers who have in the past provided satisfactory products.
b. Marketers use automated systems to make reordering easy and convenient for business
buyers.
4. In a modified rebuy purchase, a new-task purchase is changed on subsequent orders or
when the requirements of a straight-rebuy purchase are modified.
a. A business buyer might seek faster delivery, lower prices, or a different quality level of
product specifications.
b. A modified rebuy situation may cause regular suppliers to become more competitive to
keep the account, since other suppliers could obtain the business.
F. Demand for Business Products
1. Derived Demand
a. Derived demand is the demand for business products derived from the demand for
consumer products.
b. Business customers purchase products to be used directly or indirectly in the production
of goods and services to satisfy consumers’ needs.
c. When consumer demand for a product changes, a wave is set in motion that affects
demand for all firms involved in the production of that product.
2. Inelastic Demand
a. Inelastic demand is a demand not significantly altered by a price increase or decrease.
b. When a sizable price increase for a component part represents a large proportion of the
product’s cost, demand may become more elastic; the price increase of the component
part causes the price at the consumer level to rise sharply.
c. The inelasticity characteristic applies to market or industry demand for the business
product, not to the demand from an individual supplier.
3. Joint Demand
a. Joint demand occurs when two or more items are used in combination to produce a
product.
b. Certain business products, like raw materials and components, are subject to joint
demand.
4. Fluctuating Demand
a. The demand for business products may fluctuate enormously because it is derived from
consumer demand.
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b. When a business marketer’s customers change inventory policies, the organization may
notice substantial demand changes.
c. Significant price increases or decreases may lead to surprising short-run changes in
demand.
IV. Business Buying Decisions
A. Business (organizational) buying behavior refers to the purchase behavior of producers,
government units, institutions, and resellers.
B. The Buying Center
1. The buying center is a group of people within an organization, including users, influencers,
buyers, deciders, and gatekeepers, who make business purchase decisions.
a. Users are organizational participants who actually use the product being acquired.
b. Influencers often are technical personnel who help develop the specifications and
evaluate alternative products for possible use.
c. Buyers select the suppliers and negotiate the terms of the purchases.
d. Deciders actually choose the products and vendors.
e. Gatekeepers control the flow of information to and among people who occupy the other
roles in the buying center.
2. The number and structure of an organization’s buying centers are affected by the
organization’s size, its market position, the volume and types of products purchased, and the
firm’s managerial philosophy.
3. A marketer attempting to sell to a business customer should determine who is in the buying
center, the types of decisions each individual makes, and which individuals are most
influential in the decision process.
C. Stages of the Business Buying Decision Process (see Figure 8.2)
1. First stage: One or more individuals in the business recognize that a problem or need exists.
2. Second stage: The development of product specifications requires that buying center
participants assess the problem or need and determine what will be necessary to resolve or
satisfy it.
3. Third stage: This stage involves searching for potential products to solve the problem and
locating suppliers of such products.
a. Some organizations engage in value analysis, an evaluation of each component of a
potential purchase: quality, design, materials, and so on.
b. Some vendors may be eliminated because they cannot supply needed quantities or
because they have poor delivery or service records.
c. A list of products generated in the search stage are evaluated to determine which products
(if any) meet the specifications; the organization uses vendor analysis to evaluate current
and potential suppliers.
4. Fourth stage: Results of deliberations and assessments from stage three are used to select the
product to be purchased and the supplier from which to buy it. The product is ordered.
a. Multiple sourcing is the selection and use of several suppliers.
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b. Sole sourcing is the selection and use of only one supplier.

(1) Sole sourcing has been discouraged except in the cases where a product is only
available from one company.
5. Fifth stage: Product quality and supplier performance is evaluated by comparing it with
specifications. The supplier’s performance is also evaluated at this stage.
D. Influences on the Business Buying Decision Process (see Figure 8.2)
1. Environmental factors are forces, such as competitive and economic factors, political forces,
legal and regulatory factors, technological changes, and sociocultural issues.
2. Organizational factors include the company’s objectives, purchasing policies, and resources
as well as the size and composition of the buying center.
3. Interpersonal factors include the relationships among people within the buying center.
4. Individual factors are the personal characteristics of participants in the buying center, such as
age, personality, education level, tenure, and position within the organization.
(1) Promotion targeted to individuals in the buying center can influence individual decision
making as well.
(2) Personal selling is by far the most important influence of trust in maintaining strong
relationships.
V. Reliance on the Internet and Other Technology
A. The Internet has become a major channel in organizational buying.
1. The Internet allows buyers to research potential solutions, talk with peers about their
experiences with those products, read blogs, consult webinars and watch YouTube videos,
examine specifications, and even find reviews of potential products long before beginning a
formal buying process.
a. Interactions with a sales representative may occur much later in the process than in
the past.
b. Marketers should ensure that they post informative content through blogs, webinars,
videos, eBooks, whitepapers, and even responses to forum queries with a variety of
information about how their products might solve customers’ problems or address their
needs.
2. For most firms, online marketing efforts make the buying process far more efficient because
it saves time and reduces costs.
3. Businesses are increasingly turning to B2B E-commerce sites, which serve as online
marketplaces where buyers and sellers from around the world can exchange information,
goods, services, ideas, and payments.
a. Independent sites act as a neutral third party and charge a fee for providing a trading
forum.
b. Private B2B exchanges connect member firms, who typically share supply chains or
complex customers, through a secure system that permits all the organizations to share
significant information as well as facilitate exchanges.
4. Businesses may also turn to online auctions to find products.
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DISCUSSION STARTERS
Discussion Starter 1: Self-Regulation Helps to Manage Supplier Diversity
ASK: When corporations and institutions make a special effort to encourage supplier diversity, how
should “diversity” be defined?
Many large corporations encourage supplier diversity by reaching out to businesses that are small or
owned by veterans, women, or members of minority groups. Although small businesses that meet
“supplier diversity” qualifications don’t automatically receive orders—they must compete, just like every
other supplier—such programs help them get a foot in the door.
Can “diversity” cover too many or too few suppliers? At Kroger, the supermarket company, diversity
suppliers must be at least 51 percent owned by a U.S. citizen who is Hispanic, African American, Asian-
Indian, Asian-Pacific, Native American, female, gay or lesbian, bisexual, transgender, a military veteran,
or a disabled military veteran. Suppliers must also be certified by a recognized group such as the National
Minority Supplier Development Council or the U.S. Department of Veteran Affairs. For Dell, the
computer company, diversity extends to small businesses owned by socially or economically
disadvantaged people and to small businesses located in underutilized business zones, as designated by
the U.S. Small Business Association.
ASK: Are these programs going too far or not far enough in providing potential opportunities for
suppliers? Should diversity extend to businesses owned by teens, seniors, families, and first-time
entrepreneurs?
Discussion Starter 2: The Products You Depend on from the Firms You Have Never Heard of
ASK: Have you ever thought about where the products you consume come from?
Many of us will purchase a loaf of bread or a candy bar and never think about how it was made or the
origination of the ingredients. Yet, each product we purchase contains a variety of input goods.
Cargill supplies product ingredients that are common in processed foods you consume every day. It is
perhaps the largest company you may never have heard of.
http://www.cargill.com/
Cargill is one of the world’s largest ingredient makers for food products. It processes flour, sugar, corn
and other ingredients for food production, as well as biofuels and pharmaceuticals.
Discussion Starter 3: Government Purchasing

ASK: What types of goods and services do governments purchase?
Governments, being extremely large institutions, require a wide variety of goods and services.
Governments must purchase everything from food and clothing, to aircraft parts, to education and
training services. All of these products and services must be purchased and distributed to the various
government agencies and entities.
The purchasing power of a government agency may be greatly increased through cooperative
purchasing agreements. These agreements may include local entities, agencies, or other buying
groups determined by the government. Organizations like U.S. Communities
(http://www.uscommunities.org/) help facilitate those agreements.
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Discussion Starter 4: Business-to-Business Marketing and Universities

Recommended as a group activity
In this chapter we examined the world of business-to-business marketing and learned that all types of
organizations engage in marketing, even if they do not directly market to consumers. In this exercise we
will look at how universities acquire goods and services to deliver their product to the marketplace.
Step 1: Visit http://www.dartmouth.edu/~control/departments/procurement/
Step 2: Click on the Category/Buyer Listing link on the website. Are you surprised by any of the items on
the list?
Step 3: If your organization wanted to market to universities, what recommendations would you make?
Step 4: Increasingly, sustainability is a challenge on campuses. How do you think Dartmouth addresses
sustainability through its purchasing practices? You might want to have students check out Dartmouth’s
sustainability page at dartmouth.edu/life-community/sustainability.
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CLASS EXERCISES
Class Exercise 1: Business Buying Behavior vs. Consumer Buying Behavior
The objective of this class exercise is to show students that business buying behavior has many
similarities to consumer buying behavior.
Prompt for Students:
Although business buying behavior might seem quite different from your buying behavior, the two are
more similar than you may think. As you answer the following questions, think about how similar or
dissimilar the business buying process is to your own.
1. When you buy a new shirt, hair dryer, MP3 player, television, or car, which of the following criteria
is important to you?
Quality Service
Product information Repair services
Product availability Credit
On-time delivery Price
2. Give examples of products that you buy (or may buy) based on
Description Inspection
Sampling Negotiation
3. Match the business purchase situation with the consumer goods buying situation. How or why are
they related?
New-task purchase Limited decision making
Modified rebuy Routine decision making
Straight rebuy Extended decision making
4. How is the buying center of a business similar to the following purchasing roles that family
members play?
Users Influencers
Buyers Deciders
Gatekeepers
Answers:
1. If you ask enough students, you will eventually have all of these criteria listed. Although businesses
are more likely to develop formal written specifications about these concerns, final consumers also
find these to be important concerns for nearly any high-involvement product category.
2. Examples might include the following:
• Description: mail-order products (clothing, personal computers)
• Inspection: car, furniture, house, or any used item
• Sampling: grocery food items, mail samples, ice cream
• Negotiation: car, house, or any used item
3. The situations roughly match as follows:
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• New-task purchase: Extended decision making

• Modified rebuy: Limited decision making
• Straight rebuy: Routine decision making
4. You might want to ask “Who plays what roles in the family when a Wii video game console is
purchased?” Children (and perhaps their parents) are the users and influencers. The mother may be
the decider and the father the buyer. Older children may be the gatekeepers who control the flow of
information to the parents. Grandparents might also be the buyers, while the parents may play the
roles of deciders and gatekeepers. The point is that, to be successful, marketers must target the entire
buying center (or family). Focusing an entire sales presentation on the user may not be effective if the
decider is not persuaded.
Class Exercise 2: Inspection Methods

The purpose of this exercise is to allow students to demonstrate their understanding of different
purchasing methods. Business purchases can be made by several methods, including description,
inspection, sampling, and negotiation. Which method is most often used for each of the following
products?
Question Answer
1. Grain sampling
2. Used vehicles inspection
3. Office space inspection, negotiation
4. Oranges description, sampling
5. Bulldozer negotiation
6. Computer and printer inspection
7. Office furniture inspection
8. Pens and pencils description
9. Eggs description
10. Assembly line equipment inspection, negotiation
Class Exercise 3: Characteristics of Business Customers and Transactions

Bombardier specializes in planes and trains. This Canadian company’s primary markets are governments
and businesses that purchase railroad and airplane related products. Bombardier also markets corporate
jets under the names of Learjet, Challenger, and Global. Bombardier markets their products’ fuel
efficiency, low operating costs, and other benefits.
1. Which business markets does Bombardier seem to focus on? There may be more than one
answer.
2. What do you think is the most important concern of Bombardier’s customers: price, quality,
service, or supplier relationships?
Answers:
1. Bombardier sells to government and producer markets.
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2. Students might be able to argue for a few of these answers, but probably the best one is quality.
Because of the industry, it is important to have a product that works well and is durable. Price
might also be a major consideration, but probably trails quality in importance. Bombardier does
emphasize the low operating costs of its products.
Class Exercise 4: Attributes of Demand for Business Products

There are four types of demand for business products: derived, inelastic, joint, and fluctuating. Look at
the following situations. Categorize each according to its demand.
1. A manufacturer of snow tires provides a discount on its products during the summer months.
What type of demand is this?
2. A grocery store is running low on hamburger buns. They must order more to keep up with
demand. Hamburger buns illustrate what type of demand for businesses?
3. Fleetwood, an RV manufacturer, is constructing its newest model of RV. The windshield wipers
for the RV have risen in price. What type of demand applies to this product?
4. Sales of computers are increasing. Intel markets its computer chips to computer manufacturers
worldwide. Describe the type of demand for its computer chips.
Answers:
1. Fluctuating—snow tires are in low demand in the summer, high demand in the winter.
2. Joint—hamburger buns go with purchases of hamburgers.
3. Inelastic—the rising price of windshield wipers probably won’t have much of an effect on the
construction of RVs.
4. Derived—as end consumers buy more computers, there is a greater demand for computer
chips like what Intel sells to make the computers.
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SEMESTER PROJECT
Chapter 8 explains that different types of organizations market to each other. Business-to-business
marketing offers a wealth of career opportunities to marketing students. In this exercise, explore the
opportunities within this field.
Step 1: A frequent position within B2B marketing is purchasing manager. In this step, research the
position of purchasing manager. What types of firms hire purchasing managers?
Step 2: Many students do not consider the U.S. Government as a source for marketing positions, yet both
the Federal and State governments hire marketers. In this step, explore opportunities in the U.S.
Government. Visit http://www.usajobs.gov/.
Step 3: Write a brief description about the position of purchasing manager. Describe the training you
would need to become a purchasing manager. Also, list three potential job sources for purchasing
managers.
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ANSWERS TO DEVELOPING YOUR MARKETING PLAN

The information obtained from these questions should assist students in developing various aspects of
your marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com.
1. What are the primary concerns of business customers? Could any of these concerns be
addressed with the strengths of your company?
Marketing to business customers involves the same groups and the same purposes, but there are
some key differences. A company that markets to another company must understand how its product
will affect other firms in the marketing channel, such as resellers and other manufacturers. Business
products can also be technically complex, and the market often consists of sophisticated buyers.
Because the business market consists of relatively smaller customer populations, a segment of the
market could be as small as a few customers. The first question also asks students if any of these
concerns can be addressed with strengths of their companies. Student responses will vary on this
question.
2. Determine the type of business purchase your customer will likely be using when purchasing
your product. How would this impact the level of information required by the business when
moving through the buying decision process?
The answers to this question will be as varied as the students’ products.
3. Discuss the different types of demand that the business customer will experience when
purchasing your product.
Again, the answers to this question will be as varied as the students’ products. Students can refer to
Figure 8.1 when seeking to answer this question.
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ANSWERS TO DISCUSSION AND REVIEW QUESTIONS

1. Identify, describe, and give examples of the four major types of business markets.
The four major types of business markets are producer markets, reseller markets, government
markets, and institutional markets.
The producer market consists of individuals and business organizations that purchase products to
make a profit by using them to produce other products or by using them in their operations. Farmers
are a producer market because they purchase farm machinery, fertilizer, seed, and livestock to carry
out their tasks.
The reseller market consists of intermediaries, such as wholesalers and retailers who buy finished
goods and resell them to make a profit. Sears is an example of a reseller.
Government markets consist of federal, state, county, and local governments which, taken together,
annually spend billions of dollars for goods and services to support internal operations and their
constituencies.
Institutional markets are organizations which seek to achieve goals other than the normal business
goals of profit, market share, or return on investment.
2. What function does an industrial classification system help marketers perform?
An industrial classification system is a ready-made tool which allows marketers to divide
organizations into groups based on the types of goods and services provided.
3. Why might business customers generally be considered more rational in their purchasing
behavior than ultimate consumers?
Business customers usually seek and obtain more information about the product before purchasing
than do ultimate consumers. They may give special attention to information about the product’s
functional features, specifications, and technical attributes. Most business customers seek
advancement within the organization and greater financial and psychological rewards. Business
buyers attain personal goals by performing the purchasing function in a way which helps their
organization achieve organizational objectives.
4. What are the primary concerns of business customers?
A business customer’s primary considerations when making purchasing decisions fall within the areas
of price, product quality, service, and supplier relationships. Price influences operating costs and costs
of goods sold, which affect the selling price and profit margin. Quality level is maintained by
purchasing a product which meets a set of delineated characteristics called specifications. Products
which exceed specifications may cost more without providing an offsetting benefit. A supplier’s’
service to business customers influences these customers’ costs, sales, and profits. Some of the most
commonly desired services include market information, maintaining an inventory, on-time delivery,
repair services, and replacement parts. Open communication channels are also important. Businesses
are also increasingly concerned about ethics and social responsibility. Finally, business customers are
concerned about the costs of developing and maintaining relationships with their suppliers.
5. List several characteristics that differentiate transactions involving business customers from
consumer transactions.
Business-customer transactions differ from consumer transactions in several ways. Orders tend to be
larger, there are longer negotiation periods, reciprocity sometimes plays a role in the process, and
business customers tend to be more informed about the products they purchase.
6. What are the commonly used methods of business buying?
classroom use.
Most business customers use one or more of the following methods: description, inspection,
sampling, and negotiation. Standardized products may be purchased on the basis of a description of
desired characteristics. Certain products, especially those which are large, expensive, and have unique
characteristics, require inspection by the purchasers before a decision is reached. When buying
decisions are based on sampling, the purchaser assumes the sample product taken from the lot is
representative of the entire lot. Negotiated contracts occur when sellers submit bids and the buyer
discusses terms with those who submit the most attractive bids.
7. Why do buyers involved in straight rebuy purchases require less information than those
making new-task purchases?
The straight rebuy purchase is a routine procedure. The specifications and terms are set and all major
problems are resolved. Conversely, a new-task purchase requires the business to develop product
specifications, vendor specifications, and procedures for future purchases before an initial purchase.
8. How does demand for business products differ from consumer demand?
Demand for business products differs from consumer demand in that it is (a) derived, (b) inelastic, (c)
joint, or (d) fluctuating.
9. What are the major components of a firm’s buying center?
The major components or roles of a buying center are users, influencers, buyers, deciders, and
gatekeepers. One person may perform several of these roles.
10. Identify the stages of the business buying decision process. How is this decision process used
when making straight rebuys?
The stages of the business buying decision process are (1) recognizing the problem, (2) establishing
product specifications to solve the problem, (3) searching for products and suppliers and evaluating
products with respect to specifications, (4) selecting and ordering the most appropriate product, and
(5) evaluating product and supplier performance. This decision process is not used for routine,
straight rebuy purchases.
11. How do environmental, business, interpersonal, and individual factors affect business
purchases?
The influence of these factors varies depending on different factors such as different buying
situations; the type of product being purchased; and whether the purchase is new-task, modified
rebuy, or straight rebuy.
12. How has the Internet facilitated the organizational buying process?
Whereas in the past, an organization seeking a type of product might contact product suppliers, speak
with someone on the sales force, and request a catalog or brochure, business customers today first
turn to the Internet to search for information and find sources. The Internet has become a major
channel in organizational buying. The Internet allows buyers to research potential solutions through
its vast resources, and interactions with a sales representative now may occur much later in the
process than in the past. Increasingly, business are turning to B2B E-commerce sites, which serve as
online marketplaces where buyers and sellers around the world can exchange information, goods,
services, ideas, or payments.
classroom use.
COMMENTS ON THE CASES

VIDEO CASE 8.1: WILL APPLE PAY PAY OFF FOR RETAILERS?
Summary
This case discusses Apple’s introduction of its mobile payment Apple Pay and how it depends on a large
network of retailers, restaurants, and other businesses agreeing to accept its mobile payments.
McDonald’s and Walgreen’s were among the first businesses to sign up. They recognized that more and
more of their customers are paying using mobile devices and believe Apple Pay will be convenient for
their customers. Several thousand businesses have signed on with Apple Pay. However, not every retailer
is signing on. Some businesses do not like how much consumer information Apple shares with
participating merchants. Others are locked into agreements with other mobile payment services or do not
want to upgrade to new checkout technology. Apple Pay is also facing competition from rivals such as
Samsung and Google.
Questions for Discussion
1. When a retailer is considering whether to participate in Apple Pay, is the decision process like a
new-task purchase, a straight rebuy purchase, or a modified rebuy purchase? Explain your
answer.
The decision process for a retailer considering Apple Pay is unlike other decisions that are routinely
made. It requires a lot of information input and analysis before the decision can be made. The case
says that retailers must sometimes upgrade checkout technology or check whether competing mobile
payment systems will conflict. As a result, each retailer will have to check specifications for adopting
Apple Pay before making the decision. This type of purchase is therefore like a new-task purchase.
2. Which of the four categories of business markets is Apple Pay best suited for, and why?
Apple Pay is best suited for reseller markets, which are intermediaries that resell finished goods.
Specifically, retailers (including restaurants and gas stations) whose customers are consumers are the
market that Apple Pay is pursuing. These businesses want to satisfy their customers by making
payments both convenient and speedy. Institutional markets do not generally emphasize speed and
convenience in payments for services or donations. However, charitable groups and educational
institutions may be prospects for Apple Pay, because they want to encourage convenient donations
(charity) or speed purchase transactions (school book stores and cafés). Government markets are not
as well suited to Apple Pay. Although they do accept payments, speed and convenience aren’t usually
the top criteria for determining which payment methods to offer citizens. Finally, producer markets
usually sell to other businesses, which means the consumer-oriented Apple Pay isn’t appropriate for
their customers’ needs.
3. Which environmental influences on the decision process seem to have been most important to
McDonald’s when it decided to honor Apple Pay?
McDonald’s took competitive factors into account when deciding to honor Apple Pay. It wants to
make transactions as fast and easy as possible so customers in a hurry don’t switch to
competitors. Being among the first businesses to accept Apple Pay could also be considered a
competitive advantage, at least for a time. Economic factors were clearly important, with the
McDonald’s executive mentioning the sheer size of the market as a “clear and compelling
business opportunity.” Another economic factor was that Apple Pay transactions will cost
McDonald’s a few pennies more to process than cash transactions. Still, the company realized
that the profit potential in speedy checkout outweighs the transaction cost. Sociocultural iss ues
(such as the prevalence of iPhone users in the U.S. market) and technological changes (the ease
and speed of mobile payments) were both involved in this decision.
classroom use.
Solution Manual for Marketing 2018, 19th Edition, William M. Pride, O. C. Ferrell
CASE 8.2: GENERAL ELECTRIC GOES SOCIAL TO REACH

BUSINESS BUYERS
Summary
The marketing strategy of General Electric, the global leader in equipment, software, and services for
many industries, is discussed in this case. Due to the large size of this company and the amount of
customers it serves, it is important for GE to communicate effectively. To provide factual
information about products, GE has included a large amount of online data and has ensured that there
are always technical personnel available for assistance. GE has increased its social media marketing
by launching a virtual science fair and many other popular campaigns that have gone viral. GE is also
an Olympic Games sponsor who provides a wide range of goods and services for this large event.
Through these examples, GE has taken many steps to increase brand awareness and maintain
customer satisfaction.
Questions for Discussion
1. Why is GE’s involvement with the Olympics a good way to show that the company
understands the primary concerns of business customers?
Two primary concerns of business customers are product quality and service. By providing goods
and services for the Olympic Games, GE shows that the quality of its products meets the high
standards of a high-profile global event. GE also demonstrates that it can provide the kind of
responsive service a business customer would expect from a world-class supplier to the
Olympics. Students may suggest other responses, as well.
2. How does derived demand apply to the demand for passenger-jet engines? What are the
implications for GE’s marketing efforts?
Demand for passenger-jet engines purchased by airlines is related to demand for consumer air
travel. When demand for consumer air travel is up, demand for jets and engines (such as those
made by GE) tend to be higher. As a result, GE will want to have appropriate marketing effort s in
place as consumer demand starts to increase, so it is visible and available when airlines recognize
that they need aircraft, formulate specifications for engines, and search for suppliers. Of course,
GE should not halt its marketing when consumer air travel is low, because it wants to keep its
name and products in front of potential buyers even before they are researching a purchase.
3. In which stage of the business buying decision process is GE’s reputation likely to have the
most influence on a railroad that is considering the purchase of new locomotives?
GE’s reputation is especially important during the stage of the business buying decision process
when customers are searching for and evaluating possible suppliers. If GE has a good reputation,
railroads will at least consider buying its locomotives. On the other hand, if GE has a bad
reputation (because of poor service or other problems), potential customers might eliminate the
company from consideration and concentrate on suppliers with better reputations. Reputations
take time to earn but can be lost very quickly. Ask students to suggest what steps GE might take
to further polish its reputation among railroads that buy locomotives.
classroom use.
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PURPOSE AND PERSPECTIVE

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2. Complex buying procedures necessitated by the government’s public accountability deter

III. Dimensions of Marketing to Business Customers

a. A new-task purchase may require development of product specifications, vendor

b. Sole sourcing is the selection and use of only one supplier.

Discussion Starter 3: Government Purchasing

Discussion Starter 4: Business-to-Business Marketing and Universities

• New-task purchase: Extended decision making

Class Exercise 2: Inspection Methods

Class Exercise 3: Characteristics of Business Customers and Transactions

Class Exercise 4: Attributes of Demand for Business Products

ANSWERS TO DEVELOPING YOUR MARKETING PLAN

ANSWERS TO DISCUSSION AND REVIEW QUESTIONS

COMMENTS ON THE CASES

168 Chapter 8: Business Markets and Buying Behavior

CASE 8.2: GENERAL ELECTRIC GOES SOCIAL TO REACH

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