Marketing Management 13th Edition Kotler Test Bank

Marketing Management 13th Edition
Kotler Test Bank

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Chapter 7: Analyzing Business Markets
GENERAL CONCEPT QUESTIONS
Multiple Choice
1. To create and capture value, sellers need to understand business organizations’ needs,
resources, policies, and ________.
a. demands
b. protocols
c. strategies
d. buying procedures
e. personnel policies
Answer: d Page: 181 Difficulty: Easy
2. Webster and Wind define ________ as the decision-making process by which formal
organizations establish the need for purchased products and services and identify,
evaluate, and choose among alternative brands and suppliers.
a. marketing channels
b. organizational buying
c. demand-oriented buying
d. purchasing
e. inventory control
Answer: b Page: 182 Difficulty: Medium AACSB: Analytic Skills
3. The ________ consists of all the organizations that acquire goods and services used
in the production of other products or services that are sold, rented, or supplied to
others.
a. business market
b. consumer market
c. e-commerce market
d. global market
e. supplier market
Answer: a Page: 182 Difficulty: Medium AACSB: Analytic Skills
4. Business markets differ significantly consumer markets in that business markets

possess all of the following characteristics EXCEPT ________.
a. fewer, larger buyers
b. close supplier–customer relationship
c. professional purchasing
d. inverted demand
e. multiple sales calls
Answer: d Pages: 182–185 Difficulty: Hard AACSB: Reflective Thinking
170 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

5. All of the following would be among the major industries that make up the business
market EXCEPT ________.
a. agriculture, forestry, and fisheries
b. manufacturing
c. construction
d. banking, finance, and insurance
e. the Internet
Answer: e Page: 182 Difficulty: Hard
6. The business marketer normally deals with ________ buyers than the consumer
marketer does.
a. more and larger
b. more and smaller
c. fewer and larger
d. fewer and smaller
e. the same number of
Answer: c Page: 182 Difficulty: Medium AACSB: Analytic Skills
7. Trained purchasing agents, who must follow their organization’s ________, often
purchase business goods.
a. culture
b. past purchasing history
c. purchasing policies, constraints, and requirements
d. needs
e. financial budgets
Answer: c Pages: 183–184 Difficulty: Medium
8. There are a series of guidelines for selling to small businesses. Which of the
following should NOT be among those guidelines?
a. Don’t waste their time.
b. Do keep it simple.
c. Do use the Internet.
d. Don’t forget about direct contact.
e. Do lump small and midsize businesses together for efficiency sake.
Answer: e Page: 184 Difficulty: Medium AACSB: Reflective Thinking
9. Ultimately, the amount of steel sold to General Motors depends on the consumer’s
demand for GM cars and trucks. From the standpoint of the steel manufacturer, which
of the following demand forms is most pertinent?
a. Derived demand
b. Inelastic demand
c. Geographic demand
d. Relational demand
e. Static demand
Answer: a Page: 185 Difficulty: Hard AACSB: Reflective Thinking
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 171

Part 3: Connecting with Customers
10. The demand for business goods is ultimately derived from the demand for ________.
a. raw materials
b. consumer goods
c. electronics
d. business solutions
e. e-commerce
Answer: b Page: 185 Difficulty: Easy
11. A given percentage increase in consumer demand can lead to a much larger
percentage increase in the demand for plant and equipment necessary to produce the
additional output. Economists refer to this as the ________.
a. derived demand
b. inelastic demand
c. acceleration effect
d. straight rebuy
e. sales cycle
12. The total demand for many business goods and services is ________ —that is, not
much affected by price changes.
a. derived
b. fluctuating
c. accelerated
d. multiple
e. inelastic
Answer: e Page: 185 Difficulty: Medium AACSB: Analytic Skills
13. The business buyer faces many decisions in making a purchase. The number of
decisions depends on the buying situation. All of the following contribute to the
number of decisions required EXCEPT the ________.
a. complexity of the problem being solved
b. newness of the buying requirement
c. number of people involved
d. applicability of situation to mission statement
e. time required
Answer: d Page: 185 Difficulty: Hard AACSB: Reflective Thinking
14. The purchasing department buys office supplies on a routine basis. This type of
purchase is classified as a ________.
a. straight rebuy
b. modified rebuy
c. new task
d. secondary purchase
e. preordained purchase
Answer: a Page: 185 Difficulty: Easy AACSB: Analytic Skills

15. Purchasing a new security system or renting a new office building is best
characterized as a ________.
a. modified rebuy
b. regular buy
c. straight rebuy
d. new rebuy
e. new task
Answer: e Page: 185 Difficulty: Medium
16. In a ________ purchasing situation, the buyer wants to make some change to existing
product specifications, prices, delivery requirements, or other terms.
a. modified rebuy
b. regular buy
c. straight rebuy
d. new rebuy
e. new task
17. The business buyer makes the fewest decisions in the ________.
a. modified rebuy
b. regular buy
c. straight rebuy
d. new rebuy
e. new task
Answer: c Page: 186 Difficulty: Medium
18. Many business buyers prefer to buy a total solution to a problem from one seller.
________ is the correct term for this process.
a. Channel consolidation
b. Systems buying
c. Vertical buying
d. Horizontal buying
e. Supply buying
19. In order to successfully develop customer reference stories, firms should ________.
a. state the customer’s needs in compelling terms
b. use very few direct customer quotes
c. avoid referencing the barriers to satisfying customer needs
d. describe the company’s solution in terms of products and services
e. focus on qualitative results
Answer: a Page: 187 Difficulty: Medium AACSB: Reflective Thinking

20. Xerox offers a ________ approach to prospective clients when it offers a complete
turnkey solution, including the operation and management of the client’s information
and communication need.
a. supply buying
b. primary buying
c. systems buying
d. co-op buying system
e. direct buying
21. If Ampex Support Systems is the single supplier for a local manufacturing company’s
MRO (maintenance, repair, operating) supplies and needs, Ampex Support Systems is
considered as providing ________ for the manufacturer.
a. systems buying
b. purchasing support
c. turnkey logistics
d. decision support
e. systems contracting
Answer: e Page: 187 Difficulty: Hard AACSB: Analytic Skills
22. ________ is a key industrial marketing strategy in bidding to build large-scale

industrial products (e.g., dams, pipelines, et cetera).
a. Systems contracting
b. Systems buying
c. Systems selling
d. Solutions buying
e. Turnkey logistics
Answer: c Page: 187 Difficulty: Hard AACSB: Reflective Thinking
23. ________ is composed of all parties who participate in the purchasing decision-
making process and share common goals and risks associated with their decisions.
a. The buying center
b. The marketing sales team
c. Strategic management
d. Engineering support
e. The logistics center
24. In the purchasing decision process, the ________ are those who request that
something be purchased. They may be users or others in the organization.
a. users
b. initiators
c. influencers
d. deciders
e. approvers
Answer: b Page: 188 Difficulty: Easy

25. In the purchasing decision process, the ________ are those who have the power to
prevent sellers or information from reaching members of the buying center.
a. gatekeepers
b. buyers
c. initiators
d. approvers
e. deciders
26. In the purchasing decision process, the major role of ________ is in selecting
vendors and negotiating.
a. gatekeepers
b. buyers
c. initiators
d. approvers
e. deciders
27. The typical buying center has a minimum of ________ members.

a. 2–3
b. 3–4
c. 4–5
d. 5–6
e. 10
Answer: d Page: 188 Difficulty: Hard
28. Webster cautions that ultimately, ________ make purchasing decisions.

a. only senior managers
b. individuals, not organizations,
c. organizations, not individuals,
d. third parties
e. systems contractors
Answer: b Page: 189 Difficulty: Medium AACSB: Reflective Thinking
29. Business buyers are ultimately purchasing solutions to two problems: the
organization’s economic and strategic problem and ________.
a. their own personal need for individual achievement and reward
b. the community’s continued health and well-being
c. the fulfillment of the company’s social impact goals
d. to maximize overall firm performance
e. none of the above

30. Small sellers should concentrate their marketing efforts on reaching ________.
a. approvers
b. initiators
c. key buying influencers
d. users
e. the purchasing staff
Answer: c Page: 190 Difficulty: Medium AACSB: Reflective Thinking
31. In principle, business buyers seek to ________ in relation a market offering’s costs.
a. spread risks
b. obtain the highest benefit package
c. maintain everyday low prices
d. outsource as much as is possible
e. eliminate partners’ shares in profits as much as possible
Answer: b Page: 191 Difficulty: Hard AACSB: Reflective Thinking
32. In the past, what position did purchasing departments hold in the management
hierarchy of most organizations?
a. A high level because of their role in managing the company’s costs
b. A moderate level because of their spotty record on controlling costs
c. A low level despite managing more than half of the company’s costs
d. A secretive position
e. There has been no determination of this position.
Answer: c Page: 191 Difficulty: Hard
33. The new, more strategically oriented purchasing departments have a mission. Which
of the following most accurately describes that mission?
a. Make the most profit possible and remain independent of entanglements.
b. Approach every purchasing opportunity as means to create interdependency.
c. Seek the best value from fewer and better suppliers.
d. Outsource the supply function.
e. Abandon all strategies except for systems selling and buying.
34. Most purchasing professionals describe their jobs as more ________, technical, team
oriented, and involving more responsibility than ever before.
a. risky
b. strategic
c. ethically difficult
d. Web based
e. human based
Answer: b Page: 192 Difficulty: Hard

35. Robinson and his associates have identified eight stages and called them buyphases.
This model is called the ________ framework.
a. buygrid
b. buying/selling
c. seller-centered
d. commercial
e. buy-analysis
36. The first step (buyphase) in the straight rebuy buyclass is ________.
a. problem recognition
b. general need description
c. product specification
d. supplier search
e. proposal solicitation
Answer: c Page: 192 Difficulty: Hard AACSB: Analytic Skills
37. A new-task buyclass decision begins with which of the following buyphases?
a. Problem recognition
b. General need description
c. Product specification
d. Supplier search
e. Proposal solicitation
Answer: a Page: 192 Difficulty: Medium
38. Business marketers can stimulate problem recognition by ________.

a. trade directories
b. direct mail, telemarketing, and calling on prospects
c. encouraging the Better Business Bureau to release statistics
d. consumer advertising
e. requesting testimonials from existing customers
39. With respect to e-procurement, Coca-Cola, Sara Lee, Kraft, PepsiCo, P&G, and
several other companies joined forces to form a ________ called Transora to use their
combined leverage to obtain lower prices for raw materials.
a. manufacturer’s co-op
b. supplier’s co-op
c. middleman group
d. buying alliance
e. cabal
Answer: d Page: 194 Difficulty: Medium

40. Identifying good leads and converting them to sales requires the whole marketing and
sales organization to work in a coordinated, multichannel approach in the role of
________ to prospective customers .
a. product specification
b. price de-escalation
c. systems selling
d. trusted advisor
e. strategic alliance
Answer: d Page: 194 Difficulty: Medium AACSB: Reflective Thinking
41. With respect to e-procurement, Web sites are organized around two types of e-hubs:
________.
a. vertical and horizontal hubs
b. vertical and functional hubs
c. functional hubs and organizational hubs
d. supplier and user hubs
e. manufacturer and supplier hubs
Answer: b Page: 194 Difficulty: Hard AACSB: Analytic Skills
42. Moving into e-procurement has many benefits. Which of the following would not be
among those benefits?
a. Aggregating purchasing across departments gains larger volume discounts.
b. Aggregating purchasing gains centrally negotiated volume discounts.
c. There is less buying of substandard goods from suppliers not on the approved list.
d. A smaller purchasing staff is required.
e. Purchasing gains a significant leverage with top management because of its
management team.
Answer: e Page: 194 Difficulty: Hard AACSB: Reflective Thinking
43. In the proposal solicitation process, ________ should be marketing documents that
describe value and benefits in customer terms.
a. written proposals
b. oral proposals
c. e-proposals
d. alliance proposals
e. global proposals
44. As an alternative to reducing price, sellers may handle price-oriented buyers by

establishing any of the following purchasing conditions EXCEPT ________.
a. limiting the quantity that can be purchased
b. no refunds
c. no adjustments
d. no services
e. no customer advertising

45. The ________ approach to consumer research asks customers to attach a monetary
value to alternative levels of a given attribute. The value of a given configuration is
determined by adding the average values of each of the given attributes.
a. benchmarking
b. compositional
c. importance rating
d. focus-group
e. conjoint analysis
46. All of the following are methods of assessing customer value EXCEPT ________.
a. direct survey questions
b. exit interviewing
c. focus-group value assessment
d. conjoint analysis
e. benchmarks
47. A supplier signs an agreement with a customer that states $350,000 in savings will be
earned by the customer over the next 18 months in an exchange for a tenfold increase
in the customer’s share of supplies ordered by the customer. This is an example of
________.
a. solution selling
b. consultative selling
c. risk and gain sharing
d. strategic alignment
e. demand shifting
48. Using the ________ form of solution selling, W.W. Grainger employees work at
large customer facilities to reduce materials-management costs.
a. solutions to partnerships
b. solutions to alter corporate culture
c. solutions to enhance customer revenues
d. solutions to decrease customer risks
e. solutions to reduce customer costs
49. Which of the following would NOT be among those advantages gained through
leasing heavy equipment such as machinery and trucks, rather than purchasing it?
a. Higher-quality products
b. Conserving capital
c. Getting the latest products
d. Receiving better service
e. Some tax advantages

50. Several major companies regard ________ as a major responsibility of their

purchasing managers.
a. forming networks for future business
b. assuring quality conformance
c. being fair with all parties
d. using a team approach in negotiations
e. long-term supply planning
51. Which of the following methods may be used by buyers to review the performance of
chosen suppliers?
a. The buyer may contact the end users and ask for their evaluations.
b. The buyer may rate the supplier on several criteria using a weighted-score
method.
c. The buyer might aggregate the cost of poor performance to come up with adjusted
costs of purchase, including price.
d. All of the above
e. None of the above
Answer: d Page: 198 Difficulty: Medium AACSB: Analytic Skills
52. Which of the following reflects high trust between business sellers and buyers?
a. Distorted and hidden information
b. Incentive alignment for seller, not customer gains
c. Limited or biased product comparisons and advice
d. Minimal customer education and support
e. Customers help design products individually and through committees
53. Research has found that buyer–suppler relationships differed according to four
factors. Which of the following would NOT be among those factors?
a. Importance of supply
b. Complexity of supply
c. Availability of alternatives
d. Supply market dynamism
e. Demand market conservatism
54. Which of the following relationships is characterized as being one that has much trust
and commitment leading to a true partnership?
a. Mutually adaptive
b. Collaborative
c. Basic buying and selling
d. Customer supply
e. Cooperative systems

55. In the ________ category of buyer–supplier relationship, although bonded by a close,

cooperative relationship, the seller adapts to meet the customer’s needs without
expecting much adaptation or change on the part of the customer in exchange.
a. contractual transaction
b. cooperative system
c. collaborative
d. mutually adaptive
e. customer is king
56. In the ________ category of buyer–supplier relationships, competition rather than

cooperation is the dominant form of governance.
a. basic buying and selling
b. bare bones
c. contractual transaction
d. customer supply
e. collaborative
57. Vertical coordination may increase the risk to consumer’s and supplier’s ________
(e.g., those expenditures tailored to a particular company and value chain partner).
a. logistics channel
b. independent operations
c. specific investments
d. leverage ability
e. liquidity situation
58. When buyers cannot easily monitor supplier performance, the supplier might shirk or
cheat and not deliver the expected value. ________ is “some form of cheating or
undersupply relative to an implicit or explicit contract.”
a. Institutional sale
b. Opportunism
c. Business buying
d. Vertical integration
e. Contractual transactionism
Answer: b Page: 202 Difficulty: Medium
59. The ________ market consists of schools, hospitals, nursing homes, prisons, and
other institutions that must provide goods and services to people in their care.
a. vertical
b. nonprofit
c. spot
d. secondary business
e. institutional

60. In most countries, ________ are the major buyers of goods and services.
a. consumer packaged-goods companies
b. government organizations
c. health services vendors
d. educational institutions
e. households
Answer: b Page: 203 Difficulty: Medium
True/False
61. Webster and Wind define organizational buying as the decision-making process by
which formal organizations establish the need for purchased products and services
and identify, evaluate, and choose among alternative brands and suppliers.
Answer: True Page: 182 Difficulty: Easy AACSB: Analytic Skills
62. More dollars and items change hands in sales to business buyers than to consumers.
Answer: True Page: 182 Difficulty: Medium
63. The business market is essentially the same thing as the consumer market.
Answer: False Page: 182 Difficulty: Easy AACSB: Reflective Thinking
64. Business buyers often select suppliers who also buy from them.
65. Small business owners typically engage in long-range planning in order to effectively
budget for purchases over the upcoming three to five years.
Answer: False Page: 184 Difficulty: Medium AACSB: Reflective Thinking
66. The best way to generate leads among small businesses is for business suppliers to
cold call them.
67. Business buyers often buy directly from manufacturers rather than through
intermediaries, especially items that are technically complex or expensive.
68. The demand for business goods is ultimately derived from the demand for raw
materials.
69. The total demand for many business goods and services is inelastic—that is, not much
affected by price changes.
Answer: True Page: 185 Difficulty: Easy

70. In the straight rebuy, “out-suppliers” try to get a small order and then enlarge their
purchase share over time.
Answer: True Page: 185 Difficulty: Easy AACSB: Analytic Skills
71. Over time, new-buy situations become straight rebuys and routine purchase behavior.
Answer: True Page: 186 Difficulty: Medium AACSB: Reflective Thinking
72. Most business buyers, preferring to spread their risk, reject what is called systems
buying from one seller.
73. Failure to quantify a customer’s results in customer references can be a detriment to

the effectiveness of those references.
74. Systems selling is a key industrial marketing strategy in bidding to build large-scale
industrial projects such as dams or pipelines.
Answer: True Page: 187 Difficulty: Medium AACSB: Analytic Skills
75. Sellers benefit from systems contracting through lower operating costs as a result of
steady demand and reduced paperwork.
76. The buying center is where consumers go to purchase their goods and services.
Answer: False Page: 188 Difficulty: Easy AACSB: Analytic Skills
77. Initiators are those who authorize the proposed action of deciders or buyers.
Answer: False Page: 188 Difficulty: Medium AACSB: Analytic Skills
78. Users perform all seven roles in the buying center because of their direct tie to the
product and what it is supposed to do.
79. Personal needs motivate the behavior of individuals, but organizational needs
legitimate the buying-decision process and its outcomes.
80. In the business market, small sellers concentrate on reaching as many participants as
possible because their chances of success are slim.
81. Minority suppliers are the fastest-growing segment of today’s business landscape,
reflecting the importance of supplier diversity to business buyers.
Answer: True Page: 191 Difficulty: Hard AACSB: Reflective Thinking

82. Today, purchasing departments occupy a relatively low position in the management
hierarchy and answer primarily to the vice-president of marketing.
Answer: False Page: 191 Difficulty: Medium
83. According to the buygrid framework described in the text, a performance review
completes the buygrid as a last step.
84. The buying process begins when someone places an order with a sales representative.
Answer: False Page: 193 Difficulty: Easy AACSB: Analytic Skills
85. Product value analysis (PVA) attempts to reduce costs by studying components to see
if they can be redesigned, standardized, or produced more cheaply.
86. In barter markets, participants offer to trade goods or services.

87. With respect to proposal solicitation in B2B, sellers begin the process by requesting
permission to make a proposal rather than waiting for the buyer to request one.
88. In general, buyers review the product and its price rather than any other
considerations about the seller as a buying decision is made.
Answer: False Pages: 194–195 Difficulty: Easy AACSB: Reflective Thinking
89. With respect to assessing customer value, in conjoint analysis customers are asked to
rank their preference for alternative market offerings or concepts.
90. One of the forms of solution selling is to provide solutions to enhance customer
revenues.
91. Companies are increasingly reducing the number of suppliers they utilize, and there is
a trend toward single sourcing.
92. Most performance reviews are conducted by outside auditing agencies to avoid bias
and internal discrepancies.
93. Corporate credibility depends on corporate expertise, corporate trustworthiness, and

corporate likeability.

94. One of the problems facing B2B on the Web is that many firms often impose more
stringent requirements on their online business partners than they do on non-online
partners.
95. One of the eight categories of buyer–seller relationships is the contractual transaction
that generally shows low levels of trust, cooperation, and interaction; exchange is
defined by formal contract.
Answer: True Page: 201 Difficulty: Hard AACSB: Reflective Thinking
96. In the “customer is king” category of buyer–seller relationship, the category is

characterized as being one that it relatively simple where routine exchanges with
moderately high levels of cooperation and information exchange occurs.
Answer: False Page: 201 Difficulty: Hard AACSB: Analytic Skills
97. Contracts are always sufficient to govern supplier transactions and prevent supplier
opportunism.
98. A good illustration of a member of the institutional market would be Boeing because
it is a member of the aviation institution structure.
99. The U.S. government is the largest customer in the world.

Answer: True Page: 203 Difficulty: Easy
100. Today, all companies that sell to the U.S. government use a marketing orientation
because of the special relationship required.
Answer: False Page: 204 Difficulty: Medium
Essay
101. Business markets have several characteristics that contrast sharply with those of
consumer markets. Name and briefly characterize five of those characteristics.
Suggested Answer: The characteristics are: (1) fewer, larger buyers, (2) close
supplier–customer relationship, (3) professional purchasing, (4) multiple buying
influences, (5) multiple sales calls, (6) derived demand, (7) inelastic demand, (8)
fluctuating demand, (9) geographically concentrated buyers, and (10) direct
purchasing. See chapter section for brief characterizations.
Pages: 182–185 Difficulty: Medium AACSB: Reflective Thinking

102. Illustrate the differences between a straight rebuy, modified rebuy, and a new-task
purchase.
Suggested Answer: In a straight rebuy, the purchasing department reorders on a

routine basis and choose from suppliers on an approved list. In a modified rebuy,
the buyer wants to modify product specifications, prices, delivery requirements,
or other terms. Lastly, in the new-task purchase, a purchaser buys a product or
service for the first time. For additional differences, see chapter section.
Page: 185 Difficulty: Easy AACSB: Analytic Skills
103. Describe the practices of systems buying and systems contracting.
Suggested Answer: Systems buying involves buying a total solution to a problem

from one seller. Systems contracting is a variant of systems selling in which a
single supplier provides the buyer with his entire requirement for maintenance,
repair, and operating supplies. During the contract period, the supplier manages
the customer’s inventory.
Pages: 186–187 Difficulty: Medium
104. List and briefly describe the seven roles played by members of a buying center.
Suggested Answer: The roles are: (1) initiators, (2) users, (3) influencers, (4)
deciders, (5) approvers, (6) buyers, and (7) gatekeepers. For descriptions, see
chapter section.
Page: 188 Difficulty: Hard
105. List the stages (buyphases) of the industrial buying process.
Suggested Answer: The major stages in the industrial buying process include: (1)
problem recognition, (2) general need description, (3) product specification, (4)
supplier search, (5) proposal solicitation, (6) supplier selection, (7) order-routine
specification, and (8) performance review.
Page: 192 Difficulty: Medium AACSB: Analytic Skills
106. Identify four types of contract restrictions that business suppliers can use to
protect their margins when dealing with price-oriented buyers.
Suggested Answer: Some companies handle price-oriented buyers by setting a

lower price but establishing restrictive conditions, such as: (1) limited quantities,
(2) no refunds, (3) no adjustments, and (4) no services.

107. Explain the concept of solution selling. Give one example of this approach.
Suggested Answer: Solution selling approaches buyers from a solutions-to-

problems approach rather than a product-purchase approach. Three forms include:
(1) solutions to enhance customer revenues, (2) solutions to decrease customer
risks, and (3) solutions to reduce customer costs. Students may expound on any of
the above. For additional information, see chapter section.
Pages: 195–197 Difficulty: Medium AACSB: Reflective Thinking
108. List and briefly characterize five methods of assessing customer value.
Suggested Answer: There are eight suggested methods for assessing customer
value. The students may list and describe any five of the following: (1) internal
engineering assessment, (2) field value-in-use assessment, (3) focus-group value
assessment, (4) direct survey questions, (5) conjoint analysis, (6) benchmarks, (7)
compositional approach, and (8) importance ratings. See chapter section for
descriptions of each assessment method.
Page: 196 Difficulty: Hard AACSB: Analytic Skills
109. Identify the five factors affecting partner interdependence and environmental
uncertainty that influence the development of a relationship between business
partners.
Suggested Answer: The five factors affecting partner interdependence and

environmental uncertainty are: (1) one-sided market growth during the
relationship formation stage; (2) information asymmetry between partners such
that a partnership would generate more profits than if the partner attempted to
invade the other firm’s area; (3) high barriers to entry for at least one partner that
prevents the other partner from entering the business; (4) dependence asymmetry
such that one partner is more able to control or influence the other’s conduct; and
(5) one partner benefits from economies of scale related to the relationship.
Pages: 199–201 Difficulty: Hard AACSB: Reflective Thinking
110. Researchers have found that buyer–supplier relationships differed according to

four factors: availability of alternatives; importance of supply; complexity of
supply; and supply market dynamism. Based on these four factors, they classified
buyer–supplier relationships into eight different categories. What are those
categories?
Suggested Answer: The categories are: (1) basic buying and selling, (2) bare
bones, (3) contractual transaction, (4) customer supply, (5) cooperative systems,
(6) collaborative, (7) mutually adaptive, and (8) customer is king. For additional
information, see the specific chapter section.

APPLICATION QUESTIONS
Multiple Choice
111. All of the following are considered to be guidelines for selling to small businesses
EXCEPT ________.
a. do not use the Internet
b. do keep it simple
c. don’t lump small and midsize businesses together
d. don’t forget about direct contact
e. do provide support after the sale
112. Sometimes a rise of only 10% in consumer demand can cause as much as a 200%
rise in business demand for products for the next period. This is an example of
________.
a. inelastic demand
b. direct purchasing
c. fluctuating demand
d. derived demand
e. a straight rebuy
113. Shoe manufacturers are not going to buy much more leather if the price of leather
falls, nor will they buy much less leather if the price rises, unless they can find
satisfactory substitutes. This is an example of ________.
a. inelastic demand
b. direct purchasing
c. the acceleration effect
d. derived demand
e. a straight rebuy
114. Jason Riggs’ company is considered to be an in-supplier for a lawn mower

manufacturer. However, recently the lawn mower company has put out a memo to
in- and out-suppliers indicating that it would like to modify product specifications
and delivery schedules. Which of the following buying situations is most likely to
be in operation given this data?
a. Straight rebuy
b. Elastic rebuy
c. Fluctuating rebuy
d. Flatten rebuy
e. Modified rebuy

115. Orica Ltd. competes in the market for commercial explosives and recently
changed its business model to the management of an entire blast in a quarry,
selling contracts for “broken rock,” rather than just selling explosives. This
customer-solution-based approach to the sale of explosives is an example of
________.
a. systems selling
b. straight rebuying
c. customer referencing
d. derived demand
e. channel consolidation
Answer: a Pages: 186–187 Difficulty: Medium AACSB: Reflective Thinking
116. If you decided to go into the systems contracting business, which of the following
categories would constitute your main area of expertise, the service you provide
for customers?
a. Computer applications
b. Database management
c. Manufacturing
d. Promotion management
e. MRO (maintenance, repair, operating) supplies
117. Think about what you have learned about a buying center. If you performed the
role of the ________, you would be the person that has the power to prevent
sellers or information from reaching other members of the buying center.
a. initiator
b. influencer
c. decider
d. gatekeeper
e. approver
118. When purchasing disposable surgical gowns, Mercy Hospital’s vice president of
purchasing analyzes whether the hospital should buy disposable gowns or
reusable gowns. If the findings favor disposable gowns, then the operating-room
administrator compares various competitors’ products and prices and makes a
choice. Surgeons influence the decision retroactively by reporting their
satisfaction with the particular brand. In this situation, the operating-room
administrator performs the role of the ________.
a. decider
b. initiator
c. user
d. gatekeeper
e. influencer

119. When purchasing disposable surgical gowns, Mercy Hospital’s vice president of
purchasing analyzes whether the hospital should buy disposable gowns or
reusable gowns. If the findings favor disposable gowns, then the operating-room
administrator compares various competitors’ products and prices and makes a
choice. Surgeons influence the decision retroactively by reporting their
satisfaction with the particular brand. In this situation, the surgeons perform the
role of the ________.
a. decider
b. initiator
c. user
d. gatekeeper
e. buyer
120. According to Webster, with respect to buying center influences, senior managers
should remember that people are ________.
a. not buying products—they are buying solutions to problems
b. buying products that they personally will not use
c. buying surrogates that must appreciate that role
d. are human shopping bots
e. limited in their scope of overall business operations
121. Consider yourself as an upper-level marketing executive of a large seller of fleet

trucks. Which of the following strategies would be most appropriate in reaching
buying center targets?
a. Concentrate on key buying influencers.
b. Use multilevel in-depth selling.
c. Use trade-based promotions.
d. Begin all sales efforts with the secretarial support staff.
e. Move all operations to the Net.
122. The new, more strategically oriented purchasing departments have a mission to
________.
a. always make a profit
b. always take the lowest bid
c. seek the best value from fewer and better suppliers
d. continue to seek outsourcing as their primary strategy
e. use consultants whenever possible

123. In reordering office supplies, the only buyphases that the buyer passes through are
the product specification phase and the ________ phase.
c. order-routine specification
d. supplier search
e. performance review
Answer: e Page: 192 Difficulty: Hard AACSB: Analytic Skills
124. Business buyers may get new ideas at a trade show, see an ad, or receive a call
from a sales representative who offers a better product or a lower price compared
to the current in-supplier. These situations spur the ________ buyphase.
c. order-routine specification
d. supplier search
e. performance review
Answer: a Page: 193 Difficulty: Hard AACSB: Analytic Skills
125. The Tuxax Company has decided that handling price-oriented buyers can be
profitable under certain conditions. Conditions that would make good sense for
Tuxax Company would be all of the following EXCEPT ________.
a. limiting the quantity that can be purchased
b. no services
c. no adjustments
d. no refunds
e. no packaging or crating
Answer: e Page: 195 Difficulty: Easy AACSB: Reflective Thinking
126. In the ________ method for assessing customer value, customers are asked how
costs of using a new product compared to those of using an incumbent.
a. direct survey
b. importance ratings
c. field value-in-use assessment
d. benchmarking
e. conjoint analysis
127. Hendrix Voeders sales consultants help farmers deliver an incremental animal
weight gain of 5% to 10% over competitors. This is an example of ________.
a. solutions selling to enhance customer revenues
b. solutions selling to reduce customer costs
c. solutions selling to decrease customer risks
d. solutions selling to simplify customer purchasing
e. all of the above

128. The relationship between an company and its office supplies vendor is probably
best described as ________.
b. contractual transaction
c. collaborative
d. customer supply
e. customer is king
Answer: d Page: 201 Difficulty: Medium AACSB: Reflective Thinking
129. Value Central gives certain suppliers access to its sophisticated and detailed daily,
individual store-based sales data. In exchange, those suppliers are responsible for
managing Value Central’s inventory of their products. This relationship is best
described as ________.
b. contractual transaction
c. collaborative
d. customer supply
e. customer is king
Answer: c Page: 201 Difficulty: Hard
130. The closest relationships between customers and suppliers arise when ________.
a. supply is important to the customer
b. procurement is simple
c. there are many undifferentiated vendors in the marketplace
d. the customer is highly price sensitive
e. all of the above
Short Answer
131. The business market consists of all the organizations that acquire goods and
services used in the production of other products or services that are sold, rented,
or supplied to others. List the major industries that make up the business market.
Suggested Answer: The major industries making up the business market are
agriculture, forestry, and fisheries; mining; manufacturing; construction;
transportation; communication; public utilities; banking, finance, and insurance;
distribution; and services.
132. Define organizational buying.
Suggested Answer: Organizational buying is the decision-making process by

which formal organizations establish the need for purchased products and services
and identify, evaluate, and choose among alternative brands and suppliers.

133. Selling to small businesses presents a huge opportunity and huge challenges.
What are some of the challenges of selling to small businesses?
Suggested Answer: The small business market is large and fragmented by

industry, size, and number of years of operation. Additionally, small business
owners are notably averse to long-range planning and have an “I’ll buy it when I
need it” decision-making style.
Page: 184 Difficulty: Medium
134. Explain the concept of derived demand.
Suggested Answer: The demand for business goods is ultimately derived from
the demand for consumer goods. Consumer demand for business’ end products
drives their production. Production of those end products drives business demand
for the inputs to those production processes.
Page: 185 Difficulty: Medium AACSB: Reflective Thinking
135. Explain how fluctuating demand impacts business markets differently than
consumer markets.
Suggested Answer: The demand for business goods and services tends to be
more volatile than the demand for consumer goods and services. A given
percentage increase in consumer demand can lead to a much larger percentage
increase in the demand for plant and equipment necessary to produce additional
output. Economists refer to this as the acceleration effect.
Page: 185 Difficulty: Medium
136. If you were a purchasing agent facing a modified rebuy situation, how would you
describe that situation?
Suggested Answer: The buyer wants to modify product specifications, prices,

delivery requirements, or other items. The modified rebuy usually involves
additional participants on both sides.
Page: 185 Difficulty: Easy AACSB: Reflective Thinking
137. In systems buying, the U.S. government often solicits bids from prime
contractors. What do prime contractors do?
Suggested Answer: The government solicits bids from prime contractors who
assemble the package or system. The contractor who was awarded the contract
would be responsible for bidding out and assembling the system’s subcomponents
from second-tier contractors. Thus, the prime contractor would provide a turnkey
solution.
Pages: 186–187 Difficulty: Medium AACSB: Analytic Skills

138. Many firms depend on the opinions and experiences of others in evaluating a new
business proposal from a new company. Identify five keys to successfully
developing customer reference stories to respond to these demands.
Suggested Answer: Students may choose five of the following seven keys to
successfully developing customer reference stories: (1) state the customer’s needs
in compelling terms; (2) emphasize the barriers to satisfying customer needs; (3)
describe your company’s solution in terms of value; (4) list quantified results,
especially those that affect ROI; (5) differentiate your offering from those of
competitors; (6) provide a brief comprehensive summary; and (7) include
numerous customer quotes.
Page: 187 Difficulty: Hard AACSB: Communications
139. Systems selling is a key industrial marketing strategy in bidding to build large-
scale industrial projects. Competition for these projects is fierce. What are the
main areas of competition for these project engineering firms?
Suggested Answer: Primary competitive areas include: price, quality, reliability,

and other attributes to win contracts.
140. Webster and Wind call the decision-making unit of a buying organization the
buying center. What is the composition of the buying center?
Suggested Answer: It is composed of “all those individuals and groups who

participate in the purchasing decision-making process, who share some common
goals and the risks arising from the decisions.” The buying center includes all
members of the organization who play any of seven roles in the purchase decision
process. Buying centers usually include several participants with differing
interests, authority, status, and persuasiveness. Each member of the buying center
is likely to give priority to very different decision criteria.
141. Webster cautions that ultimately, individuals, not organizations, make purchasing
decisions. What does this mean for business suppliers?
Suggested Answer: Individuals are motivated by their own needs and perceptions
in attempting to maximize the rewards offered by the organization. Personal
needs motivate the behavior of individuals, but organizational needs legitimate
the buying-decision process and its outcomes. People are buying solutions to two
problems: the organization’s economic and strategic problem and their own
personal need for individual achievement.

142. How do large and small sellers differ in their approaches to buying center
targeting?
Suggested Answer: Small sellers concentrate on reaching the key buying

influencers in order to make the most effective use of their small sales force.
Large sellers go for multilevel in-depth selling to reach as many participants as
possible to increase sales volumes and strengthen relationships.
143. E-procurement Web sites are organized around two types of e-hubs. If you were
in the advertising business and were seeking to take advantage of e-procurement,
what type of e-hub should be constructed by your company?
Suggested Answer: The two types of hubs are vertical hubs (centered on
industries such as plastics) and functional hubs (centered on functions such as
advertising). Therefore, you would construct a functional hub.
144. Assume that you have been given the task of assessing customer value at your
organization. Further, you have been instructed to use the “compositional
approach” to make this assessment. Describe what you would do if you used the
compositional approach in assessing customer value.
Suggested Answer: In the compositional approach, customers are asked to attach

a monetary value to alternative levels of a given attribute. This is repeated for
other attributes. The values are then added together for any offer configuration.
145. As part of the buyer selection process, buying centers must decide how many
suppliers to use. What might motivate a buyer to use multiple sources?
Suggested Answer: Companies that use multiple sources often cite the threat of a
labor strike as the biggest deterrent to single sourcing. Another reason companies
may be reluctant to use a single source is that they fear they’ll become too
comfortable with the relationship and lose their competitive edge.
146. In the buygrid framework model, where the major stages of the industrial buying
process are listed and characterized, supplier selection is an important process.
What follows supplier selection and what occurs in this phase?
Suggested Answer: The step that follows supplier selection is order-routine

specification. After selecting suppliers, the buyer negotiates the final order, listing
the technical specifications, the quantity needed, the expected time of delivery,
return policies, warranties, and so on.
Pages: 197–198 Difficulty: Medium AACSB: Analytic Skills

147. As a seller in the business market, you have promised your customers that you
have corporate credibility as one of your corporate goals. What three factors will
have some bearing on whether you will be able to meet your goal and promise?
Suggested Answer: The three factors are: (1) corporate expertise, (2) corporate
trustworthiness, and (3) corporate likability. In other words, a credible firm is
seen as being good at what it does, it keeps its customers’ best interests in mind,
and it is enjoyable to work with.
Page: 200 Difficulty: Hard AACSB: Ethical Reasoning
148. Researchers have found that buyer–supplier relationships could be classified into
eight different categories. What category would be appropriate for a relationship
where, although bonded by a close, cooperative relationship, the seller adapts to
meet the customer’s needs without expecting much adaptation or change on the
part of the customer in exchange?
Suggested Answer: The appropriate category would be the “customer is king”

category.
Page: 201 Difficulty: Hard AACSB: Reflective Thinking
149. Vertical coordination can facilitate stronger customer–seller ties but at the same
time may increase the risk to the customer’s and supplier’s specific investments.
What are specific investments and why are they risky?
Suggested Answer: Specific investments are those expenditures tailored to a

particular company and value chain partner. These might include investments in
company-specific training, equipment, and operating procedures or systems.
Because these investments are partially sunk, they lock the firm that makes them
into a particular relationship. A buyer may be vulnerable to holdup because of
switching costs; a supplier may be more vulnerable to holdup in future contracts
because of dedicated assets and/or expropriation of technology/knowledge.
Pages: 201–202 Difficulty: Medium AACSB: Ethical Reasoning
150. Your organization is considering selling its products to the institutional market.
What type of customers will you be making your appeals to? Give specific
examples.
Suggested Answer: The institutional market consists of schools, hospitals,

nursing homes, prisons, and other institutions that must provide goods and
services to people in their care.
Page: 202 Difficulty: Easy AACSB: Reflective Thinking

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GENERAL CONCEPT QUESTIONS

4. Business markets differ significantly consumer markets in that business markets

170 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 171

172 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 173

22. ________ is a key industrial marketing strategy in bidding to build large-scale

174 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

27. The typical buying center has a minimum of ________ members.

28. Webster cautions that ultimately, ________ make purchasing decisions.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 175

176 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

38. Business marketers can stimulate problem recognition by ________.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 177

44. As an alternative to reducing price, sellers may handle price-oriented buyers by

178 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 179

50. Several major companies regard ________ as a major responsibility of their

180 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

55. In the ________ category of buyer–supplier relationship, although bonded by a close,

56. In the ________ category of buyer–supplier relationships, competition rather than

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 181

182 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

73. Failure to quantify a customer’s results in customer references can be a detriment to

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 183

86. In barter markets, participants offer to trade goods or services.

93. Corporate credibility depends on corporate expertise, corporate trustworthiness, and

184 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

96. In the “customer is king” category of buyer–seller relationship, the category is

99. The U.S. government is the largest customer in the world.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 185

Suggested Answer: In a straight rebuy, the purchasing department reorders on a

103. Describe the practices of systems buying and systems contracting.

Suggested Answer: Systems buying involves buying a total solution to a problem

105. List the stages (buyphases) of the industrial buying process.

Suggested Answer: Some companies handle price-oriented buyers by setting a

186 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Suggested Answer: Solution selling approaches buyers from a solutions-to-

Suggested Answer: The five factors affecting partner interdependence and

110. Researchers have found that buyer–supplier relationships differed according to

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 187

114. Jason Riggs’ company is considered to be an in-supplier for a lawn mower

188 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 189

121. Consider yourself as an upper-level marketing executive of a large seller of fleet

190 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 191

132. Define organizational buying.

Suggested Answer: Organizational buying is the decision-making process by

192 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Suggested Answer: The small business market is large and fragmented by

134. Explain the concept of derived demand.

Suggested Answer: The buyer wants to modify product specifications, prices,

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 193

Suggested Answer: Primary competitive areas include: price, quality, reliability,

Suggested Answer: It is composed of “all those individuals and groups who

194 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Suggested Answer: Small sellers concentrate on reaching the key buying

Suggested Answer: In the compositional approach, customers are asked to attach

Suggested Answer: The step that follows supplier selection is order-routine

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 195

Suggested Answer: The appropriate category would be the “customer is king”