Chapter 6 - Analyzing Business Markets True/False Questions

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

2. Organizational buying is the decision-process by which organizations establish and satisfy their needs for goods and services. True

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

4. Schools and prisons are considered institutional buying organizations and they tend to have captive clienteles and limited budgets. True

5. Characteristics of business markets include that there are more buyers and larger buyers. False

6. When compared to the consumer market, the demand for goods and services in the business market is derived. True

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

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

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

10. A "straight rebuy" is a more complex process than a "new task" because the firm is limited to an approved list of vendors. False

11. One key thing to keep in mind when marketing across cultural boundaries is that all people are NOT basically alike. True

12. A secretary who prevents salespersons from contacting users or deciders is playing a gatekeeper role. True

13. Interpersonal factors have almost no influence in business purchasing decisions. False

14. The business buying process is influenced by environmental, organizational, and individual factors. True

15. Reading an advertisement about a new business service in a trade magazine to which the purchasing agent subscribes would be an example of how a problem might be recognized in an organizational setting. True

16. Even if a supplier firm has the capacity to deliver a business product or service, that supplier might NOT be allowed to submit a proposal in the buying process. True

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

18. Product value analysis can involve determining which components can be made cheaper through redesign or standardization, while keeping the same performance level of those components. True

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

20. A blanket contract or stockless purchase plan establishes a long-term relationship in which the buyer promises to buy all the stock of a particular seller at agreed-upon prices. False

Multiple Choice Questions

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

22. Organizational buying is .
a. the process by which organizations recognize their needs for goods and services
b. a way a company can produce a greater variety of high-quality products at lower cost, in less time, with less labor
c. the decision-making process by which organizations establish and satisfy their needs for goods and services
d. the practice of establishing of strategic partnerships between manufacturers and their suppliers
e. the practice of buying a total solution for a problem from one seller

23. The consists of all of the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to other customers.

a. business market
b. institutional market
c. consumer market
d. government market
e. specialized market

24. The institutional market is best described as having .
a. low budgets and a captive clientele
b. demand elasticity and geographically concentrated suppliers
c. contract negotiations and fluctuating demand
d. derived demand, geographically concentrated suppliers, and budgetary constraints
e. demand that is elastic, derived, and fluctuating

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

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

27. When compared to the consumer market, the demand for goods and services in the business market is .
a. far more elastic
b. significantly more constant
c. derived
d. more likely to be affected by changes in price
e. all of the above

28. Business buyers .
a. are geographically as diverse as consumers
b. tend to be geographically concentrated with over half of them in seven states
c. are largely concentrated in the southwestern United States
d. tend to be found in smaller communities and rural areas in the Midwest

e. use geographical dispersion to keep shipping costs low

29. 3M has developed a new type of plastic film used for shipping security. It is more durable than any other form of film on the market. The first year after the product was introduced its sales totaled $435 million. Analysts have predicted an annual growth of 30 percent as businesses like transportation companies discover how well the film protects their products. Because the demand for the new 3M film is dependent on the demand for the products transported within it, the demand for the film is .
a. derived
b. inelastic
c. routine
d. elastic
e. constant

30. The buying department for a nursing home is informed the price of the ibuprofen used for patient medication has increased by 15 percent. He orders a new supply anyway because he knows he can pass the increase on to the clients. This is an example of business products having demand.
A. routine
b. inelastic
c. volatile
d. accelerated
e. elastic

31. Which of the following is true of the U.S government as a market?
a. The U.S. government is the largest customer in the world.
b. Most purchases by the U.S. government are in the billions of dollars, usually for technology.
c. The U.S. government will always award the contract to the lowest bidder.
d. A comprehensive bid proposal might take as much as a few days to prepare and "weigh in" at a few dozen pages.
e. Cost minimization is the driving force behind buying decisions made by the U.S. government.

32. organizations typically require suppliers to submit bids. Normally, they award the contract to the lowest bidder, although they sometimes take into account a supplier's superior quality or reputation for completing contracts on time.
a. Business
b. Institutional
c. Consumer
d. Government
e. Specialized

33. Suppliers describe governmental organizations as .
a. always selecting quality over price when buying products and/or services
b. avoiding opting for the bottom-line perspective

c. sometimes considering quality or reputation but primarily rewarding contracts on the basis of price
d. requiring minimal paperwork and having a process open to public scrutiny
e. woefully lacking in specific guidelines for would-be suppliers

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

35. The most routine decision process undertaken by business buyers is called .
a. straight rebuy
b. modified rebuy
c. new task
d. routine rebuy
e. direct purchase