Flashcards on Marketing Chapter 6
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122 The following questions refer to the scenario below. A-1 Stampings, Inc., produces 14 metal stampings for the automotive industry. Due to industry design changes, for the next model year, six of those stampings will require a slight change: two will have an extra hole punched through the side, two will require an extra plating process, and two will require an additional weld operation. In the meantime, the purchasing agent Richard Koehl has been asked to reduce the number of A-1's steel suppliers in an effort to cut costs. After obtaining updated price quotations and steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected his suppliers based on quality and price, but a major consideration had been the type of steel required and the specialized production processes of his respective suppliers. Not all of A-1's suppliers could produce the exact grades of steel needed; some suppliers were better at producing certain types of steel than others. Richard contacted several employees at A-1 who had worked with the various types of steel in the past. The quality control manager and line inspector, for example, could help to determine which suppliers had the capabilities of producing specific types of steel. The production control manager could provide input regarding which types of steel worked best in which presses. Even the warehouse foreman gave input regarding how long various types of steel could be held in inventory before rust spots began to form on their surfaces. Each person contributed the necessary information to help Richard in making his decision.
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122
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123 The demand for A-1 Stampings' products is ultimately based on the demand for new automobiles in the consumer market. This is an example of ________ demand.
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123 derived
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124 In this scenario, which of the following had the greatest influence on the business buying behavior at A-1 Stampings?
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124 technological changes
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125 The management directive to reduce the number of steel suppliers is most accurately classified as which type of influence affecting business buying behavior?
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125 organizational
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126 At what stage in the buying process was Richard when he sought input from others in the firm?
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126 supplier selection
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127 The main differences between business and consumer markets include market structure and demand, the nature of the buying unit, and the types of decisions. t/f
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127 true
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128 One set of business purchases is made for each set of consumer purchases. t/f
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128 false
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129 A business marketer normally deals with far fewer buyers than the consumer marketer does. t/f
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129 true
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130 Buyer and seller are less dependent upon each other in the business buying process than in the consumer buying process. t/f
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130 false
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131 The business buying process consists of business buyers determining which products and services their organizations need to purchase, and then finding, evaluating, and choosing among alternative suppliers and brands. t/f
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131 true
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132 Business demand ultimately derives from the demand for consumer goods and services. t/f
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132 true
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133 Demand in business markets is subject to more fluctuation than in consumer markets. t/f
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133 true
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134 Of the different types of buying situations, the modified rebuy presents the fewest decisions for a business buyer to make. t/f
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134 false
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135 Rob Taylor is the buyer for Major Memories. He regularly orders inexpensive merchandise in a fairly routine fashion without any modifications. He may choose other suppliers from time to time. Rob's decisions take the form of a modified rebuy. t/f
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135 false
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136 The buying center is not a fixed or formally identified unit within an organization. t/f
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136 true
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137 Nancy Zahm works for LeBray Beverage Company. She often helps to define product specifications and also provides information for evaluating alternatives. In this role she is acting as a gatekeeper. t/f
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137 false
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138 The decider is the person in the business buying process who controls the flow of information to others involved. t/f
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138 false
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139 In business buying decisions, the role of emotion is negligible in comparison to the role of reason. t/f
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139 false
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140 Environmental, organizational, interpersonal, and individual factors all influence business buyer behavior. t/f
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140 true
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141 Buyers have different buying styles influenced by interpersonal factors such as age, income, education, professional identification, and attitudes toward risk. t/f
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141 false
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142 A statement prepared by a business buyer describing the quantity and general characteristics of the items needed is a product specification description. t/f
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142 false
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143 In the product specification stage of the business buying process, the buyer ranks the importance of reliability, price, and other desired product characteristics. t/f
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143 false
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144 According to the stages of the business buying process, after completing a general need description, a business buyer should next invite qualified suppliers to submit proposals. t/f
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144 false
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145 Proposals should be marketing documents and not just technical documents. t/f
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145 true
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146 Suppliers are more likely to stay price competitive when the purchasing company uses single sourcing than when it uses multiple sourcing. t/f
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146 false
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147 When conducting a performance review, the seller monitors different factors than those monitored by the buyer to make sure that the seller is giving the expected satisfaction. t/f
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147 false
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148 E-procurement typically reduces drudgery and paperwork, thereby freeing purchasing personnel to focus on more strategic issues. t/f
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148 true
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149 The benefits of e-procurement include access to new suppliers, lower purchasing costs, and more time-efficient order processing and delivery. t/f
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149 true
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150 Unfortunately, most governments do not provide would-be suppliers with detailed guides describing how to sell to the government. t/f
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150 false
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151 ) It is rare that noneconomic factors play a role in government buying. t/f
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151 false
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152 Explain how the decision process in the business market and consumer market differs.
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152 Business buyers usually face more complex buying decisions than do consumer buyers, as business purchases more often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer's organization. Because the purchases are more complex, business buyers may take longer to make their decisions and are likely to use a more formalized buying process. In the business buying process, the buyer and seller are often much more dependent on each other.
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153 Describe the three major types of business buying situations and what differentiates each from the other two.
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153 A straight rebuy is a fairly routine decision in which the buyer reorders without any modifications from existing suppliers. In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers and usually involves more decision participants. A company buying a product or service for the first time faces a new task situation. It is the marketer's greatest opportunity and challenge because of the additional risk or cost, the larger number of decision participants, and the greater effort required to collect all of the needed information.
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154 Explain the advantages of systems selling.
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154 Many business buyers prefer to buy a packaged solution to problem from a single seller instead of buying separate products and services from different sellers and then integrating them. The sale often goes to the firm that provides the most complete system that meets the customer's needs. Systems selling, also called solutions selling, is a key business marketing strategy for winning and holding accounts, as it fosters an interdependent relationship between the seller and buyer.
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155 Describe the typical roles played by the various members of a buying center.
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155 The buying center includes all members of the organization who play any of five roles in the purchase process: user, influencer, buyer, decider, and gatekeeper. Users physically use the product or service. Influencers often help define the specifications and also provide information for evaluating alternatives. Buyers have formal authority to select the supplier and arrange terms of purchase. They may help shape product specifications, but their major role is in selecting vendors and negotiation. Deciders have formal or informal power to select or approve the final suppliers and products. Gatekeepers control the flow of information to others. Different employees may undertake these roles depending on the nature of the purchase.
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156 Provide a brief explanation of the major influences on business buyers.
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156 Both economic and personal factors play a part in buying decisions. The environmental influences of the level of primary demand, the economic outlook, and the cost of money all make their way into the decision. Each organization has its own objectives, policies, procedures, structure, and systems to learn. All of these may affect the purchasing decision. Further, interpersonal factors carry weight; however, it is often difficult to assess such factors and group dynamics. These factors are often subtle, and some participants are invisible to the marketer. Participants bring in individual influencing factors such as personal motives, perceptions, and preferences.
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157 What is the buying center concept? Explain why this concept presents a major marketing challenge.
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157 The buying center is the decision-making unit of a buying organization. The buying center is composed of all the individuals and units that play a role in the business purchase decision-making process, including the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information. The buying center is not a fixed and formally identified unit within the buying organization. Instead, it is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center varies for different products and buying situations. The variable nature of the buying center makes it a major marketing challenge. The business marketer must learn who participates in each decision, each participant's relative influence, and what evaluation criteria each decision participant uses.
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158 Describe the eight steps in the business buying process.
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158 The steps are problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. Problem recognition is the step during which someone recognizes a problem or need caused by internal/external stimuli that can be met by acquiring a specific product or service. A general need description describes the quantity and characteristics of the needed item. Product specification follows to allow purchasing of the correct items with the highest value. A supplier search finds the best vendors. The suppliers are asked to submit proposals. After selecting the supplier or suppliers, the buyer prepares an order-routine specification. After the purchase, the buyer will conduct a performance review to analyze future relationships.
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159 Briefly describe the major advantages of business-to-business marketing on the Internet.
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159 E-procurement gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. In turn, business marketers can connect with customers online to share marketing information, sell products and services, provide customer support services, and maintain ongoing customer relationships. E-procurement frees purchasing people to focus on more strategic issues such as value-added activities, finding different sources, and working with suppliers to reduce costs and develop new products.
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160 What are the major characteristics of institutional markets?
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160 The institutional market is made up of schools, hospitals, prisons, and other institutions that provide goods and services to people in their care. These markets are characterized by low budgets and captive patrons. For many institutions, the buying objective will not strictly be profit maximization or cost minimization; instead, the institution is likely to search for vendors that meet or exceed a certain minimum standard while also offering low prices.
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161 What are the major characteristics of government markets?
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161 Government markets offer large opportunities for companies. Although they also buy on a negotiated contract basis, government organizations typically require suppliers to submit bids, and normally they award the contract to the lowest bidder. The process is highly structured and famous for "red tape." In addition to the bid amount, noneconomic criteria also play a role in government buying. Government buyers often favor firms from depressed business areas, small business firms, minority-owned firms, and business firms that avoid race, gender, or age discrimination.
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162 Explain the concept of derived demand, giving an example of a product that has derived demand.
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162 Derived demand is created when demand increases due to consumers' increasing demand for some other product either made with or dependent upon the product in question.
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163 Why is demand in the business market mostly inelastic?
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163 The demand in business-to-business markets is mostly inelastic because what is being sold is often just one of the many parts or materials that go into producing the consumer product. It is not unusual for a large increase in a business product's price to have little effect on the final consumer product's price.
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164 How is the business buying process more formalized than the consumer buying process?
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164 Business purchases usually call for product specification, written purchase orders, and supplier searches.
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165 How have relationships between customers and suppliers changed in recent years?
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165 Customers and suppliers have had adversarial relationships in the past, but because they are dependent on each other, they have begun to act more as partners; many customer companies now practice supplier development, systematically developing networks of supplier-partners to ensure an appropriate and dependable supply of products and materials.
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166 In what type of purchase would one person most likely assume all buying center roles?
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166 One person will likely play all roles in purchasing routine products and services, or a straight rebuy.
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167 Why is the new-task buying situation both a great opportunity and a challenge for a marketer?
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167 In the new-task buying situation, decision participants put forth substantial effort to collect information and so are positioned to be influenced by a marketer's message; these situations are likely to be competitive, as other marketers also want to establish a relationship with the buyer.
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168 Although a company has purchased printers and copiers before, Xerox now offers the firm a multitasking machine that prints, copies, scans, and faxes. Explain what type of buying situation this is.
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168 This is a modified rebuy. The firm has already purchased similar machinery, but this purchase now involves a modified machine.
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169 Explain the buyer center role of the influencer.
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169 An influencer often helps define specifications and provide information for evaluating alternatives.
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170 Which roles in the buying center are likely to change with different purchases?
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170 Although any of the roles may change from purchase to purchase, the roles of of users and influencers are the most likely to change with each type of purchase a business makes.
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171 When are business buyers most likely to make decisions heavily influenced by personal factors?
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171 If suppliers' offers are very similar, there is little basis for a rational, objective choice; in these situations, buyers are more likely to allow emotions and other personal factors to influence their decision.
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172 Why is it difficult to assess interpersonal factors that influence the business buying process?
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172 Interpersonal factorssuch as who is liked, who controls rewards and punishments, and who has special relationships with other important participantsare subtle and not obvious to the external observer.
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173 How can marketers influence business buyers who are in the problem recognition stage?
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173 Through advertising, business marketers can make buyers aware of and concerned about potential problems and then offer their products as solutions to the newly recognized problem.
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174 What information is a buyer likely to include in the general need description?
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174 This element describes the general characteristics and quantity of the needed item.
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175 Describe two advantages of using multiple source contracts.
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175 With multiple source contracts, a buyer avoids being totally dependent on one supplier and can conduct comparisons of prices and performance of several suppliers over time.
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176 What type of noneconomic criteria impact government buying?
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176 Government buyers are asked to favor depressed business areas, small business firms, minority-owned firms, and business firms that avoid race, gender, or age discrimination.
