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Indicate whether the statement is true or false.
1. Reseller markets consist of intermediaries that buy finished goods and resell them for profit.
a. True
b. False
2. Interpersonal dynamics are easy to observe and simple for the marketer to assess.
a. True
b. False
3. One very important consideration for business purchases is the type of packaging used.
a. True
b. False
4. Reciprocal dealing is widespread because it is one of the few avenues not regulated by the FTC, and it facilitates
optimal purchases.
a. True
b. False
5. The four categories of consumer markets are producer, reseller, government, and institutional.
a. True
b. False
6. The old Standard Industrial Classification system is more comprehensive than NAICS.
a. True
b. False
7. Industrial classification systems allow marketers to divide business customers into groups based mainly on the types of
goods and services provided.
a. True
b. False
8. To obtain the names of specific potential customers, the business marketer is well advised to employ the services of a
commercial data company, since this is both cheaper and faster than any other method.
a. True
b. False
9. Business customers are forced to satisfy personal goals in pursuits that lie outside their jobs.
a. True
b. False
10. Of the three types of business purchases, the straight rebuy purchase usually requires the most information.
a. True
b. False
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11. The demand for many business products is inelastic at the industry level.
a. True
b. False
12. In the buying decision process, one of the activities included in the search for products and suppliers is examining
various online and print publications.
a. True
b. False
13. All companies, no matter what their size or market position, maintain only one buying center.
a. True
b. False
14. In the long run, business demand becomes totally unrelated to consumer demand.
a. True
b. False
15. An example of a business market would be farmers.
a. True
b. False
16. A fall in consumer demand for a product is likely to result in increased buying from suppliers as consumer goods
producers replenish depleted inventories and gear up for the next surge in consumer demand.
a. True
b. False
17. There is little or no difference between wholesalers’ customers and retailers’ customers.
a. True
b. False
18. When purchasing products, business customers are especially concerned about quality, service, price, and supplier
relationships.
a. True
b. False
19. The increase in government purchases has resulted partly from the increase in the number of services provided by the
government.
a. True
b. False
20. Price is of concern to a business marketer primarily because of its psychological impact on purchasing agents.
a. True
b. False
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21. The North American Industry Classification System includes all three NAFTA partners.
a. True
b. False
22. The fourth stage in the business buying decision process is that of searching for products and suppliers.
a. True
b. False
23. Raw materials are especially affected by joint demand.
a. True
b. False
24. In industries in which price changes occur frequently, demand fluctuations have practically been eliminated since
buyers have become used to these changes and have learned to ignore them.
a. True
b. False
25. Vendor analysis is a formal, systematic evaluation of current and potential vendors that focuses on a variety of
dimensions including price, product quality, delivery service, product availability, and overall company reliability.
a. True
b. False
26. When the major component of an item experiences a price increase, the demand for the item may become more
elastic.
a. True
b. False
27. The five-stage business buying decision process is used primarily for routine, straight rebuy purchases.
a. True
b. False
28. On-time delivery is crucial to a business customer, since a late delivery may hold up a production line or cause the
firm to lose sales.
a. True
b. False
29. Inspection refers to a purchasing method in which a representative unit is taken from a lot and evaluated, and the
buying decision is based on the conclusions.
a. True
b. False
30. When trying to estimate the purchases of a potential business customer, it is reasonable to suppose that there is a
relationship between the size of the potential customer’s purchases and a variable such as the number of personnel
employed by the customer.
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a. True
b. False
31. The factors that influence business buying behavior are the same as those that influence consumer buying behavior.
a. True
b. False
32. A new-task purchase is one in which the business makes an initial purchase of a new item.
a. True
b. False
33. Value analysis focuses primarily on the examination of the cost of products relative to design, quality, and materials
used.
a. True
b. False
34. Specific details regarding terms, credit arrangements, and technical assistance are worked out during the product
specification stage of the buying decision process.
a. True
b. False
35. NAICS provides less information about service industries and high-tech products than did the SIC system.
a. True
b. False
36. Wholesalers sell primarily to ultimate consumers.
a. True
b. False
37. Government markets, although complicated in their requirements, can be very lucrative.
a. True
b. False
38. Retailers purchase products and resell them to final consumers.
a. True
b. False
39. Grocery stores and supermarkets are a part of producer markets.
a. True
b. False
40. If a business product exceeds specifications, so much the better; the customer can then be assured of obtaining a
minimum level of acceptability.
a. True
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b. False
41. Industrial demand derives from consumer demand.
a. True
b. False
42. The owner of a trucking business, who buys gasoline from the nearby service station for the company trucks, is a part
of a business market.
a. True
b. False
43. For business products, the concept of inelasticity of demand applies equally to industry demand for the product and to
demand for an individual supplier.
a. True
b. False
44. Orders placed by business customers are usually smaller and more numerous than consumer sales.
a. True
b. False
45. Institutional markets include state prisons.
a. True
b. False
46. The term business markets refers only to producer markets.
a. True
b. False
47. Sometimes initial demand for a business product will drop following a price cut if buyers believe that further price
reductions are forthcoming.
a. True
b. False
48. It is customary for contracts for raw materials and components to be negotiated semiannually.
a. True
b. False
49. Business customers generally seek to obtain detailed information about a product before purchasing it.
a. True
b. False
50. In some cases, the types of services offered by a supplier may constitute a competitive advantage over suppliers of
similar products.
a. True
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b. False
51. Feedback acquired during the fifth stage of the business buying decision process is kept on file but not used as a
reference for future business purchase decisions.
a. True
b. False
52. After finding out which industries purchase the major portion of an industry’s output, the next step is to begin
production
a. True
b. False
53. Business purchasing agents may indirectly contribute to the satisfaction of their own personal needs by helping their
firms achieve organizational objectives.
a. True
b. False
54. Ultimate consumers are generally more rational than business customers.
a. True
b. False
55. Buyers in producer markets purchase either raw materials or semifinished products.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
56. Heritage Wines has national distribution agreements with wineries across the United States such as Cakebread and
Robert Mondavi in Napa Valley, California. Heritage Wines receives their inventory from their winery suppliers and
makes the wine available to customers—restaurants, bars, hotels, etc., through their sales representatives and extensive
catalog. What type of business market does Heritage Wines represent?
a. reseller
b. institution
c. government
d. producer
57. Retailers like Target and Kmart are considered to be members of which business market?
a. Reseller
b. Customer
c. Producer
d. Institutional
e. Services
58. Because retailers have to be concerned with product selection, price, and space, they often evaluate products on the
basis of
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a. their markup.
b. sales per square foot of selling area.
c. how many of the product they can fit in a certain amount of space.
d. profit per dollar of selling price.
e. the reliability of the supplier.
59. Many suppliers and their customers invest time and resources to build and maintain mutually beneficial relationships
which are often called
a. partnerships.
b. co-ops.
c. monopolies.
d. reciprocity.
e. alliances.
60. Christy Bridgman is considering the purchase of a new fax machine for her real estate office. She is considering a
machine that doesn’t have as many functions but is available at a considerably lower price than her current machine. She is
engaged in ____ analysis.
a. vendor
b. downsizing
c. strategic
d. value
e. profit
61. Institutional markets are
a. intermediaries who resell goods to make a profit.
b. federal and state government units.
c. state or local government units.
d. consumers who buy products for their own use.
e. organizations that seek nonbusiness goals.
62. ____ buy products from manufacturers and then resell the products to other firms in the distribution system.
a. Retailers
b. Producers
c. Distributors
d. Warehouses
e. Wholesalers
63. Which of the following is true with respect to buyers in business markets?
a. Business buyers always act rationally when making purchases for their company.
b. Business customers tend to be less informed about the products they purchase than consumer buyers.
c. Business customers demand detailed information about a product’s functional features and technical
specifications.
d. Business customers are no different than buyers in consumer markets.
e. Business customers tend to buy products from their friends and contacts with business suppliers.
64. Inelastic demand in business markets refers to a situation where
a. demand for a given product fluctuates very little over time.
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b. price increases or decreases will not significantly change demand for a given product.
c. demand for a given product fluctuates significantly over time.
d. demand for one product depends heavily on the demand for another product.
e. supply for a given product cannot keep pace with the demand for it.
65. Fred is the purchasing manager at Marc’s Auto Body and places orders for routine products such as office supplies
and items needed for service and repair of vehicles. He typically purchases tools from the Snap-On dealer and orders a
variety of nuts, bolts, and hardware from Grainger. He really likes purchasing from Grainger since he can utilize their
website where he has an intranet portal to easily place orders and receive a company discount. Grainger makes it easy and
convenient as well by providing a list of previously purchased items that Fred can select and simply click “reorder.” What
type of purchase process does Fred use when buying these items from Grainger?
a. straight rebuy
b. modified rebuy
c. new-task purchase
d. contracted purchase
66. Which method of business buying is necessary when products are highly homogeneous and examination of each item
is not feasible?
a. Negotiation
b. Sampling
c. Description
d. Inspection
e. Homogeneous selection
67. All of the following describe the demand for business products except
a. elastic.
b. derived.
c. joint.
d. inelastic.
e. fluctuating.
Scenario 7.2
Use the following to answer the questions.
Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV’s. It
also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states.
Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of
Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual
consumers are in the Midwestern states, while dealers who sell to small business landscaping companies tend to be
located in the northeastern states. Company executives are considering expansion of its distribution to markets in the
Midwest.
68. Refer to Scenario 7.2. When Precision Brake sells to the individual dealers, they would be considered which of the
following business types?
a. Producer
b. Reseller
c. Government
d. Institutional
e. Covert
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69. After deciding to order replacement parts for aging machinery, the buyer for a construction company examines
catalogs and trade publications looking for these parts. The buyer is at which stage in the business buying decision
process?
a. Problem recognition
b. Product specification
c. Product-supplier search and evaluation
d. Product-supplier selection
e. Product-supplier post-evaluation
70. Jennifer is the purchasing manager for the local public school system. Recently, the school received a large grant to
make technology-related purchases to enable students to have better access to computers and utilize the Internet. Jennifer
is working with the teachers and they recently developed product specifications that are necessary or required for tablet or
laptop computers. What is the next stage in the purchase decision process for Jennifer and the teachers?
a. search and evaluate possible products and suppliers
b. problem recognition
c. select product/supplier and order products
d. evaluate product and supplier performance
71. Motorola buys silicone which is used in its chip-making process. Motorola produces microchips for use within a wide
variety of products for other firms, such as Ford, GM and Samsung. Motorola is a buyer in a(n) ____ market.
a. producer
b. government
c. reseller
d. construction
e. institutional
72. When charitable organizations such as the American Cancer Society, Second Harvest Foodbank, and the Red Cross
make purchases for goods and services to use in their daily operations, they would be considered to be _______ buyers.
a. corporate
b. government
c. institutional
d. producer
e. nonprofit
73. An accountant who purchases software for maintaining clients’ books is an example of a buyer in a(n) ____ market.
a. consumer
b. producer
c. reseller
d. government
e. institutional
74. The second stage in the business buying decision process is to
a. search for products and suppliers.
b. select the most appropriate product.
c. develop product specifications.
d. evaluate product and supplier performance.
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e. recognize the problem.
75. Individuals and business organizations that buy finished goods and resell them to make a profit without changing the
physical characteristics of the product are classified as ____ markets.
a. consumer
b. institutional
c. producer
d. government
e. reseller
Scenario 7.1
Use the following to answer the questions.
Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production
facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods,
and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on
the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun
negotiations with their sales representatives.
76. Refer to Scenario 7.1. What type of business purchase is Samsung undertaking?
a. Modified rebuy
b. Straight rebuy
c. New-task
d. Straight purchase
e. New rebuy
77. When Hunter Ceiling Fans buys electrical wire for use in producing its ceiling fans, Hunter is part of what type of
market for electrical wire?
a. Resale
b. Wholesale
c. Customer
d. Consumer
e. Business
78. Pella Windows manufactures stock sizes as well as custom-sized windows in a variety of finishes and sells the
windows through distributors across the globe. Pella Windows’ manufacturing plants utilize just-in-time processes to
receive delivery of raw materials such as aluminum and glass, and component parts such as weather stripping and window
locks or fasteners. What category or type of business market best represents Pella Windows?
a. producer
b. reseller
c. government
d. institutional
79. What are the four major factors that influence business buying decisions?
a. Environmental, organizational, interpersonal, and individual
b. Environmental, organizational, psychological, and individual
c. Environmental, psychological, individual, and technological
d. Technological, organizational, environmental, and interpersonal
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e. Environmental, organizational, technological, and individual
80. Most businesses try to control the level of quality in the parts they buy from suppliers. Most firms develop standards
for ____ in order to achieve their quality goals.
a. how many different suppliers they use
b. how many parts can fail
c. controlling when shipments will arrive
d. the percentage of defects allowed
e. how long the parts should last
81. When the city of Chicago buys iPads for its restaurant inspectors to use during their visits, the purchase from Apple
would be considered
a. a regulatory sale.
b. a reseller purchase.
c. a government purchase.
d. a producer purchase.
e. an institutional sale.
82. In a buying center, purchasing agents or purchasing managers are also known as
a. gatekeepers.
b. deciders.
c. buyers.
d. users.
e. influencers.
83. Barry Gluckman of WP International, a major marketer of word-processing software, calls the secretary of Renee
Dorchette, director of purchasing for MMK, Inc. He sets up an appointment to discuss an upcoming purchase of software.
The secretary plays the role of ____ in this purchase decision.
a. gatekeeper
b. buyer
c. decider
d. buying center captain
e. order giver
84. Compared with consumer goods, marketers aiming at business customers
a. do not need to select target markets.
b. have an enormous amount of information available concerning potential customers.
c. have more difficulty in determining where their customers are located.
d. are restricted in the types of promotion they can use.
e. have more difficulty in estimating customers’ purchase potentials.
85. You are manager of a clothing manufacturing firm that has operations in different countries. Your Indonesian
manufacturing facility is dedicated solely to producing elementary school uniforms for the U.S. market. Most of your
product output is sold to a larger school uniform company in the U.S. called School Uniforms, Inc. School Uniforms, Inc.
has major contracts with school districts like the Los Angeles Unified School District. In this scenario, the Los Angeles
Unified School District is part of which of the following business markets?
a. Reseller market
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b. Government market
c. Institutional market
d. Distributor market
e. Wholesaler market
86. An organization that decides to buy all of a certain part from the same company is using
a. single-supplier purchasing.
b. multiple sourcing.
c. same vendor analysis.
d. straight rebuy.
e. sole sourcing.
87. You recently raised your prices on the products you sell to your business customers. To your surprise, these customers
did not change the amount of units they purchase from you. It was as if the price increase did not matter to these
customers. Which of the following types of business demand most accurately describes this situation?
a. Constant demand
b. Inelastic demand
c. Joint demand
d. Elastic demand
e. Derived demand
88. When marketing to business customers, marketers have to understand the key characteristics of the business customer,
and alter their marketing mix accordingly. For example, a business customer views _________ as the amount of
investment necessary to obtain a desired level of return or savings. Moreover, the business customer demand
______________ before buying to be sure their needs are being met with the product.
a. price; good service
b. product; price discounts
c. place; product samples
d. distribution; product guarantees
e. price; detailed information
89. Inelastic demand simply means that
a. buyers will not make a modified rebuy purchase.
b. demand depends on how many items are purchased.
c. a price increase or decrease will not significantly change the demand for an item.
d. when price goes up, demand goes down.
e. when supply is reduced, the price will increase.
90. Collin Roberts of Roberts Construction is planning to buy a piece of used earth-moving equipment. He would most
likely base his purchase decision on ____ of the alternative machines.
a. descriptions
b. inspections
c. a sampling
d. specifications
e. reputations
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91. Jason owns a small landscaping business called GreenScapes. When buying a new pickup truck for his landscaping
business, Jason negotiated with Palmetto Dodge, a dealer, with the agreement that GreenScapes would be the service
company Palmetto Dodge used for all of its landscaping needs. This is an example of
a. a new task purchase.
b. a straight rebuy.
c. a modified rebuy.
d. reciprocity.
e. a straight purchase.
92. The fact that business customers purchase products to be used directly or indirectly in the production of goods and
services to satisfy customers’ needs means that demand for business products is
a. joint.
b. economically stable.
c. derived.
d. inelastic.
e. more fluctuating.
93. The group of people within a business who are involved in making business buying decisions is referred to as
a. the new-task team.
b. negotiators.
c. purchasing agents.
d. deciders.
e. the buying center.
94. When certain consumer products are in high demand, producers might buy extra materials and equipment and when
demand subsides, producers will cut back on their material purchases. This describes ____ demand.
a. joint
b. inelastic
c. consumer
d. fluctuating
e. elastic
95. Volkswagen purchases upholstery for the interiors of its vehicles from various suppliers. This upholstery must have a
set of characteristics that is expressed by Volkswagen. This set is called
a. descriptions.
b. product features.
c. criterion.
d. purchase requests.
e. specifications.
96. Which of the following would be considered an institutional buyer?
a. The University of Illinois
b. The Environmental Protection Agency
c. Apple Computers
d. The United Way
e. City of Greenville
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97. Which of the following statements about business buying is false?
a. Business marketers prefer not to sell to customers who place small orders.
b. Business marketers must often sell their products in large quantities to make profits.
c. Most business purchases are made by committee.
d. Business purchases are usually made on the basis of contracts.
e. Orders in business markets tend to be smaller than those placed in consumer markets.
Scenario 7.1
Use the following to answer the questions.
Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production
facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods,
and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on
the purchasing decision. Samsung has already contacted several producers of the quasi-assembly pods, and has begun
negotiations with their sales representatives.
98. Refer to Scenario 7.1. What was the first step of the buying decision process that Samsung went through when looking
for the quasi-assembly pods?
a. Searching for products and suppliers
b. Selecting and ordering the most appropriate product
c. Recognizing the problem or need
d. Establishing product specifications
e. Evaluating the product relative to specifications
99. Businesses follow a defined buying decision process in order to ensure the goods and services they purchase will meet
their organization’s needs. The process has multiple stages, and in one of the stages the business will evaluate each
component of potential purchase. This includes evaluating the quality, design, materials and any other relevant aspect of
the purchase. This evaluation takes place in which of the following stages of the business buying decision process?
a. First stage – The business recognizes a problem or need exists
b. Second stage – Product specifications are developed
c. Third stage – Search for potential products
d. Fourth stage – Product for purchase is selected
e. Fifth stage – Product quality and supplier performance is evaluated
100. The Eagle Pawn Company is a regional business that owns seven pawn stores in the Houston area. The owners of
Eagle Pawn have recently purchased a new software system designed to better track their inventory. Now that they have
had the system for a couple of months, they have decided to upgrade to a newer version. The original purchase is an
example of a(an) ________, while the current purchase will be a(an) _____.
a. new task; modified rebuy
b. new task; continued new-task
c. contractual; modified rebuy
d. new task; straight rebuy
e. negotiated task; modified rebuy
101. Which type of business market tends to have the most complex buying procedures?
a. Reseller
b. Institutional
c. Retailer
d. Government
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e. Producer
102. A buyer for Macy’s Department Stores orders handbags from a supplier because that supplier allows the buyer to
maintain Macy’s company policy of 30-day advance purchase notice. This is an example of ____ influence on the business
buying decision process.
a. environmental
b. organizational
c. interpersonal
d. individual
e. demographic
103. The North American Industry Classification System (NAICS) is based on the types of ______________ performed.
It divides industrial activity into _______ sectors.
a. services; 30
b. production activities; 20
c. services and production activities; 50
d. manufacturing; 40
e. distribution; 25
104. King Auto Supply sells car and truck parts, as well as tire replacement and balancing services. As King places its
order for truck tires with Michelin, it must also place an order for valve stems and balancing weights for the tires. Such
business products are characterized as having ____ demand.
a. derived
b. inelastic
c. joint
d. fluctuating
e. higher
105. What are the two ways governments make purchases?
a. Cash or credit
b. Contracting previous suppliers and bids
c. Bids and negotiated contracts
d. Lottery system and contract negotiations
e. Request for new purchases and recurring orders
Scenario 7.2
Use the following to answer the questions.
Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV’s. It
also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states.
Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of
Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual
consumers are in the Midwestern states, while dealers who sell to small business landscaping companies tend to be
located in the northeastern states. Company executives are considering expansion of its distribution to markets in the
Midwest.
106. Refer to Scenario 7.2. Given the type of business market in which Precision Brake is currently operating, which
group would it be least likely to sell to?
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a. Producers
b. Governments
c. Retailers
d. Consumers
e. Institutions
107. Management at Readyfresh Dry Cleaners is concerned that it maintains a high level of service for its business
accounts. How should the firm monitor the level of service these customers receive?
a. Develop a code of service.
b. Set service objectives.
c. Formally survey customers.
d. Specify service uniformity.
e. Stress truthfulness with employees.
108. A representative from Coca-Cola stops by at a local fast-food restaurant once a month to inquire how much soft drink
syrup the store will need. The restaurant’s orders are an example of which type of business purchase?
a. New-task
b. Modified rebuy
c. Straight rebuy
d. Bid
e. Negotiated
109. The government decides to purchase a new fleet of fighter jets for the U.S. Air Force. What type of buying procedure
is the government most likely to use?
a. The government will request bids from all companies on its qualified bidder list.
b. It will contact whatever company made the last jets and have them develop the new ones.
c. Ads will be placed in the top five circulated U.S. newspapers for a company to produce the jets.
d. The government will select a few firms and enter into negotiations with them until the contract is awarded.
e. The contract will go to the first company that submits a reasonable bid for the desired jets.
110. Resellers are business intermediaries who buy finished goods and resell them for a profit. Their business model
dictates that they consider several factors when deciding which products to buy. Which of the following is a factor the
reseller considers when making purchase decisions?
a. The sales tax that must be charged on the product.
b. The number of substitutes for the product.
c. The availability of financing programs for purchasing the product.
d. How the product fits within the product mix of the reseller’s other products.
e. The perishability of the product.
111. Anderson Distribution Company has purchased 15 forklifts over the past two years. As it plans to place its next order
for another five machines, management wonders if additional features may be needed in order to handle changes in the
product lines it carries. For Anderson, these new forklifts represent a ____ purchase.
a. new-task
b. repetitive
c. straight rebuy
d. repetitive order
e. modified rebuy
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112. The United States Navy purchases uniforms from a single supplier. For the last twenty-five years, the trousers
purchased from this supplier have not changed and have been bought every six months, in seven different sizes. This
example is called a
a. new-product purchase.
b. repetitive purchase.
c. straight rebuy.
d. modified rebuy.
e. standard order.
113. St. Jude’s Hospital decides to redo its kitchen with new flooring, cabinets, counters, and appliances. The hospital
compiles a description of the project and then asks sellers to submit bids. After determining the most attractive bids, the
hospital will then work with two or three companies to determine who will get the contract. This is an example of using
____ for a purchase decision.
a. sampling
b. negotiation
c. inspection
d. elimination
e. description
114. The three purposes for which individuals or groups can use products in order for it to be considered a business
market are
a. use in daily operations, end consumption, and resale.
b. direct use in producing other products, company travel, and end consumption.
c. resale, use in daily operations, and direct use in producing other products.
d. governmental, institutional, and reseller purposes.
e. making other products, selling to other businesses, making component parts.
115. Ben Davideau is assigned by his sales manager to come up with the names and addresses of twenty firms in his
territory that have some potential for using sizable quantities of his firm’s products. Wanting to be as efficient as possible,
Ben looks in
a. Sales & Marketing Management.
b. an SIC listing.
c. the Census of Business.
d. the Census of Manufacturers.
e. Standard & Poor’s Register.
Scenario 7.2
Use the following to answer the questions.
Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV’s. It
also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states.
Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of
Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual
consumers are in the Midwestern states, while dealers who sell to small business landscaping companies tend to be
located in the northeastern states. Company executives are considering expansion of its distribution to markets in the
Midwest.
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Class:
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116. Refer to Scenario 7.2. Last year, Precision Brake’s sales to the manufacturers of lawn tractors declined, partially due
to the fact that more consumers were hiring small landscaping businesses to cut their grass. This decline in sales for
Precision Brake is an example of
a. Product scarcity
b. Joint demand
c. Derived demand
d. Reciprocity demand
e. Inelastic demand
117. Which method of business buying is most likely to be used when the products being purchased are standardized
based on certain characteristics?
a. Homogeneous selection
b. Inspection
c. Description
d. Sampling
e. Negotiation
118. A disadvantage of reciprocity is that it can lead to
a. a price war.
b. higher promotional costs.
c. more competitive firms entering the industry.
d. less-than-optimal purchases for the buyer.
e. longer periods of negotiation.
119. Compared with the SIC system, the North American Industry Classification System (NAICS) will
a. look at many industries at one time.
b. be used throughout the world.
c. contain the most up–to-date information for the NAFTA partners.
d. provide less information about service industries.
e. generate statistics that will not be useful in comparing countries.
120. Which of the following statements about reseller markets is false?
a. Resellers are concerned with the level of demand for the product.
b. Resellers are not concerned with how much space the product takes up as long as it has a high price.
c. Resellers want producers to be able to supply adequate quantities of the product.
d. Resellers are concerned with the availability of technical and promotional assistance from the producer.
e. Resellers are concerned with the markup percentage they can get on the product.
121. A friend of yours starts his own business. He would like to expand his client base to include the government, but he
believes his small business would be ignored. Based on your knowledge from the text, you tell him
a. that he’s absolutely right, the government doesn’t deal with small businesses.
b. although the government will deal with small businesses, he will never make a profit off a government contract.
c. that any government, federal, state, or local would laugh at the size of his business.
d. the government rarely considers new suppliers when making purchasing decisions.
e. the government buys products from all sizes of business, but there is some red tape.
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Class:
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122. Raython Hardware and Thames Industrial Supplier have worked closely for many years and have a mutually
beneficial relationship in which Raython provides all of Thames’s hardware needs in a timely manner. Raython and
Thames’s relationship could be best characterized as a(n)
a. reciprocity agreement.
b. partnership.
c. intra-organizational group.
d. alliance.
e. tying arrangement.
123. Most business buying decisions are made by
a. one person.
b. a team of purchasing agents.
c. a firm’s buying center.
d. inventory control personnel.
e. the sales force.
124. The Environmental Protection Agency (EPA) was established on December 2, 1970, to consolidate in one agency a
variety of federal research, monitoring, standard-setting, and enforcement activities to ensure environmental protection for
residents of the United States. Since its inception, EPA has been working for a cleaner, healthier environment for the
American people and is responsible for providing inspection services and cleanup efforts in the case of contamination or
hazards. The EPA is a _____ type of business market.
a. government
b. reseller
c. producer
d. institutional
125. Demand for business products is characterized as derived. From what is the demand derived?
a. Industrial demand
b. Modified demand
c. Demand for consumer products
d. Future product demand
e. The business cycle
126. What is a primary difference between business and consumer buyers?
a. Consumer buyers require more product information than business buyers.
b. Business purchases are made by one individual whereas families make consumer purchases together.
c. Repeat sales are more common with consumer buyers than business buyers.
d. Consumers primarily buy inexpensive items; businesses only buy expensive items.
e. Business buyers generally make larger orders than consumer buyers.
127. When a business is making its initial purchase of an item to be used to perform a new job, it is known as a ____
purchase.
a. straight rebuy
b. reciprocal
c. delayed
d. new-task
e. modified rebuy
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Class:
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128. Most business purchases can be classified as belonging to one of three types:
a. delinquent, repetitive, or delivered.
b. repetitive, new-task, or modified rebuy.
c. modified rebuy, new-task, or straight rebuy.
d. delinquent, new-task, or reciprocal.
e. rebuy, reciprocal, or delayed.
129. Which of the following products is most likely to be purchased on the basis of contract negotiation?
a. Eggs
b. Office supplies
c. Used cars
d. A custom-made bulldozer
e. Wheat
Scenario 7.2
Use the following to answer the questions.
Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV’s. It
also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states.
Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of
Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual
consumers are in the Midwestern states, while dealers who sell to small business landscaping companies tend to be
located in the northeastern states. Company executives are considering expansion of its distribution to markets in the
Midwest.
130. Refer to Scenario 7.2. When Precision Brake’s sales team calls on tractor manufacturing companies, the meetings
typically include the engineers who design the tractors. In this situation, the engineers would most likely be considered to
be ____, part of the buying center.
a. gatekeepers
b. influencers
c. users
d. buyers
e. controllers
131. Which of the following entities is part of the buying center?
a. Marketers
b. Users
c. Vendors
d. Distributors
e. Wholesalers
Scenario 7.1
Use the following to answer the questions.
Samsung is entering the home appliance market with its new French Door Refrigerator. In designing the production
facility, it has a need for various pieces of equipment, including the perpetual assembly belt-drive, quasi-assembly pods,
and finishing stations. The purchasing agent for the appliance division is inquiring about who will be needed for input on