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Chapter 07: Business Marketing
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1. Many companies offer ethics training to employees and have codes of ethics that help guide buyers and sellers in
business.
a.
True
b.
False
ANSWER:
True
2. A practice whereby business purchasers choose to buy from customers of their competitors is called reciprocity.
a.
True
b.
False
ANSWER:
False
3. Fluctuating demand is the demand for two or more items used together in a final product.
a.
True
b.
False
ANSWER:
False
4. In the context of negotiations, final contracts are often short and precise.
a.
True
b.
False
ANSWER:
False
5. In social media marketing, awareness occurs when action is taken and includes everything from downloading a piece of
content (like a white paper) to actually making a purchase.
a.
True
b.
False
ANSWER:
False
6. Derived demand means that an increase or decrease in the price of the product will significantly affect demand for the
product.
a.
True
b.
False
ANSWER:
False
7. Providing superior service to a firm's most valuable customers is likely to result in a maximization of the total business
value generated over time.
a.
True
b.
False
ANSWER:
True
8. In a buying center, the decider is the person who actually negotiates a purchase.
a.
True
b.
False
ANSWER:
False
9. Federal, state, and local buying units account for the greatest volume of purchases of any customer category in the
United States.
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a.
True
b.
False
ANSWER:
True
10. Ethics refers to a firm's belief that an ongoing relationship with another firm is so important that it warrants maximum
efforts at maintaining it indefinitely.
a.
True
b.
False
ANSWER:
False
11. Items such as forklifts are more commonly sold as consumer goods than as business products.
a.
True
b.
False
ANSWER:
False
12. By pressurizing a supplier to sell products at very low prices, a buyer may, in effect, force the supplier to compromise
on the quality of the product.
a.
True
b.
False
ANSWER:
True
13. Price is one of the criteria against which business buyers evaluate products and suppliers.
a.
True
b.
False
ANSWER:
True
14. Processed materials include capital goods such as large or expensive machines, mainframe computers, blast furnaces,
generators, airplanes, and buildings.
a.
True
b.
False
ANSWER:
False
15. A consumer product is also known as an industrial product.
a.
True
b.
False
ANSWER:
False
16. Businesses contract outside providers to perform janitorial, advertising, and legal services as it costs less than hiring
an employee to perform the particular task.
a.
True
b.
False
ANSWER:
True
17. The more digits in a North American Industry Classification System code, the less homogeneous a group will be.
a.
True
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b.
False
ANSWER:
False
18. The use of direct channels in business marketing has increased dramatically in the past decade with the introduction of
various Internet buying and selling schemes.
a.
True
b.
False
ANSWER:
True
19. Which of the following statements is true of relationship marketing?
a.
For many suppliers, retaining their current customers has become a secondary focus in relationship marketing.
b.
Business suppliers use social networking sites sparingly as these sites discourage businesses from shopping for
all their needs.
c.
Loyal customers are less profitable than those who are price sensitive and perceive no difference among
brands or suppliers.
d.
Relationship marketing has become more important than before because competition has becoming more
intense.
ANSWER:
d
20. Which of the following statements is true of accessory equipment?
a.
It includes goods such as large or expensive machines and mainframe computers.
b.
It includes goods such as portable drills, power tools, and microcomputers.
c.
It includes goods such as lubricants, detergents, paper towels, pencils, and paper.
d.
It includes goods such as spark plugs, tires, and electric motors for automobiles.
ANSWER:
b
21. Which of the following statements is true of business marketing?
a.
It refers to the sale of goods and services for the purpose of personal consumption.
b.
It deals with products that are used to facilitate an organization's operations.
c.
It has long and indirect channels of distribution.
d.
It includes selling stationaries to students.
ANSWER:
b
22. Which of the following is true of a firm that acts as a consumer marketer?
a.
It can also be a business marketer.
b.
It has fewer customers than a business marketer.
c.
It excludes the sale of goods that are sold in business markets.
d.
Its customers are less geographically concentrated than business markets.
ANSWER:
a
23. A _____ is used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other
customers.
a.
consumer product
b.
retail product
c.
business product
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d.
convenience product
ANSWER:
c
24. Which of the following statements is true of raw materials that are used as business products?
a.
The promotion of raw materials is almost always done via mass advertising.
b.
They are usually sold in large quantities.
c.
Individual producers have great flexibility in the pricing of raw materials.
d.
They are finished items that are ready for assembly.
ANSWER:
b
25. _____ exists when one party has confidence in an exchange partner's reliability and integrity.
a.
Obeya
b.
Trust
c.
Keiretsu
d.
Commitment
ANSWER:
b
26. Seth, an Administrative Manager at Seal Inc., is asked to purchase ten printers for the firm's office. He contacts a sales
representative at Myro Distributors Inc. and places an order for ten printers. Myro Distributors Inc. purchases the printers
from Ink Corp., a wholesaler, and delivers them to Seth at his office. In this scenario, Myro Distributors Inc. is most likely
to be a(n) _____.
a.
producer
b.
retailer
c.
institution
d.
manufacturer
ANSWER:
b
27. The North American Industry Classification System data can be used to:
a.
identify scope for new product lines.
b.
classify firms according to their number of customers.
c.
classify business establishments all over the world.
d.
identify potential new customers.
ANSWER:
d
28. Which of the following is a similarity between raw materials and component parts?
a.
Both fail to retain their identity in final products.
b.
Both become part of a final product.
c.
Both are unprocessed extractive products.
d.
Both are more expensive than major equipment.
ANSWER:
b
29. In the context of a buying center, which of the following statements is true of deciders?
a.
They approve of the selection of a brand.
b.
They make the final purchase.
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c.
They influence the buying decision.
d.
They regulate the flow of information.
ANSWER:
a
30. Nutrimax Cookies Inc. buys around three tons of raw materials every year. If the demand for its cookies increases next
year, the company might need to buy more raw materials in order to meet the increased demand. This illustrates _____.
a.
inelastic demand
b.
joint demand
c.
elastic demand
d.
fluctuating demand
ANSWER:
d
31. In a(n) _____ situation, a purchaser wants some change in the original good or service.
a.
initiation buy
b.
straight rebuy
c.
new buy
d.
modified rebuy
ANSWER:
d
32. Leo buys 500 sheets of paper from a vendor for his printing firm. He is satisfied with the product, and he orders the
same quantity from the same vendor every week. This is most likely an example of a(n) _____.
a.
initiation buy
b.
straight rebuy
c.
new buy
d.
modified rebuy
ANSWER:
b
33. Which of the following statements is true of business services?
a.
They include consumable items.
b.
They include processed items.
c.
They do not retain outside providers and contractors.
d.
They do not become part of a final product.
ANSWER:
d
34. At Magnira Corp., a company that manufactures fruit preserves, fruits of excellent quality are used to make jams,
jellies, and marmalades. In this scenario, the fruits are examples of _____.
a.
raw materials
b.
component parts
c.
MRO items
d.
finished goods
ANSWER:
a
35. Fournotts Printing Inc. manufactures and sells photocopiers, printers, and scanners to various corporate offices. This is
an example of _____.
a.
contract manufacturing
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b.
business marketing
c.
licensing
d.
franchising
ANSWER:
b
36. Which of the following statements is true of content marketing?
a.
It includes media such as videos, podcasts, webinars, and blog posts.
b.
It includes materials such as steel or lumber mills and food canners.
c.
It includes components such as spark plugs and electric motors.
d.
It includes equipment such as portable drills and microcomputers.
ANSWER:
a
37. Which of the following is a difference between supplies and business services?
a.
Supplies are consumable items, whereas business services are expense items.
b.
Supplies are more expensive compared to other business goods, whereas business services are economical.
c.
Supplies are part of a final product, whereas business services do not become part of a final product.
d.
Supplies are custom designed for each customer, whereas business services are normally standardized.
ANSWER:
a
38. In the context of business relationships in Japan, which of the following best defines the term amae?
a.
It is the feeling of nurturing concern for, and dependence upon, another.
b.
It is the lack of motivation among employees in businesses.
c.
It is a legal consolidation and collaboration of companies into a single entity.
d.
It is the lack of economic competition in the market.
ANSWER:
a
39. Having fewer customers in business markets in comparison with consumer markets:
a.
reduces the attention required to be given to customers.
b.
makes it easy to identify prospective buyers.
c.
reduces the dependency on distributors for product delivery.
d.
increases product diversity.
ANSWER:
b
40. In the context of a buying center, which of the following statements is true of gatekeepers?
a.
They initiate the buying process.
b.
They have the formal power to approve a brand.
c.
They regulate the flow of information.
d.
They negotiate a purchase.
ANSWER:
c
41. Which of the following scenarios illustrates the use of processed materials in manufacturing?
a.
No-Glut Inc. uses rice flour to manufacture its gluten-free products.
b.
Zintec Hardware Inc. uses nails to hold its ladders together.
c.
Pace Corp., an automobile company, uses magnesium alloy wheels for its high-end cars.
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d.
Reldex Steel Corp. uses blast furnaces in its manufacturing process.
ANSWER:
a
42. In the context of business customers, which of the following statements is true of institutions?
a.
They are profit-oriented companies that use purchased goods to incorporate into other products.
b.
They are organizations that buy finished goods and resell them for a profit.
c.
They are buying units that account for the greatest volume of purchases of any customer category.
d.
They are business markets that seek to achieve goals other than the standard business goals of profit.
ANSWER:
d
43. Which of the following statements is true of the North American Industry Classification System (NAICS)?
a.
Each classification group in NAICS is heterogeneous in terms of the components used.
b.
The geographic dispersion of firms cannot be identified with the help of NAICS.
c.
The more the digits in an NAICS code, the more homogeneous the group.
d.
Goods- or service-producing firms grouped under NAICS use different production processes.
ANSWER:
c
44. In the context of business products, which of the following is a difference between major equipment and accessory
equipment?
a.
Major equipment is often standardized, whereas accessory equipment is often custom designed for each
customer.
b.
Major equipment is depreciated over time, whereas accessory equipment is charged as an expense in the year
it is purchased.
c.
Major equipment has a short life, whereas accessory equipment has a long life.
d.
Major equipment is marketed more through advertising, whereas accessory equipment is marketed via
personal selling.
ANSWER:
b
45. Inland Eastex Inc. manufactures toothpastes. Even when the company increased the price of its toothpastes last year,
the sales did not drop. This is an example of _____.
a.
elastic demand
b.
inelastic demand
c.
derived demand
d.
joint demand
ANSWER:
b
46. Which of the following is a difference between component parts and supplies?
a.
Component parts require extensive processing before they become part of another product, whereas supplies
do not.
b.
Component parts are consumable items, whereas supplies are finished items.
c.
Component parts become part of a final product, whereas supplies do not.
d.
Component parts are inexpensive when compared to other business products, whereas supplies are expensive.
ANSWER:
c
47. Which of the following statements is a difference between buyers in consumer markets and buyers in business
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markets?
a.
Buyers in consumer markets tend to be insensitive to price, while buyers in business markets are very
particular about price.
b.
Buyers in consumer markets generate less stable demand trends, while buyers in business markets generate
more stable demand trends.
c.
Buyers in consumer markets approach purchasing more informally, while buyers in business markets approach
purchasing more formally.
d.
Buyers in consumer markets involve more people in a single purchase decision, while buyers in business
markets involve less people in a single purchase decision.
ANSWER:
c
48. Which of the following statements is true of a new buy?
a.
It is a situation that requires a purchasing contract.
b.
It is a situation that requires a change in the original service.
c.
It is a situation that is less critical and quick.
d.
It is a situation that is more time-consuming than a modified rebuy.
ANSWER:
d
49. Which of the following statements is true of business markets?
a.
Products or services are sold for personal consumption.
b.
Goods that are sold in consumer markets are not sold in business markets.
c.
One customer can account for a huge volume of purchases.
d.
Relationship marketing is given the least importance.
ANSWER:
c
50. The manager of TruColor Printers Inc. has purchased a sophisticated printing press for $1 million. Which of the
following statements is most likely to be true about the printing press?
a.
It will depreciate over its useful life.
b.
It will be charged as an expense in the year it is bought.
c.
It will undergo processing before it is used.
d.
It will be bought through retailers.
ANSWER:
a
51. C-Through, an optics manufacturing company, wants to focus on relationship marketing. In this case, which of the
following strategies is the best for C-Through to market its products?
a.
It can use social networking sites to advertise itself to businesses.
b.
It can market its products through dealers.
c.
It can set the price and other conditions of sale without negotiation.
d.
It can use accessory equipment and major equipment.
ANSWER:
a
52. Which of the following statements is a difference between wholesalers and retailers?
a.
Wholesalers use purchased goods to incorporate into other products, while retailers seek to achieve goals other
than the standard business goals of profit.
b.
Wholesalers account for the greatest volume of purchases of any customer category, while retailers buy
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business products and resell them to business customers.
c.
Wholesalers sell mostly to retailers and other organizational customers, while retailers sell mainly to final
consumers.
d.
Wholesalers are often known as original equipment manufacturers, or OEMs, while retailers are often known
as buying centers.
ANSWER:
c
53. Which of the following statements is true of MRO (maintenance, repair, or operating) supplies?
a.
They become part of a final product.
b.
They are intangible business products.
c.
They are relatively expensive when compared to other business products.
d.
They are normally standardized items that purchasing agents routinely buy.
ANSWER:
d
54. Which of the following characteristics distinguishes business products from consumer products?
a.
Physical form
b.
Intended use
c.
Distribution method
d.
Price
ANSWER:
b
55. Casca Paints Inc., a manufacturer of paints and emulsions, owns a user-friendly Web site. The Web site allows
customers to upload pictures of their house and select the colors that best match their expectations. Donnel Designs Inc.,
an interior decoration firm, enters into a partnership with Casca Paints Inc. As a result, customers can now get a complete
interior design solution for their houses. This is an example of a _____.
a.
straight rebuy
b.
golden handshake
c.
negative inventory
d.
strategic alliance
ANSWER:
d
56. Line Twists Inc. is a start-up dance company. On its Web site, it conducts an online competition for amateur dancers.
It also asks people to post one sentence on why they love to dance. Thousands of people participate and comment on the
Web site. In the context of business-to-business social media marketing, this step taken by Line Twists Inc. is an example
of the marketing metric of _____.
a.
product adaptation
b.
engagement
c.
conversion
d.
review
ANSWER:
b
57. _____ refers to the phenomenon in which a small increase or decrease in consumer demand can produce a much larger
change in demand for the facilities and equipment needed to make the consumer product.
a.
The multiplier effect
b.
Reciprocity
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c.
The conversion rate
d.
Frequency
ANSWER:
a
58. Which of the following is true of consumers in the context of consumer markets?
a.
They often follow the practice of reciprocity.
b.
They tend to buy in larger quantities than business consumers.
c.
They approach purchasing more formally than business buyers.
d.
They normally buy products rather than lease them.
ANSWER:
d
59. Vactin Corp., a construction company, buys ten truckloads of cement for its new project.
Given this information, the cement bought is an example of a(n) _____.
a.
consumer product
b.
service product
c.
industrial product
d.
unsought product
ANSWER:
c
60. In the context of business products, which of the following statements is true of major equipment?
a.
It is marketed by local industrial distributors.
b.
It is sold through a longer distribution channel than accessory equipment.
c.
It is often custom designed for each customer according to requirements.
d.
It is less expensive and shorter-lived than accessory equipment.
ANSWER:
c
61. Fresnas Inc., an oil refinery, buys crude oil and converts it into various products such as gasoline, kerosene, and diesel.
Fresnas Inc., then, sells these products to other companies or retailers. Based on this information, which segment of the
business market is most likely represented by Fresnas Inc.?
a.
Resellers
b.
Producers
c.
Distributors
d.
Governments
ANSWER:
b
62. Tamery Corp. is engaged in marketing various goods and services. It buys goods from various manufacturers and sells
them to businesses and end consumers. Given this information, Tamery Corp. is said to be selling consumer products if:
a.
it sells books to students.
b.
it sells spare parts to automobile manufacturers.
c.
it sells laptops to an IT company.
d.
it sells printers to a partnership firm.
ANSWER:
a
63. Which of the following statements is true of processed materials?
a.
They include materials such as large or expensive machines, mainframe computers, and generators.
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Chapter 07: Business Marketing
b.
They include materials such as sheet metal, chemicals, specialty steel, treated lumber, and plastics.
c.
They include materials such as spark plugs, tires, and electric motors for automobiles.
d.
They include materials such as lubricants, detergents, paper towels, pencils, and paper.
ANSWER:
b
64. Explain strategic alliance and the factors that contribute to its long-term survival.
ANSWER:
Answers will vary. A strategic alliance, sometimes called a strategic partnership, is a cooperative agreement
between business firms. Strategic alliances can take the form of licensing or distribution agreements, joint
ventures, research and development consortia, and partnerships. They may be between manufacturers,
manufacturers and customers, manufacturers and suppliers, and manufacturers and channel
intermediaries.For an alliance to succeed in the long term, it must be built on commitment and trust.
Relationship commitment means that a firm believes an ongoing relationship with some other firm is so
important that it warrants maximum efforts at maintaining it indefinitely. A perceived breakdown in
commitment by one of the parties often leads to a breakdown in the relationship.Trust exists when one party
has confidence in an exchange partner's reliability and integrity. Some alliances fail when participants lack
trust in their trading partners.
65. Explain the distribution structure followed in business markets.
ANSWER:
Answers will vary. Many consumer products pass through a distribution system that includes the producer,
one or more wholesalers, and a retailer. In business marketing, however, channels of distribution are
typically shorter. Direct channels, where manufacturers market directly to users, are much more common.
The use of direct channels has increased dramatically in the past decade with the introduction of various
Internet buying and selling schemes. One such technique is called a business-to-business online exchange,
which is an electronic trading floor that provides companies with integrated links to their customers and
suppliers. The goal of B-to-B exchanges is to simplify business purchasing and to make it more efficient.
66. Discuss the importance of customer service in business marketing.
ANSWER:
Answers will vary. Business marketers are increasingly recognizing the benefits of developing a formal
system to monitor opinions and perceptions of the quality of customer service. Companies such as FedEx,
IBM, and Oracle build their strategies not only around products but also around highly developed service
skills. These companies understand that keeping current customers satisfied is just as important as attracting
new ones, if not more so. Leading-edge firms are obsessed not only with delivering high-quality customer
service but also with measuring satisfaction, loyalty, relationship quality, and other indicators of nonfinancial
performance. Delivering consistent, high-quality customer service is an important basis for establishing
competitive advantage and differentiating one's company from competitors.Some customers are more
valuable than others. They may have greater value because they spend more, buy higher-margin products,
have a well-known name, or have the potential of becoming a bigger customer in the future. Some companies
selectively provide different levels of service to customers based on their value to the business. By giving the
most valuable customers superior service, a firm is more likely to keep them happy, hopefully increasing
retention of these high-value customers and maximizing the total business value they generate over time.
Providing different customers with different levels of service is a very sensitive matter. It must be handled
very carefully and very discreetly to avoid offending lesser-value, but still important, customers.
ANSWER:
Answers will vary. Major equipment includes capital goods such as large or expensive machines, mainframe
computers, blast furnaces, generators, airplanes, and buildings. Major equipment is depreciated over time
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Chapter 07: Business Marketing
to major equipment, accessories are more often standardized and are usually bought by more customers.
68. Explain how business establishments are classified under the North American Industry Classification System
(NAICS).
ANSWER:
Answers will vary. The North American Industry Classification System (NAICS) is an industry classification
system introduced in 1997 to replace the standard industrial classification system (SIC). NAICS is a system
for classifying North American business establishments. The system, developed jointly by the United States,
Canada, and Mexico, provides a common industry classification system for the North American Free Trade
Agreement (NAFTA) partners. Goods- or service-producing firms that use identical or similar production
processes are grouped together.NAICS is an extremely valuable tool for business marketers engaged in
analyzing, segmenting, and targeting markets. Each classification group is relatively homogeneous in terms
of raw materials required, components used, manufacturing processes employed, and problems faced.
Therefore, if a supplier understands the needs and requirements of a few firms within a classification,
requirements can be projected for all firms in that category. The number, size, and geographic dispersion of
firms can also be identified. This information can be converted to market potential estimates, market share
estimates, and sales forecasts. It can also be used for identifying potential new customers. NAICS codes can
help identify firms that may be prospective users of a supplier's goods and services. The more digits in a
code, the more homogeneous the group.
69. Discuss the significance of content marketing as a trend in In B-to-B Internet Marketing.
ANSWER:
Answers will vary. Content marketing is a strategic marketing approach focused on creating and distributing
valuable, relevant, and consistent content. The goal of this content is to attract and retain a clearly defined
audience, and ultimately, drive profitable customer action. This strategy has played an important role for B-
to-B marketers. Content marketing includes media such as videos, podcasts, webinars, blog posts, white
papers, e-books, slide decks, and more. Sharing valuable insights and interesting content can position a
company as a though leader in an area. A 2014 study by the Content Marketing Institute and MarketingProfs
found that 86 percent of respondents use content marketing, but many struggle with developing effective
content.
70. In the context of categories of business customers, describe the role of resellers.
ANSWER:
Answers will vary. The reseller market includes retail and wholesale businesses that buy finished goods and
resell them for a profit. A retailer sells mainly to final consumers; wholesalers sell mostly to retailers and
other organizational customers. There are approximately 1.5 million retailers and 500,000 wholesalers
operating in the United States. Consumer product firms like Procter & Gamble, Kraft Foods, and Coca-Cola
sell directly to large retailers and retail chains and through wholesalers to smaller retail units. Business
product distributors are wholesalers that buy business products and resell them to business customers. They
often carry thousands of items in stock and employ sales forces to call on business customers. Businesses
that wish to buy a gross of pencils or a hundred pounds of fertilizer typically purchase these items from local
distributors rather than directly from manufacturers such as Empire Pencil or Dow Chemical.
