Chapter 7—Business Marketing
TRUE/FALSE
1. Shimano sells the fishing and golfing equipment it manufactures to sporting goods stores, which in
turn sell the equipment to anglers and golfers. Shimano is engaged in business marketing.
2. For a product to be called a business product, it must be used to manufacture other products, become
part of another product, or facilitate the normal operations of a firm.
3. The emergence of the Internet has made buying and selling in the business market a process that is
only efficient for the largest producer to pursue.
4. The Internet has eliminated the need for distributors.
5. A keiretsu is an example of how companies can develop into a network of interlocking corporate
affiliates.
6. Any firm that purchases goods and services to make a profit by using them to produce other goods is
part of the producer segment of the business market.
7. OEM stands for operationally efficient marketing.
8. The reseller market is the same as the retailer market.
9. The government sector (federal, state and local) is a minor segment of the business market
10. The single largest customer in the world is the U.S. federal government.
11. NAICS is an industry classification system used by most nations of the world.
12. The first two digits of a NAICS code designate an industry group, such as fiber, yarn, and thread mills.
13. If DuPont runs advertisements encouraging people to buy clothing that contains Lycra (a DuPont
product), this would be an attempt to influence secondary demand.
14. A decline in the availability of tungsten will slow production of light filaments, which will in turn
reduce the demand for light bulbs. This is an example of fluctuating demand.
15. While consumer and business markets differ in many ways, the volatility of demand for products is
about the same for each type of market.
16. Unlike consumer product channels of distribution, which usually have one or more intermediaries,
channels of distribution for business products are often direct.
17. Most business marketers emphasize personal selling as their primary communications tool.
18. Another commonly used term for accessory equipment is installations.
19. Individual producers of raw materials have great flexibility in pricing their products.
20. Items that are ready for assembly and that retain their identities when incorporated into another
product are called component parts.
21. Consumable items that do not become part of the final product are called supplies.
22. Because formal committees are often established to purchase business products, members of buying
centers can be readily identified on formal organizational charts.
23. The role of gatekeeper may be filled by a receptionist.
24. Although customer service has in the past been an important factor in business buyer-seller
relationships, its importance has been waning in the last decade.
25. If Ford purchased the same number of brakes from NUCAP on a regular basis, it would be
participating in a straight rebuy.
MULTIPLE CHOICE
1. _____ is the marketing of goods and services to individuals and organizations for purposes other than
personal consumption.
a.
Secondary marketing
b.
Interactive marketing
c.
Business marketing
d.
High-level marketing
e.
Industrial marketing
2. A product is defined as a business product rather than a consumer good on the basis of its:
a.
intended use
b.
physical characteristics
c.
price
d.
distribution method
e.
tangible attributes
3. Business marketing does NOT include goods and services that:
a.
become part of another product
b.
are used to manufacture other products
c.
are used for personal consumption
d.
facilitate the normal operations of an organization
e.
are acquired for resale
4. Which of the following is the best example of a sale that could only take place in the business market?
a.
A professor is purchasing a Mac to use at home
b.
A music store owner is ordering the newest Elvis Ultimate Live collection DVD for her
mother
c.
A teen is purchasing ring tones to use on her phone
d.
A librarian is purchasing new books for the school’s library
e.
All of these are examples of business sales
5. The Solar Group, a Mississippi-based mailbox manufacturer, sells mailboxes to contractors who are
building mega-subdivisions, to hardware stores, and directly to new homeowners. What kind of
products is the Solar Group selling?
a.
business products only
b.
both business and consumer goods
c.
installations
d.
consumer goods only
e.
supplies
6. Since GE began accepting bids via the Internet, the length of the bidding process in GE’s lighting
division has been reduced from 21 days to 10. Since requesting the bids is easier, purchasing agents
approach more potential vendors. The ability to locate more vendors has lowered the cost of goods by
5 to 15 percent. GE’s experience illustrates:
a.
how using the Internet decreases competition
b.
how business marketing is becoming global
c.
how business marketing is using the Internet to become more efficient
d.
how the use of the Internet has influenced consumer markets to become larger and more
powerful than business markets
e.
how the Internet increases efficiency in data exchange
7. _____ is a measure of a Web site’s effectiveness and is calculated by multiplying the frequency of
visits times the duration of a visit times the number of pages viewed during each visit.
a.
Effective reach
b.
Effective frequency
c.
Gross rating points
d.
Interactiveness
e.
Stickiness
8. All of the following are current roles of the Internet in business marketing EXCEPT:
a.
reduce costs
b.
eliminate distributors
c.
build partnerships and alliances
d.
build and support branding
e.
integrate online and traditional media
9. The elimination of intermediaries such as wholesalers or distributors from a marketing channel is
referred to as:
a.
disintermediation
b.
disassociation
c.
unencumberance
d.
demarketing
e.
selective retention
10. Before toll-free telephone numbers and the Internet were used as commercial tools, fliers usually
purchased airline tickets from travel agents. Travel agents no longer receive a commission from the
airlines for selling tickets to consumers. This is an example of:
a.
reintermediation
b.
disassociation
c.
disintermediation
d.
discrimination
e.
transference
11. The reintroduction of an intermediary between producers and users is called:
a.
disintermediation
b.
reinstatement
c.
selective retention
d.
reestablishment
e.
reintermediation
12. A cooperative agreement between business firms is a:
a.
shared capital contract
b.
global partner development strategy
c.
strategic alliance
d.
joint contract
e.
comarketing effort
13. IBM and Cisco work together to provide banks with the products and services they need to manage
their multiple locations. In other words, the two companies have joined in a:
a.
retail cooperative
b.
direct investment venture
c.
transactional relationship
d.
strategic alliance
e.
synergistic relationship
14. Sometimes a _____ is created for the purpose of sharing resources. This was why the Donnelly
Corporation, a company that designs, manufactures, and markets automotive parts, joined with
Applied Films Laboratory, Inc. to manufacture and supply the world market with display coated glass
for liquid crystal displays (LCDs).
a.
shared capital contract
b.
global partner development strategy
c.
strategic alliance
d.
cobranding effort
e.
market cooperative
15. Which of the following means that a firm believes that an ongoing relationship with some other firm is
so important that it warrants maximum efforts at maintaining it indefinitely?
a.
amae
b.
trust
c.
relationship quality
d.
strategic alliance
e.
relationship commitment
16. DHL maintains a strategic alliance with UPS because it has confidence in UPS’s reliability and
integrity. This condition is referred to as:
a.
trust
b.
tomo
c.
commitment
d.
amae
e.
reciprocity
17. In Japan, reciprocity and personal relationships contribute to the development of:
a.
global ventures
b.
amae
c.
agricola
d.
keiretsu
e.
an independent network of small retailers
18. A keiretsu is a(n):
a.
type of strategic alliance commonly found in Japan
b.
method of business e-commerce found in Asia
c.
Internet site that offers its customers access to various languages that they can use to
conduct their business
d.
form of relationship marketing that is illegal in the United States
e.
bribe
19. Ed Rodney works for the state of Minnesota as a advocate of state growth and development. He
devises ways to encourage businesses to relocate to the state. In other words, Rodney is involved in
business marketing. He is compiling a list of potential businesses that might be willing to move their
operations to Minnesota. Which of the following possible clients should he include in his list?
a.
any family that takes an annual vacation
b.
newlyweds
c.
families that enjoy hiking
d.
companies that have growing sales
e.
students on spring break
20. A particular segment of the business market includes those individuals and organizations that purchase
goods and services for the purpose of making a profit. They achieve this goal by using purchased
goods and services to make other goods, to become part of other goods, or to facilitate the daily
operations of the organization. This group is called the _____ segment of the business market.
a.
institution
b.
reseller
c.
wholesaler
d.
producer
e.
government
21. According to the text, another commonly used name for producers is:
a.
fabricators
b.
installers
c.
original equipment manufacturers
d.
product providers
e.
component networks
22. Corn refiners buy shelled corn and convert it into a variety of products, including high fructose corn
syrup. The refiners then sell the syrup to soda and food product companies for use in foods and
beverages. The corn refiners represent the _____ sector of the business market.
a.
channel
b.
reseller
c.
producer
d.
government
e.
distributor
23. Southern Fireworks Manufacture Company in Liuyang, China provides fireworks for companies in
America such as Premier Pyrotechnics in Richland, Missouri. This means that Southern is a (n):
a.
installer of original materials
b.
demand company
c.
a reseller
d.
government buyer
e.
OEM
24. Caterpillar, the manufacturer of earthmoving equipment, uses completed drivetrains (engines–
transmissions-axles), drivetrain components, electronic controls, hydraulic and electrohydraulic
components and systems, cooling systems, and undercarriage track systems produced by other
organizations in its manufacturing process. Caterpillar is an example of a(n):
a.
fabricator
b.
installer
c.
original equipment manufacturer
d.
product provider
e.
component network
25. Businesses that buy finished goods and sell and distribute them for a profit are called:
a.
inventory carriers
b.
producers
c.
distribution networks
d.
resellers
e.
business facilitators
26. In the past 24 years, Mothers Work has grown from a small, mail-order catalog business headquartered
inside the founder’s home, to the world’s largest seller of maternity apparel, with nearly 1,600
locations. In terms of the business market, Mothers Work would be best classified as a(n):
a.
reseller
b.
producer
c.
distribution network
d.
inventory carrier
e.
business facilitator
27. Hensley Poultry is a wholesaler that buys poultry food and health products from Provini, Inc., feeding
systems from Big Dutchman, Inc. and incubation systems from Copca Corp. Hensley then sells those
products to poultry producers and farmers’ cooperatives in Iowa. Hensley Poultry could be best
classified as a(n):
a.
producer
b.
distribution network
c.
inventory carrier
d.
specialty retailer
e.
reseller
28. The U.S. government is:
a.
not a business market segment
b.
the world’s largest single customer
c.
an organization accounting for over 50 percent of the U.S. gross national product
d.
mainly a military equipment purchaser
e.
using one centralized purchasing office for the entire government
29. One segment of the business market has primary goals that differ from the ordinary business goals
such as profit, market share, or return on investment. This segment includes many schools, churches,
and civic clubs and is often called the _____ market.
a.
institution
b.
OEM
c.
service
d.
provider
e.
reseller
30. Which of the following is the BEST example of an institution market?
a.
The Government
b.
eBay
c.
Claire’s Boutique
d.
United Methodist church
e.
Starbucks
31. Organon Teknina sells inexpensive equipment to detect E.coli, listeria, or salmonella bacteria in food.
The company serves not-for-profit institutions that need to regularly check food quality. Organon
Teknina would be LEAST likely to sell to:
a.
Montgomery County school system
b.
a large pediatric hospital
c.
a chain of Mexican restaurants
d.
a chain of church-sponsored retirement homes
e.
American Red Cross emergency shelter kitchens
32. What would a U.S. company that manufactures the lighted signs used in amusement parks, at outdoor
sports arenas, for restaurant promotion, and by state departments of transportation on the sides of roads
use to facilitate its market segmentation and targeting if it wanted data that were readily available and
usable?
a.
a large amount of marketing research, including scanner data and focus groups
b.
other competing firms as a strategic alliance referral service
c.
government bidding processes
d.
the North American Industry Classification System
e.
derived demand
33. The government uses a system called NAICS to classify North American business establishments.
NAICS stands for:
a.
Non-American Industry Classification System
b.
North and South American Institutional Coding Services
c.
Non-American Industrial Corporation System
d.
North American Institution Code System
e.
North American Industry Classification System
34. Imagine you are the research director of a major industrial marketing firm. You need to select an
NAICS code that defines the most homogeneous group of companies in a particular group of highly
competitive companies . Which of the following codes might you use?
a.
7432
b.
532
c.
19
d.
7
e.
999
35. NAICS data are helpful for analyzing, segmenting, and targeting markets. The system was developed
by:
a.
large manufacturers in United States and Mexico that produce similar goods
b.
the North American Free Trade Agreement partners
c.
Brazil, Chile, Argentina, Canada, and the United States working together in a joint venture
d.
the SIC committee
e.
the U.S. government
36. Managers can use the NAICS data to:
a.
create a more focused mission statement
b.
eliminate risk
c.
classify consumer behavior
d.
identify potential new customers
e.
determine purchase motives
37. All of the following are demand characteristics of business markets EXCEPT:
a.
inelastic demand
b.
fluctuating demand
c.
joint demand
d.
stable demand
e.
derived demand
38. The demand for consumer goods often affects the demand for business products. This characteristic of
business markets is called _____ demand.
a.
elastic
b.
inelastic
c.
fluctuating
d.
derived
e.
joint
39. Inland Eastex manufactures a heavy paper stock that is used for printing covers for many different
types and sizes of consumer magazines. Consumer magazine sales determine how much paper Inland
Eastex sells. This is an example of:
a.
joint demand
b.
inelastic demand
c.
elastic demand
d.
congruent demand
e.
derived demand
40. When the demand for packaged beer fell by 8 percent in one year, the demand for aluminum beer cans
and glass beer bottles fell also because the demand for beer containers is an example of a(n) _____
demand.
a.
joint
b.
inelastic
c.
elastic
d.
fluctuating
e.
derived
41. Bàbolina Tetra is a Hungarian company that has genetically created a chicken that is guaranteed to
produce uniform brown eggs with strong shells. It breeds and sells young chicks to farmers all over
Europe who want to sell eggs in local markets. When consumers began to worry about cholesterol
content and stopped eating as many eggs, the demand for the Tetra hen also declined. This would be
an example of _____ demand.
a.
derived
b.
elastic
c.
multiplying
d.
bundled
e.
inelastic
42. When two or more items are used in combination to produce a final product, they are said to have
_____ demand.
a.
derived
b.
inelastic
c.
joint
d.
fluctuating
e.
elastic
43. Apple iTunes has sold over five billion downloads. Without iTunes the demand for the Apple iPod line
of products would be small. Without the musicians there would be no iTunes. A condition of _____
demand exists.
a.
bundled
b.
incremental
c.
functional
d.
developmental
e.
joint
44. A decline in the availability of bicycle handle bars will decrease Huffy Bicycle Company’s production
of bicycles. Decreased production in turn reduces Huffy’s demand for bicycle seats. This is because the
products in this situation have _____ demand.
a.
inelastic
b.
joint
c.
elastic
d.
congruent
e.
derived
45. When demand for a product is _____, an increase or decrease in the price of the product will not
significantly affect demand for the product.
a.
responsive
b.
elastic
c.
inelastic
d.
derived
e.
bundled
46. An acute shortage of heavy-duty tires is threatening to disrupt operations in mining and construction
sites around the world. According to one mine operator, “I’ve got the coal and market, and I have the
trucks to haul the coal, but I don’t have the tires. I’d be willing to pay double the price if I could get the
tires I need.” The demand for heavy-duty tires is:
a.
joint
b.
inelastic
c.
elastic
d.
congruent
e.
derived
47. Lanover Manufacturing supplies windshield wiper blades to General Motors and Ford. A sudden jump
in the price of rubber and its substitutes has forced Lanover and other wiper blades manufacturers to
double the price of the wiper blades. This increase in price has not affected sales volume for wiper
blades. The price change did not change demand for windshield wiper blades because demand for this
product by business customers is:
a.
inelastic
b.
secure
c.
bundled
d.
elastic
e.
resistant
48. Due to rapidly rising overhead costs and increases in raw material prices, Framarx Corporation was
forced to raise the price of its waxed and coated paper by 35 percent. (The paper is used between
frozen hamburger patties to keep the patties from freezing together.) Framarx is the leading
manufacturer in this industry, and its competitors will follow suit. While the sales force for Framarx
believes the price increase will result in a drop in sales, its marketing manager disagrees because the
demand for the waxed and coated paper is more than likely:
a.
resistant
b.
inelastic
c.
derived
d.
elastic
e.
bundled
49. During the first years of this century, the number of packages arriving at households has more than
doubled. An increase in the price of the cardboard boxes in which these packages are shipped will
have little effect on the amount of shipping done; the demand for the boxes will continue to increase.
Therefore, you know the demand for the cardboard boxes is:
a.
resistant
b.
inelastic
c.
derived
d.
elastic
e.
bundled
50. Although the price of a chemical added to paint to protect surfaces from mold and mildew has almost
doubled, the price of paint only rose an average of 5 percent, and the demand for both paint and the
chemical that eliminates mold and mildew remained stable. The demand for this chemical is:
a.
elastic
b.
derived
c.
bundled
d.
inelastic
e.
change-resistant
51. As a result of the _____, a small increase or decrease in consumer demand can produce a much larger
change in demand for the facilities and equipment needed to manufacture the consumer product.
a.
demand fluctuation principle
b.
joint demand principle or division effect
c.
inelastic demand effect
d.
multiplier effect
e.
derived force effect
52. Electric cars will increase the demand for electricity, which will then dramatically increase demand for
the equipment needed to provide consumers with the electricity. This dramatic increase is due to the:
a.
demand fluctuator principle
b.
joint demand principle or division effect
c.
inelastic demand effect
d.
circumlocution effect
e.
accelerator principle
53. Jif is the best-selling brand of peanut butter in the country. The manufacturer purchases large
quantities of peanuts every year to manufacturer its product. This order size is an example of _____
and would give Jif an advantage over other buyers of peanuts.
a.
purchase volume
b.
joint demand
c.
fluctuating demand
d.
sales volume
e.
multiplier effect
54. Buyers in the business market tend to _____ than buyers in the consumer market.
a.
use reciprocity less
b.
purchase in much smaller quantities
c.
buy more products that have a reduced probability of being affected by derived demand
d.
generate more stable demand trends
e.
be much more geographically concentrated
55. The distribution structure in business marketing typically:
a.
includes at least one wholesaler
b.
is direct
c.
is complex and multistage
d.
uses a three-step channel
e.
uses retail distributors
56. _____ is the bargaining between buyers and sellers on product specifications, delivery dates, payment
terms, and other pricing matters and is commonplace in business marketing.
a.
Negotiation
b.
Need mediation
c.
Customerization
d.
Purchase arbitration
e.
Disintermediation
57. If a business needs a particular good or service and decides to look among its own customers for a
provider of that good or service, the business is:
a.
working to create purchase arbitration
b.
opening itself up to prosecution for illegal activities
c.
acting unethically
d.
trying to eliminate derived demand barriers
e.
practicing reciprocity
58. A industrial cleaning products distributor needed to hire a janitorial service to keep his establishment
clean so he chose one of his customers for the job. This is an example of _____.
a.
nested demand
b.
derived demand
c.
reciprocity
d.
elastic demand
e.
circular buying
59. _____ occurs when a deli decides to buy its office supplies from a company that regularly buys
sandwiches for its employees.
a.
Reciprocity
b.
Joint demand
c.
Elastic demand
d.
Derived demand
e.
Bidding conformity