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Chapter 7: Business Marketing
17
improve?
a. Quality
b. Service
c. Price
d. Commitment
10. Zappos would agree with the statement that “some customers are more valuable than
others,” which is why it is expanding its Zappos Insights program.
a. True
b. False
Case Assignment: Square, Inc.
In October 2015, amid rising fears about the security of credit card transactions, financial
institutions and businesses made the transition to using chip cards. Unlike the quick swipe of a
magnetic stripe on the back of traditional credit and debit cards, chip cards have to be left inside
the terminal while the embedded chip verifies the transaction. While there is no consistent
method for measuring transaction speed, news agencies report average chip speeds of anywhere
from 8 seconds to 13 seconds.
The switch to chip readers was precarious, with many businesses taping over the chip
card slots in the terminals until the kinks were worked out. Even after a year, some businesses
still could not process chips and continued to utilize the magnetic stripe for transactions.
Financial institutions thought the additional security benefits of the chips would overshadow the
added wait times. Yet a survey conducted by Harbortouch in 2016 showed that nearly four times
as many consumers prefer speedy transactions over the additional security.
“Consumers and business owners alike loathe waiting for chip cards to process,” said
Jesse Dorogusker, Square’s Hardware Lead said in a blog post.
Chapter 7: Business Marketing
18
Founded in 2009 and headquartered in San Francisco, California, Square started with the
simple idea that all businesses, regardless of size, should be able to accept credit cards. They
offer cohesive products to run an entire business, including point-of-sale service tools for
accepting credit cards, tracking inventory, real-time analytics, and invoicing. Square also offers
sellers financial and marketing services. Square Cash is an additional service available for
businesses and individuals to send and receive money.
Chapter 7: Business Marketing
19
TRUE/FALSE
1. The main philosophy and practice of marketing is the same whether marketing to a business
organization or a consumer.
2. Square may face business trouble in the future because they have not bothered to foster a
committed relationship with other businesses.
3. When in the business of offering devices for monetary transactions, trust is an important
condition in the business relationship.
4. Square’s main customers are original equipment manufacturers (OEMs).
5. Square is a provider of both business products and business services.
MULTIPLE CHOICE
Chapter 7: Business Marketing
21
e. None of these
5. Many vendors at fairs and conventions use Square POS terminals to accept credit card
payments. If their sales decrease, the demand for the improved POS terminal will also decrease
because of __________ demand.
a. derived
b. inelastic
c. joint
d. fluctuating
Great Ideas for Teaching Chapter 7
James S. Cleveland, Sage College of Albany
Discussion Board Topics to Encourage Participation
Discussion board questions provided to students to encourage them to engage in thinking and
writing about the content of the Principles of Marketing course usually take the form of a
provocative statement to which students are asked to respond. An example of this would be “All
PR is good PR.”
Discussion topics such as this one are abstract and often require that the instructor provide an
initial reply to show students what is expected of them in their own replies. For students with
limited work experience, this approach may be quite appropriate. For adult students with
extensive experience as employees and consumers, however, the abstract nature of such topics
can be frustrating.
I have developed, therefore, a series of discussion board questions to use with experienced, adult
students. These questions are designed to encourage them to use their experiences as employees
and consumers as doorways to better understand the course material, and to make their own
responses more interesting to themselves and to the other students in the class who will read and
comment on them.
Chapter 7: Business Marketing
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Each question has three parts.
1. First, there is a sentence or two from the students’ textbooks introducing the topic. By
using the text author’s own words, students are enabled to locate relevant material in the
text more easily, the text content is reinforced, and confusion resulting from use of variant
terms or expressions is minimized.
2. Second, there is a reference to text pages the student should review before proceeding.
Since the goal of the exercise is for students to apply the course content to their own
experiences, reviewing the content first is important.
3. Third, there is a request for the student to think about or remember a specific situation in
their experience to which they can apply the text material, and a question or questions for
them to address in their reply.
Here are additional similar discussion board questions developed for Chapter 7 of MKTG11.
Each is written to fit the same text cited above but could easily be rewritten and revised to fit
another text.
Series A
1. The business market consists of four major categories of customers: producers, resellers,
government, and institutions.
3. Then describe which category your employer falls into and what sort of products it buys.
Series B
1. Business buyers behave differently from consumers. A buying center includes those
persons in an organization who become involved in the purchase decisions.
2. Review the material on buying centers and the roles in buying centers in section 7-8 of
your text.
3. Then describe how you have been involved in a buying center for your employer and what
role or roles you played.
Elizabeth J. Wilson, Louisiana State University
A Decision-Making Exercise for Business Marketing
This exercise is designed to introduce undergraduate students to decision making in the context
of organizational buying. Several distinctions of organizational buying, compared to consumer
Chapter 7: Business Marketing
23
buying, can be made by using this exercise. For example, differences in decision criteria are
highlighted, and individual versus group decision making can be demonstrated.
Procedure
The three decision evaluations represent different product categories in organizational buying—
office copiers, accessory goods that do not become part of the final product; painted sheet metal,
component parts; and an industrial boiler system, major equipment or a capital installation
(Lamb, Hair, and McDaniel 1992). Use of these three decisions illustrates the wide range of
products that may be procured by a buyer or purchasing agent.
Each exercise is designed so that there is no right or wrong answer. The “suppliers,” represented
by the attribute combinations, represent a pool of vendors from which the buyer can choose. The
display of the nine suppliers is a fractional factorial design that has each of the four decision
variables (price, quality, delivery, service) represented in orthogonal combinations. The
expression of these attributes varies in order to be decision-specific. For example, quality for the
boiler system is expressed in terms of pollution control, while quality for copiers is expressed as
the number of features available.
Part A: Individual Evaluation
A helpful class exercise is to have students role-play as organizational buyers to work through
these decisions individually. Students are instructed to read the decision context statement and
then examine the nine “vendors” described by each block. For example, in the copier decision,
vendor N offers a copier that is priced at $3,500, has the A-level feature package (see bottom of
decision), requires two hours of maintenance (downtime) per month, and can be delivered in two
weeks. Students then should cross out any vendors that are not acceptable—for whatever reason.
Of the acceptable vendors, students divide 100 points to represent how they want to source the
decision. For example, one copier vendor could be given all 100 points, or the buyer (student)
can use a multiple sourcing strategy by dividing the points among several (50/50, 70/30,
40/40/20, etc.).
At this point, the decision evaluations illustrate the concepts and variables that organizational
buyers use in selecting suppliers. After completing the decision individually, students can be
asked to offer their “solutions” to the buying decision. Since there is no right or wrong way to
complete the exercise, students will differ in their solutions. Discussion of several of their
solutions illustrates the concept of trade-offs in buying and the fact that organizational buyers
have different levels of expectations in buying. What is important to one buyer may not be as
important to another. In addition, the evaluation of decisions in a systematic, “rational” way is
sometimes different from consumer buying (e.g., impulse purchases).
Chapter 7: Business Marketing
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Part B: Group Evaluation
The second part of the exercise involves group decision making. Arrange students in groups of
two to four persons and have them evaluate these decisions again, but this time they all must
agree on the point allocations among suppliers. In discussing group solutions, the instructor may
ask if there was any conflict and, if so, how it was resolved. If the group’s decision was very
different from an individual’s original evaluation, the students may discuss the dynamics of the
decision-making process in how preferences were changed. This part of the exercise illustrates
concepts such as a buying center, the roles of members in group decisions, and conflict
management and resolution.
Reference: Charles W. Lamb, Joseph F. Hair, and Carl McDaniel (1992), Principles of
Marketing, Cincinnati, OH: Southwestern Publishing.
Buying Decision for Office Copiers
Decision Context: Your firm needs a new copier to supplement current copiers already in place.
Moderate volume use (25,000 copies per month) is expected.
N ____ pts.
D ____ pts.
J ____ pts.
Price: $3,500
Price: $4,400
Price: $5,000
Feature Package: A
Feature Package: C
Feature Package: B
Maintenance Hours per
Month:
2 hrs.
Maintenance Hours per
Month:
2 hrs.
Maintenance Hours per
Month:
2 hrs.
Delivery Lead Time: 2
weeks
Delivery Lead Time:
Immediate
Delivery Lead Time: 6
weeks
C ____ pts.
W ____ pts.
T ____ pts.
Price: $3,500
Price: $4,400
Price: $5,000
Feature Package: B
Feature Package: A
Feature Package: C
Maintenance Hours per
Month:
5 hrs.
Maintenance Hours per
Month:
5 hrs.
Maintenance Hours per
Month:
5 hrs.
Delivery Lead Time:
Immediate
Delivery Lead Time: 6
weeks
Delivery Lead Time: 2
weeks
A ____ pts.
G ____ pts.
L ____ pts.
Price: $3,500
Price: $4,400
Price: $5,000
Chapter 7: Business Marketing
25
Feature Package: C
Feature Package: B
Feature Package: A
Maintenance Hours per
Month:
8 hrs.
Maintenance Hours per
Month:
8 hrs.
Maintenance Hours per
Month:
8 hrs.
Delivery Lead Time: 6
weeks
Delivery Lead Time: 2
weeks
Delivery Lead Time:
Immediate
Feature Package Key:
A. Reduction/Enlargement, 11 17 oversized documents, toner flow control
B. Package A features plus automatic document feeder, oversized paper tray.
C. Package B features plus document sorter, automatic two-sided copying.
Chapter 7: Business Marketing
26
Buying Decision for Painted Sheet Metal
Decision Context: Your firm needs to consider vendors for awarding annual purchase
agreements. The contract to supply the annual requirement of painted sheet metal may be
awarded to one of several vendors described below.
L ____ pts.
T ____ pts.
P ____ pts.
Quality of Paint Work*:
92%
Quality of Paint Work*:
95%
Quality of Paint Work*:
99%
Lead Time per Order: 8
weeks
Lead Time per Order: 8
weeks
Lead Time per Order: 8
weeks
In-House Vendor Service
Rating: A+
In-House Vendor Service
Rating: A
In-House Vendor Service
Rating: B
Price per piece: $25
Price per piece: $20
Price per piece: $14
F ____ pts.
M ____ pts.
S ____ pts.
Quality of Paint Work*:
92%
Quality of Paint Work*:
95%
Quality of Paint Work*:
99%
Lead Time per Order: 6
weeks
Lead Time per Order: 6
weeks
Lead Time per Order: 6
weeks
In-House Vendor Service
Rating: A
In-House Vendor Service
Rating: B
In-House Vendor Service
Rating: A+
Price per piece: $14
Price per piece: $25
Price per piece: $20
W ____ pts.
G ____ pts.
B ____ pts.
Quality of Paint Work*:
92%
Quality of Paint Work*:
95%
Quality of Paint Work*:
99%
Lead Time per Order: 3
weeks
Lead Time per Order: 3
weeks
Lead Time per Order: 3
weeks
In-House Vendor Service
Rating: B
In-House Vendor Service
Rating: A+
In-House Vendor Service
Rating: A
Price per piece: $20
Price per piece: $14
Price per piece: $25
* Percentage of pieces usable per truckload.
27
BUYING DECISION FOR AN INDUSTRIAL BOILER SYSTEM
Decision Context: Your company needs a boiler system for a new office building. Evaluate the
alternatives in terms of making recommendations to senior management about which vendor(s)
would best meet your company’s needs.
G ____ pts.
T ____ pts.
P ____ pts.
Pollution Control (% Sulfur
retained):
Pollution Control (% Sulfur
retained):
Pollution Control (% Sulfur
retained):
Maintenance Hours per
Month: 6 hours
Maintenance Hours per
Month: 8 hours
Maintenance Hours per
Month: 12 hours
Price: $750,000
Price: $1,000,000
Price: $1,500,000
Manufacturing and Delivery
Lead Time: 12 months
Manufacturing and Delivery
Lead Time: 6 months
Manufacturing and Delivery
Lead Time: 9 months
R ____ pts.
J ____ pts.
F ____ pts.
Pollution Control (% Sulfur
retained):
Pollution Control (% Sulfur
retained):
Pollution Control (% Sulfur
retained):
Maintenance Hours per
Month: 6 hours
Maintenance Hours per
Month: 8 hours
Maintenance Hours per
Month: 12 hours
Price: $750,000
Price: $1,000,000
Price: $1,500,000
Manufacturing and Delivery
Lead Time: 12 months
Manufacturing and Delivery
Lead Time: 6 months
Manufacturing and Delivery
Lead Time: 9 months
B ____ pts.
M ____ pts.
W ____ pts.
Pollution Control (% Sulfur
retained):
Pollution Control (%Sulfur
retained):
Pollution Control (%Sulfur
retained):
Maintenance Hours per
Month: 6 hours
Maintenance Hours per
Month: 8 hours
Maintenance Hours per
Month: 12 hours
Price: $750,000
Price: $1,000,000
Price: $1,500,000
Manufacturing and Delivery
Lead Time: 12 months
Manufacturing and Delivery
Lead Time: 6 months
Manufacturing and Delivery
Lead Time: 9 months
Richard Turshen, Pace University
Business Document versus Academic Treatise
The Dilemma: In order to demonstrate their knowledge of marketing principles on two learning
levels—comprehension and application—students are often asked to prepare a marketing plan
for a new product. Traditionally, they are required to produce a business document and an
academic treatise simultaneously within the same written report. This dichotomous intellectual
Chapter 7: Business Marketing
28
responsibility not only creates a dilemma for the student relative to preparation, but also for the
instructor relative to evaluation.
The Solution: In order to separate the two distinct requirements, a supplemental reporting
component is added to the assignment; in effect, the plan is subdivided into two sections.
Summary: The following comparative summary is supplied to the students:
Business Subdivision
(Marketing Plan)
vs.
Academic Subdivision
(Explanatory Manual)
Business presentation for your boss
vs.
Academic presentation for your professor
Present the elements of the plan;
information, data, and strategy decisions
vs.
Present the rationale behind the
strategies; sources, derivations and
explanations
Project the plan in terns of what, how,
when, where, and who
vs.
Project the plan in terms of why
Specific decisions; the result of thinking
vs.
Corresponding rationale; the process of
thinking
Conclusion: The tested technique of subdivision avoids the muddled mix of applied strategic
marketing decision making and corresponding theoretical supporting rationale in a single report.
Both parties, the student and instructor, consequently gain a clearer mindset for the preparation
and evaluation of the business and academic requirements of the marketing plan assignment.
Shirine Mafi, Otterbein College
Researching a Corporation
Students are divided into teams of three to five members. Each team works together throughout
the quarter. Teams each select a corporation and research that company for all project
assignments. The final project grade is based partially on peer evaluations.
Chapter 7: Business Marketing
29
Project Assignment I
Through a 10- to 12-page paper, students become familiar with the company and the
environmental forces that shape the company and its industry. The report also entails a marketing
opportunity analysis.
Project Assignment II
Based upon the findings of the marketing opportunity analysis, teams recommend one of the
options given below and produce a marketing plan accordingly.
• A new marketing mix targeted to a new market
• A current marketing mix extended to a new target market
• A new or improved product/service targeted to the current market
• A combination of any of these
Each team will produce a marketing plan that includes the options given below.
• Customer and competitive situation analysis
• Marketing objectives
• Marketing strategies
• Control/evaluation procedures
Group Presentation: Each team presents its project to the class. All members participate
equally. The team not only presents its findings but must be able to defend its plan to the class.
Use of visual aids is encouraged.
Group Competition: In addition to the instructor’s evaluation, class members vote for the best
group presentation. The winning team members earn bonus points.
