978-1337407588 Chapter 7 Solution Manual Part 1

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Chapter 7: Business Marketing

Review and Assignments for Chapter 7

Review Quesons

1. Why is relationship or personal selling the best way to promote in business

marketing?

2. Explain how a marketer could use the website

http://www.census.gov/eos/www/naics/index.html to better understand the NAICS

system.

There is a link on the top of the NAICS web page labeled “FAQs” that answers frequently

3. How might derived demand affect the manufacturing of an automobile?

The demand for new cars drives the demand for products such as tires, brake linings,

4. Intel Corporation supplies microprocessors to Compaq for use in their computers.

Describe the buying situation in this relationship, keeping in mind the rapid

advancement of technology in this industry.

Students should address some of the points outlined below.

The two companies do have a close and long-standing relationship; however, the purchases are

not simple rebuys. With the new technology, Compaq and Intel are constantly renegotiating

Chapter 7: Business Marketing

Applicaon Quesons

1. As the marketing manager for Huggies diapers made by Kimberly-Clark, you are

constantly going head-to-head with Pampers, produced by rival Procter & Gamble.

You are considering unlocking the potential of the business market to increase your

share of the disposable diaper market, but how? Write an outline of several ways you

could transform this quintessentially consumer product into a successful business

product as well.

2. How could use you use the website http://www.btobonline.com to help define a target

market and develop a marketing plan?

This website provides some services to organizations that wish to do business with other

organizations. Links on the website include: services, resources, finance, tools, media kits,

and access to the Business to Business magazine. To find a potential target market, the first

3. Reconsider question 1. How could you use the Internet in your business marketing of

Huggies diapers?

4. Understanding businesses is the key to business marketing. Publications like

Manufacturing Automation, Computer Weekly, Power Generation Technology &

Markets, and Biotech Equipment Update can give you insights into many business

marketing concepts. Research the industrial publications to find an article on a

business marketer that interests you. Write a description of the company using as

many concepts from the chapter as possible. What major category or categories of

business market customers does this firm serve?

Chapter 7: Business Marketing

5. What do you have to do to get a government contract? Check out the websites

http://www.fedbizopps.gov and http://www.governmentbids.com to find out. Does it

seem worth the effort?

6. Pick a product, and determine its NAICS code. How easy was it to trace the groups

and sectors?

7. Your boss has just asked you, the company purchasing manager, to buy new

computers for an entire department. Since you have just recently purchased a new

home computer, you are well educated about the various products available. How will

your buying process for the company differ from your recent purchase for yourself?

As with family purchasing decisions, several people may play a role in the business purchase

process. The boss is the initiator and may be the decider. The coworkers for whom the

computers are being purchased will be the users, and you are the purchaser, but you may

8. In small groups, brainstorm examples of companies that feature the products in the

different business categories. (Avoid examples already listed in this chapter.) Compile

a list of 10 specific products, and compare them with another group. Have each group

take turns naming a product, and have the other groups identify its appropriate

category. Try to resolve all discrepancies through discussion. It is certainly possible

that some identified products might appropriately fit into more than one category.

9. A colleague of yours has sent you an e-mail seeking your advice as he attempts to sell

a new voice-mail system to a local business. Send him a return e-mail describing the

various people who might influence the customer’s buying decision. Be sure to include

Chapter 7: Business Marketing

suggestions for dealing with the needs of each.

Students’ answers should address some of the points given below.

The initiator is the person who first suggests making a purchase. This could be a CEO or an

office manager or someone else. Influencers or evaluators often define specifications for

The decider is the person who possesses formal or informal power to choose or approve the

Vendors need to identify and interact with the true decision makers. Other critical issues are

Applicaon Exercise

Purchasing agents are often offered gifts and gratuities. Increasingly, though, companies are

restricting the amount and value of gifts that their purchasing managers can accept from vendors.

The idea is that purchasing managers should consider all qualified vendors during a buying

decision instead of only those who pass out great event tickets. This exercise asks you to

consider whether accepting various types of gifts is ethical.

Activities

1. Review the following list of common types of gifts and favors. Put a checkmark next to the

items that you think it would be acceptable for a purchasing manager to receive from a

vendor.

Advertising souvenirs Automobiles

Clothing Dinners

2. Now look at your list of acceptable gifts through various lenses. Would your list change if

Chapter 7: Business Marketing

the purchasing manager’s buying decision involved a low-cost item (say, pens)? Why, or

why not? What if the decision involved a very expensive purchase (like a major

installation)?

3. Form a team and compare your lists. Discuss (or debate) any discrepancies.

Purpose: This exercise helps students confront the gray areas in their own ethical perceptions.

Setting It Up: Distribute the checklist above. You can have students work individually, in pairs,

or in groups to complete it. Expect some debate, as differences over what students consider

ethical are bound to arise. After students have had adequate time to determine the gifts they find

ethical, show them the grid on the next page. Discuss any differences in perceptions.

This exercise was inspired by the following Great Idea in Teaching Marketing:

Gregory B. Turner, College of Charleston

Student Ethics Versus Practitioner Ethics

This exercise can be used during a logistics or ethics segment in a basic marketing class. The

students find it quite enjoyable, and it helps promote student participation in the classroom. I

have developed a standard list of gifts and gratuities that are offered to purchasing agents. This

Chapter 7: Business Marketing

TYPE OF GIFT/FAVOR A B C D E F G H

Advertising Souvenirs 29 19 69 30 54 80 73 92

Automobiles 0 0 — 0 — — 1 1

Clothing 5 0 6 16 0 — 7 3

Dinners 38 10 22 79 8 — 48 70

A = 1995–1997 NAPM National Meetings (Turner et al. 1998)

B = 1994 State of South Carolina (Turner et al. 1995)

Ethics Exercise

Cameron Stock, purchasing manager for a sports equipment manufacturer, is responsible for

buying $5 million of supplies every year. He has a preferred list of certified suppliers who are

awarded a large percentage of his business. Cameron has been offered a paid weekend for two in

Las Vegas as a Christmas present from a supplier with whom he has done business for a decade

and built a very good relationship.

Questions

1. Would it be legal and ethical for Cameron Stock to accept this gift?

It may be legal to accept the gift in certain states, but it would not be ethical. Although

Chapter 7: Business Marketing

2. How is this addressed in the AMA Code of Ethics? Go to the AMA website at

http://www.marketingpower.com, and reread the Code of Ethics. Write a brief

paragraph summarizing where the AMA stands on the issue of supplier gifts.

There is no specific paragraph in the code regarding supplier gifts. There is, however, a

rule against exercising coercion in the marketing channel. The acceptance of the gift could

Video Assignment: Zappos

Zappos, known for its outstanding customer service and speedy shipping, also gives away

informaon about making organizaonal culture work for employees and the company. The

program, Insights, oers companies assistance in building strong cultures around core values in

a variety of ways, starng with free tours. Despite seeming like this would give away valuable

compeve informaon, Zappos is expanding this service to help other companies deliver

happiness to their customers.

1. Zappos Insights is an example of:

a. business supplies.

b. B-to-B e-commerce.

c. business service.

d. an accessory for businesses.

2. When Zappos started charging for certain training events, they were worried that people

would not pay. However, they have paid. What does this indicate about the Insights

program?

a. The Insights program has great service, just like Zappos.

b. The Insights program is a high-quality program that offers great service for a price

that is acceptable to businesses.

c. The Insights program is priced low enough to be acceptable for management

Chapter 7: Business Marketing

consulting services.

d. The buying center agreed on using the Zappos program.

3. The primary customers of Zappos are consumers. However, Zappos Insights experiences

very different customers, including:

a. all members from the buying center.

b. OEMS, raw materials handlers, and other B-to-B providers.

c. resellers, producers, and institutions.

d. members of strategic alliances.

4. Zappos wants to deliver happiness to the highest number of people, which has driven the

company’s commitment to work with other companies to help them develop a culture

promoting happy employees. This could be considered:

a. a joint demand for happy employees.

b. a derived demand for joy into the supply chain.

c. a strategic alliance for culture building.

d. the multiplier effect of happiness.

5. Zappos Insights is expanding to work onsite with companies like Google to develop even

stronger organizational cultures and connecting culture to customer service. This

relationship is a keiretsu.

a. True

b. False

Chapter 7: Business Marketing

6. Zappos Insights is an example of relationship commitment to other businesses.

a. True

b. False

7. Zappos found that the Insights program has elastic demand, because when they began

charging for the workshops, the demand for these workshops did not change.

a. True

b. False

8. When Zappos vendors visited the company headquarters and wanted to know more about

how the business was run, they were expecting:

a. installations.

b. reciprocity.

c. e-commerce training.

d. relationship marketing.

9. Which of the following criterion is Zappos Insights committed to helping other companies

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.

Chapter 7: Business Marketing

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

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

“Consumers and business owners alike loathe waiting for chip cards to process,” said

Founded in 2009 and headquartered in San Francisco, California, Square started with the

In response to customer inconvenience at the slow chip readers, in September 2016,

Square announced that it had reduced the speed of their chip card reader by 25 percent, from 5.7

Chapter 7: Business Marketing

“We’re committed to saving time for our sellers and the customers they serve.

Square was able to tackle the problem of speed better than others because they designed

Square released a $49 contactless payment and chip reader terminal with a simple design

Square is not alone in their efforts to reduce chip card transaction times. Visa debuted

Sources: N. Gagliordi, “Square Cuts Transaction Times on Its Chip Card Readers,” ZD Net,