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Marketing Chapter 6
Test banks and vocab for chapter 6
176
Marketing
02/20/2011

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Term
Business Buyer Behavior
Definition
The buying behavior of the organizations that buy goods and services for use in the production of other products and services or to resell or rent them to others at a profit.
Term
Business buying process
Definition
The decision process by which business buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose among alternative suppliers and brands.
Term
Derived Demand
Definition
Business demand that ultimately comes from (derives from) the demand from consumer goods.
Term
Supplier development
Definition
Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.
Term
Straight rebuy
Definition
A business buying situation in which the buyer routinely reorders something without any modifications.
Term
Modified rebuy
Definition
A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.
Term
New task
Definition
A business buying situation in which the buyer purchases a product or service for the first time.
Term
Systems selling (or solutions selling)
Definition
Buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation.
Term
Buying Center
Definition
All the individuals and units that play a role in the purchase decision-making process.
Term
Users
Definition
Members of the buying organization who will actually use the purchased product or service.
Term
Influencers
Definition
People in an organization's buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives.
Term
Buyers
Definition
The people in the organization's buying center who make an actual purchase.
Term
Deciders
Definition
People in the organization's buying center who have formal or informal power to select or approve the final suppliers.
Term
Gatekeepers
Definition
People in the organization's buying center who control the flow of information to others.
Term
Problem recognition
Definition
The first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.
Term
General need description
Definition
The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item.
Term
Product specification
Definition
The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
Term
Supplier search
Definition
The stage of the business buying process in which the buyer tries to find the best vendors.
Term
Proposal solicitation
Definition
The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.
Term
Supplier selection
Definition
The stage of the business buying process in which the buyer reviews proposals an selects a supper or suppliers.
Term
Order-routine specification
Definition
The stage of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties.
Term
Performance review
Definition
The stage of the business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement.
Term
E-procurement
Definition
Purchasing through electronic connections between buyers and sellers--usually online.
Term
Institutional market
Definition
Schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care.
Term
Government market
Definition
Governmental units-federal, state, and local- that purchase or rent goods and services for carrying out the main functions of the government.
Term
In which of the following ways is GE like most other large companies?
Definition
Most of its business comes from commercial and industrial customers.
Term
As a purchasing agent, Benni Lopez buys goods and services for use in the production of products that are sold and supplied to others. Benni is involved in ________.
Definition
business buyer behavior
Term
Business buying behavior refers to the buying behavior of organizations that buy all of the following EXCEPT ________.
Definition
products purchased for personal consumption
Term
In one way or another, most large companies sell to ________.
Definition
other organizations
Term
When compared to consumer markets, business markets are ________.
Definition
huge
Term
Which of the following is NOT a way that business and consumer markets differ?
Definition
satisfaction of needs through purchases
Term
There are many sets of ________ purchases made for each set of ________ purchases.
Definition
business; consumer
Term
Which of the following is true about business marketers in comparison to consumer marketers?
Definition
They deal with far fewer but far larger buyers.
Term
Hewlett-Packard and Dell buy Intel microprocessor chips because consumers buy personal computers. This demonstrates an economic principle called ________.
Definition
derived demand
Term
The Pure Drug Company produces insulin, a product with a very stable demand, even though the price has changed several times in the past two years. Insulin is a product with ________ demand.
Definition
inelastic
Term
The demand for many business goods and services tends to change more, and more quickly, than the demand for consumer goods and services does. This is referred to as ________ demand.
Definition
fluctuating
Term
Large business purchasers usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval. These are all examples of how the business buying decision process is more ________ than the consumer buying decision process is.
Definition
formalized
Term
The owners of the company you work for have developed a core network of suppliers they are working closely with to ensure an appropriate and dependable supply of products. This is an example of ________ management.
Definition
supplier development
Term
Although there are many differences between business buying behavior and consumer buying behavior, both respond to the same four stimuli: product, price, promotion, and ________.
Definition
place
Term
In a typical organization, buying activity consists of two major parts: the buying ________ and the buying ________.
Definition
center; decision process
Term
The buying center and the buying decision process are affected by all of the following factors EXCEPT ________.
Definition
self-concept factors
Term
Which business buying situation is the marketer's greatest opportunity and challenge?
Definition
new task
Term
In which type of buying situation would a supplier most likely focus on maintaining product and service quality?
Definition
straight rebuy
Term
You just lost a major account because a competitor provided the most complete system to meet the customer's needs and solve the customer's problems, and made the sale. In other words, the competition beat you with ________.
Definition
solutions selling
Term
Another name for systems selling is ________ selling.
Definition
solutions
Term
The decision-making unit of a buying organization is called the ________.
Definition
buying center
Term
A ________ consists of the actual users of products, those who control buying information, those who influence the decisions, those who do the actual buying, and those who make the buying decisions.
Definition
buying center
Term
In routine buying situations, which members of the buying center have formal or informal power to select or approve the final suppliers?
Definition
deciders
Term
A(n) ________ controls the flow of information to others in the buying center.
Definition
gatekeeper
Term
Don Amspacher, in his role on the buying committee, provides information for evaluating the alternative purchase decisions and helps define and set specifications for evaluating alternatives for purchasing. Don is a(n) ________.
Definition
influencer
Term
Gretchen Kabor has formal authority to select the suppliers and arrange terms of purchase for many of the items her firm uses. Her role in the buying center is that of ________.
Definition
buyer
Term
A buying center is not a fixed, formally identified, unit within an organization, but rather a set of ________ assumed by different people for different purchases.
Definition
buying roles
Term
Which of the following is NOT included in the decision-making unit of a buying organization?
Definition
individuals who supply the product
Term
Which of the following statements about buying centers is true?
Definition
The buying center may involve informal participants who are not obvious to sellers.
Term
When suppliers' offers are very similar, business buyers have little basis for strictly ________.
Definition
rational choice
Term
When competing products differ greatly, business buyers are more accountable for their purchase choices and tend to pay more attention to ________.
Definition
economic factors
Term
Buyers are heavily influenced by the current and expected economic environment. That includes which of the following buyer influences?
Definition
A) level of primary demand
B) economic outlook
C) the cost of money
Term
To ensure an adequate and available supply of key scarce materials, many companies are now willing to ________.
Definition
buy and hold large inventories of the materials
Term
The major influences on the buying process at General Aeronautics include company policies and systems, technological change, and economic developments. The types of influences on the buying process in this scenario are most accurately categorized as ________ and ________.
Definition
organizational; environmental
Term
Which of the following types of factors influencing members of a buying center are typically the most difficult for marketers to assess?
Definition
interpersonal
Term
Policies, procedures, and systems are all examples of ________ influences on business buyer behavior.
Definition
organizational
Term
Status, empathy, and persuasiveness are all examples of ________ influences on business buyer behavior.
Definition
interpersonal
Term
Charlie Van Dusen, executive vice president of National Central Bank, is going through all of the stages of the buying process to purchase a computer system for the bank. Charlie is facing a(n) ________ situation.
Definition
new-task buying
Term
Which of the following is an example of an internal stimulus that might lead to the business buying process stage of problem recognition?
Definition
A buyer is unhappy with a current supplier's price.
Term
The first step of the business buying process is ________.
Definition
problem recognition
Term
Business marketers often alert customers to potential problems and then show how their products provide solutions. These marketers are hoping to influence which stage of the business buying process?
Definition
problem recognition
Term
The purchasing agent at your company is working with engineers and users to define the items to purchase by describing general characteristics and quantities needed. He is also ranking the importance of reliability, durability, and price. The buyer is preparing a(n) ________.
Definition
general need description
Term
In which stage of the business buying process is a supplier most likely to provide a buyer with information about the values of different product characteristics?
Definition
general need description
Term
Which of the following is the process of the buying center deciding on the best product characteristics?
Definition
product specification
Term
During which stage of the business buying process is a buyer most likely to conduct a value analysis, carefully studying components to determine if they can be redesigned, standardized, or made less expensively?
Definition
product specification
Term
Empire Products has begun a process to find the best suppliers. Empire Products is actively engaged in ________.
Definition
supplier search
Term
A buyer would be most likely to review trade directories in which stage of the business buying process?
Definition
supplier search
Term
In the generally accepted stages of the business buying process, the step following product specification is ________.
Definition
supplier search
Term
In the generally accepted stages of the business buying process, the step following problem recognition is ________.
Definition
general need description
Term
Members of the buying center at ABC Kid's World are drawing up a list of desired toy supplier attributes and their relative importance. Next, they intend to compare several suppliers to these attributes. In which step of the business buying process is the buying center at ABC Kid's World engaged?
Definition
supplier selection
Term
Which of the following statements about the supplier selection stage of the business buying decision process is true?
Definition
Before selecting a supplier, many companies consider the supplier's reputation, ethical corporate behavior, and honest communication.
Term
During the ________ stage of the business buying decision process, the buying center assesses the proposals.
Definition
supplier selection
Term
In the case of maintenance, repair, and operating items, buyers may use a ________ rather than periodic purchase orders.
Definition
blanket contract
Term
In which stage of the business buying process is a supplier's task to make sure that the supplier is giving the buyer the expected satisfaction?
Definition
performance review
Term
Following a purchase, the buyer and seller would both monitor which phase of the new-task buying situation?
Definition
performance review
Term
Under a ________, a supplier monitors and replenishes a buyer's stock automatically as needed.
Definition
vendor-managed inventory
Term
Which of the following accurately describes a cultural difference international marketers should be aware of?
Definition
Japanese people tend to put a high value on rank.
Term
Which of the following is the best advice for an international marketer planning to interact with businesspeople from many different cultures?
Definition
Cultures really are different, so do your best to learn about those differences.
Term
Instead of focusing on managing individual purchases, a seller should focus on managing the ________.
Definition
total customer relationship
Term
Which of the following can be especially useful for a company that needs to conduct secure and frequent communications and transactions with key suppliers?
Definition
an extranet
Term
Reverse auctions, trading exchanges, and company buying sites are all ways that companies can participate in ________.
Definition
e-procurement
Term
The Bentley department store chain makes extensive use of e-procurement. As a buyer, the store should expect to enjoy all of these benefits of e-procurement EXCEPT ________.
Definition
reduced payroll
Term
B-to-B e-procurement yields many benefits. These include all of the following EXCEPT ________.
Definition
elimination of inventory problems
Term
A problem with the rapidly expanding use of e-purchasing is that it ________.
Definition
can erode established customer-supplier relationships
Term
The leading barrier to expanding electronic links with customers and partners online is ________.
Definition
concern over security
Term
Firewalls and encryption are ________.
Definition
two commonly used techniques to safeguard Internet and extranet transactions
Term
Which of the following statements about e-procurement security issues is true?
Definition
Providing e-procurement security can involve a substantial financial investment from a company.
Term
Sage, Inc., provides food services to schools, hospitals, and nursing homes in the Midwest. Management at Sage is involved in the ________ market.
Definition
institutional
Term
Many institutional markets are characterized by ________ and ________.
Definition
low budgets; captive patrons
Term
Government organizations tend to favor ________ suppliers over ________ suppliers.
Definition
domestic; foreign
Term
All of the following are difficulties associated with selling to government buyers EXCEPT ________.
Definition
low sales volume
Term
U.S. Government Purchasing, Specifications, and Sales Directory is a(n) ________ publication.
Definition
government
Term
There are many factors considered in government buying, but ________ is, above all, the most important.
Definition
price
Term
Total government spending is determined by ________ rather than by any ________ to develop this market.
Definition
elected officials; marketing effort
Term
The world's largest buyer of products and services is ________.
Definition
the U.S. government
Term
Which of the following is NOT part of the business market?
Definition
Sue buys a gift for her mother.
Term
) Giant Food Stores buy a lot of frozen turkey products at Thanksgiving and Christmas due to high consumer demand. This is an example of ________ demand.
Definition
derived
Term
Demand for outboard motors depends on consumers purchasing fishing boats. This is an example of ________ demand.
Definition
derived
Term
ABC Enterprises sold 9,000 units @ $2.99/unit in July. The firm sold 9,000 units @ $4.29/unit in August. This illustrates ________ demand.
Definition
inelastic
Term
UPS serves both consumer and business markets, but most of its revenues come from its business customers. UPS has become a strategic logistics ally for many of its business customers, going far beyond offering delivery services to offering inventory management, international trade management, and even financing to its commercial customers. This is an example of which of the following differences between the consumer and business markets?
Definition
Buyers and sellers in the business market build close, long-term relationships.
Term
You call in a department manager to assist in a purchase of industrial equipment. You are considering a change in product specifications, terms, and possibly suppliers. This is most likely a ________ situation.
Definition
modified rebuy
Term
Which of the following is most likely true about a straight rebuy?
Definition
It often involves products with low risks.
Term
You regularly purchase cleaning supplies for your custodial staff, using the same vendor and ordering relatively consistent amounts of the same products with each purchase. This is an example of a ________ situation.
Definition
straight rebuy
Term
Worthington Farm raises chickens. For years, it has used wooden coops for hauling its poultry to market. The owner of the farm needs to buy some replacement coops and is considering buying plastic coops that are slightly more expensive than wooden ones but much easier to clean after use. This purchase of coops is an example of a ________.
Definition
modified rebuy
Term
The EPA has mandated that, in order to reduce local pollution, your printing plant switch from oil-based to water-based inks. This will require entirely new printing presses and a new printing plate technology. After carefully searching through numerous manufacturers' equipment descriptions and gathering opinions from all relevant parties related to the work, the printing plant's buying center will be ready to make this ________ purchase.
Definition
new task
Term
Don Brady is responsible for obtaining price quotations from various vendors. After reviewing them, Don then determines whether or not to include the vendor on the approved vendor list. Don apparently plays two roles, that of ________ and ________.
Definition
decider; buyer
Term
One of Dr. Albrecht's dental assistants told the dentist he should buy a machine that would sterilize his tools without using any water because water tends to cause the tools to rust or corrode over time. In terms of the buying center, the dental assistant had the role of ________.
Definition
influencer
Term
One of Dr. Albrecht's dental assistants told the dentist he should buy a machine that would sterilize his tools without using any water because water tends to cause the tools to rust or corrode over time. Dr. Albrecht, who runs a solo practice in a small rural town, located some articles on the chemical sterilizer and read about how the machine works. After gathering more information and talking to salespeople, Dr. Albrecht placed his order for the machine. In terms of the buying center, Dr. Albrecht had the role of ________.
Definition
decider
Term
A trucking company is considering purchasing new trucks that are powered by ethanol instead of diesel fuel. In terms of the buying center, the truck drivers who must make sure that the trucks do not run out of fuel are the ________.
Definition
users
Term
Worthington Farm raises chickens. For years, it has used wooden coops for hauling its poultry to market. When Bob Worthington went to reuse some of his coops, he noticed many of them could not be sufficiently cleaned for reuse and needed to be replaced. Worthington was at which stage of the business buying process when he decided to replace his old coops?
Definition
problem recognition
Term
John Herr's company has standardized the size of its paper bags so that each bag can be used in five to seven different store departments. This approach to cost reduction likely took place in the ________ stage of the business buying process.
Definition
product specification
Term
In what type of buying situation would a seller most likely send only a catalog to the buyer during the proposal solicitation stage of the business buying process?
Definition
straight rebuy
Term
Most newspapers rely on ________ so they do not need to rely on only one supplier to provide the tons of paper that they use annually.
Definition
multiple sourcing
Term
Pace Hardware uses Learningnow.com to improve sales force effectiveness and facilitate sharing of expertise. It allows Pace retailers to link with other Pace retailers to ask for managerial and marketing advice. It also allows Pace retailers to ask their suppliers about product usage, deliveries, and warranties, and it allows suppliers to send new-product information directly to Pace retailers. In this scenario, Pace Hardware is using a(n) ________.
Definition
extranet
Term
Which of the following was most likely being used when Boeing received orders for $100 million in spare parts in the first year its Web site was in operation?
Definition
e-procurement
Term
All of the following organizations are likely considered to be a part of the institutional market EXCEPT ________.
Definition
Lancaster Township
Term
The following questions refer to the scenario below.

A-1 Stampings, Inc., produces 14 metal stampings for the automotive industry. Due to industry design changes, for the next model year, six of those stampings will require a slight change: two will have an extra hole punched through the side, two will require an extra plating process, and two will require an additional weld operation.
In the meantime, the purchasing agent Richard Koehl has been asked to reduce the number of A-1's steel suppliers in an effort to cut costs. After obtaining updated price quotations and steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected his suppliers based on quality and price, but a major consideration had been the type of steel required and the specialized production processes of his respective suppliers. Not all of A-1's suppliers could produce the exact grades of steel needed; some suppliers were better at producing certain types of steel than others.
Richard contacted several employees at A-1 who had worked with the various types of steel in the past. The quality control manager and line inspector, for example, could help to determine which suppliers had the capabilities of producing specific types of steel. The production control manager could provide input regarding which types of steel worked best in which presses. Even the warehouse foreman gave input regarding how long various types of steel could be held in inventory before rust spots began to form on their surfaces. Each person contributed the necessary information to help Richard in making his decision.
Definition
Term
The demand for A-1 Stampings' products is ultimately based on the demand for new automobiles in the consumer market. This is an example of ________ demand.
Definition
derived
Term
In this scenario, which of the following had the greatest influence on the business buying behavior at A-1 Stampings?
Definition
technological changes
Term
The management directive to reduce the number of steel suppliers is most accurately classified as which type of influence affecting business buying behavior?
Definition
organizational
Term
At what stage in the buying process was Richard when he sought input from others in the firm?
Definition
supplier selection
Term
The main differences between business and consumer markets include market structure and demand, the nature of the buying unit, and the types of decisions.
t/f
Definition
true
Term
One set of business purchases is made for each set of consumer purchases.
t/f
Definition
false
Term
A business marketer normally deals with far fewer buyers than the consumer marketer does.
t/f
Definition
true
Term
Buyer and seller are less dependent upon each other in the business buying process than in the consumer buying process.
t/f
Definition
false
Term
The business buying process consists of business buyers determining which products and services their organizations need to purchase, and then finding, evaluating, and choosing among alternative suppliers and brands.
t/f
Definition
true
Term
Business demand ultimately derives from the demand for consumer goods and services.
t/f
Definition
true
Term
Demand in business markets is subject to more fluctuation than in consumer markets.
t/f
Definition
true
Term
Of the different types of buying situations, the modified rebuy presents the fewest decisions for a business buyer to make.
t/f
Definition
false
Term
Rob Taylor is the buyer for Major Memories. He regularly orders inexpensive merchandise in a fairly routine fashion without any modifications. He may choose other suppliers from time to time. Rob's decisions take the form of a modified rebuy.
t/f
Definition
false
Term
The buying center is not a fixed or formally identified unit within an organization.
t/f
Definition
true
Term
Nancy Zahm works for LeBray Beverage Company. She often helps to define product specifications and also provides information for evaluating alternatives. In this role she is acting as a gatekeeper.
t/f
Definition
false
Term
The decider is the person in the business buying process who controls the flow of information to others involved.
t/f
Definition
false
Term
In business buying decisions, the role of emotion is negligible in comparison to the role of reason.
t/f
Definition
false
Term
Environmental, organizational, interpersonal, and individual factors all influence business buyer behavior.
t/f
Definition
true
Term
Buyers have different buying styles influenced by interpersonal factors such as age, income, education, professional identification, and attitudes toward risk.
t/f
Definition
false
Term
A statement prepared by a business buyer describing the quantity and general characteristics of the items needed is a product specification description.
t/f
Definition
false
Term
In the product specification stage of the business buying process, the buyer ranks the importance of reliability, price, and other desired product characteristics.
t/f
Definition
false
Term
According to the stages of the business buying process, after completing a general need description, a business buyer should next invite qualified suppliers to submit proposals.
t/f
Definition
false
Term
Proposals should be marketing documents and not just technical documents.
t/f
Definition
true
Term
Suppliers are more likely to stay price competitive when the purchasing company uses single sourcing than when it uses multiple sourcing.
t/f
Definition
false
Term
When conducting a performance review, the seller monitors different factors than those monitored by the buyer to make sure that the seller is giving the expected satisfaction.
t/f
Definition
false
Term
E-procurement typically reduces drudgery and paperwork, thereby freeing purchasing personnel to focus on more strategic issues.
t/f
Definition
true
Term
The benefits of e-procurement include access to new suppliers, lower purchasing costs, and more time-efficient order processing and delivery.
t/f
Definition
true
Term
Unfortunately, most governments do not provide would-be suppliers with detailed guides describing how to sell to the government.
t/f
Definition
false
Term
) It is rare that noneconomic factors play a role in government buying.
t/f
Definition
false
Term
Explain how the decision process in the business market and consumer market differs.
Definition
Business buyers usually face more complex buying decisions than do consumer buyers, as business purchases more often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer's organization. Because the purchases are more complex, business buyers may take longer to make their decisions and are likely to use a more formalized buying process. In the business buying process, the buyer and seller are often much more dependent on each other.
Term
Describe the three major types of business buying situations and what differentiates each from the other two.
Definition
A straight rebuy is a fairly routine decision in which the buyer reorders without any modifications from existing suppliers. In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers and usually involves more decision participants. A company buying a product or service for the first time faces a new task situation. It is the marketer's greatest opportunity and challenge because of the additional risk or cost, the larger number of decision participants, and the greater effort required to collect all of the needed information.
Term
Explain the advantages of systems selling.
Definition
Many business buyers prefer to buy a packaged solution to problem from a single seller instead of buying separate products and services from different sellers and then integrating them. The sale often goes to the firm that provides the most complete system that meets the customer's needs. Systems selling, also called solutions selling, is a key business marketing strategy for winning and holding accounts, as it fosters an interdependent relationship between the seller and buyer.
Term
Describe the typical roles played by the various members of a buying center.
Definition
The buying center includes all members of the organization who play any of five roles in the purchase process: user, influencer, buyer, decider, and gatekeeper. Users physically use the product or service. Influencers often help define the specifications and also provide information for evaluating alternatives. Buyers have formal authority to select the supplier and arrange terms of purchase. They may help shape product specifications, but their major role is in selecting vendors and negotiation. Deciders have formal or informal power to select or approve the final suppliers and products. Gatekeepers control the flow of information to others. Different employees may undertake these roles depending on the nature of the purchase.
Term
Provide a brief explanation of the major influences on business buyers.
Definition
Both economic and personal factors play a part in buying decisions. The environmental influences of the level of primary demand, the economic outlook, and the cost of money all make their way into the decision. Each organization has its own objectives, policies, procedures, structure, and systems to learn. All of these may affect the purchasing decision. Further, interpersonal factors carry weight; however, it is often difficult to assess such factors and group dynamics. These factors are often subtle, and some participants are invisible to the marketer. Participants bring in individual influencing factors such as personal motives, perceptions, and preferences.
Term
What is the buying center concept? Explain why this concept presents a major marketing challenge.
Definition
The buying center is the decision-making unit of a buying organization. The buying center is composed of all the individuals and units that play a role in the business purchase decision-making process, including the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information. The buying center is not a fixed and formally identified unit within the buying organization. Instead, it is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center varies for different products and buying situations. The variable nature of the buying center makes it a major marketing challenge. The business marketer must learn who participates in each decision, each participant's relative influence, and what evaluation criteria each decision participant uses.
Term
Describe the eight steps in the business buying process.
Definition
The steps are problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. Problem recognition is the step during which someone recognizes a problem or need caused by internal/external stimuli that can be met by acquiring a specific product or service. A general need description describes the quantity and characteristics of the needed item. Product specification follows to allow purchasing of the correct items with the highest value. A supplier search finds the best vendors. The suppliers are asked to submit proposals. After selecting the supplier or suppliers, the buyer prepares an order-routine specification. After the purchase, the buyer will conduct a performance review to analyze future relationships.
Term
Briefly describe the major advantages of business-to-business marketing on the Internet.
Definition
E-procurement gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. In turn, business marketers can connect with customers online to share marketing information, sell products and services, provide customer support services, and maintain ongoing customer relationships. E-procurement frees purchasing people to focus on more strategic issues such as value-added activities, finding different sources, and working with suppliers to reduce costs and develop new products.
Term
What are the major characteristics of institutional markets?
Definition
The institutional market is made up of schools, hospitals, prisons, and other institutions that provide goods and services to people in their care. These markets are characterized by low budgets and captive patrons. For many institutions, the buying objective will not strictly be profit maximization or cost minimization; instead, the institution is likely to search for vendors that meet or exceed a certain minimum standard while also offering low prices.
Term
What are the major characteristics of government markets?
Definition
Government markets offer large opportunities for companies. Although they also buy on a negotiated contract basis, government organizations typically require suppliers to submit bids, and normally they award the contract to the lowest bidder. The process is highly structured and famous for "red tape." In addition to the bid amount, noneconomic criteria also play a role in government buying. Government buyers often favor firms from depressed business areas, small business firms, minority-owned firms, and business firms that avoid race, gender, or age discrimination.
Term
Explain the concept of derived demand, giving an example of a product that has derived demand.
Definition
Derived demand is created when demand increases due to consumers' increasing demand for some other product either made with or dependent upon the product in question.
Term
Why is demand in the business market mostly inelastic?
Definition
The demand in business-to-business markets is mostly inelastic because what is being sold is often just one of the many parts or materials that go into producing the consumer product. It is not unusual for a large increase in a business product's price to have little effect on the final consumer product's price.
Term
How is the business buying process more formalized than the consumer buying process?
Definition
Business purchases usually call for product specification, written purchase orders, and supplier searches.
Term
How have relationships between customers and suppliers changed in recent years?
Definition
Customers and suppliers have had adversarial relationships in the past, but because they are dependent on each other, they have begun to act more as partners; many customer companies now practice supplier development, systematically developing networks of supplier-partners to ensure an appropriate and dependable supply of products and materials.
Term
In what type of purchase would one person most likely assume all buying center roles?
Definition
One person will likely play all roles in purchasing routine products and services, or a straight rebuy.
Term
Why is the new-task buying situation both a great opportunity and a challenge for a marketer?
Definition
In the new-task buying situation, decision participants put forth substantial effort to collect information and so are positioned to be influenced by a marketer's message; these situations are likely to be competitive, as other marketers also want to establish a relationship with the buyer.
Term
Although a company has purchased printers and copiers before, Xerox now offers the firm a multitasking machine that prints, copies, scans, and faxes. Explain what type of buying situation this is.
Definition
This is a modified rebuy. The firm has already purchased similar machinery, but this purchase now involves a modified machine.
Term
Explain the buyer center role of the influencer.
Definition
An influencer often helps define specifications and provide information for evaluating alternatives.
Term
Which roles in the buying center are likely to change with different purchases?
Definition
Although any of the roles may change from purchase to purchase, the roles of of users and influencers are the most likely to change with each type of purchase a business makes.
Term
When are business buyers most likely to make decisions heavily influenced by personal factors?
Definition
If suppliers' offers are very similar, there is little basis for a rational, objective choice; in these situations, buyers are more likely to allow emotions and other personal factors to influence their decision.
Term
Why is it difficult to assess interpersonal factors that influence the business buying process?
Definition
Interpersonal factorssuch as who is liked, who controls rewards and punishments, and who has special relationships with other important participantsare subtle and not obvious to the external observer.
Term
How can marketers influence business buyers who are in the problem recognition stage?
Definition
Through advertising, business marketers can make buyers aware of and concerned about potential problems and then offer their products as solutions to the newly recognized problem.
Term
What information is a buyer likely to include in the general need description?
Definition
This element describes the general characteristics and quantity of the needed item.
Term
Describe two advantages of using multiple source contracts.
Definition
With multiple source contracts, a buyer avoids being totally dependent on one supplier and can conduct comparisons of prices and performance of several suppliers over time.
Term
What type of noneconomic criteria impact government buying?
Definition
Government buyers are asked to favor depressed business areas, small business firms, minority-owned firms, and business firms that avoid race, gender, or age discrimination.