Marketing Management, 4e (Winer/Dhar) Chapter 5 Organizational Buying Behavior

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1 Marketing Management, 4e (Winer/Dhar) Chapter 5 Organizational Buying Behavior 1) When a firm markets a product or service to another organization, it is called: A) consumer marketing. B) industrial marketing. C) market segmentation. D) consumer behavior. 2) is normally targeted toward a group of individuals collectively involved in the purchase decision. A) Consumer marketing B) Organizational marketing C) Market development D) Market penetration 3) The group normally involved in the purchase decision for an organization is called a: A) buying center. B) decision center. C) buying department. D) decision maker. 4) Organizational marketing refers to: A) explaining the importance of marketing to all the departments in the organization. B) marketing a product or service to another organization. C) allowing customers to contact any member of the organization for any assistance. D) creating the corporate strategy based on a marketing plan. 5) Organizational marketing is also known as: A) industrial marketing. B) company marketing. C) consumer marketing. D) service marketing. 1

2 6) Industrial products are normally more complex than consumer products. It means that industrial companies are more likely to be: A) product focused rather than customer focused. B) customer focused rather than product focused. C) market focused rather than customer focused. D) technology focused rather than market focused. Diff: 1 Page Ref: 128 7) Identify the correct statement about organizational marketing. A) Industrial products are normally less complex than consumer products. B) Industrial companies are more likely to be customer focused rather than product focused. C) Organizational marketing is also known as B-to-B marketing. D) Most of the industrial marketers advertise on television. Diff: 1 Page Ref: 128 8) The seller of industrial products is part of the buyer's and must provide timely inventory replenishment, service and maintenance, spare parts, and efficient order handling. A) supply chain B) communication channel C) service chain D) promotional program Diff: 1 Page Ref: 128 9) Because of the need for more detailed communications, industrial marketers are heavy users of: A) print media. B) television. C) radio. D) banners. Diff: 1 Page Ref: ) Most industrial markets are not mass markets because: A) the required raw material is scarcely available. B) transporting the industrial equipments is very difficult. C) the supply chain involved in industrial markets is very complicated. D) the products are highly specialized in nature. 2

3 11) This type of segmentation variable includes company size, industry type, geographic location, and number of employees. A) demographics B) operating variables C) purchasing approaches D) situational factors 12) Which of the following variables are operating variables used for industrial marketing segmentation? A) delivery speed of the product B) order size C) technologies used by the customer D) number of employees 13) Which of the following variables used for industrial marketing segmentation includes dimensions of the customer's operations, such as what technologies the customer is currently using and how many of your services or products they need? A) demographics B) operating variables C) purchasing approaches D) situational factors 14) Which of the following is a category of segmentation variables used for industrial marketing segmentation? A) strategic variables B) operating variables C) interpersonal variables D) supply chain variables 15) Which of the following variables used for industrial marketing segmentation includes the customer's delivery speed needs, order size needs, and particular uses of the product? A) demographics B) operating variables C) purchasing approaches D) situational factors 3

4 16) are the set of descriptor variables based on the newness of the purchasing situation. A) Demographics B) Operating variables C) Situational factors D) Buy classes Diff: 1 Page Ref: ) Which of the following best describes routine purchases made from the same suppliers used in the past? A) straight rebuys B) modified rebuys C) new-task purchase D) repetitive purchase Diff: 1 Page Ref: ) Which of the following is an example of a straight rebuy? A) frequently purchased routine purchases such as printer toner B) upgrading the local intranet with new technologies C) purchasing the first local intranet for a small business D) routine purchases that have changed in some way such as air travel Diff: 1 Page Ref: ) characterize purchasing situations in which something has changed since the last purchase. A) Straight rebuys B) Modified rebuys C) New-task purchase D) Repetition purchase Diff: 1 Page Ref: ) Which of the following is a purchasing situation that is unusual or occurs infrequently in a given organization? A) straight rebuys B) modified rebuys C) new-task purchase D) repetition purchase Diff: 1 Page Ref: 132 4

5 21) Which one of the examples below best characterizes a modified rebuy? A) purchasing paper clips for the office B) purchasing airline tickets under a new fare schedule C) purchasing the first local intranet for a small business D) purchasing toner for the office Diff: 2 Page Ref: ) Which of the following is an example of a new task purchase? A) purchasing paper clips for the office B) upgrading the local intranet with new technologies C) purchasing a corporate jet aircraft D) purchasing printer and toner for the office Diff: 2 Page Ref: ) In cases, the current supplier is in an advantageous position because the buying process is likely to be automatic. A) straight rebuy B) modified rebuy C) new-task purchase D) repetition purchase Diff: 1 Page Ref: ) In which purchasing decision should the supplier focus on maintaining a good relationship with the customer and focus on timely deliveries at the expected quality level? A) straight rebuys B) modified rebuys C) new-task purchase D) repetition purchase Diff: 1 Page Ref: ) Identify the correct statement about a straight rebuy. A) It is a very complex process. B) A long time frame is required for this process. C) The current supplier is in an advantageous position in a straight rebuy. D) It takes place while purchasing expensive and seldom-purchased products. Diff: 1 Page Ref: 132 5

6 26) The first buyers of an innovation in industrial marketing situations are known as: A) early adopters. B) lead users. C) early majority. D) late majority. Diff: 1 Page Ref: ) In industrial marketing situations, are often used as beta test sites, where new products are tested and debugged. A) innovators B) early majority C) late majority D) laggards Diff: 1 Page Ref: ) With reference to the chasm model, the term visionaries refers to: A) innovators. B) early majority. C) early adopters. D) late majority. Diff: 1 Page Ref: ) Chasm refers to the large gap between: A) the late majority and the laggards. B) the early majority and the late majority. C) the innovators and the early adopters. D) the early adopters and the early majority. Diff: 1 Page Ref: ) With reference to the chasm model, early majority are referred to as: A) pragmatists. B) visionaries. C) technologists. D) conservatives. Diff: 1 Page Ref: 134 6

7 31) In the chasm model, the first small crack appears between: A) the late majority and the laggards. B) the innovators and the early adopters. C) the early adopters and the early majority. D) the early majority and the late majority. Diff: 1 Page Ref: ) With reference to the chasm model, the term conservatives refers to the: A) innovators. B) early majority. C) late majority. D) laggards. Diff: 1 Page Ref: ) In the chasm model, the third small crack between the Conservatives and the Skeptics is the problem of: A) getting laggards to buy a product. B) getting late majority to buy a product. C) getting innovators to buy a product. D) getting early adopters to buy a product. Diff: 1 Page Ref: ) Which of the following statements is true about the chasm in the chasm model? A) It is the first small crack that appears in the chasm model. B) It appears between pragmatists and conservatives. C) It represents the problem of getting laggards to buy a product. D) Pursuing a thematic niche is one of the approaches that can be used to cross the chasm. Diff: 2 Page Ref: ) Because marketing research budgets in industrial companies are usually lower than consumer product companies, industrial companies tend to use: A) primary data. B) secondary data. C) observational research data. D) phenomenological research data. Diff: 1 Page Ref: 137 7

8 36) Parsimony is important in industrial marketing because: A) there are very few targetable segments in the market. B) the industrial customers are well informed about the products. C) the industrial products are expensive. D) it is inefficient to pursue too many segments. Diff: 1 Page Ref: ) The first step in the business-to-business purchase decision is: A) need recognition. B) establishment of specification. C) source identification. D) proposal evaluation. Diff: 1 Page Ref: ) More effort by both external and internal parties is necessary for need recognition in a situation. A) modified rebuy B) straight rebuy C) new-task D) repetition purchase Diff: 1 Page Ref: ) In a, the purchasing organization realizes that the problem cannot be solved without buying something new. A) straight rebuy situation B) modified rebuy situation C) new-task situation D) repetition purchase Diff: 1 Page Ref: ) Which of the following best describes upgrading the existing copier to take advantage of new technology? A) straight rebuy situation B) modified rebuy situation C) new-task situation D) repetition purchase Diff: 1 Page Ref: 139 8

9 41) A company is not happy with the present document-copying capabilities so it decides to outsource its copying to a service firm. This is an example of a: A) straight rebuy. B) modified rebuy. C) repetition purchase. D) new-task situation. Diff: 1 Page Ref: ) In a straight rebuy situation, the need for purchase occurs when: A) the existing systems are to be updated. B) a new technology is to be introduced. C) inventory is low. D) a service is to be outsourced. Diff: 1 Page Ref: ) Most advertisements of industrial products in trade magazines are very oriented. A) feature B) status C) price D) service Diff: 1 Page Ref: ) Because of the technical nature of the products, industrial product purchases are more likely to be based on: A) cost rather than features. B) features rather than benefits. C) cost rather than benefits D) benefits rather than features. Diff: 2 Page Ref: ) When marketing a product to an organization, it is vital to understand that: A) innovators are not sure of what they want. B) initiators do not have any impact on the purchase situation. C) many individuals are involved in the purchase decision. D) the purchaser is the only person needed to be focused on. Diff: 1 Page Ref: 140 9

10 46) is the person who first recognizes the need for the product or service. A) The initiator B) The influencer C) The decider D) The purchaser Diff: 1 Page Ref: ) Which of the following influences the decision about which supplier is chosen? A) the initiator B) the influencer C) the decider D) the purchaser Diff: 1 Page Ref: ) This is the person in an organization who has the ultimate authority for a "go-no-go" purchase decision. A) the initiator B) the influencer C) the decider D) the purchaser Diff: 1 Page Ref: ) is the person who actually authorizes payment for the product. A) The initiator B) The influencer C) The decider D) The purchaser Diff: 1 Page Ref: ) Different entities involved in the buying process (like initiator, influencer etc.), have: A) the same needs and seek the same benefits. B) different needs but seek the same benefits. C) the same needs but seek different benefits. D) different needs and seek different benefits. Diff: 2 Page Ref:

11 51) A company recognizes the need for a new system to handle customer enquiries. During the buying process, who is most likely to be concerned with the return on investment (ROI)? A) the initiator B) the user C) the decider D) the purchaser Diff: 1 Page Ref: ) A company recognizes the need for a new database management system. During the process of purchasing the new system, who is most likely to be concerned with installation timing, and after-sale support? A) the initiator B) the user C) the decider D) the purchaser Diff: 2 Page Ref: ) Following, there are seven stages in the buying process. A) need recognition B) establishing specifications C) request for proposals D) post-purchase evaluation Diff: 2 Page Ref: ) Usually in this stage of the buying process, benefits rather than specific product or service characteristics are stated. A) determine the characteristics B) establish specifications C) search for and qualify potential suppliers D) request proposals Diff: 1 Page Ref: ) After the need has been determined, the next step in the buying sequence is for the product or service needed. A) determining the characteristics B) establishing specifications C) searching for and qualifying potential suppliers D) requesting proposals from qualified suppliers Diff: 1 Page Ref:

12 56) In this stage of the buying process, needs are translated into specific product features and characteristics. A) determine the characteristics B) establish specifications C) search for and qualify potential suppliers D) request proposals Diff: 1 Page Ref: ) Which of the following stages in a buying sequence will result in a specific option or set of options from which price, delivery, system compatibility, and other characteristics can be determined? A) determine the characteristics B) establish specifications C) search for and qualify potential suppliers D) request proposals Diff: 1 Page Ref: ) At the stage of the buying process, a sale can be made or lost so it is crucial to understand the needs of the different people involved with making the purchase decision. A) determining the characteristics B) establishing specifications C) search for and qualify potential suppliers D) request proposals Diff: 1 Page Ref: ) The selling organization tries to be in the of as many customers as possible. A) inert set B) supplementary set C) evoked set D) complementary set Diff: 1 Page Ref: ) The objective of which phase of the buying process is for the buyer not only to have a list of potential suppliers, but to also identify those who are qualified? A) evaluate proposals and select a supplier B) request proposals C) establish specifications D) search for and qualify potential suppliers Diff: 1 Page Ref:

13 61) During a purchase process, a junior or inexperienced salesperson is more likely to be focused on the: A) purchaser. B) influencer. C) decider. D) initiator. Diff: 2 Page Ref: ) During a buying process, the normal procedure once a list of qualified suppliers is formed is to send out a to potential suppliers. A) request for product review B) request for proposals C) request for quotation D) request for product specifications Diff: 1 Page Ref: ) After the customer receives the proposals, the deliberate(s) over the alternatives and make(s) a choice. A) CEO B) user C) buying center D) initiators Diff: 1 Page Ref: ) Which of the following statements is true regarding the Japanese style of decision making? A) short-term selling cycle B) lack of relationship building C) involving more consensus D) direct negotiating style Diff: 1 Page Ref: ) According to the classification system for global organizational culture as developed by Hofstede, the degree to which employees are threatened by ambiguity is known as: A) power distance. B) uncertainty avoidance. C) ambiguity tolerance. D) long-term orientation. Diff: 1 Page Ref:

14 66) According to the classification system for global organizational culture as developed by Hofstede, which of the following dimensions indicates the extent to which less powerful parties accept the existing distribution of power and the degree to which adherence to formal channels is maintained? A) power distance B) uncertainty avoidance C) ambiguity tolerance D) long-term orientation Diff: 1 Page Ref: ) With reference to the classification system for global organizational culture as developed by Hofstede, whether a country has inclination toward consumption or is interested in preserving status-based relationships and deferred gratification is indicated by which dimension? A) uncertainty avoidance B) power distance C) individualism vs. collectivism D) long-term orientation Diff: 1 Page Ref: ) Traditionally, the have been the most popular distribution channels for industrial products. A) retail stores and direct sales B) sales force and industrial distributors C) Internet and retail stores D) personal selling and wholesalers Diff: 1 Page Ref: ) The two key factors that affect industrial purchasing are: A) the buyer's age and gender. B) the number of people in the buying center and the competitive position of the company in the market. C) the customers' fiscal years and general economic cycles. D) the market potential of the company and the growth of the Gross Domestic Product (GDP). Diff: 1 Page Ref: ) Organizational marketing normally targets an individual. 14

15 71) When a firm markets a product or service to another organization, it is called organization marketing. 72) Industrial products are normally less complex than consumer products. Diff: 1 Page Ref: ) A group of individuals collectively involved in a purchase decision are known as a buying center. 74) The demand for an industrial product is derived from underlying consumer demand. 75) For industrial purchases the purchasing cycle can last for several years. 76) For industrial purchases, the seller is part of the buyer's supply chain and must provide timely inventory replenishment, service and maintenance, spare parts, and efficient order handling. Diff: 1 Page Ref: ) Most industrial markets are mass markets. 78) Market segmentation is irrelevant in industrial marketing. Diff: 2 Page Ref: ) Situational factors used for industrial market segmentation include the customer's delivery speed needs and order size needs. Diff: 1 Page Ref: ) Vertical marketing occurs across industries, particularly where the needs and uses are similar. Diff: 1 Page Ref:

16 81) Operating variables used for industrial market segmentation include the customer's delivery speed needs, order size needs, and particular uses of the product. 82) Straight rebuys are routine purchases from the same suppliers used in the past. Diff: 1 Page Ref: ) Generally, the time frame required for new task purchase is very short. Diff: 1 Page Ref: ) Marketing research budgets in industrial companies are usually higher than that in consumer product companies. Diff: 1 Page Ref: ) In a new task purchase situation, the current supplier is in an advantageous position. Diff: 1 Page Ref: ) Parsimony is important in industrial marketing because it is inefficient to pursue too many segments. Diff: 1 Page Ref: ) Chasm refers to the large gap between the late majority and the laggards. Diff: 1 Page Ref: ) An example of a modified rebuy situation would be the purchase of paper clips for a company. Diff: 1 Page Ref: ) Request for proposal (RFPs) usually are unnecessary for straight repurchase situations. Diff: 1 Page Ref: ) In the chasm model, the first small crack appears between the early majority and the late majority. Diff: 1 Page Ref:

17 91) The purchaser is the person in the organization who has the ultimate authority for a "go/nogo" decision. Diff: 1 Page Ref: ) Because of the strong relationship between a supplier and a customer in industrial marketing contexts, information normally flows readily between the parties. Diff: 1 Page Ref: ) After the need has been determined, the next step in the buying process is to determine the characteristics of the product or service needed as specifically as possible. Diff: 1 Page Ref: ) The decider is a person in the organization who influences the decision about which supplier is chosen. Diff: 1 Page Ref: ) List and briefly describe the differences between industrial or organizational buying and consumer purchasing behavior. Answer: a. Derived demand the demand for an industrial product is derived from underlying consumer demand. b. Product complexity industrial products are normally more complex than consumer goods. c. Buyer-seller interdependence with industrial products, the customer depends on its suppliers for its operation and ultimately its success in terms of profitability. d. Buying process complexity a variety of people with different backgrounds are involved in the industrial buying process. This group is known as a buying center. 17

18 96) List and briefly discuss the five categories of descriptor variables for industrial marketing segmentation as described in the text. Answer: a. Demographics basic descriptors include company size, industry type, geographic location, and number of employees. b. Operating variables includes dimensions of the customers' operations, such as what technologies the customer is currently using and how many of your services or products they need. c. Purchasing approaches variables related to the purchasing process and the existing relationship with the company. d. Situational factors include the customers' delivery speed needs, order size needs, and particular uses of the product. e. Personal characteristics the personal characteristics of the buyers can be used as a segmentation criteria. 97) List and briefly discuss the three different kinds of purchases or buy classes made by organizations. Answer: a. Straight rebuy routine purchases from the same suppliers used in the past. b. Modified rebuy purchasing situations in which something has changed since the last purchase, such as a new potential supplier or a large change in price levels. c. New task purchase is made when the purchasing situation is unusual or occurs infrequently. Diff: 1 Page Ref: ) List and briefly discuss individuals involved in an organizational purchase decision. Answer: a. Initiator this is the person who first recognizes the need for the product or service. b. Influencer these are people who influence the decision about which supplier is chosen. c. Decider this is the person in the organization who has the ultimate authority for a "go-no-go" decision. d. Purchaser this person actually authorizes payment for the product. e. User these people actually use the product. Diff: 1 Page Ref:

19 99) List and briefly discuss the seven stages in the organizational buying process that ultimately lead to a purchase. Answer: a. Determine the characteristics this stage is stated in terms of benefits rather than specific characteristics. b. Establish specifications this stage entails the translation of the needs into specific product features and characteristics. c. Search for and qualify potential suppliers the objective of this stage is for the buyer not only to have a list of potential suppliers, but to identify those who are qualified list. d. Request proposals send out a request for proposals. In their proposals, the suppliers indicate what products or services they propose to meet the needs and specifications of the buyer. e. Evaluate proposals and select a supplier after the customer receives the proposals, the buying center deliberates over the alternatives. f. Perform post-purchase evaluation the buyer will evaluate the relationship with the supplier when necessary to make another purchase or give a recommendation about the supplier to another company. Diff: 1 Page Ref:

Business Markets and Business Buyer Behavior. Chapter 7

Business Markets and Business Buyer Behavior Chapter 7 Objectives Be able to define the business market and explain how business markets differ from consumer markets. Know the major factors that influence