Organizational Consumers Chapter

Chapter 9: Organizational Consumers
Multiple Choice - Terminology/Concept

D c
1.
Which statement concerning organizational consumers is NOT correct?

a. They purchase goods and services for further production.
b. They purchase goods and services for use in operations.
c. They purchase goods and services for personal use.
d. They purchase goods and services for resale to others.
E d
2.
Which is NOT an organizational consumer?

a. Wholesaler
c. Government
b. Retailer
d. Final consumer
E d
3.
Firms dealing with organizational consumers are engaged in

a. systems selling.
c. value analysis.
b. institutional marketing.
d. industrial marketing.
E d
4.
A firm shifting work that was formerly done in-house to another firm is an
example of
a. systems selling.
c. value analysis.
b. institutional marketing.
d. outsourcing.
E c
5.
The major differences between organizational and final consumers are due to the
a. use of bargaining and the reliance on product specifications.
b. size of the buyer and the size of the seller.
c. nature of purchases and the nature of the market.
d. sophistication of the buyer and the seller.
E a
6.
When organizational consumers employ multiple-buying responsibility, they

a. utilize two or more employees in decision making for complex or expensive
purchases.
b. base purchases on subsequent demand for finished goods and services.
c. compare the costs versus the benefits of alternatives.
d. assess the strengths and weaknesses of current and new suppliers.
E c
7.
The costs and benefits of alternative materials, components, designs, or

processes are evaluated by organizational consumers in
a. competitive evaluation.
c. value analysis.
b. profit-based planning.
d. vendor analysis.
159

D b
8.
What technique are organizational consumers using when they seek answers to
such questions as: Can substitute goods or services perform a function more
efficiently? and Would a more costly component lower annual operating
costs?
a. Profit-based planning
c. Vendor analysis
b. Value analysis
d. Competitive analysis
E c
9.
Organizational consumers evaluate suppliers in terms of merchandise quality,

customer service, and reliability in which process?
a. Customer analysis
c. Vendor analysis
b. Value analysis
d. Sales analysis
D d
10.
Which of these questions is posed by vendor analysis?

a. Is the motor self-lubricating?
b. Can a standardized part replace a customized part?
c. Can plastic pipe replace brass plumbing fittings in an industrial pump?
d. Can General Electric deliver motors within three days of an order?
D d
11.
Which statement concerning leasing is NOT correct?

a. Aircraft, computers, and trucks are commonly leased.
b. Organizations of all sizes often lease equipment.
c. Worldwide use of leasing is increasing at a rapid pace.
d. Final consumers are not involved with leasing.
E c
12.
An organizational buyer selects a seller on the basis of terms and conditions of

purchase outlined by competing sellers. The buyer is using which process?
a. Value analysis
c. Competitive bidding
b. Vendor analysis
d. Systems selling
D c
13.
Competitive bidding is used primarily to

a. secure quantity discounts from buyers.
b. allow competing sellers to participate in setting prices.
c. ensure fairness in purchasing.
d. aid sellers in meeting their contractual obligations.
E a
14.
In competitive bidding situations, prices are set through

a. sellers independently submitting price quotations.
b. sellers collectively submitting price quotations.
c. negotiation between the buyer and potential sellers.
d. government intervention.
160

E a
15.
Which concept states that changes in wholesale sales can be directly traced to
final consumer demand?
a. Derived demand
c. Reciprocity
b. Systems selling
d. Institutionalization
E b
16.
Which concept suggests that small changes in final consumer demand can
generate large fluctuations in organizational consumers demand?
a. Relationship marketing
c. Reciprocity
b. The accelerator principle
d. Systems selling
D c
17.
Which statement about the accelerator principle is NOT correct?

a. Organizational consumer demand is more volatile than final consumer
demand.
b. A small change in final consumer demand generally yields a large change in
the organizational consumer demand.
c. A change in final consumer demand is generally a multiple of the change in
organizational consumer demand.
d. Final consumer demand affects several layers of organizational consumers.
D d
18.
Single-source accountability is a major advantage with

a. competitive bidding.
c. reciprocity.
b. industrial marketing.
d. systems selling.
E c
19.
When organizational consumers select suppliers who agree to purchase goods

and services, as well as sell them, they are involved with
a. team selling.
c. reciprocity.
b. systems selling.
d. derived demand.
D b
20.
Which organizational consumer buying practice is the most likely to restrain

trade?
a. Systems selling
b. Reciprocity
d. Vendor analysis
E a
21.
The North American Industry Classification System (NAICS)

a. replaces the Standard Industrial Classification (SIC).
b. does not cover retail trade.
c. does not cover wholesale trade.
d. does not cover foreign organizational consumers.
161

D b
22.
Which statement concerning the North American Industry Classification System

(NAICS) is NOT correct?
a. The NAICS is the official classification system of the United States, Canada,
and Mexico.
b. The NAICS can be used to derive information about most nonprofit
consumers.
c. Substantial government and commercial data is available on an NAICS basis.
d. NAICS data can be used in end-use analysis.
D d
23.
In end-use analysis,
a. sales to final consumers are studied to determine derived demand.
b. sales to channel members are studied to determine the accelerator multiplier.
c. a firm may decide to produce a product rather than purchase it from an
unaffiliated seller.
d. a seller determines the proportion of its sales that are made to organizational
consumers in different industries.
E a
24.
End-use analysis enables a firm to

a. compute its overall sales forecast.
b. locate geographic areas that account for a large proportion of its total
business.
c. study the purchase behavior of final consumers.
d. study the purchase behavior of governmental units.
D c
25.
The major difference between two- and three-digit North American Industry
Classification System (NAICS) codes is based on the
a. location of the firm: domestic or foreign.
b. size of the industry: small or large.
c. level of specificity.
d. currency of the data.
D d
26.
Which statement concerning wholesalers is NOT correct?

a. Wholesalers buy or handle merchandise and its subsequent resale to
organizational users, retailers, and other wholesalers.
b. Wholesalers do not sell significant quantities to final consumers.
c. Total wholesaler sales exceed $3 trillion.
d. Wholesalers generally eagerly welcome new products.
162

E b
27.
Which statement most clearly defines the role of retailers?

a. Retailers buy or handle merchandise and its subsequent resale to
organizational users, wholesalers, and other retailers.
b. Retailers buy or handle goods and services for sale (resale) to the final
(ultimate) consumer.
c. Retailers operate in the public interest.
d. Retailers produce products for resale to other consumers.
E c
28.
Retailers are generally more concerned than wholesalers about what factor?
a. Purchase terms
c. Location of facilities
b. Merchandise availability
d. Customer service
E a
29.
A slotting fee represents a fee paid to a retailer for

a. its providing shelf space.
b. allocating advertising time and space.
c. arranging physical distribution.
d. giving superior customer service.
D c
30.
A manufacturer of private-label products does NOT have to perform marketing

functions relating to
a. pricing.
c. branding.
b. packaging.
d. physical distribution.
E c
31.
Which statement about government as a consumer is NOT correct?

a. Federal, state, and local government expenditures equal $3 trillion annually.
b. Data on all U.S. government expenditures are compiled by the Census
Bureau.
c. There is little assistance given by governmental units to assist small firms
seeking government contracts.
d. North American Industry Classification System (NAICS) codes exist for
governmental units.
E b
32.
The federal government aids businesses by providing reference data and technical
reports on contracts through its
a. Government Procurement Centers.
b. Small Business Utilization Centers.
c. Contract Negotiation Centers.
d. Business Service Centers.
163

E d
33.
There are no separate North American Industry Classification System (NAICS)

code designations for
a. manufacturers.
c. wholesalers.
b. government.
d. nonprofit institutions.
E d
34.
Item availability, seller reliability, consistency of quality, and timeliness of

deliveries
a. are related to an organizational consumers decision process.
b. are constraints on purchases.
c. depend on an organizations buying structure.
d. are examples of organizational buying goals.
D c
35.
An advantage of an organizational customers dealing with many suppliers

(instead of buying exclusively from just one supplier) is that
a. communications between the organizations customers and its suppliers is
enhanced.
b. quantity discounts are maximized.
c. there is increased price and service competition.
d. shipments from suppliers are better coordinated.
E a
36.
The level of formality and specialization used in the purchase process refers to an
organizations
a. buying structure.
b. buying objectives.
c. purchase constraints.
d. exclusivity of its buying arrangements.
E a
37.
An organizational consumers buying structure is likely to be formal when the

firm is
a. diversified.
c. independently owned.
b. organized on a general basis.
d. financially limited.
E d
38.
The General Services Administration (GSA) is the federal government office

responsible for
a. maintaining the North American Industry Classification System (NAICS).
b. issuing technical reports on contracts and contracting procedures.
c. enforcing laws relating to reciprocity.
d. centralized procurement and coordination of purchases.
164

D c
39.
The major constraint on purchases by retailers, wholesalers, and manufacturers

(but not on government purchases) is
a. cash flow.
c. derived demand.
b. open-to-buy.
d. competition.
E a
40.
The major constraint on purchases by government consumers is

a. budgetary approval.
b. General Services Administration standards that have to be met.
c. systems selling.
d. the requirement for competitive bidding.
D d
41.
Which is NOT a key component of the organizational consumers decision

process?
a. Conflict resolution
c. Expectations
b. The buying process
d. The buying organization
E a
42.
The perceived potential of alternative suppliers and brands to satisfy buyer

objectives is part of which stage of the organizational consumers decision
process?
a. Expectations
c. Situational factors
b. Conflict resolution
d. Buying process
E b
43.
A product-specific buying factor leading to joint decisions is

a. low perceived risk.
c. high centralization.
b. low time pressure.
d. small firm size.
E a
44.
Problem solving, persuasion, bargaining, and politicking occur during which

phase of organizational consumer decision making?
a. Conflict resolution
c. Feedback
b. The buying process
d. Situational analysis
E a
45.
Which is the optimal method for resolving conflicts in the organizational

consumers decision process?
a. Problem solving
c. Bargaining
b. Persuasion
d. Competitive bidding
165

D c
46.
Which illustrates the use of persuasion as a means of conflict resolution in

organizational marketing?
a. Members agree to support each other in different situations.
b. Members agree to secure further information before making a decision.
c. After each member of a team presents his or her reasons why a particular
supplier or brand should be chosen, a decision is reached.
d. Members seek to convince outside parties and superiors to back their
positions and then seek to win at power plays.
E c
47.
The least desirable method for resolving conflicts in the organizational

consumers decision process is
a. persuasion.
c. politicking.
b. bargaining.
d. reciprocity.
E b
48.
A machine breakdown and an internal strike are examples of what aspect of the
organization consumers decision process?
a. Autonomous decision making
c. Company-specific buying factors
b. Situational factors
d. Conflict resolution
E c
49.
The modified-rebuy purchase process for organizational consumers is similar to

what process for final consumers?
a. Extended decision making
c. Limited decision making
b. Joint decision making
d. Routine decision making
E b
50.
Reordering, not decision making, characterizes which type of organizational

consumer purchase?
a. Modified rebuy
c. New task
b. Straight rebuy
d. Limited rebuy
Multiple Choice - Applied/Comprehensive/Integrative

D d
51.
Which of these is NOT an example of industrial marketing?

a. The rental of sheets to hospitals
b. The sale of household furnishings to a major department store chain
c. The leasing of personal computers to a university
d. The sale of computer supplies to a hobbyist
166

D d
52.
Which of these is a difference between organizational consumers and final

consumers that is due to the nature of the purchases themselves?
a. The impact of derived demand
b. The impact of cyclical fluctuations
c. The use of shorter distribution channels
d. The use of specifications and technical data
D c
53.
Which of these is a difference between organizational consumers and final

consumers that is due to the nature of the market?
a. The use of leasing
c. The impact of derived demand
b. The use of vendor analysis
d. The use of value analysis
D b
54.
Multiple-buying responsibility by organizational consumers is comparable to

what process in final consumer marketing?
a. Brand loyalty
c. Limited decision making
b. Joint decision making
d. High-involvement purchasing
E a
55.
Negotiations for a new factory location involve decision making by a team

comprised of accounting, finance, production, marketing, real estate, and legal
personnel. This process involves
a. multiple-buying responsibility.
c. systems selling.
b. team selling.
d. negotiated purchasing.
E d
56.
To reduce costs, a faucet manufacturer is considering replacing part of its brass

assembly with plastic. The plastic is not only less costly to purchase, but also
heats up less during usage. The faucet manufacturer is involved with
c. negotiation.
b. vendor analysis.
d. value analysis.
Questions 57 and 58 are linked to this scenario: A major room air-conditioner manufacturer
uses various techniques in its organizational marketing activities. It is currently concerned
with its purchasing practices for thermostats, a component material used to regulate
temperature. While thermostats are relatively inexpensive, a defective unit costs the
manufacturer $70 to replace in a customers home.
E d
57.
Which of these questions involves value analysis for the air conditioner
manufacturer?
a. What is vendor As average delivery speed?
b. What is a manufacturers delivery reliability?
c. What is a suppliers average defect rate?
d. Can a standardized thermostat be substituted for a custom-made part?
167

E a
58.
The air-conditioner manufacturer plans to evaluate three suppliers on the basis of

product quality (initial defect rate on delivery and defect rate during the warranty
period), prices (initial price and credit terms), and customer service (technical
support and delivery speed). The air-conditioner manufacturer is involved with
a. vendor analysis.
c. multiple-buying responsibility.
b. value analysis.
d. systems selling.
D a
59.
Higher prices yield more profit, but have a smaller chance of gaining a contract.
This is a major principle of
a. competitive bidding.
c. systems selling.
b. reciprocity.
d. multiple-buying responsibility.
D c
60.
A large organizational consumer reminds a seller that it accounts for 60 percent

of a suppliers sales. It also states that it has the resources to produce the part
itself, if the supplier is inflexible as to price. The customer is using which
technique?
a. Systems selling
c. Negotiation
b. Competitive bidding
d. Reciprocity
D c
61.
A computer chip manufacturer provides a promotional allowance to its

organizational customers. The allowance covers half the cost of the
manufacturers advertising providing that the manufacturer mentions the name of
the chip manufacturer in all advertising. The promotional allowance
demonstrates
a. value analysis.
c. derived demand.
b. vendor analysis.
d. reciprocity.
E a
62.
According to the concept of derived demand, sales of resin used to manufacture

plastic are most influenced by
a. final consumers.
c. wholesalers.
b. retailers.
d. suppliers.
D c
63.
Decreased demand for computer ZIP disks by final consumers decreases dealers
demand for disks, disk makers demand for plastic disk housings, and housing
makers demand for raw materials. Which practice is most clearly illustrated in
this example?
a. Reciprocity
c. The accelerator principle
b. The domino effect
d. Derived demand
168

D c
64.
Which concept is a logical extension of derived demand?

a. Reciprocity
b. The domino effect
d. Second-level derived demand
D c
65.
An economic analysis suggests that each 1 percent increase in air travel results in
a 3 percent increase in the demand for aircraft. Which concept does this link
most clearly represent?
a. Reciprocity
b. Second-level derived demand
d. The domino effect
D b
66.
Purchasing agents and cost accountants are examples of

a. end-use analysts.
c. vendor analysts.
b. systems selling.
d. systems analysts.
D a
67.
A manufacturer of commercial copying machines supplies paper, toner, and

service contracts. The manufacturer engages in
a. systems selling.
c. vendor analysis.
b. extended decision making.
d. end-use analysis.
D c
68.
A key advantage to an organizational consumers buying from a supplier that

uses systems selling is the
a. increased competition for components from alternate suppliers.
b. availability of generous credit/leasing terms.
c. single-source accountability in the event of system failure.
d. reciprocal orders placed by the supplier.
D c
69.
A key potential disadvantage for a vendor involved with systems selling is

a. lower interest in the product grouping by distributors.
b. a blurred image by potential buyers.
c. the increased investment required in producing and marketing a broad
product grouping.
d. compatibility difficulties due to use of components from competing
manufacturers.
E b
70.
A truck manufacturer pressures its tire suppliers to purchase trucks from the
firm. It hints that future tire purchases are contingent on a major truck order.
This practice illustrates
c. derived demand in action.
b. reciprocity.
d. systems selling.
169

E b
71.
A special case of reciprocity is known as

a. negotiation.
b. countertrade.
c. derived demand.
d. systems selling.
D d
72.
The North American Industry Classification System (NAICS) enables a vendor

to
a. identify major customers by geographic area.
b. study the buying behavior of specific industrial companies.
c. learn about the demographics (size, growth rates, and geographic
concentration) of major organizational customers.
d. forecast sales by industry grouping.
D c
73.
In performing end-use analysis, a firm needs to first determine the

a. total assets of all its customers.
b. total sales of each customer
c. North American Industry Classification System (NAICS) code for each
customer.
d. geographic area of concentration of each customer.
D b
74.
End-use analysis reveals that 60 percent of a firms sales are made to lumber and
wood products manufacturers (which are predicted to have a 3 percent annual
growth rate) and 40 percent are made to furniture and fixture manufacturers
(which are predicted to have a 1 percent annual growth rate). The companys
overall sales forecast would indicate a sales increase of
a. 1.0 percent.
c. 3.0 percent.
b. 2.4 percent.
d. 4.0 percent.
D b
75.
Which concept is most closely related to end-use analysis?

a. Reciprocity
c. Multiple-buying responsibility
b. Derived demand
d. Systems selling
D b
76.
Which of the following is NOT an example of wholesaling?

a. The sale of medical equipment to a private clinic
b. The sale of Coach belts to final consumers in a Coach factory outlet
c. The leasing of an aircraft to a major airline
d. The sale of Coach belts to a department store chain
170

D c
77.
In which situation would a retailer most likely charge a manufacturer a slotting

fee?
a. The retailer is a small independent grocery store.
b. The manufacturers product has the highest market share in the region.
c. The manufacturers product is new.
d. The manufacturer only supplies private-label merchandise for a large grocery
chain.
D a
78.
Which statement concerning the government as a consumer is correct?

a. Government purchases often involve bureaucratic procedures.
b. The federal government accounts for 20 percent of all government spending.
c. Statistics on federal government expenditures are reported in Government
Finances.
d. Few government purchases involve standard products that are offered to
traditional customers.
D c
79.
Which statement concerning nonprofit institutions as consumers is NOT correct?

a. Nonprofit institutions do not seek financial profits.
b. Most universities and public hospitals are nonprofit institutions.
c. North American Industry Classification System (NAICS) codes do not exist
for any nonprofit organization.
d. There are no separate NAICS codes for nonprofit versus profit-oriented
firms.
D c
80.
Which of these is NOT a general buying objective for all organizational

consumers?
a. Seller reliability
c. Further saleability
b. Good terms (low prices)
d. Consistent quality
D b
81.
A large department store retail chain is likely to have which type of buying
structure?
a. Formal, centralized
c. Informal, centralized
b. Formal, specialized
d. Informal, specialized
D b
82.
Small, diversified firms are apt to have which buying structure?

a. Informal, specialized
c. Formal, centralized
b. Informal, centralized
d. Formal, specialized
171

D a
83.
A university purchasing agent is most likely to use autonomous decision making

when buying which of these items?
a. Laser ink cartridges for faculty use from an existing supplier
b. Shrubs as part of a campus beautification program
c. Personal computers for a university-wide computer laboratory
d. Classroom carpeting from a new supplier
E a
84.
The board at a local school district has decided to require competitive bidding
for a major window-replacement program. An advantage of competitive bidding
to the board is that it
a. encourages price competition.
b. reduces conflicts among board members.
c. improves the quality of materials used.
d. eliminates late payment penalty provisions.
D c
85.
In evaluating a prospective new product for resale, a finance professional

computed the products profit per square foot, a marketing person determined
the impact of the new product on the sales of existing products, and an
engineering professional determined whether the product met the stated
specifications. This illustrates which method of conflict resolution?
a. Persuasion
c. Problem solving
b. Bargaining
d. Politicking
E b
86.
Three members of a purchasing department are unable to reach an agreement

about whether to deal with a new supplier. To resolve the conflict, two members
are willing to support the choice of the third, if he/she agrees to give them
support during a future impasse. The team members have engaged in
a. politicking.
c. persuasion.
b. bargaining.
d. problem solving.
E d
87.
An organizational consumers decision process for leasing an important retail site

in a small community abruptly changed when a merger was announced by top
management. The merger partner has an excellent site in that area. This illustrates
a. conflict resolution.
c. joint decision making.
b. autonomous decision making.
d. situational factors.
D c
88.
A universitys buying 1,000 disposable pens from a vendor that it has had a longterm satisfactory relationship with most closely matches a ___ purchase process.
a. new-task
c. straight-rebuy
b. modified-rebuy
d. high involvement
172

E c
89.
The purchase of new bookcases by a purchasing agent on an impulse basis most

closely matches a ___ purchase process.
a. new-task
c. straight-rebuy
b. modified-rebuy
d. high involvement
D a
90.
Which of these illustrates a linkage between organizational consumer and final

consumer demand?
a. Derived demand
b. Interest in personal goals
d. Reciprocity
True-False - Terminology/Concept
E T
91.
Organizational consumers purchase goods and services for further production,

use in operations, or resale to others.
E T
92.
Organizational consumers include manufacturers, wholesalers, retailers, and

government and other nonprofit institutions.
E T
93.
In contrast with final consumers, organizational consumers more often purchase

capital equipment, raw materials, and semifinished goods.
E F
94.
In multiple-buying responsibility, organizational consumers systematically

compare the costs versus the benefits of alternative materials and components.
D T
95.
Value analysis questions product specifications, components, design, and

materials to improve the cost/benefit ratio of purchases.
D F
96.
In value analysis, a prospective purchaser would ask How has a manufacturer

handled defects that were discovered after the finished product has been
delivered to the final consumer?
E T
97.
In vendor analysis, an organizational consumer rates suppliers on the basis of

quality, service, and price.
D F
98.
Vendor analysis can be used to determine if a new part could perform the
functions of two previous parts.
E T
99.
Organizational consumers are more likely to lease products than final consumers.
173
E F
100.
All organization pricing is either through competitive bidding or negotiation.
E T
101.
Competitive bidding and negotiation are most applicable if an organizational

consumer is purchasing complex, custom-made goods and services.
E F
102.
According to the concept of derived demand, high organizational consumer

demand will result in high final consumer demand.
E F
103.
The demand of final consumers tends to be more volatile than that of

organizational consumers.
E F
104.
Advertising agencies, public relations firms, and credit reporting bureaus are
examples of buying specialists.
E F
105.
Distribution channels for organizational consumers tend to be longer than those

for final consumers.
D T
106.
Systems selling provides organizational buyers with the advantages of singlesource accountability and compatibility.
E T
107.
With reciprocity, an organizational consumer would act as both a buyer and a

seller.
D F
108.
Countertrade is a type of reciprocity used in domestic marketing.
E F
109.
Cultural differences have little impact on negotiations among organizational

consumers.
E F
110.
While a variety of data sources exist for the United States, Canada, and Mexico
on the basis of the North American Industry Classification System (NAICS), no
comprehensive sources of comparable data exist for foreign firms.
D F
111.
The first step in end-use analysis is to determine the growth rate for each North
American Industry Classification System (NAICS) industry sector.
D T
112.
End-use analysis is a forecasting technique for industrial firms.
D T
113.
Three-digit North American Industry Classification System (NAICS) codes

classify firms into finer classifications than two-digit codes.
D T
114.
Private-label manufacturers have no final consumer brand identity from their

private-label activities.
174
E F
115.
Nonprofit organizations more often require precise specifications for goods and
services they purchase; government consumers more frequently emphasize price
and availability in purchases.
E T
116.
Large and diversified organizations are most likely to have a formal buying
structure.
E T
117.
For manufacturers, wholesalers, and retailers, derived demand is the major

constraint on their purchase behavior.
D F
118.
For organizational consumers, conflict resolution is more likely in autonomous

decision making than in joint decision making.
E F
119.
The new-task purchase process for organizational consumers is similar to routine

purchasing by final consumers.
E T
120.
Both organizational and final consumers can be described in demographic terms.
True-False - Applied/Comprehensive/Integrative
D F
121.
The major difference between organizational and final consumer marketing

relates to the types of products and services purchased.
D T
122.
Joint-decision making among final consumers is similar to multiple-buying

responsibility among organizational consumers.
D T
123.
While value analysis looks at product specifications, vendor analysis relates to

consumer satisfaction with alternate suppliers.
E F
124.
Competitive bidding and negotiation are most applicable to simple, ready-made

goods and services.
D F
125.
A purchasing agent is concerned about being accused of showing favoritism in

selecting suppliers. To overcome this, he/she should insist on negotiations rather
than competitive bidding.
D T
126.
A trade association of raw material refiners devotes 20 percent of its overall

budget to stimulate final consumer usage. This illustrates derived demand.
175
D T
127.
The accelerator principle is a special case of derived demand.
E T
128.
A buying specialist could have an engineering, accounting, production, and/or

marketing background depending on his or her role and the company for which
he or she works.
D T
129.
Systems selling generally reduces the number of suppliers for an organizational

consumer.
D T
130.
Systems selling requires that a firm produce and market products and services
that may be unrelated, except for use.
D T
131.
Reciprocity can place a small firm in a highly advantageous position when buying
from a large firm.
D T
132.
Organizational consumers in different countries can have different attitudes

toward the need to negotiate or the length of the negotiation process.
E T
133.
The market for organizational goods is affected by a countrys stage of economic

development.
D T
134.
End-use analysis enables a firm to determine the industry composition of its

clients.
D F
135.
The first step in end-use analysis requires the selling firm to determine the
percent of sales made to various North American Industry Classification System
(NAICS) codes.
D F
136.
A cereal manufacturer makes 60 percent of its sales to supermarkets, 10 percent

to convenience stores, and 30 percent to warehouse clubs. Next year,
supermarket sales are expected to go up 2 percent; convenience store sales, 1
percent; and warehouse clubs sales, 6 percent. Overall, the dairy farms sales will
rise by 3.0 percent.
D T
137.
When Coca-Cola sells its soda products to wholesalers, it is involved with

industrial marketing.
D F
138.
High slotting fees are evidence of the increased power of manufacturers over
retailers.
E T
139.
For many organizational consumers, price may be less important than such other
factors as availability, quality, and service when making purchase decisions.
176
E T
140.
Unlike nonprofit organizations and the government, wholesalers and retailers are
primarily concerned with reselling merchandise.
E F
141.
Large department stores tend to have centralized buyers for the entire store.
D T
142.
Derived demand for airline passenger travel is a major constraint on sales of new
passenger aircraft by Boeing and Airbus.
D T
143.
As with final consumers, perceived risk affects the purchase process for
organizational goods.
E F
144.
Small, centralized firms are more likely to utilize joint decision making than
autonomous decision making.
E T
145.
Competitive bidding can be either open or closed.
D F
146.
Competitors are able to determine the terms of the winning bid in closed bidding.
D F
147.
Conflict resolution occurs in both autonomous and joint decision making.
E F
148.
Of the approaches to conflict resolution, persuasion is most likely to look at the

merits of each position.
D F
149.
Perceived risk is highest in a modified-rebuy purchase process.
D T
150.
An organizational consumer can be described demographically by stating its

North American Industry Classification System (NAICS) code, firm size, and
geographic area of its headquarters location.
151.
Discuss four differences in the nature of purchases and four in the nature of the
market between organizational and final consumers.
152.
Develop a 10-item value analysis that can be used to evaluate a refrigerators

self-defrosting unit (which consists of a timer and a heating element).
153.
Develop a 10-item vendor analysis for a textbook marketer that wants to assess
its bookbinder supplier.
Essay
177
Essay
154.
Draw and explain a flowchart showing how derived demand and the accelerator
principle affect the sale of commercial aircraft.
155.
a. Present two examples of systems selling.

b. What are the benefits and limitations of systems selling for suppliers?
c. What are the benefits and limitations of systems selling for buyers?
156.
Explain how a plastics manufacturer could apply end-use analysis in developing a

sales forecast.
157.
Contrast the buying process for wholesalers and retailers with the buying process
of the government.
158.
Describe the organizational consumers decision process for a department store

considering a new line of designer jeans. The store has a decentralized buying
office with each buyer being responsible for separate product lines.
159.
Why does joint decision making by an organizational consumer often result in

conflict? How may this conflict be resolved? Which method is best? Why?
160.
Differentiate among straight-rebuy, modified-rebuy, and new-task organizational

consumer decision processes. Provide two examples of each process.
178

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Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Which statement concerning organizational consumers is NOT correct?

Which is NOT an organizational consumer?

Firms dealing with organizational consumers are engaged in

When organizational consumers employ multiple-buying responsibility, they

The costs and benefits of alternative materials, components, designs, or

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Organizational consumers evaluate suppliers in terms of merchandise quality,

Which of these questions is posed by vendor analysis?

Which statement concerning leasing is NOT correct?

An organizational buyer selects a seller on the basis of terms and conditions of

Competitive bidding is used primarily to

In competitive bidding situations, prices are set through

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Which statement about the accelerator principle is NOT correct?

Single-source accountability is a major advantage with

When organizational consumers select suppliers who agree to purchase goods

Which organizational consumer buying practice is the most likely to restrain

The North American Industry Classification System (NAICS)

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Which statement concerning the North American Industry Classification System

End-use analysis enables a firm to

Which statement concerning wholesalers is NOT correct?

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Which statement most clearly defines the role of retailers?

A slotting fee represents a fee paid to a retailer for

A manufacturer of private-label products does NOT have to perform marketing

Which statement about government as a consumer is NOT correct?

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

There are no separate North American Industry Classification System (NAICS)

Item availability, seller reliability, consistency of quality, and timeliness of

An advantage of an organizational customers dealing with many suppliers

An organizational consumers buying structure is likely to be formal when the

The General Services Administration (GSA) is the federal government office

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

The major constraint on purchases by retailers, wholesalers, and manufacturers

The major constraint on purchases by government consumers is

Which is NOT a key component of the organizational consumers decision

The perceived potential of alternative suppliers and brands to satisfy buyer

A product-specific buying factor leading to joint decisions is

Problem solving, persuasion, bargaining, and politicking occur during which

Which is the optimal method for resolving conflicts in the organizational

Chapter 9: Organizational Consumers

Multiple Choice - Terminology/Concept

Which illustrates the use of persuasion as a means of conflict resolution in

The least desirable method for resolving conflicts in the organizational

The modified-rebuy purchase process for organizational consumers is similar to

Reordering, not decision making, characterizes which type of organizational

Multiple Choice - Applied/Comprehensive/Integrative

Which of these is NOT an example of industrial marketing?

Chapter 9: Organizational Consumers

Multiple Choice - Applied/Comprehensive/Integrative

Which of these is a difference between organizational consumers and final

Which of these is a difference between organizational consumers and final

Multiple-buying responsibility by organizational consumers is comparable to

Negotiations for a new factory location involve decision making by a team