Chapter 19 and 20 Essay ?

103.

Identify the internal and external influences on organizational buyer behavior.

External influences include firmographics, culture, government, reference groups,

and marketing activities. Internal influences include organizational values,
perception, learning, memory, motives, and emotions.

104. Compare and contrast the organizational purchase situations of straight

rebuy, modified rebuy, and new task with respect to situational and purchasing
characteristics.

Table 19-2 summarizes the characteristics influencing each type of

purchase. Two situational characteristics are listed:
a. Purchase importancelow for straight rebuy; moderate for modified rebuy; high
for new task.
b. Choice complexitylow for straight rebuy; moderate for modified rebuy; high for
new task.
Several purchasing characteristics are listed:
a. Size of DMUvery small for straight rebuy; medium for modified rebuy; large,
evolving for new task.
b. Level of DMUlow for straight rebuy; mid-level for modified rebuy; top of
organization for new task.
c. Time to decisionvery brief for straight rebuy; moderate for modified rebuy; long
for new task.
d. Information searchnone/very limited for straight rebuy; moderate for modified
rebuy; extensive for new task.
e. Analysis techniquesnone/price comparisons for straight rebuy; several for
modified rebuy; extensive, complex for new task.
f. Strategic focusnone for straight rebuy; limited for modified rebuy; dominates for
new task.

105. Harry is a sales representative for a provider of computer network systems.

Part of his job entails that he understands the firmographics of companies he tries
to sell his company's products and services to. Explain the concept of firmographics,

and discuss the different factors that make up a firm's firmographics and
implications for marketers.

Firmographics involve both organizational characteristicsfor example, size,

activities, objectives, location, and industry categoryand characteristics of the
composition of the organizationfor example, gender age, education, and income
distribution of employees. Six firmographic factors were discussed in the chapter:

a. Sizelarge organizations are more likely than smaller organizations to have a

variety of specialists who attend to purchasing, finance, marketing, and general
management. That there are often multiple individuals involved in the purchase in a
large organization means advertising and sales force efforts must be targeted at
various functions in the firm, each emphasizing issues of concern only to that
function. Marketing communications targeted to a small firm, however, are more
likely to be able to use one message.
b. Activities and objectivesorganizational objectives can be categorized as
commercial, governmental, nonprofit, and cooperative, and the general nature of
organizational activities can be described as routine, complex, or technical. Each
combination implies different concerns for buying organizations (see Table 19-7).
c. Locationregional subcultures within the United States influence organizational
cultures as well as individual lifestyles. Location-based differences are magnified
when doing business in foreign cultures.
d. Industry categoryfirms of similar size, location, activity, objective, and
ownership can still have sharply differing cultures due to being in differing
industries.
e. Organization compositionthe types of individuals who work in the organization
also heavily influence organization cultures.
f. Macro segmentationorganizations with distinguishing firmographics can be
grouped into market segments through this process.

106. Name and describe the various reference groups that influence organizational
behavior and purchasing decisions.

Perhaps the most powerful type of reference group in industrial markets is that of
lead users. Lead users are innovative organizations that derive a great deal of their
success from leading change. Other reference groups such as trade associations,

financial analysts, and dealer organizations also influence an organization's decision

to buy or not buy a given product or to buy or not buy from a given supplier.
Reference group infrastructure refers to the flow of purchase influence within an
industry. Figure 19-2 combines the concept of lead users with reference group
infrastructure to give a more comprehensive picture of organizational reference
group systems.

107. List five of the eight common business values representative of an innovative
organization that seeks change, views problems as opportunities, and rewards
individual efforts.

The eight common business values listed in the chapter are (students only have to
list five):
a. Risk taking is admired and rewarded.
b. Competition is more important than cooperation.
c. Hard work comes first, leisure second.
d. Individual efforts take precedence over collective efforts.
e. Any problem can be solved.
f. Active decision making is essential.
g. Change is positive and is actively sought.
h. Performance is more important than rank or status.

Essay Questions

97.
Discuss the concerns about the ability of children to comprehend commercial
messages.
One basis for the concern over marketing to children is based on Piaget's stages of
cognitive development, which indicate that children lack the ability to fully process
and understand information, including marketing messages, until around 12 years
of age. This and related theories are the basis for most regulations of advertising
aimed at children. The American advertising industry's primary self-regulatory body,
the National Advertising Division of the Council of Better Business Bureaus,
maintains a special unit to review advertising aimed at childrenthe Children's
Advertising Review Unit (CARU). Four of the eight principles that underlie CARU's

guidelines for advertising directed to children relate to their ability to comprehend

commercial messages:

a. Advertisers have special responsibilities when advertising to children or collecting

data from children online. They should take into account the limited knowledge,
experience, sophistication, and maturity of the audience to which the message is
directed. They should recognize that younger children have a limited capacity to
evaluate the credibility of information, may not understand the persuasive intent of
advertising, and may not even understand that they are being subject to
advertising.
b. Advertising should be neither deceptive nor unfair, as these terms are applied
under the Federal Trade Commission Act, to the children to whom it is directed.
c. Advertisers should have adequate substantiation for objective advertising claims,
as those claims are reasonably interpreted by the children to whom they are
directed.
d. Advertising should not stimulate children's unreasonable expectations about
product quality or performance.
The two main components regarding children's abilities to comprehend advertising
messages are as follows: (a) Do children understand the selling intent of
commercials? (b) Can children understand specific aspects of commercials, such as
comparisons?

98.
You just graduated from college and started a new job at a consumer
packaged goods manufacturer. You will be involved with marketing activities aimed
at children. Briefly describe the controversial marketing activities aimed at children
that you should be aware of.
There are a number of marketing activities targeted at children in addition to
television that are controversial and for which various regulatory proposals are
being considered. For example, violent entertainment products (movies, videos, and
music) labeled for those 17 and older were, until recently, routinely marketed to
kids. Another area of ongoing concern is kids' clubs, which typically provide
membership certificates, a magazine or website, the chance to win prizes, and
discounts or coupons of products offered by the sponsor. A major concern is that
these clubs disguise commercial messages. Additional issues described in the
chapter include mobile marketing (i.e., ringtones, mobile games, text-in contests),
commercialization in schools (i.e., in-school ads, ads in classrooms, corporatesponsored educational materials and programs, and corporate-sponsored contents
and incentive programs), and Internet marketing to children.

99.

List the key provisions of the Children's Online Privacy Protection Act (COPPA).

Table 20-3 provides the key provisions of this law, and the answer provided here
merely highlights this information. This act requires that commercial websites that
collect personal information from children under 13 obtain prior parental consent
before they collect that information. Five elements of the act include:
a. Privacy policypost privacy policy o the homepage of the website and link to the
policy everywhere personal information is collected.
b. Parental noticeprovide parents notice about the site's information collection
practices and with some exceptions, get verifiable parental consent before
collecting personal information from children.
c. Parental consentgive parents the choice to consent to the collection and use of
a child's personal information for internal use by the website, and give them the
chance to choose not to have that personal information disclosed to third parties.
d. Parental accessprovide parents access to their child's information, and the
opportunity to delete the information and opt out of the future collection or use of
the information.
e. Conditional accessdo NOT condition a child's participation in an activity on the
disclosure of more personal information than is reasonably necessary for the
activity.
f. Confidentialitymaintain the confidentiality, security, and integrity of the
personal information collected from children.

100.

List the three guidelines of the new FTC Privacy Protection Framework.

a. Privacy by designcompanies should promote consumer privacy through their

organizations and at every stage of the development of their products and services.
b. Simplified choicecompanies should simplify consumer choice about personal
information data collection.
c. Greater transparencycompanies should increase the transparency of their data
practices, including clearer privacy notices, reasonable access, prominent
disclosures, and so on.

101. What are the issues regarding pricing practices, and which federal agency
regulates pricing activities?
Consumer groups want prices that are fair (generally defined as competitively
determined) and accurately stated (contain no hidden charges). The FTC is the

primary federal agency involved in regulating pricing activities. Perhaps the most
controversial pricing area today is the use of reference prices. An external reference
price is a price provided by the manufacturer or retailer in addition to the actual
current price of the product. The concern arises when the reference price is one at
which no or few sales actually occur. Most states and the federal government have
regulations concerning the use of reference prices, but they are difficult to enforce.
Given the history of abuse of reference prices, it is not surprising that many
consumers are skeptical of them.