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IM Part 3: Exam Questions: MC, TF, SA, Essay

Chapter 1—A Business Marketing Perspective

MULTIPLE CHOICE

1. The business market consists of the following three components:a. commercial enterprises, resellers, and government.b. manufacturers, institutions, and defense.c. manufacturers, service organizations, and government.d. commercial enterprises, service organizations, and government.e. commercial enterprises, institutions, and government.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of

general business functions

2. Concerning manufacturing customers, the business market is:a. concentrated by size.b. geographically concentrated.c. experiencing declining growth in many large metropolitan areas.d. all of the above.e. (a) and (b) only.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of

general business functions

3. Based on the volume of their purchases, _____ are the most important commercial customers in the business or industrial market.a. construction companiesb. manufacturersc. transportation companies

d. service firms (e.g., hotels)e. health care facilities

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of

general business function 4. Market-driven firms demonstrate:

a. the coordinated use of interfunctional resources (for example, research and development, manufacturing).

b. a set of values and beliefs among employees that places the customer's interests first.

c. the ability to generate, disseminate, and productively use superior information about customers and competitors.

d. all of the above.e. (b) and (c) only.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

5. Market-driven firms spot market changes and react well in advance of their competitors. This illustrates:a. the customer-linking capability of market-driven firms.b. the value proposition of market-driven firms.c. the market-sensing capability of market-driven firms.d. the value of using direct channels of distribution in the business market.e. both (b) and (c).

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

6. The particular skills, abilities, and processes that an organization has developed to manage close customer relationships are referred to as:a. the customer-linking capability.b. channel management.c. derived demand.d. the market-sensing capability.e. the extended enterprise.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

7. The ability of an organization to quickly recognize changes in its market and to anticipate customer responses to marketing programs is referred to as:a. market research capability.b. customer-linking capability.c. competitive intelligence.d. market-sensing capability.e. derived demand.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

8. Motorola reduced the price of the electronic engine control that it sells to Ford by 10 percent and experienced a 15 percent increase in quantity demanded. This suggests that Ford’s price elasticity of demand is:a. elastic.b. inelastic.c. neither elastic nor inelastic.d. insensitive to price changes.e. none of the above.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Knowledge of general business functions

9. Dayco increased the price of the drive belts that it sells to General Motors by 5 percent and sales of the item grew by 9 percent. Price elasticity of demand for drive belts appears to be:a. elastic.b. inelastic.c. neither elastic nor inelastic.d. sensitive to price changes.e. none of the above.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Knowledge of general business functions

10. A diverse array of organizations make up the business market. These organizations can be broadly classified as:a. commercial enterprises, governmental organizations, and institutions.b. commercial enterprises, users, and governmental units.c. commercial enterprises, users, and original equipment manufacturers.d. producers and resellers of industrial products or services.e. upstream suppliers, users, and governmental units.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

11. When purchasing a high speed packaging machine, General Foods would be classified as:a. an original equipment manufacturer.

b. a user.c. a distributor.d. a dealer.e. an institutional buyer.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

12. Concerning the chain of suppliers involved in the creation of a Honda automobile, which of the following fall within the business marketing domain?a. Honda purchasing power steering components from direct suppliers.b. Direct suppliers of power steering systems purchasing sheet metal from

upstream suppliers.c. Organizations purchasing Honda automobiles for their fleets.d. all of the above.e. (a) and (b) only.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Knowledge of general business functions

13. Which of the following transactions fall into the business marketing domain?a. Ford purchasing machine tools for their plants from Cincinnati Milacron.b. Ford selling their automobiles to the fleet manager at Cincinnati

Milacron for use by the sales force.c. Ford purchasing power-steering systems from Motorola for use in a

particular model.d. all of the above.e. (a) and (c) only.

ANS: D PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Knowledge of general business functions

14. When purchasing machine tools for their plants, American Honda is:a. an original equipment manufacturer.b. a user.c. a distributor.d. an institutional buyer.e. an upstream supplier.


15. Concerning the classification of customers in the business market, General Motors is a(n) ____ when purchasing a mainframe computer system from IBM, but is a(n) ____ when purchasing tires from Goodyear.a. user; original equipment manufacturer (OEM)b. user; distributorc. original equipment manufacturer (OEM); userd. user; upstream suppliere. original equipment manufacturer (OEM); downstream supplier


16. As an industrial customer, Ford Motor Company would be classified as:a. a user.b. an original equipment manufacturer (OEM).c. a user in purchasing some products, an OEM in purchasing other

products.d. a producer of facilitating goods.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

17. When purchasing microprocessors from Intel Corporation to be incorporated into Dell's line of personal computers, IBM would be classified as:a. a user.b. an original equipment manufacturer (OEM).c. an institutional buyer.d. a dealer.e. a distributor.


18. When purchasing manufacturing equipment from General Electric, Chrysler would be classified as:a. a user.b. an original equipment manufacturer (OEM).c. an institutional buyer.d. a dealer.e. a distributor.


19. When Armco Steel realizes a drop in the demand for steel as a result of a decline in ultimate consumer demand for automobiles, this illustrates the concept of:a. derived demand.

b. connector demand.c. linked demand.d. reflection demand.e. evoked demand.


20. The method of classifying industrial goods into meaningful categories in the business market centers on this question:a. How does the industrial good enter the production process and the cost

structure of the firm?b. How much effort are organizational buyers willing to exert in purchasing

this industrial good?c. Will organizational buyers purchase this industrial good from a

distributor or directly from a manufacturer?d. What is the weight and unit value of the industrial good?e. How many product alternatives are organizational buyers willing to

consider before making a choice?

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

21. Industrial products and services can be broadly classified as:a. upstream, downstream, and direct goods.b. entering, manufactured, and fabricated goods.c. entering, accessory, and manufactured goods.d. entering, foundation, and facilitating goods.e. foundation, accessory, and component goods.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

22. The cost of raw materials such as sheet steel is treated as:a. an expense item which is depreciated over time.b. a capital item which is depreciated over time.c. a fixed cost.d. an expense item which is assigned to the manufacturing process.e. none of the above.


23. Some industrial products have been processed before reaching the industrial customer, but are processed further by this customer before becoming part of the finished product that you buy. These items are called:a. component parts.b. facilitating parts.c. accessory materials.d. component materials.e. accessory parts.


24. Which of the following is(are) characteristic of the marketing strategy that would be appropriate for a firm like Otis Elevator, which sells installations in the business market?a. Personal selling is the dominant promotional tool.b. Trade advertising and direct-mail advertising reinforce personal selling.

c. Price is the central force in marketing strategy.d. All of the above.e. (a) and (b) only.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

25. Mead Paper Company recently purchased a new high-speed paper machine for one of their plants. The new machine is used in manufacturing a special grade of paper at a rate of over 1500 feet per minute. This product would be classified as:a. a facilitating good.b. an entering good.c. accessory equipment.d. an installation.e. none of the above.


26. The distinguishing characteristic(s) of foundation goods is(are) that they:a. are capital items.b. are expense items.c. become part of the finished product.d. Both (a) and (c) are true.e. All of the above are true.


27. With little or no additional processing, ____ can be installed directly into another product.a. component partsb. component materialsc. operating equipmentd. light factory equipmente. all of the above


28. Bond Office Products manufactures a diverse array of office supplies and serves the business market. Which of the following characteristics is (are) associated with the marketing strategy for this category of goods?a. Personal selling is less important for supplies than it is for other

categories of goods having a higher unit value, such as installations.b. the company requires a wide variety of marketing middlemen to cover

the broad and diverse market adequately.c. Price may be critical in the marketing strategy because many office

supply items are undifferentiated.d. All of the above are true.e. (a) and (c) only

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

29. When companies want to sell products to consumer and business markets, they have to:a. produce products that are not identical.b. reorient their business strategies.c. link customer capabilities.

d. none of the above

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer| R&D Managing decision-making processes

30. Marketers who want to serve both consumer and business market sectors should:a. develop a market oriented organizational plan.b. become proficient in understanding customers.c. become proficient in satisfying customers.d. all of the above.e. (a) and (b) only.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer| R&D Managing decision-making processes

31. Companies can demonstrate market-sensing and customer-linking capabilities by:a. sharing product movement information.b. jointly planning promotional activities with other channel members.c. jointly planning product changes with other channel members.d. all of the above.e. (a) and (b) only.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing strategy & innovation

32. A business marketer becomes a preferred supplier to major customers by:a. developing intimate knowledge of the customers operations.b. developing a market orientation organization plan.c. contributing unique value to a customer's business.

d. all of the above.e. (a) and (c) only.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

33. Business marketing strategy must be based on an assessment of the:a. customer.b. competitor.c. company.d. all of the above.e. (b) and (c) only.


34. Functional areas other than marketing directly or indirectly affect which of the following ?a. Product marketing decisionsb. Price marketing decisionsc. Promotion marketing decisionsd. Distribution marketing decisionse. All of the above are affected

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

35. Which type of goods are treated as an expense item because they do not enter the production process or become part of the finished product?

a. Facilitating Goodsb. Foundation Goodsc. Entering Goodsd. None of the above are correct.


36. The buying motives for major installations center on:a. emotional factors.b. purely economic or rational considerations.c. a blend of rational and emotional factors.d. the initial price and cost.e. projected maintenance and operating costs.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

37. An implication of relationship marketing is:a. that sellers do not require an intimate knowledge of a customer's

operations.b. that a sale signals the beginning of a relationship, rather constituting the

end result.c. the building of one-to-one relationships.d. all of the above.e. (b) and (c) only.


38. The factors that distinguish business marketing from consumer marketing include:a. the importance of promotion.b. the intended use of the product.c. the nature of the customer.d. all of the above.e. (b) and (c) only.


39. Which of the following characteristics of business customers is true?a. A single purchase by a business customer is typically larger than that of

an individual consumer.b. Demand for industrial products is derived from ultimate demand for

consumer products.c. Relationships between business marketers tend to be close and

enduring.d. All of the above characteristics are true.e. Only (a) and (b) are true.


40. The skills required to identify, initiate, develop, and maintain profitable customer relationships describes:a. customer management relationship capabilities.b. market-sensing capabilities.c. derived demand.d. supply chain management.e. the extended enterprise.


41. If consumers are not price sensitive in purchasing a consumer product such as Smucker’s Jams, a 10% increase in the retail price of strawberry jam because of a 10% increase in the cost of strawberries from farmers will not affect demand for jam. Thus, the derived demand indicates that the demand for strawberries is:a. elasticb. inelasticc. unpredictabled. unknowne. none of the above

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Knowledge of general business functions

42. Which of the following would be classified as foundation goods?a. fixed equipmentb. operating suppliesc. buildings and land rightsd. maintenance and repair servicese. both (a) and (c)


43. The use of a goods classification system can be extremely valuable to business marketers because:

a. a marketing strategy appropriate for one category of goods may be entirely unsuitable for another.

b. a marketing strategy that works for consumer products will often work for products sold in business markets.

c. the physical nature of the industrial good and its intended use by the organizational customer affects the marketing program’s requirements.

d. all of the above are true.e. only (a) and (c) are true.


44. Market-driven firms attempt to match their resources, skills, and capabilities with:a. competitive intelligence.b. customers needs that are not currently being served adequately.c. derived demand.d. the needs of upstream suppliers.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

45. Which of the following statements about major installations is true?a. Personal selling or account management is the dominant promotional

tool.b. Initial price, distribution, and advertising play lesser roles.c. Only economic factors matter as buying motives.d. All of the above are true.e. Only (a) and (b) are true.

ANS: B PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

46. Business marketers that define their business markets with a horizon that stretches beyond the boundaries of the United States to include foreign markets for industrial goods and services employ:a. a global market perspective.b. a target market perspective.c. a market orientation perspective.d. an ethnocentric perspective.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Knowledge of general business functions

47. Marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers is:a. relationship marketing.b. global marketing.c. cross-functional marketing.d. supply chain management.


48. The technique for linking a manufacturer’s operations with those of all its strategic suppliers and its key intermediaries and customers to enhance efficiency and effectiveness is called:a. relationship marketing.b. supply chain management.c. global marketing.d. consumer marketing.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

49. Achieving the goals of supply chain management requires:a. information sharing.b. joint planning.c. shared technology.d. shared benefits.e. all of the above.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

50. Which of the following would qualify as facilitating goods?a. Fixed equipment.b. Component materials.c. Raw materials.d. Operating supplies.e. Office equipment.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

51. The use of law firms or advertising agencies by business marketers constitutes what type of industrial good?a. Facilitating goods.b. Entering goods.c. Foundation goods.

d. Installations.


52. Markets for products and services, local to international, bought by businesses, government bodies, and institutions for consumption, for use or for resale are:a. consumer markets.b. business markets.c. global markets.d. target markets.


53. Developing a marketing program that reaches the ultimate consumer directly for a product that incorporates your product, such as DuPont advertising to consumers to increase the sales of carpeting which incorporates their product is known as:a. demand elasticity.b. stimulating demand.c. fluctuating demand.d. price sensitivity.


TRUE/FALSE

1. The intended use of the product and the intended consumer distinguishes business marketing from consumer-goods marketing.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

2. The demand for industrial products is derived from the ultimate demand for consumer products.


3. A close examination of a market-driven firm will reveal two important capabilities: market sensing and customer linking.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

4. Firms operating in the business market must respond not to a single consumer but to a much wider group of buying influentials, all of whom may bring different criteria to bear on the purchase decision.


5. Planning in the business marketing setting requires more functional interdependence and a closer relationship to total corporate strategy than does planning in the consumer goods sector.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy

& innovation

6. A particular industrial customer might be properly classified as a user by some business marketers and an original equipment manufacturer by other business marketers.


7. Industrial goods are classified on the basis of how organizational buyers shop for particular products and services.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

8. In contrast to raw materials, manufactured materials and parts would be classified as capital items.


9. As foundation goods are used up or worn out, a portion of their original cost is assigned to the production process as a depreciation expense.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

10. Personal computers and light factory equipment such as portable drills provide examples of industrial goods that would be classified as accessory equipment.

ANS: T PTS: 1


11. A marketing strategy that works well for selling entering goods should be equally successful for facilitating goods.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

12. Price may be critical in the marketing strategy for supplies because many supply items are undifferentiated.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

13. Other functional areas affect all business marketing decisions, either directly or indirectly.


14. The "compatibility" of a cross-functional working relationship can be defined as the common ground or shared goals that can unite managers who represent different functional areas.


15. Due to downturns in the economy, the demand for many consumer products tends to fluctuate more than the demand for industrial products.


16. None of the products purchased by customers in the business market are the same as those purchased by ultimate consumers.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Knowledge of general business functions

17. Customers in the business market can be broadly classified into three categories: (1) commercial enterprises; (2) government; and (3) institutions.


18. Supply chain management requires Information sharing, shared technologies, and shared benefits.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

19. Personal selling is less important for supplies than it is for other categories of goods, such as installations.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

20. Relationships between business marketers tend to be close and enduring.

ANS: T PTS: 1


SHORT ANSWER

1. Business market customers can be broadly classified into these three categories:

ANS:1. Business commercial enterprises2. Institutions3. Government

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

2. The value elements that contain essentially the same performance characteristics as the next best alternative and the value elements that render the supplier’s offering either superior or inferior to the next best alternative are known respectively as:

ANS:Points of parity and points of difference

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy| R&D Managing strategy & innovation

3. Because demand in business markets is derived from consumer markets, business must carefully monitor demand patterns and changing consumer buying preferences. Because of these changes, the demand for many industrial products can be described as:

ANS:Fluctuating demand

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions

4. Those that have the power in the business buying process are referred to as:

ANS:Key buying influentials

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing decision-making processes

5. This type of equipment is generally less expensive and is short-lived compared with installations, and is not considered part of the fixed plant:

ANS:Accessory equipment


6. Like supplies, business services are considered expense items. Business services can be classified as:

ANS:Maintenance and repair support and advisory support


ESSAY

1. Using a product of your choice, illustrate the concept of the supply chain and indicate which elements or exchange relationships fall into the business versus the consumer-goods marketing domain.

ANS:n/a


2. Carefully compare and contrast the marketing strategy patterns and buying considerations for a $3 million air conditioning system to be used in a large factory versus photocopying paper for use in an office.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills

3. Conrad Spring produces manufactured materials and parts for diverse customer groups in the business market, ranging from automobile manufacturers and household appliance producers to toy makers and medical equipment specialists. Describe the nature of marketing strategy for industrial goods of this type.

ANS:n/a


4. Dell Computer has excelled with a fast-paced build-to-order approach that involves taking customer orders online, orchestrating production tailored to each customer, and forging a one-to-one relationship with the customer after the sale. Some auto industry executives have turned to Michael Dell, the company founder, for advice concerning how to make their businesses look like his. Senior executives at Ford, for example, envision a future where customers will order online and factories will build to order, eliminating billions of dollars of inventory costs (for example, large stocks of vehicles on hand). All of those mass produced cars sitting for weeks on dealer lots represent a massive investment that yields no return until a buyer comes along.a. Evaluate the feasibility of a build-to-order system for an automaker

like Ford and outline the key requirements that Ford must meet to make the strategy work for a potential customer like you.

b. How would a build-to-order system alter the way in which suppliers (business marketers) would serve Ford as a customer?

ANS:n/a


5. Consider some leading-edge consumer product manufacturers like Procter & Gamble, Gillette, or Coca Cola. What major differences would you expect to find in comparing the marketing strategy patterns employed by these consumer-products companies to those of leading business marketing firms such as Intel, 3M, or Dow Chemical? Next, describe the similarities and differences that emerge when comparing the distinctive attributes of a leading-edge consumer products marketer to a firm that demonstrates superb skills serving customers in the business market.

ANS:n/a


6. Hayes enjoys a well-established position as a supplier to the automobile industry. The firm supplied wheels to the Model T Ford. Today, Hayes is betting on a new product, fabricated aluminum wheels, which weigh up to 20 percent less than cast aluminum wheels and 40 percent less than steel ones. Hayes has signed contracts worth $50 million for the new wheels—mostly for use in spare tires—with DaimlerChrysler, Ford, General Motors, and BMW. Drawing on the industrial goods classification scheme, how would you classify the aluminum wheels? Sketch out the critical buying motives that organizations like DaimlerChrysler would emphasize in evaluating the wheels and explore Hayes’ associated marketing strategy implications.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Learning, motivation & leadership

7. Smucker’s sells products to both business and consumer markets. Compare and contrast the marketing strategies that Smucker’s will use when selling their products to each type of market.

ANS:n/a


8. Please explain the following statement and how it affects business marketers.

“All business marketing decisions - product, price, promotion, and distribution - are affected, directly or indirectly, by other functional areas. In turn, marketing considerations influence business decisions in R&D and in manufacturing and procurement, as well as adjustments in the overall corporate strategy.”

ANS:n/a


Chapter 2—Organizational Buying Behavior

MULTIPLE CHOICE

1. The organizational buying process, which ultimately may lead to the purchase of a new computer, could be set into action by:a. the existing computer breaking down.b. a new cost accounting system.c. an IBM sales presentation.d. (a) and (b) only.e. any of the above.


2. Concerning the eight-stage model of the organizational buying process, research suggests that:a. the process may be reoriented at any point by a redefinition of the basic

problem.b. the process may be discontinued by a change in the external

environment.c. certain stages may be completed concurrently.d. many small or incremental decisions are made during the procurement

process that ultimately translate into the final selection of a supplier.e. all of the above


3. The purchase of an expensive piece of material handling equipment would be classified as:a. a new task buying situation.b. a modified rebuy.c. a straight rebuy.d. any of the above.e. none of the above.


4. Mary Bronson, purchasing manager for the Los Angeles Tool Company, placed her quarterly order for supplies from the Gibson Paper Company. Mary has been dealing with Gibson for many years. What type of problem solving would Mary employ in this purchase decision?a. routine problem solvingb. casual problem solvingc. limited problem solvingd. extended problem solvinge. specialized problem solving


5. As a result of poor delivery performance by a supplier of high quality metal components, Jim Houser, purchasing agent at Milton Toy Company, plans to consider a possible change in suppliers. This provides an illustration of:a. the backlash effect.b. routinized problem solving.c. a modified rebuy.d. a straight rebuy.e. selective perception.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

6. The problem solving approach followed by an organizational buyer in a new task buying situation is:a. selective.b. extensive.c. cerebral.d. systematic.e. none of the above


7. The problem solving approach followed by an organizational buyer in a modified rebuy situation is:a. limited.b. selective.

c. routinized.d. extended.e. cerebral.


8. When buying influentials and decision makers lack well-defined criteria for comparing alternative products and suppliers and they also lack strong predispositions toward a particular solution, they are operating in a stage of _____ problem solving.a. cerebralb. limitedc. selectived. routinizede. extensive


9. When organizational buyers have well developed choice criteria to apply to the purchase decision, they are operating in a stage of problem solving known as:a. cerebral response behavior.b. limited response behavior.c. selective response behavior.d. routine response behavior.e. extended response behavior.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing

decision-making processes

10. When organizational buyers have well-defined criteria to apply to the purchase decision, but are uncertain about which suppliers can best fit their needs, they are operating in a stage of _____ problem solving.a. cerebralb. limitedc. selectived. routinizede. extended


11. Because of the technical complexity of the product, the difficulty of evaluating alternatives, or the unpredictable aspects of dealing with a new supplier, this type of buying decision involves the greatest level of uncertainty.a. complex modified rebuy decisionb. strategic modified rebuy decisionc. judgmental new task decisiond. strategic new task decisione. lost-for-good decision


12. Those buying decisions that are of extreme importance to the firm strategically and financially are referred to as:a. strategic new task buying decisionsb. strategic modified rebuy decisionsc. judgmental new task decisions

d. lost-for-good decisionse. complex modified rebuy decisions


13. In choosing a new piece of manufacturing equipment, the buying organization is uncertain of the model or brand to choose, the suitable level of quality, and the appropriate price to pay. This represents which type of buying situation?a. complex modified rebuy decisionb. strategic modified rebuy decisionc. judgmental new task decisiond. strategic new task decisione. lost-for-good decision


14. Those buying decisions that involve a narrow set of choice alternatives, encompass a moderate amount of both information search and analysis, and concentrate on the long-term relationship potential of suppliers are called:a. simple modified rebuy.b. complex modified rebuy.c. casual purchases.d. routine low priority purchases.e. specialty purchases.


15. The simple modified rebuy:a. involves a narrow set of choice alternatives.b. centers on a product of minor importance to the firm.c. encompasses little or no information search or analysis.d. all of the above.e. (b) and (c) only.


16. Upon meeting with a General Electric buyer, a salesperson learned that the G.E. purchasing function is unhappy with the supplier's performance and is openly considering new options. This provides an illustration of:a. a new task buying situation.b. a straight rebuy.c. a modified rebuy.d. extended problem solving.e. value analysis.


17. Strategies that would be appropriate for an "out" supplier to follow when confronting a modified rebuy situation include:a. offering performance guarantees.b. encouraging the organization to sample the firm's offering.c. defining and responding to the organization's problem with the existing

supplier.d. all of the abovee. (b) and (c) only


18. Strategies that would be appropriate for an "out" supplier to follow in dealing with a well-satisfied customer in a straight rebuy situation include:a. attempting to gain a position on the organization's preferred list of

suppliers.b. demonstrating to the organization that the potential benefits of

reexamining requirements and suppliers exceed the costs of doing so.c. convincing organizational buyers that their purchasing requirements

have changed or that the requirements should be interpreted differently.

d. all of the abovee. (b) and (c) only


19. Jim Parker, Purchasing Manager for the Boston Motor Works, is involved in many organizational buying decisions each year. The forces that influence Jim's organizational buying decisions might be broadly classified as:a. economic, organizational, group, and legal.b. group, environmental, individual, and organizational.c. organizational, cultural, environmental, and economic.d. legal, political, organizational, and group.e. organizational, domestic, legal, and international.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing


20. The environmental forces that influence organizational buying behavior include:a. economic factors.b. political and legal factors.c. technological factors.d. all of the above.e. (a) and (b) only.


21. Within the buying center, individuals who actually make the organizational buying decision, whether or not they have formal authority to do so, are performing the role of:a. a user.b. a gatekeeper.c. an influencer.d. a decider.e. a buyer.


22. Within the buying center, an individual who has formal authority for selecting a supplier and implementing all procedures connected with securing the product is performing the role of:a. a user.b. a gatekeeper.c. an implementer.

d. a decider.e. a buyer.


23. Individuals who control the flow of information into the buying center are performing the role of:a. a user.b. a gatekeeper.c. an implementer.d. a decider.e. a buyer.


24. The composition of the buying center:a. evolves during the purchasing process.b. varies from one purchasing situation to another.c. varies from firm to firm.d. All of the above are true.e. (a) and (b) only.


25. A common identifiable element in buying centers in all sectors of the industrial market is:

a. the chief executive officer.b. the accounting function.c. the purchasing function.d. the production function.e. the engineering function.


26. In the purchase of a new papermaking machine, what role would the firm’s manufacturing superintendent assume in the buying center?a. influencerb. deciderc. gatekeeperd. any or all of the above.


27. The evaluative criteria that engineers apply to a purchasing decision may be quite different from those used by purchasing managers because engineers:a. are exposed to different journals or publications.b. possess different professional goals and values.c. have a different educational background.d. attend different conferences.e. all of the above.

ANS: E PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

28. When organizational buyers modify a salesperson's message to make it more consistent with their predispositions toward the company, this provides an illustration of:a. selective exposure.b. selective attention.c. selective perception.d. selective retention.e. selective memory.


29. The formation of organizational preferences and ultimately the organization's buying choice is determined by the _____ of the members of the buying center.a. interaction structureb. operating resourcesc. relevant setd. primary sete. none of the above.


30. As the risk associated with an organizational purchase decision increases:a. buying center participants will be motivated to invest greater effort

throughout the purchase process.

b. product quality becomes more important than price.c. after-sale service becomes more important than price.d. all of the above.e. (a) and (b) only.


31. Buying decisions that are somewhat important to the firm and involve a moderate amount of analysis are:a. casual purchases.b. routine low priority purchases.c. straight rebuy purchases.d. extensive problem-solving purchases.


32. Those buying decisions that involve a large set of choice alternatives and pose little uncertainty, and involve buyers actively searching for information, applying sophisticated analysis techniques, and careful consideration of long-term needs are called:a. simple modified rebuy.b. complex modified rebuy.c. casual purchases.d. routine low priority purchases.e. specialty purchases.



33. In a modified rebuy situation, the “in” supplier should do which of the following?a. Make every effort to understand and satisfy the procurement need.b. Try to move decision makers into straight rebuy.c. Both (a) and (b).d. Neither (a) nor (b).


34. In a modified rebuy situation, the “out” supplier should do which of the following?a. Try to move decisions makers into straight rebuy.b. Hold the buying organization in modified rebuy status long enough to

consider new alternatives.c. Both (a) and (b).d. Neither (a) nor (b).


35. A significant increase in the price of gasoline that leads to a decrease in the purchases of new automobiles is an example of the impact of which environmental force?a. economic factors.b. political and legal factors.c. technological factors.d. all of the above.e. (a) and (c) only.


36. Which of the following are ambitious strategic priorities being pursued by many chief procurement officers?a. Becoming business partners, not just buyers.b. Developing fewer and deeper relationships with strategic suppliers.c. Emphasizing more than just price, including a focus on business

outcomes, total cost of ownership, and the development of long-term value creation.

d. All of the above.e. Only (a) and (c).


37. Individuals actually making the buying decision, whether or not they have the formal authority to do so, are performing the role of:a. a user.b. a gatekeeper.c. an influencer.d. a decider.e. a buyer.


38. Individuals affecting the purchasing decision by supplying information for the evaluation of alternatives or by setting buying specifications is performing the role of:a. a gatekeeper.b. a user.c. an influencer.d. a decider.e. a buyer.


39. For a salesperson trying to determine the impact of group forces on the organizational buying process, which of the following questions are appropriate?a. Which organizational members take part in the buying process?b. What is each member’s relative influence in the decision?c. What criteria are important to each member in evaluating prospective

suppliers?d. All of the above questions are appropriate.e. Only (a) and (b) are appropriate.


40. A _____ consists of individuals who participate in the purchasing decision and share the goals and risks arising from the decision.a. buying centerb. target marketc. sales forced. strategic task force


41. Which of the following statements about buying centers is true?a. The composition can change from one buying situation to another.b. Different individuals are important to the process at different times.c. Buying centers vary from firm to firm.d. All of the above are true.e. Only (a) and (c) are true.


42. Which of the following represent clues or techniques for identifying powerful buying center members?a. Isolating the personal stakeholders.b. Following the information flows.c. Identifying the experts.d. All of the above.e. None of the above.


43. Selective _____ is the tendency to accept communication messages consistent with existing attitudes and beliefs.a. exposureb. attentionc. perception

d. retentione. memory


44. As the risk associated with an organizational purchase decision increases, which of the following occur?a. The buying center becomes smaller.b. The information search is a active and a wide variety of information

sources are consulted.c. Buying center participants invest greater effort.d. All of the above occur.e. Only (b) and (c) occur.


45. Which of the following statements are true of reverse auctions?a. They are most appropriate for commodity-type items.b. They involve one buyer who invites bids from several pre-qualified

suppliers.c. Both a and b are true.d. Neither a or b is true.


46. The Total Cost of Ownership

a. Includes all costs associated with the product and its deliveryb. Is used by buyers to determine what they should spend on an itemc. Considers the full range of costs associated with the purchase and use of a product or service over its complete life cycled. Is an accounting concept that buyer’s use to compare the value of competing offeringse. None of the above.


TRUE/FALSE

1. The decision to purchase a fork-lift truck may be a new task buying situation in one organization and a modified or straight rebuy in another.


2. Many small or incremental decisions are made during the procurement process that ultimately translate into the final selection of a supplier.


3. The information requirements of organizational buyers are highest in modified rebuy situations.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

4. Technical and engineering personnel tend to be more important to the organizational buying process where the rate of technological change is great.


5. A purchasing manager could assume the roles of buyer, gatekeeper, and influencer in the buying center.


6. Members of the buying center are generally in agreement concerning the criteria that should be used in evaluating the merits of alternative suppliers.


7. Purchasing managers assume a dominant role in repetitive buying situations.


8. Those individuals who have an important personal stake in the decision will exert more influence than other members of the buying center.


9. Well-known companies, recognized as credible sources, tend to be favored by organizational buyers facing high-risk decisions.


10. The higher the level of perceived risk in a buying situation, the lower the probability that the organizational buying decision will be made by a group.


11. For "risky" purchase decisions, the buying center will become larger and will be comprised of members with higher levels of organizational status and authority.


12. Influencers control information to be reviewed by other members of the buying center.


13. The greatest level of uncertainty confronts firms in judgmental new task situations because of the technical complexity of the product and the difficulty of evaluating the alternatives.


14. The buying center becomes larger and comprises members with higher levels of organizational status and authority as perceived risk increases.


15. A business marketer confronting a new-task buying situation can gain a differential advantage by participating actively in the initial stages of the procurement process.


16. The four groups of forces that have an impact on organizational buying behavior are environmental, organizational, strategic, and individual.


17. Because globalization is upsetting traditional patterns of competition, the rise of material costs, and customer resistance to price increases, the influence of the procurement function is increasing in most organizations.


SHORT ANSWER

1. The first stage of the Organizational Buying Process involves:

ANS:Problem Recognition

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

2. Alternative proposals are evaluated by a purchasing manager and a number of members of the production department in which stage of the Organizational Buying Process?

ANS:Acquisition and Analysis of Proposals


COMPLETION

1. ____________________forces involve job function, past experience, and buying motives of individual decision participants

ANS: Individual


2. Collectively, uncertainty about the outcome of a decision and the magnitude of consequences from making the wrong choice comprise ____________________.

ANS: Perceived risk

PTS: 1


3. Key influencers are frequently located outside of the____________________department.

ANS: Purchasing


ESSAY

1. Mary Bronson recently completed the sales training program at Dow Chemical and has spent the past few months in San Diego, her assigned territory. Today she plans to call on two accounts and then complete a sales forecast for next quarter.

The first account is a small, high-tech firm that potentially could use a Dow product directly in a production process. This production process is new and the purchasing manager indicated that several substitute products will likely receive consideration. What strategy should Mary follow in dealing with this customer?

The second account has been buying their chemical products from Allied for the past three years. Of course, Mary would like them to change to Dow but the purchasing manager at this firm seems preoccupied with other matters. What strategy should Mary follow here? She wonders if it's even worth stopping by because she could spend the time talking to an existing customer.

ANS:n/a


2. Using an illustration of your choice, describe the factors that might move a purchasing manager to shift from a straight rebuy to a modified rebuy. Next, describe the steps that should be taken by both the “in” supplier and “out” supplier as a modified rebuy situation develops.

ANS:n/a


3. To remain competitive, Johnston Equipment has decided to adopt more sophisticated manufacturing technology. The eight members of the firm who have been actively involved in defining specifications and in evaluating suppliers are evenly split over “which way to go.” Four members are strong advocates for Supplier A; four are committed to Supplier B. Describe the factors that motivate individual decision makers during the organizational buying process and explain why product perceptions and evaluation criteria often differ among organizational decision makers.

ANS:n/a


4. Boeing, AT&T, and 3M are among the corporations that have adopted centralized procurement. Other large corporations may find that a decentralized procurement structure constitutes a better fit for their operations. First, which factors are conducive to the development of a centralized procurement function? Second, what adjustments must be made in business marketing strategy to reach the centralized purchasing unit?

ANS:n/a


5. Texas Instruments has a major manufacturing plant that falls within your new sales territory. On your initial visit to this plant, you learn from a receptionist that the purchasing department is in the very preliminary stages of making a major purchase of the type of production equipment that you sell. First, how would you predict the likely composition of the buying center for this particular purchase? Second, what questions could you ask to determine the relative influence that different organizational members might exert on the buying decision?

ANS:n/a


6. Members of the buying center assume different roles throughout the procurement or organizational buying process. Discuss the nature of the five roles that a buying center member may assume. Provide an example of each role in the organizational buying context.

ANS:n/a


7. There are four categories of forces that influence organizational buying behavior. Please identify and briefly describe the four categories of forces. Assume that you are a salesperson in any industry you choose, provide one specific example in each category of how these forces affect organizational buying behavior in the industry you have chosen.

ANS:n/a


8. What are the two components that determine perceived risk in purchase decisions? Please describe some of the characteristics of the buying center and decision-making process when perceived risk is high. What actions should a salesperson take when selling to an organization when perceived risk is high?

ANS:n/a


Chapter 3—Customer Relationship Management Strategies for Business Markets

MULTIPLE CHOICE

1. Transactional exchange features very close:a. information linkages.b. social linkages.c. operational linkages.d. all of the above.e. none of the above.


2. On-going transactions in the business market where the customer and the supplier focus only on the timely exchange of standard products at competitive prices could be described as:a. transactional exchange.b. a partnership.c. collaborative exchange.d. a strategic alliance.e. a joint venture.


3. There is a gravitational pull that moves buyers toward the transactional side of the exchange spectrum because:a. competitors are continually working to attract the best customers away.b. customer requirements and expectations keep changing.c. customers can freely explore new options in real time on the Internet.d. all of the abovee. (a) and (b) only


4. _____ reflect(s) the degree to which the systems, procedures, and routines of the buying and selling firms have been connected to facilitate operations.

a. Relationship connectorsb. Information exchangec. Cooperative normsd. Operational linkagese. Legal bonds


5. Buying firms prefer a transactional relationship when:a. the complexity of the purchase is high.b. there is a competitive supply market featuring many alternatives.c. the supply market is stable.d. all of the abovee. (b) and (c) only


6. Buying firms prefer a more collaborative relationship when:a. the purchase is deemed strategically important to the buying

organization.b. the market is dynamic.c. there are few alternatives.d. all of the abovee. (a) and (c) only


7. Transactional relationships:a. are characterized by high levels of information exchange.b. are emphasized by buyers when the purchase is viewed as less

important to the organization's objectives.c. are more likely to involve operational linkages.d. all of the abovee. (a) and (c) only


8. Collaborative relationships:a. are emphasized by buying firms when the purchase is deemed important

to the organization.b. are emphasized by buyers when the complexity is high.c. are more likely to involve operational linkages.d. all of the abovee. (a) and (b) only


9. Which of the following statements about buyer-seller relationships is(are) true?a. Customers prefer a transactional orientation when there are few

alternative offerings from suppliers.b. Customers emphasize a collaborative orientation when the purchase

decision is not complex.c. Collaborative relationships are more likely to involve operational

linkages and high levels of information exchange.d. All of the above

e. None of the above


10. Which of the following statements about transactional relationships is(are) true?a. Customers emphasize a transactional orientation when the purchase is

viewed as less important to the organization.b. Customers prefer a transactional relationship when the market is

dynamic (for example, rapidly-changing technology.c. Transactional relationships are more likely to involve operational

linkages.d. all of the abovee. none of the above


11. Which of the following statements about collaborative relationships is(are) true?a. Customers prefer a collaborative relationship when there is a

competitive supply environment featuring many alternatives.b. Collaborative relationships are less likely to involve operational linkages

between the buying and selling firms.c. Buyers prefer collaborative relationships when the purchase decision is

not complex.d. all of the abovee. none of the above

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing


12. For collaborative customers, the business marketer should:a. invest resources to build operational linkages and information-sharing

mechanisms for the relationship.b. directly assist customers with planning and strategy development.c. work with a wide array of managers on strategy and coordination issues.d. all of the abovee. (a) and (b) only


13. For transactional customers, the business marketer should:a. see that operational linkages are designed into the relationship to keep

product and service offerings aligned with customer needs.b. directly assist the customer with planning and strategy issues.c. focus primary attention on the purchasing staff.d. all of the abovee. none of the above


14. Rather than adopting the approach of "one design fits all," the astute marketer matches the strategy to the product and market conditions that surround a particular relationship. Which of the following statements is(are) true?a. It is unwise for marketers to make specialized investments in

transactional relationships.b. For transactional customers, the salesperson should center primary

attention on the purchasing staff.

c. Transactional customers display less loyalty to a particular supplier and can easily switch part or all of their purchases from one vendor to another.

d. all of the abovee. (a) and (c) only


15. Business marketing relationships vary in terms of their closeness or degree of collaboration. Transactions that are almost, if not entirely, void of a close, collaborative relationship:a. do not involve the exchange of money.b. involve long-term, contractual commitments.c. are one-time exchanges of value between two parties with no prior or

subsequent interaction.d. intend to move each partner toward the attainment of some long-term

strategic goal.e. none of the above


16. The belief by a partner that an ongoing relationship is so important that it deserves maximum effort to maintain it is referred to as:a. trust.b. solidarity.c. relationship commitment.d. a strategic alliance.e. interfirm cooperation.


17. _____ exists when one party has confidence in a partner's reliability and integrity.a. Trustb. Solidarityc. Relationship commitmentd. A strategic alliancee. Interfirm cooperation


18. The open exchange of information is a characteristic of ____ relationships.a. closeb. distantc. transactionald. all of the abovee. (b) and (c) only.


19. Value can be defined as the _____ benefits received by a customer firm in exchange for the price paid for a product offering.a. economicb. technicalc. sociald. all of the above

e. (a) and (b) only


20. Using the continuum of working relationships, the industry bandwidth refers to:a. the range of relationship strategies (from transactional to collaborative)

that are pursued by competing firms.b. the number of competitors in the particular industry.c. always-a-share customers.d. the lost-for-good customer.e. the number of organizations in a straight rebuy situation.


21. Business marketers track customer loyalty and retention because:a. the cost of new customers is often far less than long-standing customers.b. all satisfied customers will remain loyal.c. the firm can identify opportunities for expanding the relationship.d. the cost of serving established customers usually increases.


22. When a business marketer demonstrates special skills in managing relationships with key customers or by developing innovative strategies with alliance partners, they are trying to create:a. a collaborative advantage.

b. an equal advantage.c. an arm’s length transaction.d. a transactional exchange.e. None of the above.


23. _____ centers on all activities directed toward establishing, developing, and maintaining successful exchanges with customers and other constituents.a. Relationship marketingb. Transactional exchangec. A strategic allianced. Buying centers


24. Which of the following are reasons for business marketers to employ relationship marketing activities?a. Loyal customers are far more profitable than price sensitive customers.b. Having strong relationships with customers can be hard for competitors

to understand or duplicate.c. Both (a) and (b) are true.d. Neither (a) nor (b) is true.


25. _____ involves a partner’s belief that an ongoing relationship is so important that it deserves maximum efforts to maintain it.a. Trustb. Relationship commitmentc. Relationship marketingd. A strategic alliance


26. When organizational buyers consider changes from one selling firm to another, what are the two main categories of switching costs they consider?a. Trust and relationship commitmentb. Transactional and collaborative relationshipsc. Investments and risk of exposured. Operational linkages and relationship connectors.


27. _____ features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits.a. Transactional exchangeb. Value-added exchangec. Competitive exchanged. Collaborative exchange


28. _____ occur in between the two extremes on the relationship continuum, where the focus of the selling firm shifts from attracting customers to keeping customers.a. Transactional exchangesb. Value-added exchangesc. Competitive exchangesd. Collaborative exchanges


29. Which of the following are goals of customer relationship management (CRM)?a. A continuing dialogue with customers.b. Personalized treatment of the most valuable customers.c. Achieving customer retention.d. All of the above.e. (a) and (c) only.


30. A(n) _____ represents the products, services, ideas, and solutions that a business marketer offers to advance the performance goals of the customer organization.a. industry bandwidthb. value propositionc. marketing pland. customer relationship management program



31. Which of the following performance attributes has research recently shown influences customer satisfaction of business buyers?a. Responsiveness of the supplier in meeting the firm’s needs.b. Product quality.c. Delivery reliability.d. All of the above.e. Only (a) and (b).


32. When business marketers are assessing which of their current customers represent the best opportunities for growth, which of the following factors should be considered?a. The cost-to-serve the customer.b. Projected profit margins.c. The current share of the wallet the firm has attained.d. All of the above.e. Only (a) and (b).


33. _____ illuminates exactly what activities are associated with serving a particular customer and how these activities are linked to revenues and the consumption of resources.a. Customer profitabilityb. Activity-based costingc. Total cost of ownership

d. Margin analysis


34. Relationship efficacy a. relates to the longevity of the relationship between a buyer and seller b. is created by interactions at the top levels of the two firms involved in a relationship c. refers to the ability of an interfirm relationship to achieve desired objectives. d. is not required if the firms are in an arms-length relationship e. none of the above


35. From the customer's perspective, relationship quality centers on:a. the sensitivity of the salesperson in understanding how business conditions affect the industry within which the buying firm operates.b. the ability of the salesperson to understand the selection criteria of each member of the buying center.c. trust in the salesperson.d. satisfaction with the salesperson.e. both (c) and (d)


36. ____ is composed of at least two dimensions: (1) trust in the salesperson and (2)

satisfaction with the salesperson.a. role definitionb. relational adaptivenessc. relationship qualityd. role congruitye. relationship congruity

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

TRUE/FALSE

1. Customized, high-technology products-like semiconductor test equipment-fit the transactional exchange category.


2. Buyers seek a close relationship for strategic purchases and employ a more distant arms-length approach in procuring non- strategic items.


3. Buying firms prefer a transactional relationship when there are few alternatives and the complexity of purchase is high.


4. Buying firms prefer a more collaborative relationship when the supply market is dynamic.


5. Buyer-seller relationships that arise for important purchases are the ones that are more likely to involve operational linkages and high levels of information exchange.


6. When supply needs are complex, the buying firm is less likely to opt for a close relationship with a supplier.


7. Operational linkages and information-sharing mechanisms are common features of collaborative relationships.


8. For collaborative customers, the salesperson not only works with the purchasing staff, but also with a wide array of managers throughout the organization.


9. Relationship commitment exists when one party has confidence in a partner's reliability and integrity.


10. Transactional exchange centers on the timely delivery of basic products for highly competitive market prices.


11. The cost of serving a long-standing customer is often more than the cost of acquiring a new customer.


12. While loyal customers are likely to be satisfied, all satisfied customers will not remain loyal.


13. Collaborative exchange features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits.


14. Relationship commitment involves a partner’s belief than an ongoing relationship is so important that it deserves maximum efforts to maintain it.


15. Total cost of ownership illuminates exactly what activities are associated with serving a particular customer and how these activities are linked to revenues and the consumption of resources.


16. Firing a customer may be appropriate if the customer is not profitable, not new, and shows little or no opportunity for learning.


17. All customers hold similar amounts of growth potential.


18. Having a relationship orientation is critical to developing a customer-relating capability.


19. The contribution of a firm’s customer-relating capability to the firm’s position of advantage depends on the degree to which the market offers an attractive opportunity.


20. The whale curve of cumulative probability demonstrates that the most profitable 20 percent of customers generate between 150 and 300 percent of total profits.


SHORT ANSWER

1. When the focus of the selling firm shifts from attracting customers to keeping customers, these exchanges are best described as:

ANS:Value-added exchanges


2. In a collaborative exchange, the supply market dynamism would best be described as:

ANS:Volatile

PTS: 1


3. Once a firm implements an Activity-Based Costing approach, and plots cumulative profitability against customers, a striking pattern emerges that is known as:

ANS:The Whale Curve


4. A cross-functional process for achieving a continuing dialogue with customers, with personalized treatment of the most valuable customers and ensuring customer retention and the effectiveness of marketing initiatives is known as:

ANS:Customer relationship management


5. Value is best defined as the economic, technical, service and social benefits received by a customer firm in exchange for the:

ANS:price paid for a product offering.


COMPLETION

1. The most profitable customers are those that have a high____________________and a low____________________.

ANS: Net margin realized, Cost-to-serve


2. ____________________ consist of unwritten and largely nonverbalized sets of congruent expectations and assumptions held by the parties to the alliance about each other’s prerogatives and obligations.

ANS: Psychological contracts


ESSAY

1. Xerox serves a diverse set of customers in the business market.

· Customer group A demands a wide variety of services in addition to a perfectly functioning copier. These customers value the relationship with Xerox and are willing to pay a premium for product and service quality.

· Customer group B wants a quality copier but, most of all, they want a rock bottom price and choose suppliers on that basis.

· Customer group C demands a quality product and extensive service support but wants all of this for a “rock bottom” price. These customers will freely switch from one supplier to the next. As competition intensifies for Xerox, more customers are moving into this

group each month.

First, describe how Xerox might develop a portfolio of relationship strategies to meet the needs of such diverse customer groups. Second, some customers in each group are more costly to serve than others. How should such cost differences be reflected in the particular relationship strategies that Xerox follows? Third, what strategies can Xerox follow to increase the switching costs of customers in Group B or Group C?

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes

2. Rather than adopting the approach of “one design fits all,” the astute marketer matches the strategy to the product and market conditions that surround a particular account. Describe the product and market conditions that support a collaborative relationship? a transactional relationship?

ANS:n/a


3. To optimize the purchasing strategy, buying firms across industries are beginning to segment the supply base: buyers seek a close relationship for strategic purchases and employ a more distant arm’s-length approach in procuring non-strategic items. Describe the resulting implications for firms that are evaluating potential customers to target with relationship marketing strategies.

ANS:

n/a


4. Some customers place a high value on supporting services (for example, technical advice and training) and are willing to pay a premium price for this support. Other customers do not value service support and are extremely price sensitive in making product selection decisions. Describe how a business marketer might profitably serve each of these customer segments.

ANS:n/a


5. Gartner Group, a research firm for information technology users, reports that 55 percent of all customer relationship management software projects fail to produce results. Worse yet, one in every five companies report that their CRM initiatives not only had failed to deliver profitable growth but also had damaged long-standing customer relationships. Experts suggest that these problems tend to occur when executives mistake CRM technology for a customer strategy. First, define customer relationship management (the cross-functional process) and describe how CRM technology (the software) allows a firm to provide customized treatment of key customers. Second, describe the central components of a customer relationship management strategy and the way in which CRM technology can support each strategy component.

ANS:n/a

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes

6. As software manufacturers and consulting organizations diffuse best practices, and the relevant CRM software becomes widely available and economical to use, all competitors will be equally equipped. However, when compared to rivals, some firms will be rewarded by customers with higher rates of customer loyalty and lower rates of defection while others will continue to stumble. In the end, to excel at customer relationship management, a firm requires a customer-relating capability. Describe the central elements of a customer-relating capability and how it can provide a firm with a strong advantage over competitors.

ANS:n/a


7. Large firms tend to make up the majority of the most profitable customers AND of the least profitable customers. What are some of the characteristics that define both high-cost-to-serve and low-cost-to-serve customers? What can business marketers do to manage high and low cost-to-serve customers?

ANS:n/a


8. Please identify the three main components of a strong customer-relating capability and how each component helps develop a strong customer-relating capability. How does customer-relating capability lead to a relationship advantage?

ANS:n/a


Chapter 4—Segmenting the Business Market and Estimating Segment Demand

MULTIPLE CHOICE

1. Concerning segmentation criteria, _____ refers to the degree to which information on the particular buyer characteristic exists or can be obtained.a. measurabilityb. accessibilityc. substantialityd. responsivenesse. enforceability

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

2. Which of the following statements concerning business market segmentation is(are) true?a. The decision to enter a particular market segment carries with it

significant long-term resource commitments for the industrial firm.b. In evaluating alternative bases for segmentation, the marketer is

attempting to identify good predictors of differences in buyer behavior.c. Segmentation decisions can be reversed more easily in the business

market than in the consumer market.d. all of the abovee. (a) and (b) only

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

3. Market segmentation is:a. more useful to consumer goods marketers than to business marketers.b. of little value to business marketers that concentrate on the

governmental and institutional sectors of the organizational market.c. difficult to apply in the business market because groups, not individuals,

make many purchasing decisions.d. a useful tool for both business and consumer goods marketers.e. inappropriate for low market share firms.


4. Which of the following statements concerning business market segmentation is(are) false?a. In selecting a market segment, the business marketer is also choosing a

competitive environment.b. The cost of research increases if a microlevel of segmentation is

required.c. Compared to their consumer goods counterparts, business marketers

can more readily change segmentation strategies, shifting attention from one segment to another.

d. both (a) and (c)

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

5. The business market can be segmented on several bases, broadly classified into two major categories:a. economic and demographic.b. macro and micro.c. top-down and bottom-up.d. concentration and coverage.e. organizational and end-use application.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

6. The business market can be segmented on several bases. Macro bases of segmentation center on:a. characteristics of the buying situation.b. characteristics of the buying organization.c. the nature of the product application.d. all of the abovee. both (a) and (c)


7. Bases of business or organizational market segmentation that center on the characteristics of the buying organization and the buying situation are broadly categorized as:a. macrosegmentation.b. microsegmentation.c. economic bases.d. bottom-up bases.e. concentration bases.


8. Bases of business or organizational market segmentation that focus on the characteristics of decision-making units are broadly classified as:a. macrosegmentation.b. microsegmentation.c. economic bases.d. demographic bases.e. coverage bases.


9. The microsegmentation of business markets center on characteristics of:a. buying organizations (e.g., the size).b. the product application (e.g., end market served).c. decision-making units (e.g., decision style).d. the purchasing situation (e.g., types of buying situation).e. geographic regions (e.g., Midwest).


10. All of the following are potential macro bases of business market segmentation except:a. purchasing strategy.b. usage rate.

c. size.d. product application.e. geographic location.


11. All of the following are potential micro bases of business market segmentation except:a. organizational innovativeness.b. importance of purchase.c. personal characteristics.d. structure of decision-making unit.e. type of buying situation.


12. Large buying organizations may possess unique requirements and respond to different marketing stimuli than small firms. Research suggests that the degree of influence of presidents, vice presidents, and owners _____ with an increase in corporate size.a. remains constantb. increasesc. decreasesd. none of the above


13. Park Rapids Electronics divides their market on the basis of NAICS category, end market served, and type of buying situation. They have also developed a special strategy for large centralized buyers. They are emphasizing:a. macro bases of segmentation.b. micro bases of segmentation.c. a blend of macro and micro bases of segmentation.d. psychographic and economic bases of segmentation.e. none of the above


14. Chandler Machine Tool has been successful in segmenting their market using the following bases: (1) NAICS category and (2) key purchasing criteria emphasized by particular groups of buyers within each NAICS industry. They are using:a. macro bases of segmentation.b. micro bases of segmentation.c. a blend of macro and micro bases of segmentation.d. psychographic and economic bases of segmentation.e. none of the above


15. Lansing Motor Works produces a line of precision motors. Based on feedback from the sales force, management has learned that one of their new motors is especially well-suited to high-speed packaging systems. The new motor requires less maintenance and has a longer useful life than competing offerings. Lansing Motor Works is now concentrating on this segment. This provides an illustration of segmentation on the basis of:

a. usage rate.b. purchasing strategy.c. size of firm.d. value-in-use.e. organizational innovativeness.


16. For the medical x-ray market, Du Pont initiated a formal positioning study among hospital administrators, radiology department administrators, and technical managers in order to identify the firm's relative standing and the specific needs (criteria) for each level of buying influence within each potential segment. This provides an illustration of segmentation on the basis of:a. the importance of purchase.b. attitude toward vendors.c. value-in-use.d. key criteria.e. decision-specific conflict.


17. A segmentation study found that purchasers of IBM equipment are more concerned about software support and breadth of product line and they are less concerned about absolute price and price flexibility (i.e., willingness of suppliers to negotiate price). This provides an illustration of segmentation on the basis of:a. the importance of purchase.b. key criteria.c. the structure of the decision-making unit.d. attitude toward vendors.

e. decision style.


18. Concerning segmentation criteria, _____ concerns the degree to which segments respond differently to different marketing mix elements, such as pricing or product features.a. measurabilityb. accessibilityc. substantialityd. compatibilitye. responsiveness


19. Business market segmentation at the _____ level requires a higher level of market knowledge and, therefore, a greater investment in research.a. geographicb. macroc. microd. demographice. aggregate


20. The Thompson Spring Company has developed a separate marketing strategy for each of the industries that uses its products. These industries include makers of machine tools, bicycles, surgical devices, telephones, and missile systems. This provides an illustration of segmentation on the basis of:a. usage rate.b. product application.c. type of buying situation.d. the structure of procurement.e. key decision criteria.


21. The criteria marketers use to evaluate the degree to which the firm can effectively focus its marketing efforts on chosen segments is:a. accessibility.b. measurability.c. sustainability.d. compatibility.e. responsiveness.


22. Which of the following are means by which a marketer can implement a microsegmentation strategy?a. Importance of the purchase.b. Attitudes toward vendors.c. Organizational Innovativeness.d. (a) and (b) only.e. (a) and (c) only.


23. A successful implementation of a segmentation strategy requires attention to:a. how should the sales force be organized.b. what adaptations will be needed to serve selected international market

segments.c. which media outlets can be used to target advertising at a new segment.d. all of the above.e. (b) and (c) only.


24. Which of the following is a benefit of effective segmentation?a. The mere attempt to segment business market forces the marketer to

become more attuned to the unique needs of customer segments.b. Knowledge of the needs of particular market segments helps the

business appropriately train and deploy the salesforce.c. It allows the business marketer to focus on product development efforts. d. all of the above.e. (b) and (c) only.


25. The classification of customers on a continuum range from nonuser to heavy user is an example of:

a. macro level segmentation.b. micro level segmentation.c. product application segmentation.d. "value in use" segmentatione. none of the above.


26. Which of the following is not one of the criteria for assessing the desirability of a potential market segment?a. Measurabilityb. Accessibilityc. Responsivenessd. Substantialitye. Accountability


27. A _____ is a group of present or potential customers with some common characteristic which is relevant in explaining and predicting their response to a supplier’s marketing stimuli.a. market segmentb. prospect groupc. business populationd. market opportunity

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy

& innovation

28. Concerning segmentation criteria, _____ refers to the degree to which the segments are large or profitable enough to be worth considering for separate marketing cultivation.a. measurabilityb. accessibilityc. substantialityd. compatibilitye. responsiveness


29. When a business marketer determines whether a buyer is employing a new task, modified rebuy or straight rebuy decision-making process, what macrolevel segmentation variable is being used?a. Type of buying situation.b. Structure of procurement.c. Geographical location.d. End market being served.


30. When a business marketer decides to target only those firms with centralized buying centers, what macrolevel segmentation variable is being used?a. Geographical location.b. Usage rate.c. Structure of procurement.d. End market served.


31. Which of the following is NOT a personal characteristic used in microlevel segmentation?a. Demographics.b. Risk.c. Confidence.d. Job responsibility.e. Importance of purchase.


32. Successful implementation of a business segmentation strategy requires attention to which of the following issues?a. Adaptations to serve selected international markets.b. A comprehensive on-line strategy to provide continuous support to

customers in the segments.c. Organization of the sales force.d. All of the above.e. Only (b) and (c).


33. Qualitative techniques that can be used for forecasting sales include:a. market surveys.

b. time series.c. the Delphi method.d. single series statistical methods.e. none of these.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

34. Advanced Technologies, Inc. faces a forecasting dilemma. They wish to evaluate the level of sales that a new technology might enjoy in 2014. Historical data is limited and of little value since the new product is not well defined and the product concept is unique. Which forecasting approach would appear to be most appropriate?a. time series analysisb. input/output analysisc. the sales force composited. regression analysise. the Delphi method

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

35. Which sales forecasting approach is effective when intimate knowledge of customer plans is important?a. executive judgmentb. Delphi methodc. time seriesd. sales force compositee. causal analysis

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

36. The qualitative approach that most closely resembles the executive panel method of sales forecasting is:a. input/output analysis.b. the sales force composite.c. market surveys.d. time series methods.e. regression analysis.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

37. The sales forecasting approach that utilizes a panel of experts and converts their opinions into an informed consensus by means of highly structured, multi-stage pooling is:a. the Delphi method.b. executive panel method.c. the sales force composite.d. organizational learning.e. the multiple series method.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

38. The industrial chemical industry in England shows a fairly regular rise and fall in demand over four- or five-year periods. This provides an illustration of the _____ component of a time series.a. trend

b. cyclec. randomd. seasonale. irregular


39. Albany Products found that the sales of one of their most important products is logically related to new construction expenditures. If the firm can forecast future values of this variable, which forecasting technique would appear to be most appropriate?a. time seriesb. regressionc. Delphi methodd. trend extensione. none of the above


40. Which forecasting technique uses historical data ordered in time to project the trend and growth rate of sales?a. input/output analysisb. the Delphi methodc. causal techniquesd. time series analysise. market survey method

ANS: D PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

41. Company sales, reported on a monthly basis for the past four years, is an example of a:a. cycle.b. time series.c. top-down approach.d. trend.e. seasonal index.


42. The _____ component of a time series reflects short-term, random movements in the data that do not conform to a pattern which is regularly related to the calendar.a. trendb. cyclec. seasonald. irregular


43. The _____ component of a time series reflects intermediate-term, regularly recurring, upswings and downswings of data around the long-term general direction of the data.a. trendb. cyclec. seasonal

d. irregular


44. _____ techniques have as their objective the determination of a relationship between sales and one or more variables presumed to be related to sales.a. Time seriesb. Delphic. Causald. Qualitativee. Trend extension


45. The most crucial limitation(s) associated with causal methods of sales forecasting is(are):a. the problem of determining future values of the independent or causal

variables.b. the problem of securing unbiased sales estimates from the sales force.c. that seasonal variations in performance are difficult to precisely

estimate.d. both (b) and (c).e. All of the above are crucial limitations of causal methods of sales

forecasting.


46. The ideal approach to sales forecasting for the business marketer relies on:a. strictly quantitative approaches.b. strictly qualitative approaches.c. a blend of the Delphi method and well-executed market surveys.d. a combination of qualitative and quantitative approaches.e. single and multiple statistical series approaches.


47. Sales forecast data is used to:a. distribute inventory.b. manage stock levels.c. directing the entire supply chain process.d. all of the above.e. (a) and (b) only.


48. Executive judgement methods produce accurate forecasts when:a. forecasts are made infrequently.b. the environment is volatilec. the linkage between decision, action, and feedback is short.d. all of the above.e. (a) and (b) only.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy

& innovation

49. Quantitative forecasting includes the primary methodology called:a. time series.b. causal.c. regression.d. all of the above.e. (a) and (c) only.


50. Typically, causal models are more reliable for:a. intermediate than for long-range forecasts.b. long-range than intermediate forecasts.c. long-range than short-range forecasts.d. short-range than long range forecasts.e. short-range than for intermediate forecasts.


51. Which of the following are true of qualitative approaches to sales forecasting?a. Effectiveness depends on close relationships between customers and

suppliers.b. They are more appropriate for well-established products.c. It brings users of the forecast into the forecasting process.d. All of the above.e. Only (a) and (c).

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

52. The Delphi technique is particularly well suited to:a. new product forecasts.b. estimation of future events for which historical data are limited.c. situations that are not suited to quantitative analysis.d. All of the above.e. Only (b) and (c).


53. In time series analysis, the _____ component indicates the long-term general direction of the data.a. trendb. cyclec. seasonald. irregulare. causal


54. In time series analysis, the _____ component represents regular, recurring movements within the year.a. trendb. cyclec. seasonald. irregular

e. causal


TRUE/FALSE

1. The concept of market segmentation is more applicable to consumer-goods marketers than to business marketers.


2. Micro bases of organizational market segmentation require a high degree of market knowledge and focus on the characteristics of decision-making units within each of the various macrosegments.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

3. Examples of possible micro bases of business market segmentation include size, geographical location, and usage rate of buying organizations.


4. If the business marketer can identify meaningful and profitable market segments at the macro level, the segmentation process is complete.

ANS: T PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

5. The information needed for micro level segmentation in the business market can usually be drawn from available secondary sources.


6. Compared to centralized buyers, decentralized purchasing units emphasize short-term cost efficiency.


7. Industrial firms lack the flexibility of their consumer-goods counterparts in moving into and out of market segments.


8. Value-in-use constitutes a microlevel base of segmentation.


9. The North American Industrial Classification System (NAICS) is an especially valuable source when segmenting the market on the basis of end use.


& innovation

10. The cost of research is greater at the macrolevel of segmentation than at the microlevel.


11. In evaluating alternative bases for segmentation, the marketer is attempting to identify good predictors of differences in buyer behavior.


12. Because a specific industrial good is often used in different ways, the marketer can divide the market using the NAICS.


13. Buying organizations can be segmented based on the stages of the procurement process, such as new-task or straight rebuy.


14. By directing its resources to all of its customers evenly, the business marketer is less vulnerable to focused competitors that may seek to "cherry pick" the firm's most valuable customers.

ANS: F PTS: 1


15. If the requirements of segmentation are met, it should provide the business marketer with valuable guidelines for allocating marketing resources.


16. In order to use macrolevel bases of segmentation, the business marketer must move beyond secondary sources of information by soliciting input from the sales force or by conducting a special market segmentation study.


17. The personal characteristics of decision-makers in buying centers, such as their decision style and confidence, are examples of macrolevel bases of segmentation.


18. Customers that actively seek business marketing firms that can help them create new value to gain a competitive edge in their markets can be segmented using value-based strategies.


19. A well-defined segmentation plan will fail without careful attention to implementing the plan.


20. The Delphi method constitutes a highly sophisticated quantitative approach to sales forecasting.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

21. Time series techniques are especially appropriate when management believes that sales will behave differently in the future than they have in the past.


22. The cycle component in a time series indicates the long term general movement in the data in one direction.


23. The fact that sales and some causal variables are correlated implies that the causal variable "caused" sales.


24. Time series methods are well suited to short-range forecasting because the assumption that the future will be like the past is more reasonable over the short run than over the long run.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

25. Qualitative sales forecasting techniques provide a systematic analysis of cause and effect relationships.


26. Regression models are useful to industrial firms projecting final consumer demand for items of which their products become a part.


27. Recent research on forecasting techniques indicates that improvements in forecasting accuracy can be achieved by combining the results of several forecasting methods.


28. The primary advantage of the Executive Judgement method is that systematically analyzes cause-and-effect relationships.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy

& innovation

29. The sales force composite approach to forecasting is a quantitative forecasting method because it uses past sales data to predict future sales potential.


30. Because the Delphi technique is often used for new products or when a product concept is unique, it is only applied to short-range forecasting.


31. Regression methods of forecasting require considerable historical data to be valid and reliable.


32. In time series analysis, the seasonal component represents regular, recurring movements within the year.


COMPLETION

1. Customers who are not particularly price or service sensitive and who made purchases in a routine fashion of products that are not central to their operation are best known as____________________buyers.

ANS: Programmed

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

2. Bargain hunters are____________________-volume buyers who are very sensitive to any changes in price or service with respect to products that are very important to their operations.

ANS: Large


3. ____________________-focused customers are committed to being first to market with new technologies and seek new-product-development expertise that will attract new customers.

ANS: Innovation


4. Sharing of downstream data along with replenishment plans and sales forecasts describe customers who align with____________________-tier services.

ANS: High


5. Once demand is estimated for each segment, the manager can allocate expenditures on the basis of ____________________ volume.

ANS: potential sales

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

6. ____________________ data is used to distribute inventory in the supply chain, manage stock levels at each link and schedule resources for all the members of a supply chain.

ANS: Sales forecast


7. The ____________________ method combines and averages top executives’ estimates of future sales and is popular because it is easy to apply and understand.

ANS: Executive judgment


8. ____________________ is a unique approach to forecasting demand in that it involves combined efforts of many functions within the firm as well as with supply chain partners.

ANS:CPFR

Collaborative Planning Forecasting and Replenishment


ESSAY

1. An emerging high-technology firm develops and sells a line of electronic software products and services that enable businesses to engage in business-to-business communications and transactions with suppliers and customers. The firm’s products and services are used by retailers such as Wal-Mart, manufacturers like Pillsbury, apparel firms like New Balance Athletic Shoes, and insurance firms and others. The firm needs your assistance in segmenting this vast potential market that includes most types of businesses.

First, suggest possible bases of segmentation that the high-tech firm might use in isolating potential clusters or segments of customers. Next, provide a set of guidelines that the firm might follow in evaluating whether or not a particular base of segmentation provides an appropriate market and strategic fit for the firm.

ANS:n/a


2. Johnson Technology, a highly successful producer of specialized equipment for the paper industry is contemplating entry into a new industry segment. Beth Walker, the firm's marketing vice-president, has always felt that Johnson Technology could serve the equipment needs of food processors like General Foods. The same basic technology underlies the equipment in both sectors and Beth feels that Johnson Technology has a meaningful edge over all competitors.

Describe the company, competitive, and market factors that the firm should consider before committing resources to this new industry segment.

ANS:n/a


3. Your first task as a product manager at Dow Chemical is to evaluate the market segmentation strategy followed by your predecessor. For the past four years, this manager had been dividing the market on the basis of NAICS codes and developing a separate marketing strategy for each of 5 different NAICS industries. Describe the specific steps that you would follow in evaluating the existing segmentation plan. What factors might prompt you to seriously consider making a change in the existing segmentation approach?

ANS:n/a


4. Provide an illustration of a situation where value-in-use segmentation would seem to be especially appropriate.

ANS:n/a


5. You have just taken over as the new national sales manager for Smucker’s. You have just been presented with a plan from your boss, the Vice-President of Sales, to add new institutional market segments for Smucker’s products - cafeterias in schools and hospitals. After reading the report, you strongly believe that the new segments have been well-defined and are extremely viable. What steps can you take to ensure that this new segmentation strategy is successfully implemented?

ANS:n/a


6. Effective segmentation often begins with the analysis of macrolevel bases of segmentation, and then continues with the identification of microsegments within each potential macrosegment using microlevel bases of segmentation. However, segmentation can effectively end after considering only macrolevel variables. Please provide an illustration of a situation where only macrolevel bases are used to identify market segments and what variables or issues business marketers should use to determine whether macrosegmentation alone is enough for effective organizational market segmentation.

ANS:n/a


7. Compare and contrast the different quantitative sales forecasting techniques that are used by business marketing managers. Be sure to note the strengths and limitations of each technique.

ANS:

n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Strategic & systems skills

8. Using a product example and market setting of your choice, describe the underlying logic of forecasting with regression or causal analysis. What are the limitations of the approach?

ANS:n/a


9. Compare and contrast the different qualitative sales forecasting techniques that are used by business marketing managers. Be sure to note the strengths and limitations of each technique.

ANS:n/a


10. Recent research on forecasting techniques indicates that forecasting accuracy can be improved by combining the results of several forecasting methods, leading many to advocate the use of a composite forecasting model that includes both qualitative and quantitative factors. Using a product example and market setting of your choice, demonstrate how the use of a composite forecasting model can lead to more accurate forecasting.

ANS:n/a

PTS: 1NAT

Chapter 5—Business Marketing Planning: Strategic Perspectives

MULTIPLE CHOICE

1. In the hierarchy of strategies, _____ strategy defines the businesses in which a company will compete, preferably in a manner that utilizes resources to convert distinctive competence into competitive advantage.a. functionalb. corporatec. business-leveld. producte. divisional


2. In the hierarchy of strategies, _____ strategy centers on how a firm will compete in a given industry and will position itself against its competitors.a. functionalb. corporatec. business-leveld. producte. divisional

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy

& innovation

3. In the hierarchy of strategies, _____ strategy centers on how resources allocated to various functional areas can be used most effectively and efficiently to support the strategy of a strategic business unit.a. functionalb. corporatec. business-leveld. producte. divisional


4. A _____ is a single business or collection of businesses that has a distinct mission, a responsible manager, its own competitors, and an independent position in the firm.a. strategic business unitb. market segmentc. sub-business centerd. divisional organizational schemee. sector unit


5. The collective action perspective of strategy formulation applies to strategic decisions that cut across functional areas, involve issues related to the organization's long-term goals, or involve the allocation of resources across business units. According to the collective action perspective, strategic decision processes:

a. are typically centered in a single functional area (e.g., in marketing or in R&D).

b. are often characterized by conflict that often divides participants in the strategy formulation process.

c. involve negotiation and compromise among partisan participants.d. all of the abovee. (b) and (c) only


6. Conflict often divides participants in the strategy formulation process. Conflict most often emerges from:a. bickering within a single functional area.b. issues surrounding sales territories.c. turf issues.d. thought world differences.e. both (c) and (d)


7. The composition or functional area representation of the marketing strategy center:a. is strictly prescribed by the organizational chart.b. evolves during the strategy development process.c. varies from one strategy situation to another.d. all of the abovee. (b) and (c) only


8. Responsibility charting provides a tool for defining decision-making roles. A manager who accepts or vetoes a decision before it is implemented, or chooses from alternatives developed by others, is performing which of the roles?a. responsibleb. approvec. consultd. implemente. inform


9. Responsibility charting constitutes an approach that can be used to classify decision-making roles and to highlight the multifunctional nature of business marketing decision making. A manager who takes initiative for analyzing a situation, developing alternatives, assuring consultation with others, and who makes initial recommendations is performing which of the following roles?a. responsibleb. approvec. consultd. implemente. inform


10. In developing strategic plans, managers who represent the various business functions in the firm often hold different views concerning the best strategic course. Why?a. Because different functions are rewarded for different things.b. Because each function often reflects a unique orientation or thought

world.c. Because some functions are oriented toward short-term objectives while

others center on long-term goals.d. All of the above.e. (a) and (c) only.


11. A business concept or model consists of the following major components except:a. core strategy.b. strategic resources.c. customer interface.d. value networke. negotiated outcomes.


12. The overall objectives of the strategy that sets a course of direction and defines a set of performance criteria that will be used to measure progress is called the:a. business mission.b. product scope.c. market scope.d. basis for differentiation.


13. Which of the following describes where the firm competes?a. The business mission.b. The product scope.c. The market scope.d. All of the above.e. (b) and (c) only.


14. All of the following are elements that determine how a firm chooses to compete except:a. the business mission.b. the product scope.c. the basis for differentiation.d. the core process processes.


15. Which of the following is an element of the customer interface?a. Relationship dynamics.b. Core processes.c. Pricing structure.d. All of the above.e. (a) and (c) only.


16. All of the following are components of a firm's value network except:a. suppliers.b. coalitions.c. strategic alliance partners.d. customers.


17. Cisco and General Electric demonstrate special skills in forging relationships with suppliers and alliance partners. This is an example of:a. a value network.b. relationship dynamicsc. a strategic asset.d. a market scope.


18. Responsibility charting constitutes an approach that can be used to classify decision-making roles and to highlight the multifunctional nature of business marketing decision-making. A manager who is asked for substantive input before the decision is approved but does not possess veto power is performing which of the following roles?a. responsible

b. approvec. consultd. implemente. inform


19. Responsibility charting constitutes an approach that can be used to classify decision-making roles and to highlight the multifunctional nature of business marketing decision-making. A manager who is told of the decision when it is made, but may not have been consulted before the decision was approved is performing which of the following roles?a. responsibleb. approvec. consultd. implemente. inform


20. The element of customer interface that refers to the channels a business marketing firm uses to reach customers and the level of service it provides is:a. fulfillment and support.b. information and insight.c. relationship dynamics.d. pricing structure.

ANS: A PTS: 1


21. The element of customer interface that refers to the knowledge captured from customers and the degree to which this information is used to provide enhanced value to the customer is:a. fulfillment and support.b. information and insight.c. relationship dynamics.d. pricing structure.


22. Techniques for differentiating products and services include which of the following?a. Superior service or technical assistance.b. Superior quality.c. Lowest price among competitors.d. All of the above.e. Only a and b.


23. _____ are the set of skills, systems, and technologies a company uses to create uniquely high value for customers.a. Strategic assetsb. Core competenciesc. Core processesd. Core strategies

e. Customer interfaces


24. _____ are the most tangible requirements for advantage that enable a firm to exercise its capabilities.a. Core competenciesb. Strategic assetsc. Core processesd. Core strategiese. Customer interfaces


25. _____ are the methodologies and routines companies use to transform competencies, assets, and other inputs in to value for customers.a. Core competenciesb. Core strategiesc. Core processesd. Value networkse. Customer interfaces


26. The three major levels of strategy include which of the following?a. Corporate strategy

b. Competitive strategyc. Functional strategyd. All of the above.e. Only a and c.


27. The role of marketing at the corporate level of strategy includes which of the following?a. Assess market attractiveness.b. Assess competitive effectiveness.c. Formulate the firm’s overall value proposition.d. All of the above.e. Only a and b.


28. The members of the organization involved in the business marketing decision-making process constitute the _____.a. marketing strategy center.b. buying center.c. value network.d. target market.e. core business.


29. Common challenges for marketers using the marketing strategy center to manage across business functions include which of the following?a. The fostering of a shared appreciation of other functional units. b. Minimization of interdepartmental conflict.c. Elimination of interdependencies between functional units.d. All of the above.e. Only a and b.


30. Which of the following represent the three bridge elements that tie together the major components of the business model?a. Customer benefits, configuration, and company boundaries.b. Firm benefits, configuration, and functional boundaries.c. Customer benefits, configuration, and functional boundaries.d. Core strategies, strategic resources, and value networks.


31. The _____ provides managers with a comprehensive system for converting a company’s vision and strategy into a tightly connected set of performance measures.a. value networkb. balanced scorecardc. customer interfaced. financial audite. core business strategy


32. The balanced scorecard uses which of the following perspectives to measure firm performance?a. Financial.b. Customer.c. Internal business processes.d. Learning and growth.e. All of the above.


33. Which of the following are forms of differentiation that can be used by business marketers when developing a value proposition?a. Lowest total cost.b. Complete customer solutions.c. Product innovation.d. All of the above.e. Only a and c.


34. Which of the following are used in the Customer Perspective of the Balanced Scorecard to measure core customer outcome measures?a. Market share.b. Customer acquisition.

c. Customer retention.d. All of the above.e. Only b and c.


35. Internal business processes support which elements of a company’s strategy?a. They create and deliver the value proposition for customers.b. They create and support interfirm supply chain teams.c. Both a and b.d. Neither a or b.


36. The three principal drivers of organizational learning and growth include:a. human capital.b. information capital.c. organizational capital.d. All of the above.e. Only b and c.


37. A _____ enables an organization to describe and illustrate its objectives, initiatives, targets, the measures used to assess performance, and the linkages that are the foundation for strategic direction.

a. value networkb. marketing strategy centerc. strategy mapd. strategic alignmente. positioning map


TRUE/FALSE

1. Functional strategy centers on how a firm will compete in a given industry and will position itself against its competitors.


2. All business marketing decisions are affected, directly or indirectly, by other functional areas.


3. The composition of the marketing strategy center is neatly prescribed on the organizational chart.


4. The composition or functional area representation of the strategy center evolves during the marketing strategy development process, varies from firm to firm, and varies from one strategy situation to another.


5. All participants in the business marketing planning process are evaluated on the bases of sales, profits, and market share.


6. Strategic plans emerge out of a bargaining process among functional areas.


7. Conflicts frequently emerge during the strategy formulation process because various functional units operate under unique reward systems and reflect unique orientations.


8. For a strategy to succeed, individuals in a company must understand and share a common definition of a firm's existing business concept.


9. The extent to which the business concept is common to competitors on dimensions shared by the customer is a factor than can determine the potential profit of a business concept.


10. Suppliers and coalitions are part of a firm's value network.


11. The business mission defines where the firm competes.


12. In the hierarchy of strategies, the three major levels of strategy are corporate, business-level, and functional.


13. The two most common forces that divide participants during the strategy formulation process are turf issues and different thought-worlds.


14. Responsibility charting is an approach that can classify decision-making roles and highlight the multifunctional nature of business marketing decision making.


15. The four perspectives used in the balanced scorecard to measure performance are financial, customer, internal business processes, and learning and growth.


16. Lowest total cost and product innovation are two forms of differentiation that can be uses by business marketers when developing a value proposition.


17. The four major components of the business model or concept are customer interface, core competencies, strategic resources, and the value network.


18. The core strategy determines how the firm chooses to compete.


19. Core competencies are the more tangible requirements for advantage that enable a firm to exercise its capabilities.


20. Core customer outcome measures used to monitor performance include market share, customer retention, and customer profitability.


21. The three principal drivers of organizational learning and growth are human capital, information capital, and financial capital.


COMPLETION

1. Subcultures exist when one subunit shares different values, beliefs, and goals than another subunit, resulting in different____________________.

ANS: thought-worlds


2. Responsibility charting is an approach that can classify ____________________roles and highlight the multifunctional nature of business marketing decision making.

ANS: decision-making


3. Customer interface, core strategy, strategic resources and the value network constitute the ____________________or model.

ANS: business concept


4. The____________________determines how the firm chooses to compete.

ANS: Core strategy


5. A ____________________ is a tool used for visualizing a firm’s strategy as a chain of cause-and-effect relationships among strategic objectives.

ANS: Strategy map


6. The ____________________clarifies the condistions that will create value for the customer.

ANS: Customer value proposition


7. Growth, sustain and ____________________ are three stages of a business that are isolated and linked to appropriate financial objectives.

ANS: Harvest


ESSAY

1. For a strategy to succeed, individuals in a company must understand and share a common definition of a firm’s existing business concept. For example, ask any employee at Dell and they will tell you about the “Dell model” that sets them apart from competitors. A critical component of a business model is the core strategy. Describe the key elements that are involved in setting a core strategy.

ANS:n/a


2. Some business models demonstrate more profit potential than others: Southwest Airlines is more profitable than America West Airlines; Dell is more profitable than Gateway; and Intel readily outperforms its rivals. Describe the factors that determine the profit potential of a business concept or model.

ANS:n/a


3. Jim Craig, a marketing manager at a communications equipment firm, was enthusiastic about the prospects for the new, upgraded model of the Apex tester. The previous two models were quite profitable and a marketing research study clearly identified the improvements that should be embodied in the new model. Key market segments wanted a lighter more compact system and one that could handle a wider range of equipment test functions. Given the strength of the firm's R&D and manufacturing capabilities and the “can do” attitude that prevailed in the organization, Jim was confident that the model could be designed to incorporate the new upgrades and meet the planned target to release the new model in fifteen months. To his surprise, however, R&D and manufacturing vigorously resisted his proposed modification. In the end, the Apex tester was released on schedule, embodied the attributes isolated by marketing research, and was a glowing market success. Why do managers who represent different functional areas often see things differently and clash over the appropriate strategic course? What steps can marketing managers like Jim take to minimize cross-functional conflict while serving as a strong advocate for the consumer?

ANS:n/a


4. A central challenge for the business marketer during the strategy formulation process is to minimize interdepartmental conflict while fostering shared appreciations of the interdependencies with other functional units. Explain.

ANS:n/a


5. The marketing strategy center includes the members of an organization involved in the business marketing decision-making process. Using any product and market setting you choose, please illustrate how responsibility charting can be used to classify decision-making roles and highlight the multifunctional nature of business marketing. Be sure to include a discussion of all five roles that participants can play in the decision-making process.

ANS:n/a


6. The balanced scorecard provides managers with a performance measurement system that can be linked to a company’s business marketing strategies. Identify and briefly describe the four perspectives of performance in the balanced scorecard. Next, explain how each perspective can help business marketers with their business strategies.

ANS:n/a


Chapter 6—Business Marketing Strategies for Global Markets

MULTIPLE CHOICE

1. An industrial firm's first encounter with an overseas market usually involves _____ because it involves the least commitment and risk.a. contractingb. licensingc. exportingd. franchisinge. a turnkey operation

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

2. Exporting is a viable international entry strategy when the firm:a. wishes to maintain direct control of the marketing program.b. lacks the resources to make a significant commitment to the market.c. wants to form long-term relationships with international customers.d. all of the abovee. none of the above

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

3. Included among the contractual modes of international market participation are:a. licensing.b. management contracts.c. exporting.d. all of the abovee. both (a) and (b)

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

4. As a mode of international market entry, licensing agreements pose the following limitation(s):a. a firm has less control over a license than over its own exporting or

manufacturing abroad.b. licensing agreements include a time limit and additional extensions

(beyond the first) that may not be readily permitted by a number of foreign governments.

c. the licensee may become an important competitor in the future.d. all of the abovee. (b) and (c) only

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

5. _____ involves sourcing a product from a producer located in a foreign country for sale there or in other countries.a. Contract manufacturingb. Exportingc. Franchisingd. A joint venturee. A turnkey operation

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

6. This mode of international market participation permits a client to require a complete operational system, together with skills sufficient to allow the unassisted maintenance and operation of the system. Once the package agreement is on line, the system is owned, controlled, and operated by the client. This provides an apt description of:a. licensing.b. a turnkey operation.c. a joint venture.d. contract manufacturing.e. importing.


7. In pursuing international entry options, joint ventures often constitute a feasible option because:a. they provide the only path of entry into many foreign markets.b. they may provide for better relationships with local organizations (for

example, local authorities) and with customers.c. they may open up market opportunities that neither party to the

venture could pursue alone.d. all of the abovee. (a) and (b) only


8. Consider this position: If you run a pharmaceutical company with a good product to distribute in Japan but have no sales force to do it, find someone in Japan who also has a good product but no sales force in your country. Why not join forces to maximize contribution to each other's fixed costs? This describes the logic of:

a. a joint venture.b. exporting.c. franchising.d. importing.e. global marketing.


9. Multinational firms have traditionally managed operations outside their home country with an approach that permits individual subsidiaries to compete independently in different country-markets. Here each subsidiary resembles a strategic business unit that is expected to contribute earnings and growth to the organization. This describes:a. a multidomestic strategy.b. a differentiated strategy.c. a global strategy.d. an export-based strategy.e. a coordinated strategy.


10. When a firm seeks competitive advantage with strategic choices that are highly integrated across countries (for example, a standardized core product that requires minimal local adaptation across country-markets), this describes:a. a multidomestic strategy.b. a differentiated strategy.c. a global strategy.d. an export-based strategy.e. a coordinated strategy.


11. _____ is one in which a firm's competitive position in one country is significantly influenced by its position in other countries.a. A multidomestic industryb. A differentiated industryc. A global industryd. An export-based industrye. A coordinated industry


12. In _____, firms pursue separate strategies in each of their foreign markets-competition in each country is essentially independent of competition in other countries.a. a multidomestic industryb. a differentiated industryc. a global industryd. an export-based industrye. a coordinated industry


13. The type of international strategy that concentrates as many activities as possible in one country, serves the world market from the home base, and closely coordinates those activities that must be performed near the buyer (for example, service) is referred to as:a. a country-centered strategy.b. an export-based strategy.c. a purest global strategy.d. a segmented international strategy.e. a coordinated international strategy.


14. Concerning international strategy, a firm that concentrates manufacturing and support activities in one country but gives local marketing subsidiaries significant latitude in each region of the world is following which type of international strategy?a. a country-centered strategyb. an export-based strategyc. a purest global strategyd. a segmented international strategye. a coordinated international strategy


15. The choice of a particular international market entry mode depends on a range of factors including the size of the market and its growth potential. Markets of limited size surrounded by trade barriers may be supplied most cost effectively via:a. licensing or contract manufacturing.

b. a local production and marketing subsidiary.c. exporting.d. selective distribution.e. none of the above


16. In entering high-risk country-markets, firms can reduce their risk exposure by adopting low-commitment modes of entry such as:a. licensing.b. wholly-owned subsidiaries.c. contract manufacturing.d. all of the abovee. (a) and (c) only


17. Which of the following modes of international market entry provides for greater potential returns and a greater degree of control over operations?a. licensingb. wholly-owned subsidiariesc. contract manufacturingd. exportinge. franchising


18. As an entry strategy, licensing requires:a. capital investment.b. marketing strength in foreign markets.c. a company to have less control over a licensee than over its own

exporting or manufacturing abroad.d. all of the above.e. (b) and (c) only.


19. Potential partners for a global alliance are evaluated based on:a. resources.b. relationships.c. culture.d. all of the above.e. (a) and (b) only.


20. An advantages of joint ventures is:a. they include the only path of entry into many foreign markets.b. they open up market opportunities that neither partner to the venture

could purse alone.c. they transfer knowledge to the partner.d. all of the above.e. (a) and (b) only.


21. The home base for a business is the location where:a. strategy is set.b. core product and process technology is created and maintained.c. a critical mass of sophisticated production and service activities reside.d. all of the above.e. (a) and (c) only.


22. Successful global companies achieve unified action by:a. establishing a strategies that are independent across countries.b. developing accounting systems that are country specific.c. encouraging personal relationships and the transfer of learning among

subsidiary managers across locations.d. all of the above.


23. Research suggest that over _____ % of joint ventures are disbanded or fall short of expectations.a. 10b. 20c. 30d. 40e. 50


24. In high-risk markets, firms can reduce their equity exposure by adopting low commitment modes such as:a. licensing.b. contract manufacturing.c. joint ventures with a majority share.d. all of the above.e. (a) and (b) only.


25. Rather than modifying the firm's product offerings from country to country, ____ strategy requires a patient, long-term campaign to enter every significant foreign market while maintaining and leveraging the company's unique strategic position.a. a globalb. an exportingc. a joint ventured. a licensing


26. Firms that quickly and intelligently seize global opportunities can secure which of the following forms of competitive advantage?a. Cost advantage.

b. Market access advantage.c. Capabilities advantage.d. All of the above.e. (a) and (b) only.


27. A firm that includes rapidly developing economies (RDEs) in their global cost structures can realize savings of _____ in the landed costs of their products.a. 0 to 20 percentb. 20 to 40 percentc. 40 to 60 percentd. 60 to 80 percent


28. The hidden costs in operating in rapidly developing economies include which of the following?a. One-time setup costs.b. Risk management costs.c. Exit costs.d. All of the above.e. (a) and (b) only.


29. Companies can use capabilities advantages to:a. improve research and development.b. address unmet customer needs.c. further standardize products in the home country.d. All of the above.e. (a) and (b) only.


30. The decision to outsource business operations to rapidly developing economies is affected by which of the following sets of factors?a. Economic.b. Competitive.c. Environmental.d. All of the above. e. (a) and (b) only.


31. Factors that favor relocation of products or services to rapidly developing economies include: a. High labor content.b. Low growth potentialc. Standardized manufacturing or service-delivery processes.d. All of the above.e. (a) and (c) only.

ANS: E PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

32. Factors that favor keeping products or services at home instead of relocating to rapidly developing economies include:a. Protection of intellectual property is critical.b. High sensitivity to production location.c. Very high technology content.d. All of the above.e. (a) and (c) only.


33. Which of the following issues pose challenges to business marketers considering strategic alliance as a market entry mode?a. Problems with maintaining alliances over time.b. Difficult to implement alliances on a global scale.c. Problems establishing coordination and trust.d. All of the above.e. (a) and (c) only.


34. Which of the following issues pose problems to firms trying to manage joint venture relationships?a. Disagreements over profit-sharing.b. Opening up of new market opportunities.c. Problems responding to changing market needs.d. All of the above.

e. (b) and (c) only.


35. The choice of a foreign market entry mode depends upon:a. the size of the market.b. the market’s growth potential.c. Both (a) and (b).d. Neither (a) or (b).


36. _____ refers to how similar activities performed in various countries are couple with each other.a. Coordinationb. Configurationc. The home based. The value network


37. The BCG Global Advantage Diamond portrays the key elements that must be developed and integrated to secure a strong position in global markets. This framework includesa. A market access elementb. A market relevancy element

c. A resource accuracy elementd. All of the abovee. None of the above


36. When moving to a RDE, suppliers must adjust their operating models to:a. Maintain quality levelsb. Counter local suppliers offeringsc. To fully capture the cost advantages.d. Consider the increased transportation costs involvede. Consider market research data on procurement preferences


TRUE/FALSE

1. Some research suggests that, compared to consumer goods, industrial and high-technology products may be more appropriate for global brand strategies.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

2. An industrial firm's first encounter with an overseas market usually involves the formation of a wholly-owned subsidiary in another country.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D

Managing strategy & innovation

3. Exporting involves giving up direct control of the marketing program, which often makes it difficult to coordinate activities.


4. As an entry strategy, licensing requires a major capital investment in a foreign market.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

5. Problems often plague joint ventures and, as a result, many of them fall short of expectations or are disbanded.


6. A multidomestic strategy seeks competitive advantage with strategic choices that are highly integrated across countries.


7. Upstream activities in the value chain involve those primary activities that are closely tied to where the buyer is located.



8. In multidomestic industries, a firm's competitive position in one country is significantly influenced by its position in other countries.


9. The purest global strategy concentrates as many activities as possible in one country, serves the world market from this home base, and closely coordinates those activities that must be performed near the buyer.


10. In high-risk foreign markets, firms can reduce their equity exposure by adopting low-commitment modes of entry such as licensing or contract manufacturing.


11. Markets of limited size surrounded by trade barriers may be supplied most cost effectively by using the exporting mode of entry.


12. The home base for a business is the location where strategy is set and a critical mass of sophisticated production and service activities reside.

ANS: T PTS: 1


13. A single-country may not be large enough for a firm to realize economies of scale.


14. The choice of a particular entry mode will also depend on the size of the market and its growth potential.


15. Coordination centers on where each activity is performed, including the number of locations.


16. The need for a global strategy is determined by the nature of international competition in a particular industry.


17. For truly global industries, a firm's position in one country significantly affects its position elsewhere, so a multi-domestic strategy is required.



18. The two primary sources of cost advantages driving firm to implement operations in rapidly developing economies are lower operating costs and lower capital investment requirements.


19. A factory in a rapidly developing economy can be built with 70% of the investment level needed in a highly developed economy.


20. A firm whose products are technically complex and are protected by U.S. patents is a good candidate for relocating to a rapidly developing economy.


21. Arguments over profit-sharing and management styles are common problems experienced in exporting.


22. Configuration centers on where each activity is performed, including the number of locations.

ANS: T PTS: 1


23. Multidomestic industries do not need a global strategy because the focus should be on developing a series of distinct domestic strategies.


COMPLETION

1. The primary reason that companies are moving to sourcing from Rapidly Developing Economies is due to very large and sustainable ____________________ from lower operating costs and lower capital investment requirements.

ANS: cost advantages

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

2. The realized net savings after logistics costs, other management costs, and import duties involved in moving the product from the RDE to the market destination is referred to as ____________________costs.

ANS: landed


3. In China’s steel industry, their main source of competitive advantage is due not to cheap labor, but rather massive government energy ____________________.

ANS: subsidies


4. An industrial firm’s first foray into an overseas market usually involves____________________because it requires the least commitment and risk.

ANS: exporting


5. ____________________involves sourcing a product from a producer located in a foreign country for sale there or in other countries.

ANS: Contract manufacturing


6. ____________________offer a number of benefits, such as access to markets or technology, economies of scale in manufacturing and marketing, and the sharing of risk among partners.

ANS: Strategic alliances


7. Multinational firms have traditionally managed operations outside their home country with ____________________ that permit individual subsidiaries to compete independently in their home country markets.

ANS: Multidomestic strategies


8. A global industry is one in which a firm’s ____________________ in one country is significantly influenced by its position in other countries.

ANS: competitive position


9. Additional insights into international strategy can be gained by examining two dimensions of competition in the global market:____________________and____________________.

ANS:configuration, coordinationcoordination, configuration


ESSAY

1. Some experts emphasize that since customer needs are becoming increasingly homogeneous worldwide, the opportunity exists to sell the same type of product across countries and to use essentially the same marketing strategy around the globe. If customers respond favorably to a strategy in St. Louis, will the same strategy work in London or Tokyo? While a standardized approach might work for Coke or Levi's, will it work for business marketers like Dow Chemical or Hewlett-Packard? Explain.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

2. To diagnose the sources of competitive advantage, domestic or international, Michael Porter divides the chain of activities performed by a firm into distinct groups. Describe Porter's value chain concept and explore its relevance to international strategy.

ANS:n/a


3. Joint ventures assume a very prominent role in the global strategy of many business marketing firms like Dow Chemical and Xerox. While offering significant benefits, joint ventures often fall short of expectations or dissolve. Why?

ANS:n/a

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

4. Rather than modifying the firm’s product and service offerings from country to country, a global strategy requires a patient, long-term campaign to enter every significant foreign market while maintaining and leveraging the company’s unique strategic positioning. Agree or disagree? Support your position.

ANS:n/a


5. While the location of the corporate headquarters is less important and may reflect historical factors, a firm must develop a clear home base for competing in each of its strategically distinct businesses. What role does a home base assume in forming a global strategy and what factors should be considered in choosing a location? Under what conditions might a firm create a home base for a different product line in another country?

ANS:n/a


6. Rapidly developing economies (RDEs) are having a significant impact on the global economy, both as attractive new markets but also as new competitors for firms in highly developed economies. Explain the three forms of competitive advantage that firms can achieve by moving operations to and marketing in RDEs. What products or services make the most sense to relocate to RDEs?

ANS:n/a


7. Options for entry into foreign markets range from exporting to global strategies. Explain how commitment, complexity, risk, and control changes as firms move across the spectrum of involvement in international marketing. What factors should firms consider when choosing entry modes?

ANS:n/a


Chapter 7—Managing Products for Business Markets

MULTIPLE CHOICE

1. Industrial product lines that are created to meet the needs of one or a small group of customers are defined as:a. custom-built items.b. catalog items.c. proprietary items.d. custom-designed items.e. component items.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

2. Industrial product lines that are offered only in certain configurations and are produced in anticipation of orders are called:a. custom-designed items.b. services.c. catalog items.d. custom-built items.e. component items.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

3. When the buyer is purchasing a company's capability in a particular area, such as maintenance or machine repair, the customer is buying:a. a catalog item.b. an industrial service.c. a custom-designed item.d. a generic product class.e. a specialty item.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

4. A lathe manufacturer that offers a line of products in different sizes, with a range of options (such as different motor sizes) and accessories for different applications is a producer of:a. custom-designed items.b. services.c. catalog items.d. custom-built items.e. proprietary items.


5. _____ represents the place that a product occupies in a particular market; it is found by measuring organizational buyers' perceptions and preferences for a product in relation to its competitors.a. Product positioningb. Product anchorc. Product determinacyd. Product segmente. Product attribute

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

6. Which of the following dimensions of a product market definition is(are) relevant?a. the alternative technologies available to satisfy a particular need

(technology dimension)b. the sequence of stages along which competitors serving the market can

operate (value-added system dimension)c. the customer groups that have needs that must be served (customer

segment dimension)d. all of the abovee. (a) and (c) only


7. All of the following are dimensions relevant to the definition of a product-market except:a. customer function.b. technological.c. customer segment.d. physical distribution system.e. value-added system.


8. Because organizational buyers perceive products as bundles of attributes, the product strategist should examine the attributes that assume a central role in buying decisions. Attributes that are both important and differentiating are called:a. primary attributes.b. star attributes.c. determinant attributes.d. quality attributes.e. dominant attributes.


9. St. Louis Capital Equipment Company found that organizational buyers view reliability as being important in the purchase of a machine tool. In turn, research indicates that a new model recently introduced by the firm is viewed by organizational buyers as being superior to competing brands on the reliability dimension. Thus, reliability would be classified as a _____ attribute.a. primaryb. starc. dominant

d. determinante. focal


10. If organizational buyers view a particular attribute as being neither important nor differentiating, an appropriate generic strategy for a product manager to follow would be to:a. increase the importance of the attribute to customers.b. increase the difference between the competition and the firm's brand.c. convert this determinant attribute into a non-determinant one.d. all of the abovee. (a) and (b)

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

11. Consider this dilemma: A product manager finds that organizational buyers view a particular product attribute as being both important and differentiating; unfortunately, the firm's brand is viewed as being inferior to competing brands on this attribute. In this situation, an appropriate generic strategy for the product manager to follow would be to:a. increase the importance of the attribute to customers.b. increase the difference between the competition and the firm's brand.c. convert this determinant attribute into a non-determinant one.d. all of the abovee. (a) and (b)

ANS: C PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

12. Some industrial products are created to meet the needs of one or a small group of customers. Boeing, for example, serves a very defined group of customers with its 747 aircraft model. This is an example of:a. a proprietary product.b. a specialty product.c. a custom-built product.d. a custom-designed product.e. a catalog product.


13. NCR offers a set of basic equipment items to retailers that includes numerous accessories and options. The retailer can begin with a simple cash register or checkstand system and later add inventory control systems for the store and ultimately a computer that ties multiple stores in a chain together. This provides an example of:a. proprietary products.b. specialty products.c. custom-built products.d. custom-designed products.e. catalog products.


14. Among technology adopters, these customers serve as a gatekeeper to the rest of the technology life cycle and their endorsement is needed for an innovation to get a fair hearing in the organization. However, they do not have access to the resources needed to move an organization toward a large-scale commitment to the new technology. This describes:a. technology enthusiasts.b. visionaries.c. skeptics.d. pragmatists.e. product champions.


15. Among technology adopters, these customers have access to organizational resources and can assume an influential role in giving an innovation a boost during the early stages of market development. However, these customers frequently demand modifications to the product that are difficult for the innovator to provide. This describes:a. technology enthusiasts.b. visionaries.c. skeptics.d. pragmatists.e. product champions.


16. Among technology adopters, these customers make the bulk of technology purchases in organizations and seek products from a market leader with a proven track record of providing useful productivity improvements. This describes:

a. technology enthusiasts.b. visionaries.c. skeptics.d. pragmatists.e. product champions.


17. The stage in the adoption life cycle where a product gains acceptance from segments within the mainstream market but has yet to achieve widespread adoption is referred to as:a. the segmentation phase.b. the early market phase.c. the bowling alley phase.d. the mainstreet phase.e. the tornado phase.


18. During the bowling alley phase of the adoption life cycle, the business marketing strategist should:a. focus on market segmentation.b. extend distribution channels.c. drive to the next lower price point.d. all of the above.e. (b) and (c) only.

ANS: A PTS: 1


19. During the tornado phase of the adoption life cycle, the business marketing strategist should:a. focus on market segmentation.b. extend distribution channels.c. drive to the next lower price point.d. all of the above.e. (b) and (c) only.


20. The quality standards set out by the Geneva-based International Standards Organization are referred to as:a. ISO 9000b. Six Sigmac. the Big Qd. none of the above.


21. The standard of quality that means a product would have to have a defect level of no more than 3.4 parts per million is called:a. Six Sigmab. ISO 9000c. the Big Qd. none of the above.


22. The first stage of the quality movement:a. centers on conformance to standards or success in meeting

specifications.b. emphasized that quality was more than a technical specialty.c. examines a firm's quality performance relative to competitors.d. focuses on market-perceived quality and value versus that of

competitors.


23. In stage three of the quality movement attention shifts:a. from zero defects in products to zero defections in customers.b. to customer loyalty.c. to the conformance to standards or success in meeting specifications. d. (a) and (b) only.e. (a) and (c) only.


24. The percentage of organizational buyers who have a positive image of a company minus the buyer with a negative opinion is called:a. brand attitude.b. brand equity.c. a strong brand

d. none of the above.


25. Which of the following statements is false in regard to brand attitude for high-technology firms?a. The appointment of a well-recognized executive officer who introduced

a new strategy increases b. Brand attitude is independent of competitive actions.c. Changes in brand attitude have been shown to be associated with stock

market performance.d. Investments in building brand attitude for high-technology firms

increases the firm's value.


26. A ____ establishes the distinct arena in which the business marketer competes.a. target market b. product marketc. market segmentd. competitive analysis


27. Among technology adopters, these customers are pessimistic about their ability to derive any value from technology investments and are extremely price sensitive.

a. technology enthusiasts.b. visionaries.c. pragmatists.d. conservatives.e. skeptics.


28. Among technology adopters, these customers are ever-present critics of the hype surrounding high-technology products.a. technology enthusiasts.b. visionaries.c. pragmatists.d. conservatives.e. skeptics.


29. _____ represents a business customer’s overall assessment of a relationship with a supplier based on perceptions of benefits received and sacrifices made.a. Market analysisb. A value networkc. Customer valued. Relationship managemente. Relationship quality

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy

& innovation

30. Customer benefits from a relationship with a supplier include which of the following?a. Core benefits.b. Add-on benefits.c. Gross margin benefits.d. All of the above.e. Only a and b.


31. Benefits and sacrifices are both considered when assessing customer value. Sacrifices include:a. the purchase price.b. acquisition costs.c. operations costs.d. All of the above.e. Only a and b.


32. Which dimension of the product market definition involves the benefits that are provided to satisfy the needs of the organizational buyers?a. Customer function.b. Technological.c. Customer segment.d. Value-added system.


33. Which dimension of the product market definition considers the distinct customer needs that must be served?a. Customer function.b. Technological.c. Customer segment.d. Value-added system.


34. Which of the following is NOT a step in the product-positioning process?a. Identify the relative set of competitive products.b. Determine the product’s current position versus competing offerings.c. Develop an evoked or consideration set of possible positions.d. Examine the fit between preferences of segments and the current

product position.


35. In the technology adoption life cycle, the gap between visionaries and pragmatists where sales often drop significantly is called:a. the bowling alley.b. main street.c. the chasm.d. the end of life.

e. the early market.


36. In the technology adoption life cycle, the stage that represents a period of aftermarket development where supply exceeds demand is called:a. the chasm.b. the tornado.c. the bowling alley.d. the main street.e. the end of life.


37. In the technology adoption life cycle, the main goal of the ____ stage is to develop value-based strategies targeted to particular end user segments.a. chasmb. tornadoc. bowling alleyd. main streete. end of life


38. The basic premise of his CBBE model is that the power of a brand lies ina. What consumers have learned, felt, seen, and heard about the brand over time

b. The market share it commandsc. How the decision maker perceives the ultimate value of the itemd. None of the abovee. All of the above


39. The main factor stimulating the megatrend of sustainability isa. Intensified global competition for natural resourcesb. Escalating public concernc. Escalating government concernd. Natural resource depletione. All of the above

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy

& innovation

40. A brand mantra isa. a very short summary of the essence of the brand

b. is used to communicate the core values of the brandc. helps employees understand the key meaning of the company’s productd. is crucial in the overall process of building a strong brande. all of the above.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy

& innovation

TRUE/FALSE

1. Proprietary items are industrial products that are offered only in certain configurations and produced in anticipation of orders.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

2. Custom-built items are created to meet the needs of one or a small group of customers.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

3. Strong brands have a personality that defines how it might be described if it had human qualities (for example, friendly, confident).


4. Determinant attributes are both important and differentiating in the eyes of business market customers.


5. Visionaries make the bulk of technology purchases in organizations.


6. A finely-tuned market segmentation strategy is critical to success during the tornado phase of the adoption life cycle.


7. A mass market strategy is the appropriate course to follow during the bowling alley phase of the technology adoption life cycle process.


8. Brand attitude is defined as the percentage of organizational buyers who have a negative image of a company minus the buyers with a positive one.


9. The two forms of customer benefits are core and add-on.


10. Recent research has demonstrated that add-on benefits more strongly influence customer value than core benefits.


11. Custom-designed products are creates to meet the needs of one or a small group of customers.


12. The four dimensions of a product market definition are customer function, environmental, technological, and value-added system.


13. For high-technology firms, well-recognized executives and competitive actions can both be drivers of brand attitude change.


14. The central success factors for the tornado phase of the technology adoption life cycle are remarkably similar to the bowling alley phase.


COMPLETION

1. ____________________ is a set of brand assets and liabilities linked to a brand, its name, and symbol that add to or subtract from the value provided by a product or service and/or to that firm’s customers.

ANS: Brand equity

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

2. ____________________ brand equity is defined as the differential effect that customers’ brand knowledge has on their response to marketing activities and programs for that brand.

ANS: Customer-based


3. Brand ____________________is described as the ways in which the brand attempts to meet customers’ more abstract psychological or social needs.

ANS: Imagery


4. Brand ____________________refers to the customer’s ability to recall or recognize a brand under different conditions.

ANS: awareness


5. Brand ____________________represents the strength of the psychological bond that a customer has with a brand and the degree to which this connection translates into loyalty, attachment, and active engagement with the brand.

ANS: resonance


6. New products or services that require the end-user and the marketplace to dramatically change their past behavior, with the promise of gaining equally dramatic new benefits are known as ____________________ innovations.

ANS: discontinuous


ESSAY

1. Along with consumer-goods names like Nike or Coca Cola, the world’s most valuable brands include high-tech representatives such as Intel, Hewlett-Packard, IBM, and Microsoft. Describe the attributes of a strong high-tech brand. Do the investments in building a high-tech brand pay off? Explain.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills

2. Strategy experts suggest that a company’s product or service is competitively superior if, at a price equal to the price of competing products, customers always choose it. With this in mind, consider the spectacular growth of Dell Computer—a firm that sells direct to organizations and individuals who can place orders by phone or through the Internet. Using the value-in-use concept, describe the costs and benefits a customer faces in buying a computer directly from Dell. On what dimensions would local computer dealers and retailers enjoy an edge over Dell? Overall, what are the critical factors that shape the product strategy followed by Dell?

ANS:n/a


3. Selecting a hypothetical product and market setting, describe how a business marketing manager might use product positioning analysis to examine the competitive position of a product. Drawing on your illustration, suggest the product strategy implications.

ANS:n/a


4. The bowling alley represents a stage in the adoption life cycle where a product gains acceptance from selected groups of customers within the mainstream market but has yet to achieve widespread adoption. Describe the strategy that the business marketing firm should follow at this stage in the technology adoption life cycle. Next, explore the factors that trigger a tornado in high-tech markets and discuss how the focus of strategy changes during this chaotic phase.

ANS:n/a


5. Main Street represents a stage in the technology adoption life cycle where the frantic waves of adoption have subsided and supply now exceeds demand. Using any product and industry you choose, please describe the strategies that business marketers should follow during this phase.

ANS:n/a


6. Customer value represents a business customer’s overall assessment of a supplier based on perceptions of benefits received and sacrifices made. Discuss the benefits and sacrifices typically considered by customers when assessing value. What has recent research discovered matters most in customer value and how do these findings impact business marketing strategies?

ANS:n/a


Chapter 8 —Managing Innovation and New Industrial Product Development

MULTIPLE CHOICE

1. Concerning the management of product innovation, which of the following statements is incorrect? The successful management of product innovation:a. is vital to the long-term health of an industrial company.b. requires the firm to take risks.c. is properly characterized as a rational, deliberate, and analytical process.d. should lead to a stream of attractive products.e. None of the above statements is incorrect.


2. With respect to induced strategic behavior, please identify the incorrect statement. Induced strategic behavior:a. exhibits communication that is consistent with the organizational work

flow pattern.b. is generally observed in conjunction with major types of innovations for

new markets.c. typically involves formal organizational channels related to decision

making.d. follows established administrative procedures.e. is characterized by well-defined roles for the participants in the strategy

formulation process.


3. Please identify the incorrect statement concerning autonomous strategic behavior. Autonomous strategic behavior:a. normally relies on the emergence of an informal network of participants.

b. exhibits communication flows that depart from the formal organizational work flow pattern.

c. is analogous to entrepreneurial activity.d. is generally activated by an individual manager defining a market need

that diverges from the organization's existing concept of strategy.e. None of the above statements is incorrect.


4. Within the context of autonomous strategic behavior, product championing refers to the process of:a. defining organizational goals more clearly.b. actively promoting an existing product for an existing market.c. creating or adapting an idea for an innovation and actively creating

momentum for the project.d. specifying organizational roles to be assumed as strategic alternatives

are mapped out.e. attempting to maintain the status quo in the face of changing market

conditions.


5. In contrasting induced strategic behavior with autonomous strategic behavior, which of the following statements is incorrect?a. Induced behavior corresponds to deliberate strategies while

autonomous behavior gives rise to emergent strategies.b. Autonomous behavior stems from the organization's existing concept of

strategy while induced behavior will eventually be integrated into the firm's concept of strategy.

c. The two types of behavior cannot be meaningfully separated and discussed.

d. While autonomous behavior will initially rely on an informal network of support, induced behavior will draw support from formal organizational channels.

e. (a) and (b)


6. Identify the correct statement(s) concerning differences between induced strategic behavior and autonomous strategic behavior:a. Induced behavior will rely on the firm's current concept of strategy for

its rationale while autonomous behavior necessitates active championing.

b. Autonomous behavior will appear haphazard in nature, when compared to induced behavior.

c. While induced behavior will normally exhibit a creeping commitment toward a particular strategy, autonomous behavior can often benefit from existing administrative mechanisms and commitment.

d. All of the above are correct.e. Both (a) and (b) are correct.


7. The type of development project that centers on incremental product enhancements (for example, new feature), incremental process improvements (for example, a lower-cost manufacturing process), or incremental changes in both dimensions is referred to as a:a. platform project.

b. breakthrough project.c. research and development project.d. derivative project.e. none of the above


8. A feature-enhanced or cost-reduced Canon fax machine provides an example of which type of development project?a. platform projectb. breakthrough projectc. research and development projectd. derivative projecte. none of the above


9. Commercial development projects that create the design and components that are shared by a set of products are referred to as:a. platform projects.b. breakthrough projects.c. research and development projects.d. derivative projects.e. none of the above


10. A common motor in all Black & Decker hand tools provides an example of which type of commercial development project?a. platform projectb. breakthrough projectc. research and development projectd. derivative projecte. none of the above


11. Commercial development projects that establish new core products and new core processes that differ from those of previous generations are referred to as:a. platform projects.b. breakthrough projects.c. research and development projects.d. derivative projects.e. none of the above


12. Computer disks and fiber-optics cable each created a new product category. The type of commercial project that created these products would be classified as a:a. platform project.b. breakthrough project.c. research and development project.d. derivative project.e. none of the above


13. _____ involve the creation of the know-how and know-why of new materials and technologies that eventually translate into commercial development.a. Platform projectsb. Breakthrough projectsc. Research and development projectsd. Derivative projects


14. _____ involves activities in which the decision and execution of strategy actions approach convergence with each other in time.a. Time pacingb. Patchingc. Routinizationd. Quality function deploymente. Improvisation


15. _____ is a strategy for competing in fast-changing markets by creating new products at predictable intervals.a. Time pacingb. Patchingc. Routinization

d. Quality function deploymente. Improvisation


16. Successful product innovators in the computer industry:a. emphasize real-time communication within new product development

teams and across product teams.b. do not invest in any version of the future but, instead, use a variety of

low-cost probes to create many options for the future.c. carefully manage the transition between current and future projects.d. all of the abovee. (a) and (c) only


17. Products that share a common platform but have different specific features and enhancements that are required for different sets of consumers constitute:a. a product family.b. a product market.c. derivative products.d. a product consideration set.e. heavyweight products.


18. A benchmarking study sought to uncover the critical success factors that drive a firm's new product performance. The results indicate that successful firms:a. center development efforts on clearly-defined market and technology

domains.b. seldom "kill" a project once the new product development process has

been initiated.c. emphasize low-price strategies to penetrate a mass market.d. all of the above.e. (b) and (c) only.


19. Successful companies employ a high quality new product development process. Among high performing firms,a. the new product process was flexible-certain stages could be skipped in

line with the nature and risk of a particular project.b. tough project Go/Kill decision points are included in the process and the

Kill option is actually used.c. market and technical assessments are conducted before projects move

into the development phase.d. all of the above.e. (b) and (c) only.


20. "Lead users" are characterized as important sources of new product ideas because they:a. have needs that will be general in the marketplace in the future.b. represent influential buying organizations.

c. are consistent early adopters of new technologies.d. all of the abovee. (a) and (b) only


21. Rapid product development offers a number of competitive advantages. Research indicates that the _____ strategy increased the speed of product development for products that had predictable designs and that were targeted for stable and mature markets.a. inducedb. experientialc. autonomousd. compressede. funnel


22. Speed is becoming an important strategic weapon, particularly in high-technology markets. Research indicates that the _____ strategy increased the speed of product development for markets characterized by rapidly evolving technology and unpredictable patterns of competition.a. inducedb. experientialc. autonomousd. compressede. funnel


23. This strategy for the new product development process views product development as a predictable series of steps and speed comes from carefully planning these steps and shortening the time it takes to complete each step. This describes the _____ strategy.a. inducedb. experientialc. autonomousd. compressede. funnel


24. This strategy for the new product development process views product development as a highly uncertain path and speed comes from multiple design iterations, extensive testing, and a powerful leader who can keep the product teams focused. This describes the _____ strategy.a. inducedb. experientialc. autonomousd. compressede. funnel


25. The move toward a product family perspective requires:

a. a long-term view of technology strategy.b. an isolated R&D function that free to create.c. a multiple-year commitment of resources.d. (a) and (b) only.e. (a) and (c) only.


26. Competitors are strongly motivated to react to new product introductions in their market when:a. the market is experiencing a low rate of growth.b. the new product represents a major threat to their market.c. the new product targets a niche markets.d. all of the above.e. (a) and (b) only.


27. New products ideas flow from:a. top management who know the company's strengths and weaknesses.b. salespersons who are close to customer needs.c. channel members.d. all of the above.e. (a) and (b) only.


28. Which of the following characteristics is true of induced strategic behavior?a. Communication is consistent with organizational flow.b. An informal network assesses technical and market merit.c. An individual manager defines a market need that diverges from the

organization’s concept of strategy.d. All of the above. e. Only a and b.


29. Which of the following is NOT a type of development project?a. Derivative.b. Platform.c. Breakthrough.d. Research and development.e. Market capital.


30. The use of a product-family focus in planning should include which of the following?a. Close interfunctional working relationships.b. A short-term view of technology strategy.c. A year-by-year commitment of resources.d. All of the above.e. Only b and c.


31. Special insights into innovation management can come from examining the rate at which products are improving and customers can use the improvements. These insights are captured in:a. the disruption innovation model.b. the supply chain management model.c. the derivative projects model.d. the value network.e. the technology life cycle adoption model.


32. A _____ targets demanding, high-end customers with better performance than what was previously available.a. sustaining innovationb. disruptive innovationc. a new market innovationd. None of the above.


33. A _____ represents a product or service that is not as good as currently available alternatives, but that is typically simpler and less expensive.a. sustaining innovationb. disruptive innovationc. a breakthrough innovation

d. None of the above.


34. For a low-end disruptive innovation strategy to work, which of the following requirements must be met?a. There needs to be customers at the low end of the market who are

eager to purchase a “good enough” product for a lower price.b. The company must be able to create a business model to make profits at

a discount price.c. Both a and b.d. Neither a or b.


35. Examples of low-cost probes or experiments in product development include which of the following?a. Development of experimental products for new markets.b. Conducting regular planning sessions on the future.c. Increase understanding of future customer needs by entering into

strategic alliances with leading-edge customers.d. All of the above.e. Only a and b.


36. According to research, major drivers of a firm’s new product performance include:a. Resource commitment.b. Profitability relative to competition.c. Success rate of new products.d. All of the above.e. Only a and c.


37. Important dimensions of the new product development process include:a. technical knowledge.b. predevelopment proficiency.c. market knowledge.d. All of the above.e. Only a and b.


38. For a new-market strategy innovation strategy to work, which of the following requirements need to be met?a. The company must be able to create a business model to make profits at

a discount price.b. Present customers need to go to an inconvenient location to use the

product or service.c. Both a and b.d. Neither a or b.

ANS: B PTS: 1


39. A firm that lead customers where they want to go before the customers actually know it themselves is employing:a. the lead user method.b. the new product development process.c. time pacing.d. a discontinuous innovation.


TRUE/FALSE

1. Induced strategic behavior relates primarily to major types of innovations.


2. Product championing refers to the process of creating or adopting an idea for an innovation and actively creating momentum for the project.


3. Induced strategic behavior corresponds to deliberate strategies while autonomous strategic behavior gives rise to emergent strategies.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy

& innovation

4. Creators of successful product portfolios emphasize planning rather than experimentation or improvisation.


5. Derivative projects establish new core products and new core processes that differ fundamentally from previous generations.


6. Platform projects create the design and components that are shared by a set of products.


7. Breakthrough projects center on incremental product enhancements, incremental process improvements, or incremental changes on both dimensions.


8. "Lead users" are consistent early adopters of new technologies.


9. Research and development is the creation of the know-how and the know-why of new materials and technologies that eventually translate into commercial development.


10. Cross-functional teams appear to work best when the products are familiar, such as product modifications.


11. For well-known markets and technologies, a compression strategy speeds development.


12. Improvisation involves activities in which the design and execution of actions approach convergence with each other in time.


13. New product ventures require systematic thought.


14. Competitors are less motivated to react to a new production introduction when the market is experiencing a high rate of growth.


15. A detailed market research study and a preliminary business/financial analysis is an example of predevelopment proficiency.


16. All development projects center on either improving the manufacturing process or improving product, but not both.


17. Many business marketing strategists believe that firms should focus on product families instead of single products to improve planning.


18. A disruptive innovation targets demanding, high-end customers with better performance than was previously available.


19. Research has shown that creators of successful product portfolios do not invest in one version of the future but use several low-cost probes to create options.


20. Research has shown that the three factors that drive a firm’s new product performance are the quality of the firm’s new-product-development process, the resource commitments made to new product development, and the new product strategy.


21. Lead user projects are conducted by cross-functional teams that include four to six managers from marketing and technical departments.


COMPLETION

1. An organization member who creates, defines, or adopts an idea for an innovation and is willing to assume significant risk to successfully implement the innovation is known as a____________________.

ANS: Product champion


2. Compared with induced strategic behavior, autonomous or____________________initiatives are more likely to involve a communication process that departs from the regular work flow and the hierarchical decision-making channels.

ANS: Entrepreneurial


3. Disruptive strategies can take two forms: ____________________ disruptions and ____________________.

ANS: low-end; new-market


4. A small number of highly influential and high-volume buying organizations that are consistent early adopters of new technologies that deserve special attention are known as ____________________.

ANS: Lead users


5. Marketing____________________ is the fit between the needs of the project and the firm’s resources and skills in marketing.

ANS: synergy


6. New products developed and designed to meet foreign requirements and targeted at world or nearest-neighbor export markets is enhanced by firms holding an____________________orientation.

ANS: international


7. New-product-development efforts for existing businesses or market-development projects for the firm’s present products are the outgrowth of____________________strategic initiatives.

ANS: induced


ESSAY

1. Kathleen Eisenhardt argues that in fast-paced high-technology markets, "strategy is a video game." Strategic decision making is often described as a rational and deliberate process but, in turbulent markets, new technology and rapidly-changing customer expectations can upset the established order. Given the unstable state, describe the characteristics that separate winners and losers in high-tech markets.

ANS:n/a


2. Research indicates that the most significant and profitable innovations that many leading-edge firms have introduced in the past decade emerged from an informal championing effort rather than from a highly-structured planning system. What implications does this raise for structuring the new product development process, for motivating and rewarding employees, and for nurturing creativity and risk-taking?

ANS:n/a


3. Consider this position taken by Tom Peters in Thriving on Chaos: "You must become what I call an executive champion-a nurturer, protector, facilitator, and interference runner for as many energetic champions as you can induce to sally forth." Compare and contrast induced versus autonomous strategic behavior and describe the role that the product champion assumes in new product development.

ANS:n/a


4. Successful new product creation is a collective achievement that requires the energy and commitment of multiple functions in the organization. Often, however, managers who represent different functional areas hold sharply different views concerning the course that product development should take. Discuss the source of this conflict.

ANS:n/a


5. Research has isolated certain determinants of new product success in the business market. What factors are most important in determining the success of a new industrial product?

ANS:n/a


6. What are the characteristics of lead user firms? What are the characteristics of lead user projects and how can the lead user method be used to develop new products?

ANS:n/a


7. What are the differences between a sustaining and disruptive innovation? Explain the differences in creating new-growth businesses represented by sustaining innovations, low-end disruptions, and new market disruptions.

ANS:n/a


Chapter 9—Managing Services for Business Markets

MULTIPLE CHOICE

1. From the following list, identify the item that is least likely to be considered a pure service.a. market researchb. security and protection servicesc. after-sales equipment repair and maintenanced. insurancee. consulting


2. Many business offerings are composed of a combination of product and service elements. From the following, choose the correct ordering, from tangible dominant to intangible dominant, of the items listed.a. industrial grease, executive management seminars, convention hotelb. executive management seminars, industrial grease, convention hotelc. convention hotel, industrial grease, executive management seminarsd. convention hotel, executive management seminars, industrial grease

e. industrial grease, convention hotel, executive management seminars


3. Simultaneous production and consumption is a unique service characteristic. From the following list, choose the marketing implication most closely related to this characteristic.a. planning capacity on the basis of peak demandb. buyer-seller interaction requires that the service be done "right"c. focusing promotion on the advantages of non-ownershipd. using pricing and promotion to even out demand peaks and valleyse. developing systems that minimize deviations and human error


4. The degree of tangible-intangible dominance of an industrial offering refers to the:a. simultaneous production and consumption of the service.b. variability in the quality of the service.c. perishability of the offering.d. non-ownership of the service purchased.e. relative importance accorded, by the buyer, to tangible versus intangible

elements.


5. Service variability is a unique service characteristic. From the following list, choose the marketing implication most closely related to this characteristic.a. buyer-seller interaction requiring that the service be done "right"b. planning capacity on the basis of peak demandc. emphasizing strict quality control standardsd. using pricing and promotion to even out demand peaks and valleyse. None of the above applies specifically to service variability.


6. When the marketer emphasizes reductions in staff, overhead, and capital as potential benefits to the purchaser, this relates to the service characteristic of:a. variability.b. perishability.c. simultaneous production and consumption.d. intangibility.e. lack of ownership.


7. In the production and sale of industrial services, productive capacity is often a substitute for inventory. In other words, capacity will reflect the level of demand which the service provider can meet. This is primarily in response to which service characteristic?a. perishabilityb. lack of ownershipc. nonstandardized outputd. simultaneous production and consumptione. the extent to which tangible elements dominate intangible elements


8. Concerning the nonstandardized nature of most industrial services, which of the following statements is incorrect?a. The more labor-intensive the service, the less uniform will be the output.b. As the extent to which equipment is utilized to produce the service

increases, variability will increase.c. As automation of the service decreases, uniformity of the output will

also decrease.d. It is important to develop systems to minimize human error.e. It is often difficult for the user to judge service quality before the service

is provided.


9. The interaction of the individual service provider with the customer may be the key element in the firm's entire marketing strategy. This is an explicit recognition of which characteristic unique to business services?a. simultaneous production and consumptionb. lack of ownershipc. nonstandardized outputd. inability to stockpilee. the dominance of intangible elements


10. Buyers of business services often experience difficulty in evaluating service quality. Since it is difficult to evaluate quality,a. buyers tend to experience more perceived risk.b. buyers rely on different prepurchase information sources to reduce risk.c. symbology plays a more important role in the evaluation process.d. all of the abovee. (a) and (b) only


11. When the business service marketer attempts to facilitate the customer's evaluation process, this is in response to:a. the nonstandardized nature of services.b. the simultaneous consumption and production of services.c. perceived determinant attributes.d. the difficulty in evaluating service quality.e. an emphasis on equipment/facilities service attributes.


12. In evaluating service quality, customers focus on:a. empathy.b. responsiveness.c. assurance.d. reliability.e. all of the above


13. In evaluating the quality of a service, which of the following dimensions is most important to customers?a. empathyb. responsivenessc. assuranced. reliabilitye. all of the above


14. "Delivering on promises" relates to which of the following dimensions of service quality?a. empathyb. responsivenessc. assuranced. reliabilitye. all of the above


15. Development of the marketing mix is contingent upon the customer segment to be served. How do customer service segments differ from product market segments?a. Service segments are often narrower than product segments.b. Service segmentation focuses on what business buyers need versus on

what they expect.c. Service segments are often wider than product segments.d. The demand patterns of each service segment are very similar.e. none of the above


16. The customer benefit concept refers to:a. a detailed listing of which services will be provided.b. guidelines for the delivery of the service product.c. the core benefit that the customer will derive from the service.d. the general benefits the service company will provide to the customer.e. none of the above


17. In conceptualizing the service product, the service offer refers specifically to the:a. actual creation and delivery of the service product.b. detailed service elements that will make up the total services package.c. general benefits the service company will provide to the customer.d. benefits sought by customers.e. overall process of assessing and responding to customer needs.


18. The ____ defines the general benefits the service company will provide in terms of the bundle of goods and services sold to the customer.a. customer-benefit conceptb. service offerc. cross-selling conceptd. mixed bundling concepte. service concept


19. In the marketing of business services, items such as uniforms, logos, guarantees, written contracts, and color schemes are examples of:a. determinant attributes.b. the service concept.c. the actual service offer.d. physical evidence of the actual service.e. the system used to create and deliver the service.


20. Which of the following capabilities are particularly critical to the successful launch of hybrid service offerings:a. Design-to-service capability.b. an assessment of the impact of demand elasticity on price changes.c. Production capacity evaluation.d. Customer engagement in the design process.e. the marketing of two or more services in a "package" for a special price.


21. Research on new service success suggests that:a. the determinants of success for new services closely resemble those

found for successful new products.b. a well managed service development process is crucial.c. successful projects provide clear customer benefits.d. all of the above.e. (b) and (c) only.


22. Services are:a. deeds.b. processes.c. performances.d. all of the above.e. (b) and (c) only.


23. The concept of tangibility helps the manager to:a. focus clearly on the firm's total market offering.b. recognize that a change in one of the elements of the marketing offering

may completely change the offering in the view of the customer.c. determine how a service will marketed.d. all of the above.

e. (a) and (b) only.


24. Which of the following statements regarding the perishability of services is incorrect?a. Capacity is a substitute for inventory.b. The demand for services is often predictable and consistent.c. If capacity is set for peak demand, a service inventory must exist to

supply the highest level of demand.d. all of the above.e. (a) and (c) only.


25. When a manager is in charge of intangible and heterogeneous services, he/she should develop marketing strategies that:a. emphasize word-of-mouth communication.b. provide tangible evidence.c. employ value pricing.d. all of the above.e. (b) and (c) only.


26. Recent research shows that business-to-business service firms are more likely to emphasize:a. relationship strategies as opposed to transactional strategies.b. arms-length strategies.c. the total buyer-seller processd. all of the above.e. (a) and (c) only.


27. Service quality benefits should be linked to::a. customer satisfaction.b. customer retention.c. profitability.d. market share.e. all of the above.


28. If a firm provides maintenance and repair services to its installed base of products at a customer location, then:a. the service attributes can be evaluated before purchase.b. the core service demand is inelastic.c. product usage data can be systematically gathered and used to tailor

service offerings that advance customers’ goals.d. all of the above.e. (a) and (b) only.


29. When Xerox offers a Total Satisfaction Guarantee that allows customers to return copiers for any reason, this is an example of:a. word of mouth.b. developing tangible clues.c. service bundling.d. none of the above.


30. Which of the following is NOT true of the solutions-centered approach instead of a product-centered approach?a. Win by creating and delivering superior customer solutions.b. Value is created by the firm.c. Relationship with customer is interaction-based.d. Quality focus on customer-firm interactions.e. All of the above are true.


31. Benefits of solution-centered marketing strategy include:a. new avenues for growth.b. sustained differentiation and customer loyalty.c. Both a and b.d. Neither a or b.


32. Differences between goods and services include:a. intangibility.b. variability.c. profitability.d. All of the above.e. Only a and b.


33. Perishability is a unique service characteristic. From the following list, choose the marketing implication most closely related to this characteristic.a. Need to use promotion and pricing to even out demand patterns.b. Use physical cues in promotions to help customers evaluate service

quality.c. Emphasize strict quality control standards.d. High-level training for service personnel.


34. Non-ownership is a unique service characteristic. From the following list, choose the marketing implication most closely related to this characteristic.a. Need to use promotion and pricing to even out demand patterns.b. Need to emphasize the benefits of reduced labor and overhead.c. Use strict quality control standards.

d. High-level training for service personnel.


35. Which of the following are components of a firm’s service offering and customer-linking processes that affect customer satisfaction?a. Technical assistance and training.b. Recovery process for fixing service problems.c. Basic elements of the service offering expected by customers.d. All of the above.e. Only a and b.


36. _____ encompasses the procedures, policies, and processes a firm uses to resolve customer service problems promptly and efficiently.a. A value networkb. Service recoveryc. Service qualityd. Service loyaltye. Service offering


37. The _____ is the product dimension of service, including decisions about the essential concept of the service, the range of services provided, and the quality and level of the service.a. service strategyb. service packagec. service recoveryd. service bundlinge. service loyalty


38. The service offer is linked with the service concept and also:a. spells out in more detail the service offering.b. when and to whom they will be provided.c. how they will be presented.d. All of the above.


39. Hybrid service offeringsa. May be a combination of services and products.b. Have inelastic demand.c. come from a well-managed new-service-development process.d. All of the above.e. Only a and c.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy

& innovation

40. In following a “solutions” strategy” for B2B services, solution effectiveness can be enhanced by the supplier bya. Laying out a blueprint to guide employees on creating a solutionb. Documenting the history of prior customer solution engagementsc. Developing complimentary incentives for all of the staff that may be involvedd. Only a and ce. All of the above


TRUE/FALSE

1. A pure service, by definition, accompanies the sale of a physical product.


2. Simultaneous production and consumption requires that the service be done "right."


3. An emphasis on strict quality control standards is necessitated by service variability.

ANS: T PTS: 1


4. Planning capacity on the basis of peak demand is necessitated by service variability.


5. The more labor-intensive the service, the less uniform will be the output.


6. Perishability of services may necessitate equating capacity with peak demand.


7. Research suggests that among the service quality dimensions, responsiveness is most important to customers.


8. Hybrid service offerings can be classified on the basis of whether the provider promises to perform a deed or to achieve a certain performance outcome.


9. The service offer refers to the detailed service elements that will make up the total services package.


10. In the marketing of business services, items such as logos, uniforms, guarantees, and color schemes are examples of physical evidence of the actual service.


11. Product lifestyle services refer to services that facilitate the customer’s access to a manufacturers product and ensure is functioning throughout the product’s useful life..


12. The concept of tangibility helps the manager to focus clearly on the firm's total market offering.


13. For services, capacity is a substitute for inventory.


14. The actual performance by the service provider is of little relevance compared to the customer's perception of the service.


15. Business-to-business service firms are more likely to emphasize transactional strategies as opposed to relationship strategies.


16. A solution-centered approach starts with the product and leads to a solution that satisfies customers.


17. In order to effectively use a solutions perspective, business marketers need to define their unique capabilities and determine how to use them to help customers reduce costs, increase responsiveness, or improve quality.


18. Reliability, responsiveness, and empathy are all dimensions of service quality.


19. Service quality encompasses the procedures, policies, and processes a firm uses to resolve customer service problems promptly and effectively.


20. Process delegation services (PDS) represent those services where a manufacturer performs specific processes on behalf of the customer.


21. Demand for services is rarely steady or predictable enough to avoid service perishability.


22. Research indicates that manufacturers typically earn a very high percentage of gross profits from the aftermarket, though it accounts for a very much smaller percent of revenue


COMPLETION

1. Customer____________________represents teh internal and subjective response a business customer has to any direct or indirect contact with a company.

ANS: experience


2. Instances where the customer has direct contact with either the product or service itself or with representatives of it by a third party, such as a channel partner are known as____________________.

ANS: touchpoints


3. The first step in understanding a customer’s experience is to develop a ____________________map.

ANS: life cycle


4. Service____________________means that services cannot be stored or stockpiled; if they are not provided at the time they are available, the lost revenue cannot be recaptured.

ANS: perishability


5. Treating customers as individuals exemplifies the____________________dimension of service quality.

ANS: empathy


6. ____________________combine products and services into innovative value propositions for customers .

ANS: Hybrid offerings


7. __________________________ is the manufacturer’s capacity to integrate the product and service elements of the offering early in the development process to tap the full potential for revenue generation and/or cost reduction.

ANS: Design-to-service capability


ESSAY

1. A large hospital in Chicago recently purchased four top-of-the-line, high-speed copiers from Xerox. The purchasing department carefully scrutinized the quality, price, warranties, and service features of several vendors before choosing Xerox. In the words of Jim Parker, the director of purchasing at the hospital, "it was the quality that gave Xerox the edge." Describe the role of service quality in this buyer-seller relationship. What factors may have been involved in shaping Jim Parker's perception of service quality?

ANS:n/a


2. Automatic Data Processing (ADP) was born through an innovation that created a new business niche-a foolproof outside service to help small businesses meet their weekly payrolls. First, position this service on a product-service continuum for which the basic underlying variable is tangibility. Second, describe how ADP's marketing strategy would be different from an office equipment manufacturer that called on the same small businesses.

ANS:n/a


3. The development of marketing programs for both products and services can be approached from a common perspective, yet the relative importance of various strategic elements and the form of these strategic elements will differ between products and services. Explain.

ANS:

n/a


4. New product development is inherently more difficult, messier, and less successful in the service sector. What steps can be taken to enhance the effectiveness of the new service development process? What are the common features that successful new service projects seem to share?

ANS:n/a


5. Many business marketers are turning from a product to a solutions perspective. How is the solutions perspective different from a product-centered perspective? What are the benefits of solution marketing? Illustrate the differences and benefits of solution marketing with an example using a business services marketer.

ANS:n/a


6. Because business marketers cannot always provide flawless service, the response to service problems is critical to future success. Explain how an excellent service recovery process can lead to a differential advantage for firms. How does a business marketer figure out how much to spend on service recovery and service quality?

ANS:n/a


Chapter 10—Managing Business Marketing Channels

MULTIPLE CHOICE

1. The channel strategy that does not utilize any manufacturers' representatives, industrial distributors, or other kinds of middlemen is referred to as:a. indirect distribution.b. selective distribution.c. direct distribution.d. exclusive distribution.e. restrictive distribution.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

2. The channel strategy that involves the utilization of one or more middlemen is referred to as:a. indirect distribution.b. direct distribution.c. selective distribution.d. exclusive distribution.e. restrictive distribution.

ANS: A PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

3. The most appropriate channel of distribution for an industrial product is:a. direct.b. indirect.c. one that relies on the firm's sales force.d. a combination of direct and indirect.e. dependent upon a host of product, company, market, and competitive

conditions.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

4. The need to employ more than one type of industrial channel of distribution arises as a result of:a. different target markets sought by the firm.b. a geographically concentrated market.c. different marketing tasks associated with different products produced by

the firm.d. both (a) and (c)e. all of the above

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

5. The largest proportion of sales handled by industrial channel members is accounted for by:a. brokers and jobbers.b. brokers and commission merchants.c. manufacturers' representatives and industrial distributors.

d. jobbers and industrial distributors.e. brokers and distributors.


6. Service provided by industrial distributors includes:a. repair.b. credit.c. maintenance.d. all of the abovee. (b) and (c) only


7. The industrial distributor:a. takes title to the product sold.b. occasionally does some assembly and manufacturing work.c. provides delivery.d. all of the abovee. (a) and (b) only


8. A distributor classification, the combination house:a. operates in two sectors of the industrial market.b. operates a chain of distributorships.

c. operates in both the industrial and consumer markets.d. does not take title to the goods handled.e. is paid on a commission basis.


9. Generally, manufacturers' reps:a. take title to the products handled.b. are restricted to a limited geographical area.c. hold inventory.d. provide customers with prompt delivery.e. all of the above

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

10. Manufacturers' reps:a. possess expert product knowledge.b. sell non-competing but complementary products.c. take title to the goods handled.d. all of the abovee. (a) and (b) only


11. Concerning the compensation of manufacturers' representatives, the business marketer compensates them on the following basis:

a. percentage commission.b. a salary.c. salary plus commission.d. varies by product category.e. varies by SIC industry.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

12. A business marketer who places the highest priority on achieving control in the channel of distribution should use:a. a direct channel.b. a channel which includes numerous industrial distributors.c. a channel which includes numerous manufacturers' representatives.d. a channel which includes numerous commission merchants.e. an indirect channel.


13. The first step in the channel design process is to:a. determine channel design constraints.b. consider the availability of good intermediaries.c. outline key channel alternatives.d. determine the tasks to be performed by the channel.e. define customer segments


14. Which of the following statements concerning the selection of industrial channel structures is(are) true?a. Frequently, the manager has little flexibility in the selection because of

trade, competitive, company, and environmental factors.b. The channel should be viewed as a set of channel institutions rather than

as a sequence of activities to be performed.c. Competitors often have the better intermediaries "locked up."d. all of the abovee. (a) and (c) only


15. In specifying channel alternatives, which of the following issues is(are) involved?a. determining the levels to be included in the channelb. determining the number of channel intermediaries at each level of the

channelc. determining the types of intermediaries to employd. all of the abovee. (a) and (b) only


16. Industrial products that are complex, unique and made to order are more frequently sold through:a. direct channels.b. indirect channels.c. manufacturers' representatives.d. industrial distributors.

e. merchant wholesalers.


17. Factors that contribute to the use of more than one distribution channel for the same product include:a. various market segments are served.b. the needs and buying processes employed by prospective customers

varies.c. conflict between competing channels is relatively rare.d. all of the abovee. both (a) and (b)


18. Which of the following channels would give the business marketer the greatest amount of channel control?a. a channel consisting of merchant wholesalersb. a channel composed of industrial distributorsc. a channel consisting of both manufacturers' reps and distributorsd. a channel composed of jobberse. a channel consisting of manufacturers' reps


19. The compensation provided to industrial channel members should reflect:

a. the length of service of the channel member.b. the nature of the marketing tasks performed by the channel member.c. the loyalty of the channel member.d. the amount of market potential available in the territory.e. all of the above


20. Manufacturers who wish to strengthen the dependence that channel members have on them could:a. increase commissions.b. encourage channel members to carry the firm's full product line.c. increase promotion to enhance the profitability of channel members.d. all of the abovee. (b) and (c) only


21. Robert Morgan and Shelby Hunt suggest that relationship commitment and trust develop when:a. firms align themselves with partners that have distinctly different

corporate values.b. firms share valuable information on expectations, markets, and

performance.c. firms offer benefits and resources that are superior to what other

partners could offer.d. all of the above.e. (b) and (c) only.


22. A direct sales force is best used for:a. highly standardized solutions.b. small customers.c. simple transactions.d. complex products.


23. The industrial distributor's primary responsibilities include:a. contact.b. repair.c. product availability.d. all of the above.e. (a) and (c) only.


24. _____ cater to a broad array of industrial goods.a. Specialistsb. General-line distributorsc. A combination house.d. none of the above.


25. There is a trend toward _____ as a result of increasing technical complexity of products.a. general-line distributorsb. specialistsc. combination housesd. none of the above


26. A recent poll asked distributors which business strategies would have the largest impact on them in the future. The top two factors were:a. collaboration with supply chain partners.b. new information technologies.c. the increase in general-line distributorsd. (a) and (b) only.e. (b) and (c) only.


27. Manufacturer reps are most likely used:a. by large firms.b. when there is unlimited market potential.c. to eliminate significant overhead costs.d. all of the above.e. (a) and (c) only.


28. The manufacturer-rep channel is generally used when the:a. gross margin is large.b. product is not technically complex.c. product is not standard, but is closer to made-to-order.d. all of the above.


29. The primary reason for using more than one type of intermediary for the same product is:a. the gross margin is not large.b. the product tends toward technical complexity.c. different market segments require different channel structures.d. the product is not standard, but is closer to made-to-order.


30. When evaluating alternative channels, the critical element is to compare both systems on the basis of:a. customer service.b. performance.c. structure.d. costs.

e. all of the above.


31. When evaluating channel alternatives, if the existing channel is about as good as it can be and if customer satisfaction is low,: a. an alternative channel should be utilized.b. the fault is not with the channel design, it is with poor management.c. the existing system can be changed without sacrificing management

goals.d. none of the above.


32. When evaluating channel alternatives, if the feasible system lies between the ideal and existing system,a. the existing system can be changed without sacrificing management

goals.b. relaxing management constraints might produce even greater benefits.c. the fault is not with the channel design, it is with poor management.d. (a) and (b) only.e. (a) and (c) only.


33. Techniques for motivating individual channel members include all of the following except:a. dealer advisory councils.b. competitive compensation.c. building trust.d. better planning by the business marketer.e. product training for channel members.


34. Which of the following are tasks that are performed by channels of distribution?a. Arranging financing.b. Storage.c. Transportation.d. All of the above.e. Only b and c.


35. Use of a direct sales force is best for:a. highly customized solutions.b. smaller customers.c. complex products.d. All of the above.e. Only a and c.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing

strategy & innovation

36. E-channels can be used by business marketing firms for:a. information platforms.b. transaction platforms.c. customer relationship management platforms.d. All of the above.e. Only b and c.


37. What percentage of U.S. Gross Domestic Product is sold through indirect distribution channels?a. 10%b. 25%c. 40%d. 60%e. 80%


38. _____ are generally small, independent businesses serving narrow geographic markets.a. Distributorsb. Channel partnersc. Manufacturers’ representativesd. Broker housese. Field offices


39. Responsibilities for distributors include:a. making products available.b. repair.c. providing service and technical advice.d. All of the above.e. Only a and b.


40. In the classification of distributors, _____ focus on one line or on a few related lines.a. general-line distributorsb. specialistsc. combination housesd. brokers


41. Manufacturers’ representatives are used:a. by smaller firms that cannot afford their own sales force.b. when a manufacturer’s market potential is limited.c. to help reduce overhead costs.d. All of the above.e. Only a and c.


42. _____ is the dynamic process of developing new channels where none existed and modifying existing channels.a. Channel structureb. Channel designc. Channel choiced. Channel partneringe. Supply chain management


43. Channel length decreases:a. when the purchase becomes more significant.b. when market or industry concentration increases.c. when customer potential increases.d. All of the above.e. Only a and b.


44. When motivating channel members, the primary motivating device tends to be:a. dealer advisory councils.b. trust.c. compensation.

d. strong relationships.e. training.


45. Selecting the best channel of distribution to accomplish objectives can be difficult because:a. the alternatives are so numerous.b. marketing goals differ.c. separate channels must often be used concurrently.d. All of the above.e. Only a and b.


TRUE/FALSE

1. Industrial distributors are generally large business firms that cover broad geographical markets.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

2. The industrial distributor takes title to the products sold but rarely maintains an inventory.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing


3. A business marketer that uses industrial distributors will usually, as a matter of policy, not utilize any manufacturers' representatives.


4. A source of conflict between business marketers and their manufacturers' representatives centers on the size of inventory levels reps maintain.


5. Manufacturers' representatives sell noncompeting but complementary products.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

6. When a manufacturer sells through hundreds of distributors across the U.S., reps may sell and service the distributors.


7. There are many situations in business marketing where a direct channel of distribution is not feasible.


8. The compensation provided to middlemen should be based on loyalty, length of service, and past years' sales performance.


9. By retaining title to the goods, the business marketer has a higher level of channel control in a rep channel as opposed to a distributor channel.


10. A business marketer that serves many different market segments would likely use a direct channel.


11. Indirect distribution is appropriate when control of the selling job is necessary to ensure proper implementation of the total product package and to guarantee a quick response to market conditions.


12. For products that are bought frequently, repetitively, and in small quantities, industrial distributors provide an efficient channel path.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing


13. Frequently, the manager has little flexibility in the selection of channel structures because of trade, competitive, company, and environmental factors.


14. Once a particular industrial channel structure is selected, channel participants must be selected, and arrangements made to ensure that all obligations are assigned.


15. A direct sales force is best used for complex sales opportunities.


16. Channel member motivation begins with the understanding that the channel relationship is a partnership.


17. Business marketing channels typically include fewer types of intermediaries than consumer-goods channels.



18. The goal of a multichannel model is to coordinate the activities of many channels to enhance the total customer experience and profitability.


19. The two critical elements of the distributor’s function are to secure financing and have products readily available.


20. The availability of good intermediaries and product characteristics are two factors that often limit the choice of industrial channels.


21. The geographic dispersion of customers and competitive strategies have very little influence on the choice of industrial channels.


22. The backbone of channel design is the analysis of objectives, constraints, and channel activities.



COMPLETION

1. Manufacturers’ representatives and industrial distributors are both examples of____________________channels.

ANS: Indirect

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

2. ____________________systems provide a valuable tool for coordinating sales channel activities and managing crucial connections and handoffs between them.

ANS: CRM


3. The primary responsible of____________________salespersons is to take telephone orders, processing orders, and schedule delivery.

ANS: inside


4. Full-service intermediaries that take title to the products they sell and perform the full range of marketing functions are known as____________________.

ANS: distributors


5. Channel____________________refers to the number of channel levels, the number and types of intermediaries and the linkages among channel members.

ANS: structure


6. The last step of the channel design process is to evaluate and select ____________________.

ANS: channel options


7. The surest way to lose intermediary support is____________________ policies that do not meet industry and competitive standards.

ANS: compensation


ESSAY

1. An Arizona-based high-technology firm, Three Five Systems, produces component parts that are sold to cellular phone manufacturers as well as a diverse set of customers across several different industry sectors. The firm uses a corporate sales force for large customers, like Motorola, and relies on a mix of manufacturers' reps and/or industrial distributors to serve small and medium-sized customers.

The top management team at Three Five Systems would like you to conduct an audit of the firm's channel strategy. These executives are concerned that rapidly-changing customer needs have created important gaps in the firm's market coverage and market offerings. Describe the specific steps that you would follow in conducting this audit and highlight the particular questions that you would emphasize in the assessment.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills

2. A medium-sized industrial firm plans to significantly expand their operations next year, and they are considering a change in channel structure. Discuss five (5) questions you would ask them to help you determine whether they should use their own sales force, reps, or industrial distributors.

ANS:n/a


3. Describe specific product, market, and competitive conditions that lend themselves to: (a) a direct channel of distribution and (b) an indirect channel of distribution.

ANS:n/a


4. A large consumer goods company recently entered the business market with a new product with broad industrial application. They must develop a channel of distribution through which the product will be sold. Discuss, generally, the key factors the company must evaluate in designing the channel.

ANS:n/a


5. Since all of the organizations or member firms that comprise the business marketing channel are interested in achieving important profit goals, why does conflict often emerge in the channel and what steps can the business marketing manager take to control it?

ANS:n/a


6. Explain the important product/market factors that lend themselves to the use of manufacturers’ representatives by business marketers.

ANS:n/a


7. Consider a small manufacturing firm that does not have the resources or ability to hire their own sales force. As this firm considers hiring distributors and manufacturers’ representatives, what factors should they use to determine whether to hire distributors, reps, or both?

ANS:n/a


8. Describe the major factors that limit the choice of industrial channels for business marketers.

ANS:n/a


9. Marketing strategies can fail if business marketers do not consider the needs and capabilities of their intermediaries. What are the key factors in effectively motivating channel members?

ANS:n/a

PTS: 1

Chapter 11—Supply Chain Management

MULTIPLE CHOICE

1. The supply chain includes a variety of firms, ranging from those that process raw materials to make component parts to those engaged in wholesaling. Included also are organizations engaged in:a. warehousing.b. transportation.c. materials handling.d. all of the above.e. (a) and (b) only.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

2. To integrate activities across the supply chain, supply chain management often:a. requires that firms in the supply chain share sensitive and proprietary

information about customers and corporate plans.b. creates excess inventory in the pipeline leading to the customer.c. involves higher transportation and handling costs.d. all of the above.e. (b) and (c) only

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing

logistics & technology

3. Supply chain management seeks to achieve which of the following goals?a. waste reductionb. unit cost reductionc. flexible responsed. all of the abovee. (a) and (b) only


4. A firm that can respond to a customer's unique requirements for packaging and order size in a cost-effective manner is addressing which of the following supply chain goals?a. time compressionb. waste reductionc. unit cost reductiond. flexible responsee. inventory reduction


5. The most commonly reported benefits for firms that adopt supply chain management are:a. higher profit margins.b. enhanced cash flow.c. higher order-to-delivery cycle time.d. all of the above.e. (a) and (b) only.


6. The supply chains for products that could be categorized as "innovative" (e.g., high-tech products) differ from the supply chains for functional products because:a. demand is less predictable for innovative products.b. attention centers on capturing high profits during peak demand periods

for the innovative product.c. minimizing inventory costs is not a major concern with innovative

products.d. all of the abovee. (a) and (b) only


7. In contrast to "innovative" products, the supply chain for functional products is designed to:a. minimize logistics and inventory costs.b. assure low-cost manufacturing.c. adapt production capacity to uncertain demand patterns.d. all of the abovee. (a) and (b) only


8. Many U.S. manufacturers have adopted the just-in-time (JIT) purchasing principle. Concerning this trend, all of the following statements are accurate except:a. One objective of a JIT system is to eliminate waste of all kinds from the

production process.b. Because JIT attempts to relate purchases to production requirements,

the typical order size increases.c. A significant effect of JIT purchasing has been the drastic reduction in the

number of suppliers utilized by manufacturers.d. Suppliers find that relationships with JIT customers are longer lasting.e. both (b) and (c)


9. In serving JIT customers, business marketers find that:a. the typical order size shrinks.b. more frequent deliveries are required.c. relationships with JIT customers are longer lasting and often formalized

with a written contract that may span up to five years.d. all of the abovee. (b) and (c) only


10. As a controllable element in the logistics system, ____ triggers the logistics process and directs the activities necessary to deliver products to customers.a. order processingb. customer servicec. production planningd. inventory management

e. information management

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

11. In applying the total cost approach to logistical management, management:a. seeks to minimize the cost associated with each logistical activity in the

firm.b. attention centers on minimizing transportation costs.c. attention centers on minimizing inventory costs.d. recognizes that a decision made for one logistical variable affects all or

some of the other logistics variables.e. recognizes the importance of minimizing fixed facility (warehouse) costs.


12. In the management of logistical activities, the performance variable(s) of prime interest (is) are:a. number of products handled.b. total distribution costs.c. inventory movement per warehouse facility.d. the level of logistical service provided to customers.e. both (a) and (d)


13. In regard to logistical service, the business marketer should:

a. provide the same level of logistical service to all customers.b. adjust the level of logistical service for different segments based on

requirements of the product type.c. adjust the level of logistical service for different segments based on

requirements of the customer.d. all of the above.e. (b) and (c) only.


14. A business marketer that provides erratic delivery service to industrial distributors:a. increases the distributor's inventory carrying costs.b. creates stockouts at the distributor level.c. damages channel relations.d. all of the abovee. (a) and (c) only


15. The warehouse circumvents the need for premium transportation (for example, air freight) and costly order processing by keeping products readily available in local markets. Which type of warehousing involves no capital investment and offers the advantage of flexibility--the firm can increase or decrease its use of space in a given market?a. merchantb. mobilec. fixedd. third partye. private


16. The use of faster modes of transportation within the logistical network results in:a. lower variable costs for product movement.b. higher customer service levels.c. higher investments in inventory.d. all of the abovee. (a) and (c) only


17. _____ is typically the largest logistics expense.a. Warehousingb. Inventory controlc. Transportationd. Order processinge. Materials handling

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

18. Concerning speed of service in the logistical system, which of the following is(are) accurate?a. The longer the delivery time, the more inventory customers must

maintain to service their needs while the shipment is in transit.b. The slower modes of transportation involve higher variable costs for

product movement.c. The faster modes of transportation result in the need for higher

investments in inventory by customers.d. all of the abovee. both (b) and (c)


19. A business marketer who shifts from rail to air in the logistical system would likely generate:a. higher variable costs associated with product movement.b. lower customer investments in inventory.c. a higher customer service level.d. all of the abovee. (a) and (c) only


20. The "best" mode of transportation to use in moving industrial products to customers is:a. rail.b. air.c. truck.d. barge.e. dependent upon cost, service and investment tradeoffs.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing


21. The use of slower modes of transportation within the logistical network results in:a. lower variable costs for product movement.b. higher customer service levels.c. higher investments in inventory.d. all of the abovee. (a) and (c) only


22. An emerging development in performing the logistics process is the utilization of third-party logistics firms. Third-party logistics firms can:a. perform the warehousing function.b. perform the transportation function.c. perform the entire logistics process from production scheduling to

delivery of finished goods to the customer.d. all of the above.e. (a) and (b) only.


23. The advantages of third-party warehouses are that they allow the business marketing firm to:a. increase or decrease warehouse space in a given market.b. replace the distributor channel when the sales function can be

performed by a direct sales force or by manufacturers' representatives.c. reduce expenditures on company-owned warehouses.d. all of the above

e. (a) and (c) only


24. Despite the advantages, some firms are reluctant to use third party logistics firms because:a. of the diminished direct contact with customers.b. they lose direct control of the logistics process.c. of the problems associated with terminating internal operations.d. all of the abovee. (b) and (c) only


25. Which of the following statements are false regarding Supply Chain Management?a. SCM is one of the predominant management approaches driving many

organizations.b. The supply chain increasingly is seen as the main conduit for getting

products from its source to the ultimate customer.c. The supply chain touches almost every function within the organization.d. The supply chain has the greatest impact on customer satisfaction and

the greatest potential for improving the bottom line and enabling competitive advantage.

e. All of the above are true statements.


26. Supply chains should manage _____ in an integrated manner across organizational borders.a. relationshipsb. informationc. material flowd. all of the above.e. (b) and (c) only.


27. Which of the following statements is false regarding supply chain management?a. SCM seeks to create an overlap among participants in the supply chain.b. Traditional supply chains openly share information across the supply

chain.c. Non-integrated approaches to managing product and information flows

are expensive and time consuming.d. Aligning both internal and external processes is the ultimate goal of

SCM.


28. The underlying premise of SCM is that waste reduction and enhanced supply chain performance will exist when there is both intrafirm and interfirm:a. functional integration.b. sharing.c. cooperation.d. all of above.e. (b) and (c) only.


29. Waste reduction throughout the supply chain is accomplished by minimizing:a. duplication.b. harmonizing operations and systems.c. quality defects.d. all of the above.e. (a) and (b) only.


30. The Internet has allowed business marketers to realize several supply chain related benefits, including more timely:a. product development.b. access to new customer segments.c. reduction in communication and customer support costs.d. all of the above.e. (b) and (c) only.


31. Which of the following statements is false regarding the relationship of the Internet and SCM?a. The Internet promotes efficiency across the supply chain.b. The Internet promotes effectiveness across the supply chain.

c. The Internet permits suppliers to gain real-time knowledge of their customer's needs for materials and components.

d. The use of the Internet as a part of supply chain management has allowed business marketers develop new products in a more timely manner.

e. The Internet has provided companies the opportunities to increase channel inventories.


32. Which of the following is false regarding supply chain management?a. The focus of logistics is the flow of product through the supply chain.b. Timely information drives the entire supply chain process.c. Product flow in the reverse direction is an important aspect of supply

chain management.d. The formation close relationships among participants is an inherent

need of SCM.e. All of the above are true statements.


33. The mechanism to trace the cost of performing logistics services to the customer that use these services is called:a. ABCb. JITc. TCOd. SCM


34. Inventories are needed in business channels because:a. production and demand are perfectly matched.b. operating deficiencies in logistical system often result in product

unavailability.c. business customers can predict their product needs with certainty.d. all of the above.e. (a) and (c) only.


35. A firm that is able to accomplish production and logistics processes in less time is addressing which of the following supply chain management goals?a. Waste reduction.b. Time compression.c. Flexible response.d. Unit cost reduction.e. Transportation cost reduction.


36. A firm that is able to lower costs by minimizing duplication, harmonizing operations, and enhancing quality is addressing which of the following supply chain management goals? a. Waste reduction.b. Time compression.

c. Flexible response.d. Inventory reduction.e. Transportation cost reduction.


37. As a controllable element in the logistics system, _____ ensures that products are available for inventory in the correct assortment and quantity.a. production planningb. plant and warehouse locationc. customer serviced. inventory controle. logistics communication


38. As a controllable element in the logistics system, _____ relates to the effectiveness of creating time and place utility.a. customer serviceb. order processingc. inventory controld. production planninge. logistics communication


39. As a controllable element in the logistics system, _____ ensures that information exchanged in the distribution process guides the activities of the logistics system.a. customer serviceb. order processingc. logistics communicationsd. inventory controle. production planning


40. _____ is the integration of business processes from end user through original suppliers that provides products, services, and information that add value for customers.a. Customer relationship managementb. Supply chain managementc. Logistics managementd. A marketing plane. Order processing


41. The final stage in the adoption of supply chain management where companies have successfully aligned both their internal and external processes is called:a. the Expanded Enterprise stage.b. Internal Process Integration stage.c. the Informal stage.d. the Functional stage.e. the Customer Relationship Management stage.


42. The key to maintaining a competitive advantage through supply chain strategies is to:a. the ability to adapt to changes.b. the ability to maintain low cost relationships with partners.c. the ability to continuously develop successful new products.d. continue purchasing the most advanced supply chain software and

technologies.


43. For a supply chain partnership to succeed, which of the following are true?a. Partners need to clearly define their strategic objectives.b. Managers in both organizations need to fairly divide decision-making

responsibilities.c. Use performance metrics that are tied to chosen strategies.d. All of the above.e. Only (a) and (c).


44. When compared to logistics management, supply chain management is:a. broader.b. less integrative.c. is focused on moving and storing activities.

d. All of the above.e. Only (a) and (b).


45. Common elements of logistics service include:a. delivery time.b. order accuracy.c. cost-per-unit.d. All of the above.e. Only (a) and (b).


46. _____ is the variable cost of moving products from origin to destination, including any terminal and accessory charges.a. Speed of serviceb. Transportation costc. Cost of serviced. Fixed coste. None of the above.


TRUE/FALSE

1. Supply chain management may require that all firms in the supply chain share sensitive and proprietary information about customers and corporate strategic plans.


2. Properly implemented, supply chain management will lead to longer order-to-delivery cycle time.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

3. Firms that adopt supply chain management generally find that costs increase but are more than offset by higher profit margins and revenue growth.


4. For innovative products, the goal is to design a supply chain that minimizes logistics and inventory costs, and assures low- cost manufacturing.


5. For supply chain management, functional products typically have predictable demand patterns while innovative products do not.


6. If the costs of each logistical activity are minimized, total logistical costs for the enterprise will be minimized.


7. An increase in the supplier's delivery time performance permits a buyer to hold less inventory.


8. If the business marketer can offer a buyer more consistent delivery performance from the logistical system, the buyer would have the opportunity to cut the level of safety stock maintained.


9. The longer the delivery time in the logistical system, the more inventory customers must maintain to service their needs.


10. Not all products nor all customers require the same level of logistical service.


11. Warehousing is usually the largest single logistical expense.


12. Although air provides the lowest average delivery time, generally it has the highest variability in delivery time relative to average.


13. As a customer adopts JIT purchasing, the typical order size shrinks and more frequent deliveries are required.


14. Some firms are reluctant to use third-party logistics firms because they wish to maintain direct contact with customers and retain control over the logistics process.


15. The faster modes of transportation result in higher levels of customer service, but also higher investments in inventory.


16. Supply chain management, as a source of competitive advantage, should be seen as a source of revenue as well as a means of reducing costs.


17. The underlying premise of SCM is that waste reduction and enhanced supply chain performance come only when there is both intrafirm and interfirm functional integration, sharing and cooperation.


18. Recent evidence suggests that firms that stumble in the SCM area are punished by the stock market.


19. Speed of service is usually more important that service consistency.


20. Supply chain management is both a boundary and function spanning endeavor.


21. Waste reduction, time compression, and flexibility are all goals of supply chain management.


22. Logistics management is primarily concerned with movement and storage activities.


23. Materials handling is the controllable element of a logistics system that relates to the effectiveness of in creating time and place utility.


24. The two performance variables that must be considered when managing logistical activities are the total distribution costs and the level of logistical service.


25. When evaluating transportation performance, service consistency is usually more important than average delivery time.


26. Reasons for having inventories in business channels include the inability of business customers to predict their demand perfectly and operational problems in the logistics system that can cause stockouts.


COMPLETION

1. The focus of____________________in the supply chain for business marketers is the flow of product through the supply chain, with timely information driving the entire process.

ANS: logistics

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

2. The ____________________, or trade-off, approach to logistical management guarantees to minimize total logistical costs in the firm and within the channel.

ANS: total-cost


3. ____________________ increases the speed of, and reduces the cost of, picking orders in the warehouse and moving products between storage and the transportation carriers.

ANS: Materials handling


4. A measure of the physical conditions of the product when received by the buyer is known as____________________, this common element of logistics service.

ANS: Damage


5. Innovative approaches to tighten the distribution process, bolstering links with suppliers and customers, and integrating production and marketing is described by the term ____________________management.

ANS: Supply chain


6. Central to SCM are the coordination and collaboration activities performed with channel partners, which may include____________________, ____________________, third party____________________, and____________________.

ANS:suppliers, intermediaries, service providers, customersintermediaries, customers, service providers, supplierscustomers, suppliers,service providers, intermediaries

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing


7. Supply chain management can improve overall company performance in two fundamental ways: ____________________ and ____________________.

ANS:revenue enhancement, cost reductioncost reduction, revenue enhancement


8. When designing the supply chain, firms should concentrate on creating____________________processes for functional products and____________________processes for innovative products.

ANS: efficient; responsive


9. SCM requires____________________not only among departments within the organization but also with external partners.

ANS: integration


ESSAY

1. Rather than Ford competing with Honda on a firm-to-firm basis, some experts argue that the true competitive battle involves Ford's supply chain versus Honda's supply chain. Define the supply chain management concept and relate it to the competitive rivalry between Ford and Honda.

ANS:n/a


2. By reducing waste, compressing time, reducing unit costs, and by demonstrating a flexible response, Dell Computer achieves the four major goals of supply chain management. Briefly describe the meaning and significance of each of these goals to a firm like Dell.

ANS:n/a


3. What are the most commonly reported financial benefits that accrue to firms that excel in supply chain management?

ANS:n/a


4. The Ford Motor Company's electronic components plant in Lansdale, Pennsylvania produces 124,000 engine controllers, anti-lock brake sensors, and speed-control units a day. Since each product has 400 to 500 parts, managers have to keep track of more than five million individual pieces daily. Lean inventories and quick production changeovers require dependable suppliers. To maintain tight control, Ford issues a monthly report card to suppliers listing quality rejects, conformance with schedule, and overshipments. In the words of the plant manager, "this puts our relationship with them on an objective basis." Describe the particular logistical capabilities that a business marketer must possess to successfully meet the requirements of this highly sophisticated Ford plant. Explore other elements of the business marketing strategy that may be crucial in initiating and sustaining a profitable relationship with this customer.

ANS:n/a


5. Rather than waiting for customers in the business market to demand just-in-time (JIT) service, explain how a business marketer could proactively seek out opportunities to assist customers using JIT inventory management as a marketing strategy. To implement such a strategy, what adjustments would be required in the logistical system?

ANS:n/a


6. Since purchasing managers are evaluated and rewarded on the basis of cost savings generated, why are they often willing to overlook the low-price supplier in favor of a higher-priced supplier that offers superior logistical service? Can they justify this on a cost basis?

ANS:n/a


7. What is the total-cost approach to developing a logistical system? Explain what variables should be considered when designing and administering a logistical system aimed at utilizing the total-cost approach.

ANS:n/a


8. The implementation of supply chain management (SCM) by business marketers requires strong relationships, shared information, common goals aligned with common strategies, and integration between functions and across firms. What are some possible barriers or challenges to successfully implementing SCM given these and other requirements?

ANS:n/a


Chapter 12—Pricing Strategy for Business Markets

MULTIPLE CHOICE

1. From an organizational buyer's perspective, the cost of an industrial good:a. is equal to the seller's price.b. is equal to the seller's price plus order processing costs.c. includes not only the seller's price, but also transportation, installation,

order handling, and inventory carrying costs.d. includes the seller's price adjusted for quantity discounts that may be

received in the future.

ANS: C PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

2. The price elasticity of demand:a. is not the same at all prices.b. varies by industrial market segment.c. is relatively easy to measure in the industrial market.d. all of the abovee. (a) and (b) only

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

3. The business marketer will find that total revenue will ____ if the price is decreased and demand is price inelastic.a. rise a littleb. rise sharplyc. remain the same

d. fall

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

4. If the business marketer's product input assumes an insignificant role in the final product's total cost, demand is likely:a. elastic.b. price sensitive.c. inelastic.d. small.


5. Successful pricing strategies are:a. value based.b. proactive.c. profit-driven.d. all of the above.e. only a and c.


6. Those costs, fixed or variable, that can be traced to a product, customer, or sales territory (for example, general plant overhead may be indirectly assigned to a product) are called:a. direct traceable costs.

b. indirect traceable costs.c. assignable costs.d. general costs.e. administrative overhead.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

7. Concerning pricing and the competitive environment, which of the following statements is(are) accurate?a. Competition establishes an upper limit on price.b. Late entrants to the market often enjoy potential cost advantages over

the pioneering firm.c. Competitors will be more sensitive toward price reductions that

threaten market segments that they deem important.d. all of the abovee. (a) and (b) only


8. The degree of latitude that an industrial firm has in setting prices above those offered by competitors is dependent upon:a. the firm's objectives.b. the cost of producing the product.c. the level of differentiation that the product enjoys in the perceptions of

organizational buyers.d. the size of the firm's promotional budget.e. both (a) and (b)


9. Motorola introduced a new personal communicator priced at a significant premium over competing models. Initially, Motorola will concentrate on the business user but the firm plans to reduce the price later and capture a share of the consumer market. This policy of beginning with a high price and then moving to a lower price is referred to as:a. product differentiation.b. market segmentation.c. price administration.d. time segmentation.e. life cycle pricing.


10. The policy of using a skimming pricing approach when a product is introduced, followed by penetration pricing as the product matures, is referred to by Joel Dean as:a. product differentiation.b. market segmentation.c. time segmentation.d. price administration.e. life cycle pricing.


11. A penetration policy is appropriate when there is:

a. a strong threat of imminent competition.b. inelastic demand.c. an opportunity for a substantial reduction in production costs as volume

expands.d. all of the abovee. (a) and (c) only


12. During the innovative firm's monopoly period, a _____ is optimal if the demand curve is stable over time (no diffusion) and production costs decline with accumulated volume.a. life cycle costing pricing policyb. skimming policyc. penetration policyd. time segmentation policye. bid price policy


13. During the innovative firm's monopoly period, a _____ is optimal if there is a relatively high repeat purchase rate for nondurable goods or if a durable good's demand is characterized by diffusion.a. life cycle costing pricing policyb. skimming policyc. penetration policyd. time segmentation policye. bid price policy


14. The competitive bidding approach that may include deliberations with suppliers throughout the bidding process is referred to as:a. closed bidding.b. open bidding.c. contractual bidding.d. institutional bidding.


15. Before preparing a bid for any potential contract, the industrial firm should first:a. estimate the profitability of the potential contract.b. assess the probability of winning the contract.c. carefully define their objectives.d. conduct a preliminary analysis of their expected costs in performing the

potential contract.e. evaluate the strength of potential competing bidders.


16. Which of the following statements concerning target costing is(are) accurate?a. Japanese managers who pioneered the approach view target costing as

a profit-management tool.b. The approach is designed to reach market segments comprised of

buyers who consistently select the lowest-priced alternative.

c. Target costing tends to move product developers toward products that include only the bare essentials.

d. All of the above.e. None of the above.

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

17. Pine River Equipment has developed a distinctly new product that offers considerable promise. By exploiting the experience effect, management believes that there are opportunities for a substantial reduction in production costs as volume expands. While the market is quite large, there is a strong threat of imminent competition. The firm should likely use:a. product differentiation.b. a skimming approach to pricing.c. a penetration approach to pricing.d. a bid price policy.e. a life cycle costing pricing policy.


18. In hypercompetitive environments,a. leading-edge firms are reluctant to lower prices because they enjoy

attractive margins.b. successful firms sustain quality but drive to the next lower price point to

enjoy a burst of volume and an expansion of market share.c. successful firms are reluctant to disrupt the equilibrium of the market.d. successful firms look for the first opportunity to raise prices.e. both (a) and (c).


19. The successful implementation of value-based strategies requires close coordination between the _____ and _____ units in the firm.a. productb. salesc. serviced. all of the above.e. (b) and (c) only


20. Pertinent considerations for pricing industrial products or services include:a. competition.b. demand determinants.c. cost determinants.d. all of the above.e. (b) and (c) only.


21. Examples of pricing objectives include:a. channel relationships.b. achieving a market-share goal.c. achieving a target return on investment.d. all of the above.

e. (b) and (c) only.


22. Since higher costs are incurred in providing higher levels of performance on one or more of the attributes, the strategists should assess the:a. relative importance of the attributes to different market segments.b. strength of the firm's offering on each of the importance attributes vis-a-

vis competitors.c. costs associated with the experience effect.d. (a) and (b) only.e. (b) and (c) only.


23. The buyer's price sensitivity increases to the degree that:a. buyers can switch from one supplier to another without incurring

additional costs.b. organizational buyers can easily shop around and assess the relative

performance and price of alternatives.c. the product represents one for which it is difficult to make price

comparisons.d. all of the above.e. (a) and (b) only.


24. _____ are those that support a number of activities that cannot be objectively assigned to a product on the basis of a direct physical relationship.a. Indirect traceable costsb. Attributable costsc. General costsd. none of the above.


25. Which of the following statements regarding competitive threats is incorrect?a. Matching a price cut will be an ineffective strategy if the competitor

simply reestablished the differential by a further price reduction.b. A single response is rarely enough to stop price moves by competitors

that are struggling to establish a market position.c. If a price response is required, the strategist should focus the firm's

competitive retaliation on those actions that are most cost-effective for the firm.

d. All of the above.


26. General plant overhead is an example of _____ costs.a. direct traceableb. indirect traceablec. general d. attributable


27. If competitors are likely to continue to pursue price cutting, the best strategy for the defender is to:a. allow the competitor to win where it is least damaging to profitability.b. create barriers that make it more difficult for competitors to reach less

price-sensitive customer segments.c. center reactive price cuts on a particular geographic region.d. all of the above.e. (a) and (b) only.


28. _____ costs include financing, storage, and inspection costs.a. Acquisitionb. Possession c. Usaged. None of the above


29. _____ refers to the rate of percentage change in quantity demanded attributable to change in price.a. Cost/benefit analysisb. Customer demandc. Price elasticity of demandd. Perceived value

e. Competitive edge


30. A skimming strategy is appropriate when:a. there is high price elasticity of demand.b. strong threat of imminent competition.c. the firm has a distinctly new product in a monopoly period.d. All of the above.e. Only (b) and (c).


31. _____ features a design-to-cost philosophy that begins by examining market conditions.a. Target costingb. ABC costingc. Value-based segmentationd. Total cost costinge. Penetration pricing


32. _____ represents a business customer’s overall assessment of the utility of a relationship with a supplier based on the benefits received and sacrifices made.a. Core benefits

b. Add-on benefitsc. Customer valued. Relationship commitmente. Total cost analysis


33. _____ are those attributes that are not typically required but that can ultimately lead to a supplier being selected by a customer over other qualified suppliers.a. Core benefitsb. Add-on benefitsc. Supplier personality traitsd. Customer valuese. Elasticities of demand


34. Examples of typical add-on benefits include:a. joint working relationships.b. commitment.c. supplier flexibility.d. All of the above.e. Only (a) and (b).


35. Which of the following are useful to business marketers trying to gauge competitive responses to pricing?a. Examining the cost structure and strategy of direct competitors.b. Examination of annual reports and other public records.c. Identifying which markets competitors deem as important.d. All of the above.e. Only (a) and (c).


36. Which of the following are reasons why followers into a market often find lower costs than the pioneer firm?a. The use of more current production technologies.b. Experience of suppliers leads to cost reductions.c. Learning from the pioneer’s mistakes.d. All of the above.e. Only (b) and (c).


37. Which of the following are questions that must be addressed when determining responses to a competitor’s threat?a. If you respond, is the competitor willing and able to lower their price

again?b. Is our position in other markets at risk if the competitor gains market

share?c. Is there a response that would cost you more than the preventable sales

loss?



38. _____ involves a formal invitation to potential suppliers to submit written, sealed bids.a. Closed biddingb. Open biddingc. On-line biddingd. E-commercee. Comparative bidding


TRUE/FALSE

1. Organizational buyers tend to associate high price with high quality.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

2. Business marketers should base their pricing decisions primarily on cost and competitive considerations.


3. If the business marketer's product input plays an insignificant role in the final product's total cost, demand is likely elastic.


4. Success in penetrating a buying organization with one item often means success for other items in the product line.


5. Closed bidding is particularly appropriate when specific requirements are hard to rigidly define or when the products and services of competing suppliers vary substantially.


6. To sustain profitability, price reductions should be avoided by strategists in hypercompetitive environments.


7. The value customers assign to a firm’s offering can vary by market segment because of how the product will be used.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy &

innovation

8. Buyers tend to be price sensitive when they can switch from one supplier to another without incurring additional costs.


9. The importance of the business marketer's product as an input into the total cost of the end product influences demand elasticity. If the business marketer's product has an insignificant effect on cost, demand is likely to be inelastic.


10. Developing a bidding strategy is the important first step in planning for competitive bidding.


11. Price elasticity of demand is not the same at all prices.


12. Total revenue will decrease if the price is decreased and demand is price elastic.


13. Low switching costs allow a buyer to focus on minimizing the cost of a particular transaction.


14. Raw materials are an example of indirect traceable costs.


15. According to the Robinson-Patman Act, price differentials are permitted, but they must be based on cost differences or the need to meet competition.


16. Because making competitive bids is costly and time-consuming, firms should choose potential bid opportunities with care.


17. Differentiation value is the value associated with product features that are unique and different from competitors


18. Recent research indicates that highly satisfied customers are just as sensitive to price changes as customers with low to moderate levels of satisfaction.


19. The goals of a cost classification system are to properly classify cost data in to fixed and variable components and to properly link costs to the activities causing them.


20. A penetration pricing policy is optimal if there is a relatively low repurchase rate for durable goods.


COMPLETION

1. Costs that support a number of activities that cannot be objectively assigned to a product on the basis of a direct physical relationship are classified as____________________costs.

ANS: General

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

2. A____________________pricing approach is most appropriate for a distinctly new product, and provides an opportunity to profitably reach market segments that are not sensitive to the high initial price.

ANS: skimming


3. The Robinson-Patman Act holds that it is unlawful to____________________in price between different purchasers of commodities of like grade and quality.

ANS: discriminate


4. Two types of benefits can contribute to customer value in business markets: ____________________ benefits which are the basic requirements the business marketer must meet to be included in the customer’s consideration set and ____________________ benefits which are those attributes typically not required, that assist the customer in selecting a supplier from among a qualified set of potential suppliers.

ANS: core, add-on


5. ____________________costs include financing, storage, inspection, taxes, insurance, and other internal handling costs.

ANS: Possession


6. The first component in the Price-Setting Decision Process is____________________.

ANS: Set strategic pricing objectives


7. ____________________drivers add incremental value by facilitating revenue or margin expansion while____________________drivers create value by providing economic savings.

ANS: Revenue, cost


ESSAY

1. A small high-technology firm in Arizona recently developed a new component part that offers superior advantages over competing products. The component is used in high-speed production systems and, due to its durable composition, has a useful life of 12 months versus 3 months for competing products. By reducing downtime and frequent changeovers, the product will offer users a significant improvement in production efficiency. Of course, the exact savings will vary by market segment. The two executives, who launched the firm, are divided over the course that should be followed in pricing the component—one favors a high price for a quick payback while the other opts for a lower price and a more deliberate approach. Outline the critical issues that should be examined in setting the price.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills

2. Two competitors with similar products may ask differing prices because their total offerings are perceived as being unique by buyers. In the eyes of the organizational buyer, one firm may provide more value than another. Demonstrate how this might occur and outline the corresponding marketing strategy implications.

ANS:n/a


3. A firm developed a new component part (i.e., a timing mechanism) that can be effectively used in dishwashers, automobiles, toys and medical equipment. Describe the process that the firm might follow in measuring the elasticity of demand for the new product. Is it likely to vary by application?

ANS:n/a


4. A large consumer goods company recently entered the business market with a new product with broad industrial application. They are in the process of determining the appropriate price for the product. Discuss the role of costs in determining price and indicate some of the key cost considerations that must be evaluated in setting price.

ANS:n/a


5. When challenged by an aggressive competitor, the immediate thought that comes to mind for many managers is to fight back and match the price cut. However, because price wars can be quite costly, experts suggest that a more systematic process should be followed. Describe the factors that a strategist should consider before matching a price cut by a rival.

ANS:n/a


6. If an aggressive competitor cuts prices, what action can a strategist take to minimize the damage and respond in the most cost-effective way? Under what conditions should a strategist merely ignore an aggressive price move by a competitor?

ANS:n/a


7. How do conditions differ in hypercompetitive environments as opposed to traditional markets? How can business marketers create and/or use hypercompetitive rivalries to their advantage and how can they predict the reactions of their competitors to their pricing actions?

ANS:n/a


Reflective Thinking | CB

Chapter 13—Business Marketing Communications: Advertising and Sales Promotion

MULTIPLE CHOICE

1. Important social media to be considered by B2B marketers would be focused on:a. discussion forums b. blogs.c. social networks.d. wiki

e. all of the above


2. Social media:a. are more effective than traditional media at reaching hard-to-reach

propects.b. are typically less expensive that print media.c. facilitate targeted, personalized contact across the customer experience

landscape.d. enhance the impact of trade promtions.e. all of the above


3. In designing advertising strategy, the business marketer should first:a. determine the size of the advertising budget.b. select appropriate media sources.c. determine advertising objectives.d. develop a series of responsive messages.e. forecast sales.


4. Advertising objectives are typically stated in terms of:a. sales goals.

b. profit goals.c. cost constraints.d. communication goals.e. market share goals.

ANS: D PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

5. ____ provides the guidelines for company and advertising agency personnel on how the product is to be "positioned" in the marketplace.a. The creative strategy statementb. The objective-task conceptc. Product positiond. Controlled circulatione. Advertising objectives

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

6. A useful method for determining the size of the business or industrial advertising budget is:a. the objective-task method.b. the percentage of sales approach.c. the competitive parity approach.d. the affordable approach.e. the trend line approach.


7. In formulating advertising messages, the business marketer should:a. emphasize product and technical specifications.b. identify general buying criteria of importance to a range of buying center

members.c. use color and illustrations sparingly.d. both (a) and (b)e. none of the above


8. The most successful advertisements directed at business customers tend to focus on:a. the physical product.b. product attributes.c. product benefits.d. indirect appeals to action.e. the price of the advertised product.


9. Which method for determining advertising expenditures focuses on the communications effects of advertising, not on the sales effects?a. affordableb. percent-of-salesc. match competitorsd. objective-taske. arbitrary


10. Concerning business-to-business advertising media, _____ publications are directed at a specific industry and may be read by everyone from foreman to company president.a. commonb. specialtyc. horizontald. verticale. target


11. Concerning business-to-business advertising media, the publications Purchasing, Advertising Age, and Materials Handling Engineering would be classified as a:a. specialty publication.b. target publication.c. horizontal publication.d. vertical publication.e. common publication.


12. Concerning business-to-business advertising media, _____ publications are directed at a specific task, technology, or function, whatever the industry.a. common

b. specialtyc. horizontald. verticale. target


13. Concerning the allocation of the publication budget among various journals,a. the cost-per-thousand calculation should be based on circulation to the

total audience.b. the cost-per-thousand calculation should be based on circulation to the

target audience.c. the comparison of alternative journals can readily be made by examining

their actual page rates (cost-per-page).d. the comparison of alternative journals can readily be made by examining

total circulation.e. publications with low circulation levels should be avoided.

ANS: B PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

14. In evaluating the effectiveness of a business-to-business advertising program, the manager should center on:a. changes in the target market's purchase rate.b. changes in the target market's product awareness.c. changes in the target market's product knowledge.d. both (b) and (c)e. none of the above


15. Measuring industrial advertising effectiveness involves an assessment of advertising's impact on:a. sales variables.b. profit variables.c. intervening variables in the buyer’s purchase decision process.d. all of the abovee. both (b) and (c)


16. An advertising evaluation program would include an assessment of:a. target markets.b. media and messages.c. overall results.d. buying motives.e. all of the above


17. The cost of reaching a prospect at a trade show is approximately:a. $50b. $150c. $250d. $500e. $750


18. Which of the following statements concerning trade shows is(are) accurate?a. The cost of reaching a prospect at a trade show less than the cost of

making a personal sales call.b. Over 83 percent of all trade show visitors have some buying authority.c. The average company participates in 45 trade shows per year.d. all of the abovee. (a) and (b) only


19. In deciding which trade shows to attend, some business marketing strategists turn to reports published by Exhibit Surveys, Inc., a company that surveys trade show audiences. One useful measure that they provide isolates the percentage of the show audience that has decision authority for the types of products being exhibited. This is called:a. Surveys of Industrial Purchasing Power.b. Controlled Audience Index.c. Total Buying Plans.d. Buying Power Index.e. Net Buying Influences.


20. The final, and critical, step for managing Business-to-Business advertising is:a. integrating it with other business components.b. formulating advertising objectives.c. evaluating and selecting media.d. evaluating the effectiveness of the campaign.


21. An advertising objective must:a. specify what is to be achieved and when.b. be measurable.c. be realistic.d. all of the above.e. (a) and (c) only.


22. Which of the following statements regarding advertising expenditures is incorrect?a. Because advertising is a relatively large part of the total marketing

budget for business firms, managers tend to follow simple rules of thumb (e.g., allocate 1% of sales to advertising).

b. The fundamental problem with percentage-of-sales rules is that they implicitly make advertising a consequence rather than a determinant of sales and profits.

c. Percentage-of-sales rules suggest that the business advertiser reduce advertising when sales volumes decline.

d. The decision to "match the competition's level of advertising spending" is an example of a rule of thumb philosophy.


23. The Objective-Task method addresses the major problem of the rule-of-thumb methods by applying funds to accomplish a specific goal:a. so that advertising is a determinant of those results.b. so that advertising is a consequence of those results.c. because the manager does not have to have some knowledge or instinct

for the proper relationship between expenditure level and communication response.

d. none of the above.


24. The formula for calculating adverting cost is:a. Cost per thousand = Cost per page / Circulation in thousands.b. Cost per thousand = Circulation in thousands / Cost per page.c. Cost per page = Cost per thousands / Circulation in thousands.d. Cost per page = Circulation in thousands / Cost per thousands


25. Direct mail is commonly used for:a. corporate image promotion.b. sales force support.c. distribution channel communication.d. all of the above.

e. (a) and (b) only.


26. Which of the following statements regarding direct mail is incorrect?a. Direct mail is efficient when compared to other media.b. Direct mail is a viable medium when potential buyers cannot be clearly

identified.c. A direct mail advertisement typically gains the full attention of the

reader.d. Direct mail can accomplish all of the major advertising functions.


27. An e-mail list can be created by:a. offering an e-mail alert service.b. asking for e-mail addresses in direct mail campaigns.c. collecting e-mail addresses at trade shows.d. all of the above.e. (b) and (c) only.


28. An evaluation of an advertising campaign will usually measure:a. awareness.b. recall.

c. motivation.d. all of the above.e. (a) and (b) only.


29. In deciding which trade shows to attend, some business marketing strategists turn to reports published by Exhibit Surveys, Inc., a company that surveys trade show audiences. One useful tool that they provide measures the percentage of the audience planning to buy the products being exhibited within the next 12 months. This is called:a. Surveys of Industry Purchasing Power.b. Controlled Audience Index.c. Total Buying Plans.d. Buying Power Index.e. Net Buying Influences.


30. A model of "lead efficiency" is calibrated using the firm's:a. historical sales lead and lead conversion-to-sale data.b. total number of sales booths at past shows.c. gross margin.d. all of the above.e. (a) and (c) only.

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of

media communications & delivery

31. Which of the following statements is (are) true about the Internet’s impact on marketing communications?a. Changed from a one-way to a two-way process.b. Customization of advertising messages.c. Improved customer service.d. All of the above.e. Only (a) and (b).


32. Which of the following are advantages of the objective-task method of setting advertising budgets?a. Advertising is determinant of results, not a consequence.b. Easy to use and familiar to management.c. Must use instinct for identifying proper level of expenditures to reach

goals.d. All of the above.e. Only (a) and (c).


33. The important elements of perception include:a. attention.b. interpretation.c. benefits.d. Only (a) and (b).e. Only (b) and (c).


34. Horizontal publications are more effective for business marketers when:a. their product has applications in only a few industries.b. many industries are potential usersc. well-defined functions are the principal buying influencers.d. All of the above.e. Only (b) and (c).


35. Characteristics of effective B2B print ads include:a. the use of a “rational approach.”b. a clear description of the product and its benefits.c. a detailed listing of most pricing considerations.d. All of the above.e. Only (a) and (b).


36. Recent research has indicated that the indirect communication effects of advertising include:a. increased word-of-mouth communications.b. increased overall company reputation.c. improved logistics performance.



37. The benefits of having a trade show exhibit to business marketers include:a. the ability communicate with a large and interested audience.b. free publicity.c. the generation of sales leads.d. All of the above.e. Only (a) and (c).


38. Which of the following factors should be considered when planning an effective trade show communications strategy?a. The focus of the marketing efforts.b. The appropriate show mix.c. The functions performed by the trade show in the total marketing

communications program.d. All of the above.e. Only (a) and (c).


39. Which of the following represent common trade-show objectives?

a. Identification of decision influencers.b. Handling current customer problems.c. Providing product, service, and company information.d. All of the above.e. Only (a) and (c).


40. Indices of trade show performance include:a. attraction.b. contact.c. conversion efficiency.d. All of the above.e. Only (b) and (c).


TRUE/FALSE

1. Most industrial firms spend roughly the same amount of dollars on advertising as they do on personal selling.

ANS: F PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

2. Generally, social media can augment an offering to expand the value proposition, thereby changing what people buy and how they relate to a brand


3. Business-to-business advertising objectives are usually stated in terms of a specific sales goal.


4. Organizational buyers tend to retain messages that clash with their attitudes, needs, and beliefs.


5. From the business marketer's perspective, the cost-per-thousand calculations for various media options should be based on circulation to the target audience, not the total audience.


6. The planning and budgeting for trade shows must focus on specific objectives to be accomplished.


7. The organizational buyer may read every word of the ad copy, and find a meaning in it quite opposite from that intended by the advertiser.


8. Measuring advertising effectiveness means assessing advertising's impact on sales.


9. Internet marketing costs far less than direct mail marketing.


10. Although certain mechanical aspects help create awareness and interest in the advertisement, its ultimate success will depend on how well the message is targeted to the benefits sought by the buying influential.


11. Circulation is the most important criterion in the selection of publications.


12. If a business marketer's product has applications only within a few industries, horizontal publications are a logical choice.

ANS: F PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

13. Lead efficiency is defined as the number of sales leads obtained at the show divided by the total number of show visitors with definite plans to buy the exhibitor's product or one similar to it.


14. Vertical publications are directed at a specific task, technology, or function whatever the industry.


15. Even though a publication has a high cost-per-thousand basis, it may in fact be a cost-effective alternative due to a low rate of wasted circulation.


16. The Internet is more than just an advertising medium for business marketers because it can also help them create value for customers by customizing messages and helping customers search for products.


17. For many purchasing decisions, advertising alone cannot create product preference.


18. The rules of thumb approach to setting advertising budgets is not always effective, but it is commonly used because it is easy to implement and managers are familiar with it.


19. The five primary areas for evaluating advertising are profits generated, markets, motives, messages, and results.


20. Recent research indicates that follow-up sales efforts generate higher sales productivity when customers have already seen a company’s products at a trade show.


COMPLETION

1. The communications process attempts to take potential buyers sequentially from unawareness of a product to____________________, to brand preference, to conviction that a particular purchase will fulfill their requirements, and ultimately to____________________.

ANS: awareness, purchase

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

2. The initial stage of developing the business-to-business advertising program entails setting____________________and defining the____________________.

ANS: Advertising objectives, target market


3. The____________________statement provides guidelines for the company and advertising agency on how to position the product in the marketplace.

ANS: creative strategy


4. The objective-task method for budgeting ad expenditures consists of evaluating the tasks advertising will perform, analyzing the costs, and summing up the____________________to arrive at a final budget.

ANS: total costs


5. Many trade publications are____________________publications, meaning that they offer free subscriptions to selected readers.

ANS: requester


6. The number of sales leads obtained at a trade show divided by the total number of show visitors with definite plans to buy the exhibitor’s product or one similar to it describes the concept of____________________.

ANS: lead efficiency


ESSAY

1. Dell Computer has been developing closer relationships with its corporate customers by setting up Web sites on internal company networks. The system enables individual employees at customer locations to easily order from a pre-approved line of Dell Computers. Discuss how Dell might use direct e-mail advertising to reach employees at these companies and reinforce its Web strategy.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills

2. For most business marketers, the amount of the promotional budget spent on personal selling far exceeds expenditures on advertising. In addition, it is nearly impossible to evaluate the impact of advertising on industrial sales. Given this situation, should business marketers advertise, and how can they justify advertising if they cannot measure its impact on sales?

ANS:n/a


3. Describe the steps that a business marketing manager should follow in developing an appropriate advertising message for a new high-speed packaging system targeted for the food industry.

ANS:n/a


4. Explain why a full-page ad by Digital in the Wall Street Journal might be carefully read by a production manager at Pillsbury but quickly passed over by the purchasing manager across the hall.

ANS:n/a


5. Possis Medical invests a significant proportion of their promotional budget in trade shows. Management, however, wonders whether they are getting the proper return on this sizeable investment. Propose a set of guidelines that the firm might use in designing a more effective trade show communications strategy and in evaluating trade show performance.

ANS:n/a


6. Compare and contrast the rules of thumb and objective task method of setting advertising budgets. Describe the process that business marketers should use that decide to use the objective task method.

ANS:n/a


7. Interactive marketing, or the use of the Internet, e-mail, and web sites in advertising, is becoming more common. Compare and contrast direct mail with interactive marketing as direct marketing tools. What factors should business marketers consider when deciding on the mix of direct marketing approaches to use?

ANS:n/a

PTS: 1NAT: AACSB &E Model Promotion | R&D Strategic & systems skills

Chapter 14—Business Marketing Communications: Managing the Personal Selling Function

MULTIPLE CHOICE

1. High-performing salespeople are generally set apart from low performing sales people on the basis of:a. their time on the jobb. their ability to recruit desired ad hoc members on to their sales teamc. their past experience in new task selling situationsd. all of the abovee. none of the above


2. Expertise coordination is the process ofa. integrating the functions of finance and operations with salesb. working with top management to help engage the top level managers in the sales processc. diagnosing customer requirements and assembling an ad hoc team of internal experts who possess the skills to deliver a superior customer solution.d. evaluating competitive offers and developing plausible approaches for surpassing those offers in the mind of prospective customerse. All of the above


3. The best practices of high-performing salespeople can provide

a. relational adaptiveness to a sales effortb. Improved role definition to the sales jobc. the opportunity to create relationship congruityd. relationship quality to the sales teame. a template for improving the client management process.


4. The product-oriented sales organization presents which of the following disadvantages?a. A "critical mass" of demand is required to offset the associated costs.b. Compared to other ways of organizing the sales force, the salesperson

has the greatest degree of latitude in choosing which products and customers to emphasize.

c. Several salespersons may be required to meet the diverse product requirements of a single customer.

d. all of the abovee. both (a) and (c)


5. When each industrial salesperson performs all of the selling tasks associated with all of the firm's products, and performs these tasks for all customers in a particular territory, the sales force is organized on:a. a customer basis.b. a market-centered basis.c. a geographical basis.d. a product basis.e. a cluster basis.


6. The geographical sales organization structure presents which of the following disadvantages?a. Each salesperson requires substantial product and customer knowledge.b. This is the most costly form of sales organization.c. Sales personnel may have a tendency to emphasize those products and

end-use applications with which they are most familiar.d. all of the abovee. (a) and (c) only


7. By organizing its sales force around retailing, financial services, and the petroleum industry, Hewlett-Packard is employing the _____ approach in structuring the sales force.a. geographicalb. productc. market-centeredd. territorye. national accounts


8. Effective sales training:

a. builds the confidence and motivation of the salesperson.b. keeps the personal selling function aligned with marketing program

objectives.c. reduces the costs associated with recruiting.d. all of the abovee. (a) and (b) only


9. Salespersons tend to have a high level of job satisfaction when:a. management provides them with the assistance and support needed to

meet unusual and nonroutine problems.b. they perceive themselves to have an active part in determining company

policies and standards that affect them.c. they perceive that their first-line supervisor closely directs and monitors

their activities.d. all of the abovee. (a) and (b) only


10. Sales managers use a variety of measures to evaluate salesperson performance. When the measurement system is behavior-based, the sales manager:a. employs objective measures to evaluate performance.b. emphasizes a compensation system with a large incentive component.c. monitors and directs the activities of salespeople.d. indirectly supervises salesperson activities.e. measures the self-esteem of each salesperson.


11. Both behavior-based and outcome-based measures are used by sales managers to evaluate salesperson performance. When the system is outcome-based, the sales manager:a. employs objective measures (sales results, market share gains) to

evaluate performance.b. directly monitors the activities of salespeople.c. uses subjective measures of salesperson performance.d. emphasizes a compensation system with a large fixed component.e. measures the self-esteem and verbal intelligence of each salesperson.


12. In the sales performance literature, recent evidence suggests that a strict reliance on the ____ measurement approach may not produce the desired sales or marketing results because it "has lulled some sales executives into thinking that important sales outcomes could be reasonably accomplished without intense management reinforcement."a. esteem-basedb. behavior-basedc. satisfaction-basedd. outcome-basede. none of the above


13. The _____ measurement approach of salesperson performance is best suited for the emerging emphasis on relationship selling.a. esteem-basedb. behavior-basedc. satisfaction-basedd. outcome-basede. none of the above


14. Using the behavior-based measurement approach to salesperson performance, sales managers:a. monitor and direct the activities of salespeople.b. use subjective measures of salesperson behavior.c. emphasize a compensation system with a large fixed component.d. consider the knowledge and presentation skills of the salesperson.e. all of the above


15. Concerning the level of sales that a salesperson might achieve in a particular territory, which specific territory traits appear to be most important?a. potential, workload, dispersionb. potential, concentration, dispersionc. potential, competition, concentrationd. potential, workload, competitione. potential, dispersion, competition


16. The characteristic of a sales territory that refers to the degree to which potential is available in the larger accounts in a particular territory is called:a. potential.b. critical mass.c. concentration.d. workload.


17. The sales resource grid indicates that a particular territory (planning and control unit) possesses high PCU opportunity but low sales organization strength. This suggests which of the following sales resource assignments?a. Invest a high level of sales resources to take advantage of opportunity.b. Invest a minimal level of sales resources; selectively eliminate resource

coverage; possible elimination of PCU.c. Either direct a high level of sales resources to improve position and take

advantage of opportunity or shift resources to other planning and control units.

d. Invest a moderate level of sales resources to maintain current position.


18. The sales resource grid indicates that a particular territory (planning and control unit) possesses low PCU opportunity but high sales organization strength. This suggests which of the following sales resource assignments?a. Invest a high level of sales resources to take advantage of opportunity.b. Invest a minimal level of sales resources; selectively eliminate resource

coverage; possible elimination of PCU.c. Either direct a high level of sales resources to improve position and take

advantage of opportunity or shift resources to other planning and control units.

d. Invest a moderate level of sales resources to maintain current position.


19. The primary objective of the organizational selling center include:a. acquisition and processing of pertinent marketing-related information.b. execution of selling strategies.c. designing the channel structure.d. all of the above.e. (a) and (b) only.


20. A _____ sales organization is especially appropriate when the product line is large or diverse.a. geographicalb. product orientedc. market centeredd. none of the above


21. A key account represents a customer who:a. purchases an insignificant volume as a percentage of a seller's total

sales.b. buys for an organization with geographically concentrated units.c. involves several organizational members in the purchasing process.d. (a) and (b) only.e. (b) and (c) only.


22. Responsibility for recruiting salespersons may lie with:a. the first-line supervisor.b. the Human Resources department.c. executives at the headquarters level.d. all of the above.e. (a) and (b) only.


23. Motivation to perform is thought to be related strongly to:a. the value the salesperson places on rewards.b. the individual's perceptions of the types and amounts of rewards that

will accrue from various degrees of job performance.c. the extent to which a salesperson can see him/herself as a member of

the target market.d. (a) and (b) only.e. (a) and (c) only.


24. Job satisfaction is theorized to decline when the salesperson's perception of his/her role is:a. inaccurate in terms of the expectations of superiors.b. characterized by conflicting demands among role partners that the

salesperson cannot possibly resolve.c. surrounded by uncertainty due to a lack of information about the

expectations and evaluation criteria of superiors and customers.d. all of the above.e. (b) and (c) only.


25. The sales resource grid indicates that a particular territory (planning and control unit) possesses high PCU opportunity and high sales organization strength. This suggests which of the following sales resource assignments?a. Invest a high level of sales resources to take advantage of opportunity.b. Invest a minimal level of sales resources. c. Invest a moderate level of sales resources to keep current position

strength.d. Either direct a high level of sales resources to improve position or shift

resources to other PCUs.


26. The sales resource grid indicates that a particular territory (planning and control unit) possesses low PCU opportunity and low sales organization strength. This suggests which of the following sales resource assignments?a. Invest a high level of resources to take advantage of opportunity.b. Invest a moderate level of resources.c. Invest a minimal level of sales resources, selectively eliminate resource

coverage, or possibly eliminate the PCU.d. None of the above.


27. _____ is a measure of the total business opportunity for all sellers in a particular market.a. Potentialb. Concentrationc. Dispersedd. Territory workload


28. The final phase of for selecting key accounts:a. centers on the profit potential of a customer.b. identifies those customer accounts that have unique support

requirements.c. considers the degree to which the transactions with potential customer

will complement the economies of the seller's business.d. none of the above.


29. The first phase of for selecting key accounts:a. identifies those customer accounts that have unique support

requirements.b. centers on the profit potential of a customer.c. considers the degree to which the transactions with potential customer

will complement the economies of the seller's business.d. none of the above.


30. The second phase of for selecting key accounts:a. considers the degree to which the transactions with potential customer

will complement the economies of the seller's business.b. identifies those customer accounts that have unique support

requirements.c. centers on the profit potential of a customer.d. none of the above.


31. Organization of the sales force depends on the:

a. nature of the product.b. the length of the product line.c. the nature of the buying behavior in each segment.d. All of the above.e. Only (a) and (c).


32. A key account represents a customer who:a. buys for an organization with geographically concentrated units.b. involves a small number of key organizational members in the

purchasing process.c. purchases a significant volume as a percentage of a seller’s total sales.d. All of the above.e. Only (b) and (c).


33. When compared to a traditional selling focus, a key account selling focus is different in which of the following ways?a. Uses a longer-term time horizon. b. Wants to lower customer’s total costs.c. Individual salesperson is primary link to customer organization.d. All of the above.e. Only (a) and (b).

ANS: E PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of


34. Research suggests that successful national account units:a. have senior management support.b. have well-defined objectives.c. have experienced individuals who know how to create effective

customer solutions.d. All of the above.e. Only (b) and (c).


35. Which of the following topics must be part of a business firm’s salesperson training programs?a. Effective communication skills.b. Knowledge about the company.c. Knowledge about the product line.d. All of the above.e. Only (a) and (c).


36. _____ is the amount of effort a salesperson desires to expend on each of the activities or tasks associated with his or her job.a. Supervisionb. Motivationc. Attituded. Performancee. Intrinsic satisfaction


37. A salesperson’s job performance is a function of:a. product knowledge and expertise.b. level of motivation.c. aptitude or ability.d. All of the above.e. Only (b) and (c).


38. When a salesperson attains rewards on a personal basis, such as feelings of accomplishment or self-worth, this is a an example of:a. internally mediated rewards.b. externally mediated rewards.c. job satisfaction.d. aptitude.


39. Which of the following are influences on the potential level of sales in a particular territory?a. Salesperson characteristics.b. Competition.c. Territory characteristics.



40. To identify coverage gaps across territories and to better match sales resources with market opportunity, the GE process for accomplishing territory alignment involves

a. evaluating account qualityb. examining account densityc. implementing changes to enhance sales force effectiveness and

efficiencyd. all of the abovee. a and c above


TRUE/FALSE

1. The most common form of sales organization found in the industrial market is the market-centered organization.


2. Frequent contact between the salesperson and sales manager is instrumental to the job satisfaction of the salesperson.


3. Salespersons appear to be able to accept authority and direction from a number of different departments in the organization without a significant negative impact on job satisfaction.


4. An example of a planning and control unit or PCU is a sales territory.


5. Relationship quality is composed of at least two dimensions: trust in the salesperson and satisfaction with the salesperson.


6. If the territory is geographically dispersed, sales will probably be lower due to time wasted in travel by the salesperson.


7. A key account represents a customer who buys for an organization with geographically concentrated units.


8. The final phase for selecting key accounts centers on the profit potential of a customer.


9. A successful training effort will increase the cost of recruiting.


10. Internally mediated rewards are those controlled and offered by managers or customers.


11. A salesperson's job performance is a function of aptitude.


12. Salespersons tend to have a higher level of job satisfaction when they perceive that their first-line supervisor closely directs and monitors their activities.

ANS: T PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of


13. Smaller firms often reduce training costs by hiring experienced and more expensive salespersons.


14. Changes in business marketing strategy requires corresponding changes in personal selling styles.


15. When the sales resource opportunity grid indicates a low PCU and a high PCU sales organization strength, the firm should invest a moderate level of sales resources to keep current position strength.


16. Strategic components of sales force management include methods for organizing the sales force and key account management.


17. The organization of the sales force can be affected by the length of a product line and the nature of buying behavior in each market segment.

ANS: T PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

18. A key account represents a customer that purchases a significant volume as a percentage of a seller’s total sales but is easier to manage because there are only a few organizational members involved in the purchasing process.


19. The decision whether to use key accounts depends on three factors: profit potential, learning benefits, and cost drivers associated with customers.


20. Salesperson job satisfaction decreases when there is increased uncertainty about expectations and the length of the product line increases.


SHORT ANSWER

1. Relationship marketing activities influence three important drivers of relationship marketing effectiveness including relationship____________________,____________________, and____________________.

ANS:quality, breadth, compositionbreadth, composition, quality

composition, quality, breadth


2. Relationship____________________represents the number of interpersonal ties that a firm has with an exchange partner.

ANS:Breadth


3. Relationship____________________captures the ability of an interfirm relationship to achieve desired objectives.

ANS:efficacy


4. Relationship____________________represents the customer’s desire to engage in strong relationships with a current or potential supplier.

ANS:orientation


5. Key account customers purchase in very large volume and the focus of exchange extends beyond a core product as the seller augments the offering through____________________ services and support.

ANS:value-addedvalue added


6. The structure of the buying center in a traditional selling focus is indicated by the____________________and a few other individuals are involved in the buying decision.

ANS:purchase manager


7. Periodic training is required to sharpen the skills of experienced salespersons, especially when the firm’s environment is____________________.

ANS:changing rapidly


8. Externally mediated rewards are controlled and offered by____________________or____________________, such as financial incentives, pay, or recognition.

ANS:managers, customerscustomers, managers


9. An outcome-based sales force control system involves less direct field supervision of salesperson activities and uses____________________measures to evaluate____________________and a compensation system with a large incentive component.

ANS:objective, performance


ESSAY

1. Key account management strategies are emphasized by top-tier business marketing firms like 3M, IBM, and Dow Chemical. Compare and contrast a key account with a regular account. Next, describe how the sales strategy for a key account differs from the traditional selling focus used for regular accounts.

ANS:n/a

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills

2. While key accounts possess buying power, they are also very demanding customers that are often more costly to serve. If the business marketing firm can have close and important relationships with a rather small set of customers and if these relationships each require a large investment, key accounts must be chosen wisely. Describe the process, along with the specific criteria that the business marketing strategist should use, in selecting the right key accounts.

ANS:n/a


3. IBM is reorganizing its marketing and sales operations into 14 worldwide industry groups such as banking, retail, and insurance. In moving away from an organization based on geography, IBM hopes to eliminate turf wars and make itself more responsive to customers. Explain the cost/benefit trade-offs of a market-centered sales organization. What is the nature of the turf wars that plague firms that are organized around products or geographical territories?

ANS:n/a


4. Cassidy Computer Systems has witnessed a gradual decline in the performance of its sales force since a key sales manager left the company for another position. While well-educated and extremely knowledgeable about the computers that they sell, the sales force is not inspired by the management style of their new superior. Using the concepts of sales force motivation, job satisfaction, and role perceptions, describe why salesperson performance may have declined at Cassidy. Recommend a strategy that Cassidy could adopt to improve the effectiveness and productivity of their sales force.

ANS:n/a


5. Describe the factors that appear to influence the salesperson's satisfaction with the job and the work environment.

ANS:n/a


6. Describe the sales resource opportunity grid and illustrate how a firm might use it in deploying the sales force. What specific information does a sales manager require in order to properly apply and use the sales resource opportunity grid?

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic &

systems skills

7. What roles do account managers play in the selling organization? What are some of the characteristics and factors that separate high performing account managers from other account managers?

ANS:n/a


8. Why is training so important to selling organizations? What are some of the keys to effective salesperson training programs?

ANS:n/a


Chapter 15—Marketing Performance Measurement

MULTIPLE CHOICE

1. The balanced scorecard measures the performance of a business unit from:a. a customer perspective.b. a financial perspective.c. a learning and growth perspective.d. all of the above.e. (a) and (b) only.


2. The level of marketing control that examines whether the strategy is being implemented as planned and whether it produces the intended results is termed:a. strategic control.b. annual plan control.c. strategic component control.d. profitability control.e. incremental control.


3. The level of marketing control that examines how well resources have been utilized in each element of the marketing strategy is:a. strategic control.b. annual plan control.c. efficiency and effectiveness control.d. profitability control.e. incremental control.


4. The ____ is a comprehensive, periodic and systematic evaluation of the firm's marketing operation which analyzes the market environment and the firm's internal marketing activities.a. environmental auditb. marketing audit

c. profit auditd. annual plane. competitive audit


5. The purpose of annual plan control is to:a. examine the general direction the company is pursuing.b. examine how well resources have been utilized in each element of the

marketing strategy.c. examine where the company is making or losing money.d. examine whether the planned performance standards are being

achieved.e. examine the general directions of industry demand.


6. If a business marketer is particularly concerned with over- or underspending on a particular marketing strategy element, such as advertising, which of the following tools would be most useful?a. expense-to-sales ratio analysisb. market share analysisc. sales analysisd. marketing audite. profit analysis

ANS: A PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy

& innovation

7. If a business marketer is concerned with how the firm is performing relative to competition, which of the following tools would be most useful?a. expense-to-sales ratio analysisb. market potential analysisc. market share analysisd. sales analysise. segmental analysis


8. ____ is an assessment of how the firm is doing relative to competition.a. Sales analysisb. Expense-to-sales analysisc. Profit analysisd. Market share analysise. Segmental analysis


9. St. Paul Equipment Company experienced a 15 percent sales gain that, on the surface, appears favorable. However, if total industry sales are up 30 percent, an analysis of ____ could suggest that the firm has not fared well relative to competitors.a. expense-to-sales ratiosb. profitc. market shared. distribution costs

e. sales by channel type


10. Flagstaff Electrical Supply wonders whether they are spending too much or too little on various elements in their marketing program. Which of the following tools would appear to be most appropriate in examining the efficiency of operations?a. sales analysisb. market share analysisc. expense-to-sales ratio analysisd. price analysise. product analysis


11. _____ reveals the links between performing particular activities and the demands that those activities make on the organization's resources.a. A logistical cost systemb. A supply-oriented cost systemc. A demand-oriented cost systemd. An activity-based cost systeme. A controllable element cost system


12. Which of the following statements concerning an activity-based cost (ABC) system is(are) correct?a. ABC analysis illuminates exactly what activities are associated with a

particular product or customer segment and how these activities are linked to the generation of revenues and the consumption of resources.

b. ABC analysis often relies on percentage allocations that are somewhat arbitrary.

c. ABC analysis segregates the expenses of indirect and support resources by activities.

d. all of the abovee. (a) and (c) only


13. Using this approach, the costs of producing a printed circuit board are determined by first evaluating the activities required to produce the board and then costing out each of the activities. This describes:a. traditional cost accounting.b. an activity-based cost system.c. variable cost analysis.d. direct traceable costing.e. contribution costing.


14. The process that translates marketing plans into action assignments and ensures that such assignments are executed in a manner to accomplish a plan's defined objectives is called:a. marketing control.

b. marketing implementation.c. strategic marketing.d. marketing accountability.e. competitive advantage.


15. If marketing implementation is poor:a. management may never become aware of the soundness of the

strategy.b. the cause of failure is hard to diagnose because poor strategy might be

masked by the inability to execute.c. management can usually see the problem immediately.d. all of the abovee. (a) and (b) only


16. Which of the following could assume a role in the marketing strategy center?a. technical service managersb. physical distribution managersc. research & development executivesd. manufacturing executivese. all of the above


17. _____ provides a visual representation of the cause-and-effect relationships among the components of a company’s strategy.a. A Strategy Mapb. Market Sensingc. Customer-Linkingd. Building Blocks


18. Marketing managers who are flexible and intelligent in dealing with the firm's information and control systems are exhibiting good _____ skills.a. monitoringb. allocationc. interactingd. organizing


19. Which of the following are steps in the planning process that utilizes the Balanced Scorecard and a Strategy Map to build a tightly integrated marketing strategy? a. Define Financial Objectives.b. Define the Customer Value Proposition.c. Identify the Critical Strategic Themes and Internal Processes.d. All of the above.e. Only (a) and (b).

ANS: D PTS: 1


20. When using strategy maps, shareholder value can be created via:a. long-term revenues.b. short-term productivity.c. product differentiation.d. All of the above.e. Only (a) and (b).


21. The _____ of the Balanced Scorecard describes the human capital, information capital, and organizational capital that must be aligned with strategy.a. financial perspectiveb. customer perspectivec. internal perspectived. learning and growth perspective


22. Which of the following are interrelated evaluations that are required to design a marketing strategy?a. How much should be spent on marketing in the planning period?b. How are marketing dollars to be allocated?c. Within each element of the marketing strategy, how should dollars be

allocated?d. Which segments, products, and geographic areas are most profitable?e. All of the above.


23. _____ represents the portion of total purchases in a product and service category that a customer makes from the firm.a. Share-of-walletb. Market sharec. Marketing reachd. Feedforward control


24. The major forms of marketing control are:a. control over the efficient allocation of marketing effort.b. the comparison of planned and actual performance.c. Both (a) and (b).d. Neither (a) nor (b).


25. The primary levels of marketing control include:a. strategic control.b. annual plan control.c. efficiency and effectiveness control.d. profitability control.e. All of the above.


26. Examples of product measures for efficiency and effectiveness control include which of the following?a. Sales by market segments.b. Logistics costs by logistics activity by channel.c. New accounts per time period.d. All of the above.e. Only (a) and (c).


27. The goal of _____ is to describe where the firm is making or losing money in terms of the important segments of its business.a. strategic controlb. annual plan controlc. efficiency and effectiveness controld. profitability control


28. Research has shown that which of the following are important implementation skills for marketing managers?a. Organizing.b. Allocating.

c. Monitoring.d. All of the above.e. Only (a) and (b).


29. To be successful, successful business marketing managers:a. must assume an active role in the marketing strategy center.b. must negotiate with other functions.c. must get advanced secondary education.d. All of the above.e. Only (a) and (b).


30. The ____ of the Balanced Scorecard describes the expected outcomes of strategy, such as revenue growth or productivity improvements.a. financial perspectiveb. customer perspectivec. internal perspectived. learning and growth perspective


31. The primary responsibility for strategic control typically lies with:a. top management.

b. middle management.c. salespeople.d. buying organizations.e. front-line employees.


TRUE/FALSE

1. The balanced scorecard attempts to keep the sales of a business unit in balance with profit growth.


2. One component of the balanced scorecard centers on customer satisfaction while another centers on employee satisfaction.


3. The central focus of a marketing audit is on the firm's cost accounting system.


4. Expense-to-sales ratios provide one measure of the efficiency of marketing operations.


5. R&D, manufacturing, technical service, and other business functions play fundamental roles in the development and implementation of business marketing strategy.


6. Under an activity-based cost system, managers must refrain from allocating all expenses to individual units and, instead, separate the expenses and match them to the level of activity that consumes the resources.


7. Warehousing costs fit into an activity-based cost system but advertising costs do not.


8. Sales results provide an excellent benchmark against which to measure performance.


9. Although the dividing line between strategy and execution is a bit fuzzy, it is often not difficult to diagnose implementation problems and to distinguish them from strategy deficiencies.


10. Market share analysis is an attempt to determine why actual sales varied from planned sales.


11. Good implementers struggle and wrestle with their markets and businesses until they can simply and powerfully express the "back of the envelope ratios necessary to run the business, regardless of formal control system inadequacies."


12. The Balanced Scorecard measures performance from a learning and growth perspective.


13. Marketing control is a process whereby management generates information on performance, such as efficient allocation of marketing effort.


& innovation

14. The efficiency of a marketing operation can be assessed via expense-to-sales ratios.


15. In regard to profitability control, a segment can be a channel structure.


16. Strategy maps can be used to align internal processes to support different marketing strategies.


17. The strategy map, when coupled with the measures and targets from the balanced scorecard, provides a valuable framework for the strategist.


18. For customers with a transactional focus, business marketers should discontinue the use of expensive customer databases and set revenue targets and profit goals.


19. Middle management typically has the primary responsibility for efficiency and effectiveness control.


20. In annual plan control, the objectives specified in the annual plan become the performance standards that are compared to actual results.


21. Relating sales revenues and marketing costs to market segments improves decision making.


22. Important implementation skills for marketers include interacting, allocating, and monitoring.


23. The strategy map provides a framework for highlighting the interdisciplinary role of marketing strategy and for exploring key implementation requirements.


COMPLETION

1. In the balanced scorecard, the____________________perspective describes the business processes that have the greatest effect on the chosen strategy, such as customer relationship management, innovation management or supply-chain management.

ANS: internal


2. The second step of the strategy process is defining the customer____________________for target customer segments, in effort to generate revenue from existing customers.

ANS: value proposition


3. The____________________coupled with the balanced scorecard provides a valuable framework by describing the strategy, detailing objectives for the processes that create value and the organizational assets needed to support them.

ANS: strategy map


4. The portion of the total purchases in a product and service category that a customer makes from the firm is known as ____________________.

ANS: Share-of-wallet


5. Strategic____________________focuses on assessing whether the strategy is being implemented as planned and whether it produces the intended results.

ANS: control


6. Efficiency and effectiveness control is the primary responsibility of____________________management.

ANS: middle


7. Expense-to-sales ratios are analyses of the____________________of marketing operations to determine whether the firm is overspending or underspending.

ANS: efficiency


8. ____________________cost systems reveal the links between performing particular activities and the demands those activities make on the organization’s resources.

ANS: Activity-based


ESSAY

1. Dell Computer entered into a strategic alliance with Lexmark, a producer of printers and ink cartridges, to provide a more direct challenge to Hewlett-Packard (H-P)—the market leader in printer and cartridge sales. Clearly, this will take time and a well conceived strategy by Dell because H-P has about 50 percent market share in printer sales and a huge installed base of printer customers around the world. For this strategic initiative in the printer business, describe how Dell might use a strategy map to illustrate objectives, targets, and strategies as well as measures it might use to assess its performance in this new business.

ANS:n/a


2. With the balanced scorecard, executives can now measure how their business units create value for current and future customers and how they must enhance internal capabilities and the investment in people, systems, and procedures necessary to improve future performance. Describe the four perspectives of organizational performance that are considered in the balanced scorecard approach.

ANS:n/a


3. Motorola plans to introduce an advanced personal communicator to the business market. They feel that the system is ideally suited for managers. While a broad marketing strategy has been sketched out, it is now time to put together the specific details of the marketing plan from start-to-finish. The planned introduction is six months away. Provide a comprehensive list of the key decisions the firm should make in the areas of pricing, channels, advertising, sales force training, segmentation, and related areas. Next, describe the specific types of information that might be gathered to facilitate each decision. Finally, once the product is introduced, what performance areas should be monitored to determine if strategy adjustments are required for the new product?

ANS:n/a


4. A firm that sells sophisticated equipment to paper manufacturers (for example, Mead Corporation) learned that the same technology may have important potential in the lucrative food-processing industry. Potential customers here would include firms such as General Foods and Sarah Lee. Suggest several critical issues that this firm should address before embarking on this new strategy course.

ANS:n/a


5. Many marketing plans fail because they are poorly implemented. Explain the special implementation challenges that emerge for managers operating in the business marketing environment.

ANS:n/a


6. Illustrate how a business marketing manager might use a responsibility chart to pinpoint the roles that diverse functional specialists must perform in the implementation of marketing strategy.

ANS:n/a


7. Using any selling firm, product, and market of your choice, please illustrate how a strategy map that utilizes the balanced scorecard measures can be used to build an effective and efficient marketing strategy plan.

ANS:n/a

PTS: 1NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems

skills

8. Marketing control is a process business marketers can use to generate information on marketing performance. For each of the levels of marketing control, describe the purpose of the control, identify who is primarily responsible for that control in the organization, and provide examples of tools that can be used.

ANS:n/a


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