Test Bank Business Marketing Management B2b 11th Edition.doc 484x5e

For Order This And Any Other Test Banks And Solutions Manuals, Course, Assignments, Discussions, Quizzes, Exams, us At: [email protected] Test Bank Business Marketing Management B2B 11th Edition 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: 1 NAT: 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: 1 NAT: 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 companies

b. c. d. e.

manufacturers transportation companies service firms (e.g., hotels) health care facilities

ANS: B PTS: 1 NAT: 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: 1 NAT: 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: 1 NAT: 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: 1 NAT: 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: 1

NAT: 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: 1 NAT: 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: 1 NAT: 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, s, and governmental units. c. commercial enterprises, s, and original equipment manufacturers. d. producers and resellers of industrial products or services. e. upstream suppliers, s, and governmental units. ANS: A PTS: 1 NAT: 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 . c. a distributor. d. a dealer. e. an institutional buyer. ANS: B PTS: 1 NAT: 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: 1 NAT: 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 . c. a distributor. d. an institutional buyer. e. an upstream supplier. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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. ; original equipment manufacturer (OEM) b. ; distributor c. original equipment manufacturer (OEM); d. ; upstream supplier e. original equipment manufacturer (OEM); downstream supplier ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 16. As an industrial customer, Ford Motor Company would be classified as: a. a . b. an original equipment manufacturer (OEM). c. a in purchasing some products, an OEM in purchasing other products. d. a producer of facilitating goods. ANS: C PTS: 1 NAT: 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 . b. an original equipment manufacturer (OEM). c. an institutional buyer. d. a dealer. e. a distributor. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 18. When purchasing manufacturing equipment from General Electric, Chrysler would be classified as: a. a . b. an original equipment manufacturer (OEM). c. an institutional buyer. d. a dealer. e. a distributor. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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: 1 NAT: 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: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions

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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 27. With little or no additional processing, ____ can be installed directly into another product. a. component parts b. component materials c. operating equipment d. light factory equipment e. all of the above ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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: 1 NAT: 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: 1 NAT: 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. tly planning promotional activities with other channel . c. tly planning product changes with other channel . d. all of the above. e. (a) and (b) only. ANS: D PTS: 1 NAT: 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: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 34. Functional areas other than marketing directly or indirectly affect which of the following ? a. Product marketing decisions b. Price marketing decisions c. Promotion marketing decisions d. Distribution marketing decisions e. All of the above are affected ANS: E PTS: 1 NAT: 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 Goods b. Foundation Goods c. Entering Goods d. None of the above are correct. ANS: A

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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.

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. elastic b. inelastic c. unpredictable d. unknown e. none of the above ANS: B PTS: 1 NAT: 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 equipment b. operating supplies c. buildings and land rights d. maintenance and repair services e. both (a) and (c) ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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. b. c. d. e.

Personal selling or management is the dominant promotional tool. Initial price, distribution, and advertising play lesser roles. Only economic factors matter as buying motives. All of the above are true. 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: 1 NAT: 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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: 1 NAT: 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. t planning. c. shared technology. d. shared benefits. e. all of the above. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 50. Which of the following would qualify as facilitating goods?

a. b. c. d. e.

Fixed equipment. Component materials. Raw materials. Operating supplies. Office equipment.

ANS: D PTS: 1 NAT: 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions TRUE/FALSE 1. The intended use of the product and the intended consumer distinguishes business marketing from consumer-goods marketing. ANS: T PTS: 1 NAT: 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.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 3. A close examination of a market-driven firm will reveal two important capabilities: market sensing and customer linking. ANS: T PTS: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 6. A particular industrial customer might be properly classified as a by some business marketers and an original equipment manufacturer by other business marketers. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 7. Industrial goods are classified on the basis of how organizational buyers shop for particular products and services. ANS: F PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 11. A marketing strategy that works well for selling entering goods should be equally successful for facilitating goods. ANS: F PTS: 1 NAT: 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: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 15. Due to downturns in the economy, the demand for many consumer products tends to fluctuate more than the demand for industrial products. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 16. None of the products purchased by customers in the business market are the same as those purchased by ultimate consumers. ANS: F PTS: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 18. Supply chain management requires Information sharing, shared technologies, and shared benefits. ANS: T

PTS: 1

NAT: 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: 1 NAT: 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 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions SHORT ANSWER 1. Business market customers can be broadly classified into these three categories: ANS: 1. Business commercial enterprises 2. Institutions 3. Government PTS: 1 NAT: 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: 1 NAT: 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: 1 NAT: 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 6. Like supplies, business services are considered expense items. Business services can be classified as: ANS: Maintenance and repair and advisory PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Knowledge of general business functions 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills

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 ing system. c. an IBM sales presentation. d. (a) and (b) only. e. any of the above. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 solving b. casual problem solving c. limited problem solving d. extended problem solving e. specialized problem solving ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 5. As a result of poor delivery performance by a supplier of high quality metal components, Jim Ho, 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: 1 NAT: 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 ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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. cerebral b. limited c. selective d. routinized e. extensive ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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: 1 NAT: 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. cerebral b. limited c. selective d. routinized e. extended ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 decision b. strategic modified rebuy decision c. judgmental new task decision d. strategic new task decision e. lost-for-good decision ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 12. Those buying decisions that are of extreme importance to the firm strategically and financially are referred to as: a. strategic new task buying decisions

b. c. d. e.

strategic modified rebuy decisions judgmental new task decisions lost-for-good decisions complex modified rebuy decisions

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 decision b. strategic modified rebuy decision c. judgmental new task decision d. strategic new task decision e. lost-for-good decision ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 14. Those buying decisions that involve a narrow set of choice alternatives, encom 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. encomes little or no information search or analysis. d. all of the above. e. (b) and (c) only. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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.

ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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 . b. a gatekeeper. c. an influencer. d. a decider. e. a buyer. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 . b. a gatekeeper. c. an implementer. d. a decider. e. a buyer. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 23. Individuals who control the flow of information into the buying center are performing the role of: a. a . b. a gatekeeper. c. an implementer. d. a decider. e. a buyer. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 25. A common identifiable element in buying centers in all sectors of the industrial market is: a. the chief executive officer. b. the ing function. c. the purchasing function. d. the production function. e. the engineering function. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making

processes 26. In the purchase of a new papermaking machine, what role would the firm’s manufacturing superintendent assume in the buying center? a. influencer b. decider c. gatekeeper d. any or all of the above. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 29. The formation of organizational preferences and ultimately the organization's buying choice is determined by the _____ of the of the buying center. a. interaction structure b. operating resources c. relevant set d. primary set e. none of the above. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 30. As the risk associated with an organizational purchase decision increases: a. buying center participants will be motivated to invest greater effort throughout the

b. c. d. e.

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

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

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

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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 . b. a gatekeeper. c. an influencer. d. a decider. e. a buyer. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 . c. an influencer. d. a decider. e. a buyer. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 take part in the buying process?

b. c. d. e.

What is each member’s relative influence in the decision? What criteria are important to each member in evaluating prospective suppliers? All of the above questions are appropriate. Only (a) and (b) are appropriate.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 40. A _____ consists of individuals who participate in the purchasing decision and share the goals and risks arising from the decision. a. buying center b. target market c. sales force d. strategic task force ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 42. Which of the following represent clues or techniques for identifying powerful buying center ? a. Isolating the personal stakeholders. b. Following the information flows. c. Identifying the experts. d. All of the above. e. None of the above. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 43. Selective _____ is the tendency to accept communication messages consistent with existing attitudes and beliefs. a. exposure b. attention c. perception d. retention e. memory ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 46. The Total Cost of Ownership a. Includes all costs associated with the product and its delivery b. Is used by buyers to determine what they should spend on an item c. Considers the full range of costs associated with the purchase and use of a product or service over its complete life cycle d. Is an ing concept that buyer’s use to compare the value of competing offerings e. None of the above. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 2. Many small or incremental decisions are made during the procurement process that ultimately translate into the final selection of a supplier. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 3. The information requirements of organizational buyers are highest in modified rebuy situations. ANS: F PTS: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 5. A purchasing manager could assume the roles of buyer, gatekeeper, and influencer in the buying center. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 6. of the buying center are generally in agreement concerning the criteria that should be used in evaluating the merits of alternative suppliers. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 7. Purchasing managers assume a dominant role in repetitive buying situations. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 8. Those individuals who have an important personal stake in the decision will exert more influence than other of the buying center. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 9. Well-known companies, recognized as credible sources, tend to be favored by organizational buyers facing high-risk decisions. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 11. For "risky" purchase decisions, the buying center will become larger and will be comprised of with higher levels of organizational status and authority. ANS: T

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 12. Influencers control information to be reviewed by other of the buying center. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 14. The buying center becomes larger and comprises with higher levels of organizational status and authority as perceived risk increases. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 16. The four groups of forces that have an impact on organizational buying behavior are environmental, organizational, strategic, and individual. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes SHORT ANSWER 1. The first stage of the Organizational Buying Process involves: ANS: Problem Recognition PTS: 1 NAT: 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 of the production department in which stage of the Organizational Buying Process? ANS: Acquisition and Analysis of Proposals PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes COMPLETION 1. ____________________forces involve job function, past experience, and buying motives of individual decision participants ANS: Individual PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 3. Key influencers are frequently located outside of the____________________department. ANS: Purchasing PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 s and then complete a sales forecast for next quarter. The first 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 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 3. To remain competitive, Johnston Equipment has decided to adopt more sophisticated manufacturing technology. The eight of the firm who have been actively involved in defining specifications and in evaluating suppliers are evenly split over “which way to go.” Four 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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 might exert on the buying decision? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 6. 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 t venture. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 connectors b. Information exchange c. Cooperative norms d. Operational linkages e. Legal bonds ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (b) and (c) only ANS: E

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (c) only ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. none of the above ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. none of the above ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. none of the above ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 15. Business marketing relationships vary in 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 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 17. _____ exists when one party has confidence in a partner's reliability and integrity. a. Trust b. Solidarity c. Relationship commitment d. A strategic alliance e. Interfirm cooperation ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 18. The open exchange of information is a characteristic of ____ relationships. a. close b. distant c. transactional d. all of the above e. (b) and (c) only. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes

19. Value can be defined as the _____ benefits received by a customer firm in exchange for the price paid for a product offering. a. economic b. technical c. social d. all of the above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 23. _____ centers on all activities directed toward establishing, developing, and maintaining successful exchanges with customers and other constituents. a. Relationship marketing b. Transactional exchange c. A strategic alliance d. Buying centers ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making

processes 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 25. _____ involves a partner’s belief that an ongoing relationship is so important that it deserves maximum efforts to maintain it. a. Trust b. Relationship commitment c. Relationship marketing d. A strategic alliance ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 commitment b. Transactional and collaborative relationships c. Investments and risk of exposure d. Operational linkages and relationship connectors. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 27. _____ features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits. a. Transactional exchange b. Value-added exchange c. Competitive exchange d. Collaborative exchange ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 exchanges b. Value-added exchanges c. Competitive exchanges d. Collaborative exchanges ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making

processes 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 bandwidth b. value proposition c. marketing plan d. customer relationship management program ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 profitability b. Activity-based costing c. Total cost of ownership d. Margin analysis

ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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) ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

36. ____ is composed of at least two dimensions: (1) trust in the salesperson and (2) satisfaction with the salesperson. a. role definition b. relational adaptiveness c. relationship quality d. role congruity e. relationship congruity ANS: C PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 2. Buyers seek a close relationship for strategic purchases and employ a more distant arms-length approach in procuring non- strategic items.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 3. Buying firms prefer a transactional relationship when there are few alternatives and the complexity of purchase is high. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 4. Buying firms prefer a more collaborative relationship when the supply market is dynamic. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 6. When supply needs are complex, the buying firm is less likely to opt for a close relationship with a supplier. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 7. Operational linkages and information-sharing mechanisms are common features of collaborative relationships. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 8. For collaborative customers, the salesperson not only works with the purchasing staff, but also with a wide array of managers throughout the organization. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 9. Relationship commitment exists when one party has confidence in a partner's reliability and integrity. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 10. Transactional exchange centers on the timely delivery of basic products for highly competitive market prices.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 11. The cost of serving a long-standing customer is often more than the cost of acquiring a new customer. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 12. While loyal customers are likely to be satisfied, all satisfied customers will not remain loyal. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 13. Collaborative exchange features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 14. Relationship commitment involves a partner’s belief than an ongoing relationship is so important that it deserves maximum efforts to maintain it. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 16. Firing a customer may be appropriate if the customer is not profitable, not new, and shows little or no opportunity for learning. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 17. All customers hold similar amounts of growth potential. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 18. Having a relationship orientation is critical to developing a customer-relating capability. ANS: T

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 2. In a collaborative exchange, the supply market dynamism would best be described as: ANS: Volatile PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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. PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes COMPLETION 1. The most profitable customers are those that have a high____________________and a low____________________. ANS: Net margin realized, Cost-to-serve PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of general business functions 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 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 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: 1 NAT: 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 . Describe the product and market conditions that a collaborative relationship? a transactional relationship? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes 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’slength 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Customer | R&D Managing decision-making processes 4. Some customers place a high value on ing services (for example, technical advice and training) and are willing to pay a price for this . Other customers do not value service 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes

5. Gartner Group, a research firm for information technology s, 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 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes 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-toserve customers? What can business marketers do to manage high and low cost-to-serve customers? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing decision-making processes

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. measurability b. accessibility c. substantiality d. responsiveness e. enforceability ANS: A PTS: 1 NAT: 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 above e. (a) and (b) only ANS: E PTS: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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: 1 NAT: 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: 1 NAT: 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 above e. both (a) and (c) ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. Bases of business or organizational market segmentation that focus on the characteristics of decisionmaking units are broadly classified as: a. macrosegmentation. b. microsegmentation. c. economic bases. d. demographic bases. e. coverage bases. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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). ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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.

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 constant b. increases c. decreases d. none of the above ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 15. Lansing Motor Works produces a line of precision motors. Based on 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 16. For the medical x-ray market, Du Pont initiated a formal positioning study among hospital s, radiology department s, 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 17. A segmentation study found that purchasers of IBM equipment are more concerned about software 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 18. Concerning segmentation criteria, _____ concerns the degree to which segments respond differently to different marketing mix elements, such as pricing or product features. a. measurability b. accessibility c. substantiality d. compatibility e. responsiveness ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 19. Business market segmentation at the _____ level requires a higher level of market knowledge and, therefore, a greater investment in research. a. geographic b. macro c. micro d. demographic e. aggregate ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

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

25. The classification of customers on a continuum range from non to heavy is an example of: a. macro level segmentation. b. micro level segmentation. c. product application segmentation. d. "value in use" segmentation e. none of the above. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 26. Which of the following is not one of the criteria for assessing the desirability of a potential market segment? a. Measurability b. Accessibility c. Responsiveness d. Substantiality e. ability ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 segment b. prospect group c. business population d. market opportunity ANS: A PTS: 1 NAT: 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. measurability b. accessibility c. substantiality d. compatibility e. responsiveness ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 to customers in the segments. c. Organization of the sales force. d. All of the above. e. Only (b) and (c). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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: 1 NAT: 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 analysis b. input/output analysis c. the sales force composite d. regression analysis e. the Delphi method ANS: E PTS: 1 NAT: 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 judgment

b. c. d. e.

Delphi method time series sales force composite causal analysis

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 36. The qualitative approach that most closely resembles the executive 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 37. The sales forecasting approach that utilizes a 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 method. c. the sales force composite. d. organizational learning. e. the multiple series method. ANS: A PTS: 1 NAT: 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. cycle c. random d. seasonal e. irregular ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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 series b. regression c. Delphi method d. trend extension e. none of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 40. Which forecasting technique uses historical data ordered in time to project the trend and growth rate of sales?

a. b. c. d. e.

input/output analysis the Delphi method causal techniques time series analysis 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. trend b. cycle c. seasonal d. irregular ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. trend b. cycle c. seasonal d. irregular ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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 series b. Delphi c. Causal d. Qualitative e. Trend extension ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 48. Executive judgement methods produce accurate forecasts when: a. forecasts are made infrequently. b. the environment is volatile c. the linkage between decision, action, and is short. d. all of the above. e. (a) and (b) only. ANS: C PTS: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 51. Which of the following are true of qualitative approaches to sales forecasting?

a. b. c. d. e.

Effectiveness depends on close relationships between customers and suppliers. They are more appropriate for well-established products. It brings s of the forecast into the forecasting process. All of the above. Only (a) and (c).

ANS: E PTS: 1 NAT: 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 53. In time series analysis, the _____ component indicates the long-term general direction of the data. a. trend b. cycle c. seasonal d. irregular e. causal ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 54. In time series analysis, the _____ component represents regular, recurring movements within the year. a. trend b. cycle c. seasonal d. irregular e. causal ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation TRUE/FALSE 1. The concept of market segmentation is more applicable to consumer-goods marketers than to business marketers. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 6. Compared to centralized buyers, decentralized purchasing units emphasize short-term cost efficiency. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 7. Industrial firms lack the flexibility of their consumer-goods counterparts in moving into and out of market segments. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. Value-in-use constitutes a microlevel base of segmentation. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 9. The North American Industrial Classification System (NAICS) is an especially valuable source when segmenting the market on the basis of end use. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 10. The cost of research is greater at the macrolevel of segmentation than at the microlevel. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 11. In evaluating alternative bases for segmentation, the marketer is attempting to identify good predictors of differences in buyer behavior. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 12. Because a specific industrial good is often used in different ways, the marketer can divide the market using the NAICS.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 13. Buying organizations can be segmented based on the stages of the procurement process, such as newtask or straight rebuy. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 15. If the requirements of segmentation are met, it should provide the business marketer with valuable guidelines for allocating marketing resources. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 17. The personal characteristics of decision-makers in buying centers, such as their decision style and confidence, are examples of macrolevel bases of segmentation. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 19. A well-defined segmentation plan will fail without careful attention to implementing the plan. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 20. The Delphi method constitutes a highly sophisticated quantitative approach to sales forecasting. ANS: F PTS: 1 NAT: 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. ANS: F

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 22. The cycle component in a time series indicates the long term general movement in the data in one direction. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 23. The fact that sales and some causal variables are correlated implies that the causal variable "caused" sales. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 26. Regression models are useful to industrial firms projecting final consumer demand for items of which their products become a part. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 27. Recent research on forecasting techniques indicates that improvements in forecasting accuracy can be achieved by combining the results of several forecasting methods. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 28. The primary advantage of the Executive Judgement method is that systematically analyzes cause-andeffect relationships. ANS: F PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation

31. Regression methods of forecasting require considerable historical data to be valid and reliable. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 32. In time series analysis, the seasonal component represents regular, recurring movements within the year. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 4. Sharing of downstream data along with replenishment plans and sales forecasts describe customers who align with____________________-tier services. ANS: High PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 5. Once demand is estimated for each segment, the manager can allocate expenditures on the basis of ____________________ volume. ANS: potential sales PTS: 1

NAT: 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 of a supply chain. ANS: Sales forecast PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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: FR Collaborative Planning Forecasting and Replenishment PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Research | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 4. Provide an illustration of a situation where value-in-use segmentation would seem to be especially appropriate. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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

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

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. functional b. corporate

c. business-level d. product e. divisional ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. functional b. corporate c. business-level d. product e. divisional ANS: C PTS: 1 NAT: 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 the strategy of a strategic business unit. a. functional b. corporate c. business-level d. product e. divisional ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 unit b. market segment c. sub-business center d. divisional organizational scheme e. sector unit ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 above e. (b) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

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) ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 above e. (b) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. responsible b. approve c. consult d. implement e. inform ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. responsible b. approve c. consult d. implement e. inform ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 11. A business concept or model consists of the following major components except: a. core strategy. b. strategic resources. c. customer interface. d. value network e. negotiated outcomes. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 16. All of the following are components of a firm's value network except: a. suppliers. b. coalitions.

c. strategic alliance partners. d. customers. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 dynamics c. a strategic asset. d. a market scope. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. approve c. consult d. implement e. inform ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. responsible b. approve c. consult d. implement e. inform ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 . b. information and insight. c. relationship dynamics. d. pricing structure. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 .

b. information and insight. c. relationship dynamics. d. pricing structure. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 23. _____ are the set of skills, systems, and technologies a company uses to create uniquely high value for customers. a. Strategic assets b. Core competencies c. Core processes d. Core strategies e. Customer interfaces ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 24. _____ are the most tangible requirements for advantage that enable a firm to exercise its capabilities. a. Core competencies b. Strategic assets c. Core processes d. Core strategies e. Customer interfaces ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 25. _____ are the methodologies and routines companies use to transform competencies, assets, and other inputs in to value for customers. a. Core competencies b. Core strategies c. Core processes d. Value networks e. Customer interfaces ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 26. The three major levels of strategy include which of the following? a. Corporate strategy b. Competitive strategy c. Functional strategy d. All of the above. e. Only a and c.

ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 28. The 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 network b. balanced scorecard c. customer interface d. financial audit e. core business strategy ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 35. Internal business processes which elements of a company’s strategy? a. They create and deliver the value proposition for customers. b. They create and interfirm supply chain teams. c. Both a and b. d. Neither a or b. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 network

b. c. d. e.

marketing strategy center strategy map strategic alignment positioning map

ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation TRUE/FALSE 1. Functional strategy centers on how a firm will compete in a given industry and will position itself against its competitors. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 2. All business marketing decisions are affected, directly or indirectly, by other functional areas. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 3. The composition of the marketing strategy center is neatly prescribed on the organizational chart. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 5. All participants in the business marketing planning process are evaluated on the bases of sales, profits, and market share. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 6. Strategic plans emerge out of a bargaining process among functional areas. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 7. Conflicts frequently emerge during the strategy formulation process because various functional units operate under unique reward systems and reflect unique orientations. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. For a strategy to succeed, individuals in a company must understand and share a common definition of a firm's existing business concept.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 10. Suppliers and coalitions are part of a firm's value network. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 11. The business mission defines where the firm competes. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 12. In the hierarchy of strategies, the three major levels of strategy are corporate, business-level, and functional. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 13. The two most common forces that divide participants during the strategy formulation process are turf issues and different thought-worlds. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 14. Responsibility charting is an approach that can classify decision-making roles and highlight the multifunctional nature of business marketing decision making. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 15. The four perspectives used in the balanced scorecard to measure performance are financial, customer, internal business processes, and learning and growth. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 16. Lowest total cost and product innovation are two forms of differentiation that can be uses by business marketers when developing a value proposition. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 17. The four major components of the business model or concept are customer interface, core competencies, strategic resources, and the value network. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

18. The core strategy determines how the firm chooses to compete. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 19. Core competencies are the more tangible requirements for advantage that enable a firm to exercise its capabilities. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 20. Core customer outcome measures used to monitor performance include market share, customer retention, and customer profitability. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 21. The three principal drivers of organizational learning and growth are human capital, information capital, and financial capital. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation COMPLETION 1. Subcultures exist when one subunit shares different values, beliefs, and goals than another subunit, resulting in different____________________. ANS: thought-worlds PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 2. Responsibility charting is an approach that can classify ____________________roles and highlight the multifunctional nature of business marketing decision making. ANS: decision-making PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 3. Customer interface, core strategy, strategic resources and the value network constitute the ____________________or model. ANS: business concept PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 4. The____________________determines how the firm chooses to compete. ANS: Core strategy

PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 5. A ____________________ is a tool used for visualizing a firm’s strategy as a chain of cause-andeffect relationships among strategic objectives. ANS: Strategy map PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 6. The ____________________clarifies the condistions that will create value for the customer. ANS: Customer value proposition PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 7. Growth, sustain and ____________________ are three stages of a business that are isolated and linked to appropriate financial objectives. ANS: Harvest PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills

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 crossfunctional conflict while serving as a strong advocate for the consumer? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 5. The marketing strategy center includes the 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills

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. contracting b. licensing c. exporting d. franchising e. a turnkey operation ANS: C PTS: 1 NAT: 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 above e. none of the above ANS: B PTS: 1 NAT: 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 above e. both (a) and (b) ANS: E PTS: 1 NAT: 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 above e. (b) and (c) only ANS: D PTS: 1 NAT: 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 manufacturing b. Exporting

c. Franchising d. A t venture e. A turnkey operation ANS: A PTS: 1 NAT: 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 t venture. d. contract manufacturing. e. importing. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 7. In pursuing international entry options, t 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 forces to maximize contribution to each other's fixed costs? This describes the logic of: a. a t venture. b. exporting. c. franchising. d. importing. e. global marketing. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 industry b. A differentiated industry c. A global industry d. An export-based industry e. A coordinated industry ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 industry b. a differentiated industry c. a global industry d. an export-based industry e. a coordinated industry ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: C

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 14. Concerning international strategy, a firm that concentrates manufacturing and 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 strategy b. an export-based strategy c. a purest global strategy d. a segmented international strategy e. a coordinated international strategy ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 16. In entering high-risk country-markets, firms can reduce their risk exposure by adopting lowcommitment modes of entry such as: a. licensing. b. wholly-owned subsidiaries. c. contract manufacturing. 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 17. Which of the following modes of international market entry provides for greater potential returns and a greater degree of control over operations? a. licensing b. wholly-owned subsidiaries c. contract manufacturing d. exporting e. franchising ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 20. An advantages of t 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 22. Successful global companies achieve unified action by: a. establishing a strategies that are independent across countries. b. developing ing systems that are country specific. c. encouraging personal relationships and the transfer of learning among subsidiary managers across locations. d. all of the above. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 23. Research suggest that over _____ % of t ventures are disbanded or fall short of expectations.

a. b. c. d. e.

10 20 30 40 50

ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 24. In high-risk markets, firms can reduce their equity exposure by adopting low commitment modes such as: a. licensing. b. contract manufacturing. c. t ventures with a majority share. d. all of the above. e. (a) and (b) only. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 global b. an exporting c. a t venture d. a licensing ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 percent b. 20 to 40 percent c. 40 to 60 percent d. 60 to 80 percent ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing

strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 31. Factors that favor relocation of products or services to rapidly developing economies include: a. High labor content. b. Low growth potential c. 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.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 34. Which of the following issues pose problems to firms trying to manage t 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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). ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 36. _____ refers to how similar activities performed in various countries are couple with each other. a. Coordination b. Configuration c. The home base d. The value network ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 includes a. A market access element b. A market relevancy element c. A resource accuracy element d. All of the above e. None of the above

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 36. When moving to a RDE, suppliers must adjust their operating models to: a. Maintain quality levels b. Counter local suppliers offerings c. To fully capture the cost advantages. d. Consider the increased transportation costs involved e. Consider market research data on procurement preferences ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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: 1 NAT: 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: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 4. As an entry strategy, licensing requires a major capital investment in a foreign market. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 5. Problems often plague t ventures and, as a result, many of them fall short of expectations or are disbanded. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

6. A multidomestic strategy seeks competitive advantage with strategic choices that are highly integrated across countries. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 7. Upstream activities in the value chain involve those primary activities that are closely tied to where the buyer is located. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 8. In multidomestic industries, a firm's competitive position in one country is significantly influenced by its position in other countries. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 11. Markets of limited size surrounded by trade barriers may be supplied most cost effectively by using the exporting mode of entry. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 13. A single-country may not be large enough for a firm to realize economies of scale. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing

strategy & innovation 14. The choice of a particular entry mode will also depend on the size of the market and its growth potential. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 15. Coordination centers on where each activity is performed, including the number of locations. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 16. The need for a global strategy is determined by the nature of international competition in a particular industry. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 17. For truly global industries, a firm's position in one country significantly affects its position elsewhere, so a multi-domestic strategy is required. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 19. A factory in a rapidly developing economy can be built with 70% of the investment level needed in a highly developed economy. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 21. Arguments over profit-sharing and management styles are common problems experienced in exporting. ANS: F

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 22. Configuration centers on where each activity is performed, including the number of locations. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 23. Multidomestic industries do not need a global strategy because the focus should be on developing a series of distinct domestic strategies. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 4. An industrial firm’s first foray into an overseas market usually involves____________________because it requires the least commitment and risk. ANS: exporting PTS: 1

NAT: 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. ANS: Contract manufacturing PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 9. Additional insights into international strategy can be gained by examining two dimensions of competition in the global market:____________________and____________________. ANS: configuration, coordination coordination, configuration PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills 3. t ventures assume a very prominent role in the global strategy of many business marketing firms like Dow Chemical and Xerox. While offering significant benefits, t 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? your position. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

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: 1 NAT: 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: 1

NAT: 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: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 positioning b. Product anchor c. Product determinacy d. Product segment e. Product attribute ANS: A PTS: 1 NAT: 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 (valueadded system dimension) c. the customer groups that have needs that must be served (customer segment dimension) d. all of the above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. primary b. star c. dominant d. determinant e. focal ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 above e. (a) and (b) ANS: E PTS: 1 NAT: 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 above e. (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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 largescale commitment to the new technology. This describes: a. technology enthusiasts. b. visionaries. c. skeptics. d. pragmatists. e. product champions. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 20. The quality standards set out by the Geneva-based International Standards Organization are referred to as: a. ISO 9000 b. Six Sigma c. the Big Q d. none of the above. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 Sigma b. ISO 9000 c. the Big Q d. none of the above. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 22. The first stage of the quality movement:

a. b. c. d.

centers on conformance to standards or success in meeting specifications. emphasized that quality was more than a technical specialty. examines a firm's quality performance relative to competitors. focuses on market-perceived quality and value versus that of competitors.

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 26. A ____ establishes the distinct arena in which the business marketer competes. a. target market b. product market c. market segment d. competitive analysis ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 28. Among technology adopters, these customers are ever-present critics of the hype surrounding hightechnology products. a. technology enthusiasts. b. visionaries. c. pragmatists. d. conservatives. e. skeptics. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 analysis b. A value network c. Customer value d. Relationship management e. Relationship quality ANS: C PTS: 1 NAT: 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 37. In the technology adoption life cycle, the main goal of the ____ stage is to develop value-based strategies targeted to particular end segments. a. chasm b. tornado c. bowling alley d. main street e. end of life ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 38.

The basic premise of his CBBE model is that the power of a brand lies in a. What consumers have learned, felt, seen, and heard about the brand over time b. The market share it commands

c. How the decision maker perceives the ultimate value of the item d. None of the above e. All of the above ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 39.

The main factor stimulating the megatrend of sustainability is a. Intensified global competition for natural resources b. Escalating public concern c. Escalating government concern d. Natural resource depletion e. All of the above ANS: NAT:

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

40. A brand mantra is a. a very short summary of the essence of the brand b. is used to communicate the core values of the brand c. helps employees understand the key meaning of the company’s product d. is crucial in the overall process of building a strong brand e. all of the above. ANS: NAT:

E PTS: 1 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: 1 NAT: 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: 1 NAT: 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). ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 4. Determinant attributes are both important and differentiating in the eyes of business market customers. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 5. Visionaries make the bulk of technology purchases in organizations.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. A finely-tuned market segmentation strategy is critical to success during the tornado phase of the adoption life cycle. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 7. A mass market strategy is the appropriate course to follow during the bowling alley phase of the technology adoption life cycle process. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 9. The two forms of customer benefits are core and add-on. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 10. Recent research has demonstrated that add-on benefits more strongly influence customer value than core benefits. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 11. Custom-designed products are creates to meet the needs of one or a small group of customers. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 12. The four dimensions of a product market definition are customer function, environmental, technological, and value-added system. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 13. For high-technology firms, well-recognized executives and competitive actions can both be drivers of brand attitude change. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 14. The central success factors for the tornado phase of the technology adoption life cycle are remarkably similar to the bowling alley phase. ANS: F

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 3. Brand ____________________is described as the ways in which the brand attempts to meet customers’ more abstract psychological or social needs. ANS: Imagery PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 4. Brand ____________________refers to the customer’s ability to recall or recognize a brand under different conditions. ANS: awareness PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. New products or services that require the end- and the marketplace to dramatically change their past behavior, with the promise of gaining equally dramatic new benefits are known as ____________________ innovations. ANS: discontinuous PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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

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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 istrative procedures. e. is characterized by well-defined roles for the participants in the strategy formulation process. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 , induced behavior will draw from formal organizational channels. e. (a) and (b) ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 istrative mechanisms and commitment. d. All of the above are correct. e. Both (a) and (b) are correct. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: D

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 8. A feature-enhanced or cost-reduced Canon fax machine provides an example of which type of development project? a. platform project b. breakthrough project c. research and development project d. derivative project e. none of the above ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 10. A common motor in all Black & Decker hand tools provides an example of which type of commercial development project? a. platform project b. breakthrough project c. research and development project d. derivative project e. none of the above ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: B

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 13. _____ involve the creation of the know-how and know-why of new materials and technologies that eventually translate into commercial development. a. Platform projects b. Breakthrough projects c. Research and development projects d. Derivative projects ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 14. _____ involves activities in which the decision and execution of strategy actions approach convergence with each other in time. a. Time pacing b. Patching c. Routinization d. Quality function deployment e. Improvisation ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 15. _____ is a strategy for competing in fast-changing markets by creating new products at predictable intervals. a. Time pacing b. Patching c. Routinization d. Quality function deployment e. Improvisation ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 20. "Lead s" 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. induced b. experiential c. autonomous d. compressed e. funnel ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. induced b. experiential c. autonomous

d. compressed e. funnel ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. induced b. experiential c. autonomous d. compressed e. funnel ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. induced b. experiential c. autonomous d. compressed e. funnel ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 . d. all of the above.

e. (a) and (b) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 32. A _____ targets demanding, high-end customers with better performance than what was previously available. a. sustaining innovation b. disruptive innovation c. a new market innovation d. None of the above. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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 innovation b. disruptive innovation c. a breakthrough innovation d. None of the above. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 38. For a new-market strategy innovation strategy to work, which of the following requirements need to be met?

a. b. c. d.

The company must be able to create a business model to make profits at a discount price. Present customers need to go to an inconvenient location to use the product or service. Both a and b. Neither a or b.

ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 39. A firm that lead customers where they want to go before the customers actually know it themselves is employing: a. the lead method. b. the new product development process. c. time pacing. d. a discontinuous innovation. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation TRUE/FALSE 1. Induced strategic behavior relates primarily to major types of innovations. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 2. Product championing refers to the process of creating or adopting an idea for an innovation and actively creating momentum for the project. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 3. Induced strategic behavior corresponds to deliberate strategies while autonomous strategic behavior gives rise to emergent strategies. ANS: T PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 5. Derivative projects establish new core products and new core processes that differ fundamentally from previous generations. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. Platform projects create the design and components that are shared by a set of products. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

7. Breakthrough projects center on incremental product enhancements, incremental process improvements, or incremental changes on both dimensions. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 8. "Lead s" are consistent early adopters of new technologies. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 10. Cross-functional teams appear to work best when the products are familiar, such as product modifications. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 11. For well-known markets and technologies, a compression strategy speeds development. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 12. Improvisation involves activities in which the design and execution of actions approach convergence with each other in time. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 13. New product ventures require systematic thought. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 14. Competitors are less motivated to react to a new production introduction when the market is experiencing a high rate of growth. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 15. A detailed market research study and a preliminary business/financial analysis is an example of predevelopment proficiency. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 16. All development projects center on either improving the manufacturing process or improving product, but not both.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 17. Many business marketing strategists believe that firms should focus on product families instead of single products to improve planning. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 18. A disruptive innovation targets demanding, high-end customers with better performance than was previously available. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 21. Lead projects are conducted by cross-functional teams that include four to six managers from marketing and technical departments. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

3. Disruptive strategies can take two forms: ____________________ disruptions and ____________________. ANS: low-end; new-market PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 s PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 5. Marketing____________________ is the fit between the needs of the project and the firm’s resources and skills in marketing. ANS: synergy PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. New products developed and designed to meet foreign requirements and targeted at world or nearestneighbor export markets is enhanced by firms holding an____________________orientation. ANS: international PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 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 risktaking? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 6. What are the characteristics of lead firms? What are the characteristics of lead projects and how can the lead method be used to develop new products? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills

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

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 research b. security and protection services c. after-sales equipment repair and maintenance d. insurance e. consulting ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 hotel b. executive management seminars, industrial grease, convention hotel c. convention hotel, industrial grease, executive management seminars d. convention hotel, executive management seminars, industrial grease e. industrial grease, convention hotel, executive management seminars ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 demand b. buyer-seller interaction requires that the service be done "right" c. focusing promotion on the advantages of non-ownership d. using pricing and promotion to even out demand peaks and valleys e. developing systems that minimize deviations and human error ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 demand c. emphasizing strict quality control standards d. using pricing and promotion to even out demand peaks and valleys e. None of the above applies specifically to service variability. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. perishability b. lack of ownership c. nonstandardized output d. simultaneous production and consumption e. the extent to which tangible elements dominate intangible elements ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 to judge service quality before the service is provided. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 consumption

b. c. d. e.

lack of ownership nonstandardized output inability to stockpile the dominance of intangible elements

ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 12. In evaluating service quality, customers focus on: a. empathy. b. responsiveness. c. assurance. d. reliability. e. all of the above ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 13. In evaluating the quality of a service, which of the following dimensions is most important to customers? a. empathy b. responsiveness c. assurance d. reliability e. all of the above ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 14. "Delivering on promises" relates to which of the following dimensions of service quality? a. empathy b. responsiveness c. assurance

d. reliability e. all of the above ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 18. The ____ defines the general benefits the service company will provide in of the bundle of goods and services sold to the customer. a. customer-benefit concept b. service offer c. cross-selling concept d. mixed bundling concept e. service concept ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 22. Services are: a. deeds. b. processes. c. performances. d. all of the above. e. (b) and (c) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: E

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 process d. all of the above. e. (a) and (c) only. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 27. Service quality benefits should be linked to:: a. customer satisfaction. b. customer retention. c. profitability. d. market share. e. all of the above. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 32. Differences between goods and services include: a. intangibility. b. variability. c. profitability. d. All of the above. e. Only a and b. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 36. _____ encomes the procedures, policies, and processes a firm uses to resolve customer service problems promptly and efficiently. a. A value network b. Service recovery c. Service quality d. Service loyalty e. Service offering ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 strategy b. service package c. service recovery d. service bundling e. service loyalty ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 39. Hybrid service offerings a. 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: 1 NAT: 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 by a. Laying out a blueprint to guide employees on creating a solution b. Documenting the history of prior customer solution engagements c. Developing complimentary incentives for all of the staff that may be involved d. Only a and c e. All of the above

ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation TRUE/FALSE 1. A pure service, by definition, accompanies the sale of a physical product. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 2. Simultaneous production and consumption requires that the service be done "right." ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 3. An emphasis on strict quality control standards is necessitated by service variability. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 4. Planning capacity on the basis of peak demand is necessitated by service variability. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 5. The more labor-intensive the service, the less uniform will be the output. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. Perishability of services may necessitate equating capacity with peak demand. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 7. Research suggests that among the service quality dimensions, responsiveness is most important to customers. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 9. The service offer refers to the detailed service elements that will make up the total services package. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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.. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 12. The concept of tangibility helps the manager to focus clearly on the firm's total market offering. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 13. For services, capacity is a substitute for inventory. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 14. The actual performance by the service provider is of little relevance compared to the customer's perception of the service. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 15. Business-to-business service firms are more likely to emphasize transactional strategies as opposed to relationship strategies. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 16. A solution-centered approach starts with the product and leads to a solution that satisfies customers. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 18. Reliability, responsiveness, and empathy are all dimensions of service quality. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 19. Service quality encomes the procedures, policies, and processes a firm uses to resolve customer service problems promptly and effectively.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 20. Process delegation services (PDS) represent those services where a manufacturer performs specific processes on behalf of the customer. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 21. Demand for services is rarely steady or predictable enough to avoid service perishability. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 22. Research indicates that manufacturers typically earn a very high percentage of gross profits from the aftermarket, though it s for a very much smaller percent of revenue ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation COMPLETION 1. Customer____________________represents teh internal and subjective response a business customer has to any direct or indirect with a company. ANS: experience PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 2. Instances where the customer has direct 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 3. The first step in understanding a customer’s experience is to develop a ____________________map. ANS: life cycle PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation

5. Treating customers as individuals exemplifies the____________________dimension of service quality. ANS: empathy PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 6. ____________________combine products and services into innovative value propositions for customers . ANS: Hybrid offerings PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Product | R&D Strategic & systems skills

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

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: 1 NAT: 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: 1 NAT: 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 5. The largest proportion of sales handled by industrial channel is ed 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 6. Service provided by industrial distributors includes: a. repair. b. credit. c. maintenance. d. all of the above

e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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: 1 NAT: 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 above e. (a) and (b) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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: 1 NAT: 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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 ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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 above e. (a) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 15. In specifying channel alternatives, which of the following issues is(are) involved? a. determining the levels to be included in the channel b. determining the number of channel intermediaries at each level of the channel c. determining the types of intermediaries to employ d. all of the above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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 above e. both (a) and (b) ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 18. Which of the following channels would give the business marketer the greatest amount of channel control? a. a channel consisting of merchant wholesalers b. a channel composed of industrial distributors c. a channel consisting of both manufacturers' reps and distributors d. a channel composed of jobbers e. a channel consisting of manufacturers' reps ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 19. The compensation provided to industrial channel 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 ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 20. Manufacturers who wish to strengthen the dependence that channel have on them could: a. increase commissions. b. encourage channel to carry the firm's full product line. c. increase promotion to enhance the profitability of channel . d. all of the above e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation

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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 22. A direct sales force is best used for: a. highly standardized solutions. b. small customers. c. simple transactions. d. complex products. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 23. The industrial distributor's primary responsibilities include: a. . b. repair. c. product availability. d. all of the above. e. (a) and (c) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 24. _____ cater to a broad array of industrial goods. a. Specialists b. General-line distributors c. A combination house. d. none of the above. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 25. There is a trend toward _____ as a result of increasing technical complexity of products. a. general-line distributors b. specialists c. combination houses d. none of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. b. c. d. e.

collaboration with supply chain partners. new information technologies. the increase in general-line distributors (a) and (b) only. (b) and (c) only.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 33. Techniques for motivating individual channel 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 . ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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: 1 NAT: 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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% ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 38. _____ are generally small, independent businesses serving narrow geographic markets. a. Distributors b. Channel partners c. Manufacturers’ representatives d. Broker houses e. Field offices ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 40. In the classification of distributors, _____ focus on one line or on a few related lines. a. general-line distributors b. specialists c. combination houses d. brokers ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 42. _____ is the dynamic process of developing new channels where none existed and modifying existing channels. a. Channel structure b. Channel design c. Channel choice d. Channel partnering e. Supply chain management ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 44. When motivating channel , the primary motivating device tends to be: a. dealer advisory councils. b. trust. c. compensation. d. strong relationships. e. training. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation TRUE/FALSE 1. Industrial distributors are generally large business firms that cover broad geographical markets.

ANS: F PTS: 1 NAT: 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 3. A business marketer that uses industrial distributors will usually, as a matter of policy, not utilize any manufacturers' representatives. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 4. A source of conflict between business marketers and their manufacturers' representatives centers on the size of inventory levels reps maintain. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 5. Manufacturers' representatives sell noncompeting but complementary products. ANS: T PTS: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 7. There are many situations in business marketing where a direct channel of distribution is not feasible. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 8. The compensation provided to middlemen should be based on loyalty, length of service, and past years' sales performance. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 10. A business marketer that serves many different market segments would likely use a direct channel. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 12. For products that are bought frequently, repetitively, and in small quantities, industrial distributors provide an efficient channel path. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 13. Frequently, the manager has little flexibility in the selection of channel structures because of trade, competitive, company, and environmental factors. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 14. Once a particular industrial channel structure is selected, channel participants must be selected, and arrangements made to ensure that all obligations are assigned. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 15. A direct sales force is best used for complex sales opportunities. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 16. Channel member motivation begins with the understanding that the channel relationship is a partnership. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 17. Business marketing channels typically include fewer types of intermediaries than consumer-goods channels.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 18. The goal of a multichannel model is to coordinate the activities of many channels to enhance the total customer experience and profitability. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 19. The two critical elements of the distributor’s function are to secure financing and have products readily available. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 20. The availability of good intermediaries and product characteristics are two factors that often limit the choice of industrial channels. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 21. The geographic dispersion of customers and competitive strategies have very little influence on the choice of industrial channels. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 22. The backbone of channel design is the analysis of objectives, constraints, and channel activities. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation COMPLETION 1. Manufacturers’ representatives and industrial distributors are both examples of____________________channels. ANS: Indirect PTS: 1 NAT: 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

PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 3. The primary responsible of____________________salespersons is to take telephone orders, processing orders, and schedule delivery. ANS: inside PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 5. Channel____________________refers to the number of channel levels, the number and types of intermediaries and the linkages among channel . ANS: structure PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 6. The last step of the channel design process is to evaluate and select ____________________. ANS: channel options PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 7. The surest way to lose intermediary is____________________ policies that do not meet industry and competitive standards. ANS: compensation PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing strategy & innovation 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 deg the channel. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 6. Explain the important product/market factors that lend themselves to the use of manufacturers’ representatives by business marketers. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 8. Describe the major factors that limit the choice of industrial channels for business marketers. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 ? 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: 1 NAT: 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: 1 NAT: 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 reduction b. unit cost reduction c. flexible response d. all of the above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 4. A firm that can respond to a customer's unique requirements for packaging and order size in a costeffective manner is addressing which of the following supply chain goals? a. time compression b. waste reduction c. unit cost reduction d. flexible response e. inventory reduction ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (b) only

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (b) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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) ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 processing b. customer service c. production planning d. inventory management e. information management ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 11. In applying the total cost approach to logistical management, management:

a. b. c. d.

seeks to minimize the cost associated with each logistical activity in the firm. attention centers on minimizing transportation costs. attention centers on minimizing inventory costs. 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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) ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 15. The warehouse circumvents the need for 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. merchant b. mobile c. fixed d. third party e. private

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (c) only ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 17. _____ is typically the largest logistics expense. a. Warehousing b. Inventory control c. Transportation d. Order processing e. Materials handling ANS: C PTS: 1 NAT: 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 above e. both (b) and (c) ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 above e. (a) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 24. Despite the advantages, some firms are reluctant to use third party logistics firms because: a. of the diminished direct with customers. b. they lose direct control of the logistics process. c. of the problems associated with terminating internal operations. d. all of the above e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 26. Supply chains should manage _____ in an integrated manner across organizational borders. a. relationships b. information c. material flow d. all of the above. e. (b) and (c) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics &

technology 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 costs. d. all of the above. e. (b) and (c) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 33. The mechanism to trace the cost of performing logistics services to the customer that use these services is called: a. ABC b. JIT c. TCO d. SCM ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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.

ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 37. As a controllable element in the logistics system, _____ ensures that products are available for inventory in the correct assortment and quantity. a. production planning b. plant and warehouse location c. customer service d. inventory control e. logistics communication ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 38. As a controllable element in the logistics system, _____ relates to the effectiveness of creating time and place utility. a. customer service b. order processing c. inventory control d. production planning e. logistics communication ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. b. c. d. e.

customer service order processing logistics communications inventory control production planning

ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 40. _____ is the integration of business processes from end through original suppliers that provides products, services, and information that add value for customers. a. Customer relationship management b. Supply chain management c. Logistics management d. A marketing plan e. Order processing ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

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). ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 46. _____ is the variable cost of moving products from origin to destination, including any terminal and accessory charges. a. Speed of service b. Transportation cost c. Cost of service d. Fixed cost e. None of the above. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 2. Properly implemented, supply chain management will lead to longer order-to-delivery cycle time. ANS: F PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics &

technology 4. For innovative products, the goal is to design a supply chain that minimizes logistics and inventory costs, and assures low- cost manufacturing. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 5. For supply chain management, functional products typically have predictable demand patterns while innovative products do not. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 6. If the costs of each logistical activity are minimized, total logistical costs for the enterprise will be minimized. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 7. An increase in the supplier's delivery time performance permits a buyer to hold less inventory. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 9. The longer the delivery time in the logistical system, the more inventory customers must maintain to service their needs. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 10. Not all products nor all customers require the same level of logistical service. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 11. Warehousing is usually the largest single logistical expense. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

12. Although air provides the lowest average delivery time, generally it has the highest variability in delivery time relative to average. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 13. As a customer adopts JIT purchasing, the typical order size shrinks and more frequent deliveries are required. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 14. Some firms are reluctant to use third-party logistics firms because they wish to maintain direct with customers and retain control over the logistics process. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 15. The faster modes of transportation result in higher levels of customer service, but also higher investments in inventory. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 18. Recent evidence suggests that firms that stumble in the SCM area are punished by the stock market. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 19. Speed of service is usually more important that service consistency. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology

20. Supply chain management is both a boundary and function spanning endeavor. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 21. Waste reduction, time compression, and flexibility are all goals of supply chain management. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 22. Logistics management is primarily concerned with movement and storage activities. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 23. Materials handling is the controllable element of a logistics system that relates to the effectiveness of in creating time and place utility. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 24. The two performance variables that must be considered when managing logistical activities are the total distribution costs and the level of logistical service. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 25. When evaluating transportation performance, service consistency is usually more important than average delivery time. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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, customers intermediaries, customers, service providers, suppliers customers, suppliers,service providers, intermediaries PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics &

technology 7. Supply chain management can improve overall company performance in two fundamental ways: ____________________ and ____________________. ANS: revenue enhancement, cost reduction cost reduction, revenue enhancement PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 8. When deg the supply chain, firms should concentrate on creating____________________processes for functional products and____________________processes for innovative products. ANS: efficient; responsive PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 9. SCM requires____________________not only among departments within the organization but also with external partners. ANS: integration PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics & technology 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills

3. What are the most commonly reported financial benefits that accrue to firms that excel in supply chain management? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Strategic & systems skills 7. What is the total-cost approach to developing a logistical system? Explain what variables should be considered when deg and istering a logistical system aimed at utilizing the total-cost approach. ANS: n/a

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

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: 1 NAT: 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 above e. (a) and (b) only ANS: E PTS: 1 NAT: 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 little b. rise sharply c. remain the same d. fall ANS: D PTS: 1 NAT: 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 5. Successful pricing strategies are: a. value based. b. proactive. c. profit-driven. d. all of the above. e. only a and c. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. istrative overhead. ANS: B PTS: 1 NAT: 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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) ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

9. Motorola introduced a new personal communicator priced at a significant over competing models. Initially, Motorola will concentrate on the business 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 istration. d. time segmentation. e. life cycle pricing. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 istration. e. life cycle pricing. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 above e. (a) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 policy b. skimming policy c. penetration policy d. time segmentation policy e. bid price policy ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 policy b. skimming policy c. penetration policy d. time segmentation policy e. bid price policy ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 16. Which of the following statements concerning target costing is(are) accurate? a. Japanese managers who pioneered the approach view target costing as a profitmanagement 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: 1 NAT: 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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).

ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 19. The successful implementation of value-based strategies requires close coordination between the _____ and _____ units in the firm. a. product b. sales c. service d. all of the above. e. (b) and (c) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

24. _____ are those that a number of activities that cannot be objectively assigned to a product on the basis of a direct physical relationship. a. Indirect traceable costs b. Attributable costs c. General costs d. none of the above. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 26. General plant overhead is an example of _____ costs. a. direct traceable b. indirect traceable c. general d. attributable ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 28. _____ costs include financing, storage, and inspection costs. a. Acquisition b. Possession c. Usage d. None of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 29. _____ refers to the rate of percentage change in quantity demanded attributable to change in price. a. Cost/benefit analysis b. Customer demand

c. Price elasticity of demand d. Perceived value e. Competitive edge ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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). ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 31. _____ features a design-to-cost philosophy that begins by examining market conditions. a. Target costing b. ABC costing c. Value-based segmentation d. Total cost costing e. Penetration pricing ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 benefits c. Customer value d. Relationship commitment e. Total cost analysis ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 benefits b. Add-on benefits c. Supplier personality traits d. Customer values e. Elasticities of demand ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 34. Examples of typical add-on benefits include: a. t working relationships. b. commitment. c. supplier flexibility. d. All of the above. e. Only (a) and (b).

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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? d. All of the above. e. Only (a) and (b). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 38. _____ involves a formal invitation to potential suppliers to submit written, sealed bids. a. Closed bidding b. Open bidding c. On-line bidding d. E-commerce e. Comparative bidding ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation TRUE/FALSE 1. Organizational buyers tend to associate high price with high quality. ANS: F PTS: 1 NAT: 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 3. If the business marketer's product input plays an insignificant role in the final product's total cost, demand is likely elastic. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 4. Success in penetrating a buying organization with one item often means success for other items in the product line. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 6. To sustain profitability, price reductions should be avoided by strategists in hypercompetitive environments. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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: 1 NAT: 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 10. Developing a bidding strategy is the important first step in planning for competitive bidding. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

11. Price elasticity of demand is not the same at all prices. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 12. Total revenue will decrease if the price is decreased and demand is price elastic. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 13. Low switching costs allow a buyer to focus on minimizing the cost of a particular transaction. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 14. Raw materials are an example of indirect traceable costs. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 16. Because making competitive bids is costly and time-consuming, firms should choose potential bid opportunities with care. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 17. Differentiation value is the value associated with product features that are unique and different from competitors ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 18. Recent research indicates that highly satisfied customers are just as sensitive to price changes as customers with low to moderate levels of satisfaction. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 20. A penetration pricing policy is optimal if there is a relatively low repurchase rate for durable goods. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation

COMPLETION 1. Costs that 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 5. ____________________costs include financing, storage, inspection, taxes, insurance, and other internal handling costs. ANS: Possession PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 6. The first component in the Price-Setting Decision Process is____________________. ANS: Set strategic pricing objectives PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 7. ____________________drivers add incremental value by facilitating revenue or margin expansion while____________________drivers create value by providing economic savings. ANS: Revenue, cost PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Managing strategy & innovation 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 s 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Pricing | R&D Strategic & systems skills 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 ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media

communications & delivery 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 across the customer experience landscape. d. enhance the impact of trade promtions. e. all of the above ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 3. In deg 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 4. Advertising objectives are typically stated in of: a. sales goals. b. profit goals. c. cost constraints. d. communication goals. e. market share goals. ANS: D PTS: 1 NAT: 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 statement b. The objective-task concept c. Product position d. Controlled circulation e. Advertising objectives ANS: A PTS: 1 NAT: 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. ANS: A

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 . c. use color and illustrations sparingly. d. both (a) and (b) e. none of the above ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 8. The most successful ments 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 d product. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 9. Which method for determining advertising expenditures focuses on the communications effects of advertising, not on the sales effects? a. affordable b. percent-of-sales c. match competitors d. objective-task e. arbitrary ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. common b. specialty c. horizontal d. vertical e. target ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 12. Concerning business-to-business advertising media, _____ publications are directed at a specific task, technology, or function, whatever the industry. a. common b. specialty c. horizontal d. vertical e. target ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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: 1 NAT: 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 ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 above e. both (b) and (c) ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 16. An advertising evaluation program would include an assessment of: a. target markets.

b. c. d. e.

media and messages. overall results. buying motives. all of the above

ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 17. The cost of reaching a prospect at a trade show is approximately: a. $50 b. $150 c. $250 d. $500 e. $750 ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 r 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 25. Direct mail is commonly used for: a. corporate image promotion. b. sales force . c. distribution channel communication. d. all of the above. e. (a) and (b) only.

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 ment typically gains the full attention of the reader. d. Direct mail can accomplish all of the major advertising functions. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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: 1 NAT: 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 33. The important elements of perception include: a. attention. b. interpretation. c. benefits. d. Only (a) and (b). e. Only (b) and (c). ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 s c. well-defined functions are the principal buying influencers. d. All of the above. e. Only (b) and (c). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. d. All of the above. e. Only (a) and (b). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 40. Indices of trade show performance include:

a. b. c. d. e.

attraction. . conversion efficiency. All of the above. Only (b) and (c).

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery TRUE/FALSE 1. Most industrial firms spend roughly the same amount of dollars on advertising as they do on personal selling. ANS: F PTS: 1 NAT: 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 ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 3. Business-to-business advertising objectives are usually stated in of a specific sales goal. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 4. Organizational buyers tend to retain messages that clash with their attitudes, needs, and beliefs. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 6. The planning and budgeting for trade shows must focus on specific objectives to be accomplished. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 r.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 8. Measuring advertising effectiveness means assessing advertising's impact on sales. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 9. Internet marketing costs far less than direct mail marketing. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 10. Although certain mechanical aspects help create awareness and interest in the ment, its ultimate success will depend on how well the message is targeted to the benefits sought by the buying influential. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 11. Circulation is the most important criterion in the selection of publications. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 14. Vertical publications are directed at a specific task, technology, or function whatever the industry. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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.

ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 17. For many purchasing decisions, advertising alone cannot create product preference. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 19. The five primary areas for evaluating advertising are profits generated, markets, motives, messages, and results. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 3. The____________________statement provides guidelines for the company and advertising agency on how to position the product in the marketplace. ANS: creative strategy PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 5. Many trade publications are____________________publications, meaning that they offer free subscriptions to selected readers. ANS: requester PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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: 1 NAT: 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 , and how can they justify advertising if they cannot measure its impact on sales? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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 ed over by the purchasing manager across the hall. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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 deg a more effective trade show communications strategy and in evaluating trade show performance. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills

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: 1 NAT: 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 job b. their ability to recruit desired ad hoc on to their sales team c. their past experience in new task selling situations d. all of the above e. none of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 2. Expertise coordination is the process of a. integrating the functions of finance and operations with sales b. working with top management to help engage the top level managers in the sales process c. 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 suring those offers in the mind of prospective customers e. All of the above ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 3. The best practices of high-performing salespeople can provide a. relational adaptiveness to a sales effort b. Improved role definition to the sales job c. the opportunity to create relationship congruity d. relationship quality to the sales team e. a template for improving the client management process. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 above e. both (a) and (c) ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 above e. (a) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 7. By organizing its sales force around retailing, financial services, and the petroleum industry, HewlettPackard is employing the _____ approach in structuring the sales force. a. geographical b. product c. market-centered d. territory e. national s ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 above e. (a) and (b) only

ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 9. Salespersons tend to have a high level of job satisfaction when: a. management provides them with the assistance and 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 above e. (a) and (b) only ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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-based b. behavior-based c. satisfaction-based d. outcome-based e. none of the above ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery

13. The _____ measurement approach of salesperson performance is best suited for the emerging emphasis on relationship selling. a. esteem-based b. behavior-based c. satisfaction-based d. outcome-based e. none of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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, dispersion b. potential, concentration, dispersion c. potential, competition, concentration d. potential, workload, competition e. potential, dispersion, competition ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 16. The characteristic of a sales territory that refers to the degree to which potential is available in the larger s in a particular territory is called: a. potential. b. critical mass. c. concentration. d. workload. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. deg the channel structure. d. all of the above. e. (a) and (b) only. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 20. A _____ sales organization is especially appropriate when the product line is large or diverse. a. geographical b. product oriented c. market centered d. none of the above ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 21. A key 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 in the purchasing process. d. (a) and (b) only. e. (b) and (c) only. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 24. Job satisfaction is theorized to decline when the salesperson's perception of his/her role is: a. inaccurate in 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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.

ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 27. _____ is a measure of the total business opportunity for all sellers in a particular market. a. Potential b. Concentration c. Dispersed d. Territory workload ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 28. The final phase of for selecting key s: a. centers on the profit potential of a customer. b. identifies those customer s that have unique 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 29. The first phase of for selecting key s: a. identifies those customer s that have unique 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. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 30. The second phase of for selecting key s: a. considers the degree to which the transactions with potential customer will complement the economies of the seller's business. b. identifies those customer s that have unique requirements. c. centers on the profit potential of a customer. d. none of the above. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: D

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 32. A key represents a customer who: a. buys for an organization with geographically concentrated units. b. involves a small number of key organizational 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). ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 33. When compared to a traditional selling focus, a key 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 34. Research suggests that successful national units: a. have senior management . 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. Supervision b. Motivation c. Attitude d. Performance e. Intrinsic satisfaction

ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 38. When a salesperson attains rewards on a personal basis, such as feelings of accomplishment or selfworth, this is a an example of: a. internally mediated rewards. b. externally mediated rewards. c. job satisfaction. d. aptitude. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. d. All of the above. e. Only (a) and (b). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 quality b. examining density c. implementing changes to enhance sales force effectiveness and efficiency d. all of the above e. a and c above ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery TRUE/FALSE 1. The most common form of sales organization found in the industrial market is the market-centered organization.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 2. Frequent between the salesperson and sales manager is instrumental to the job satisfaction of the salesperson. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 4. An example of a planning and control unit or PCU is a sales territory. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 5. Relationship quality is composed of at least two dimensions: trust in the salesperson and satisfaction with the salesperson. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 6. If the territory is geographically dispersed, sales will probably be lower due to time wasted in travel by the salesperson. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 7. A key represents a customer who buys for an organization with geographically concentrated units. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 8. The final phase for selecting key s centers on the profit potential of a customer. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 9. A successful training effort will increase the cost of recruiting.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 10. Internally mediated rewards are those controlled and offered by managers or customers. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 11. A salesperson's job performance is a function of aptitude. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 13. Smaller firms often reduce training costs by hiring experienced and more expensive salespersons. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 14. Changes in business marketing strategy requires corresponding changes in personal selling styles. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 16. Strategic components of sales force management include methods for organizing the sales force and key management. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 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 involved in the purchasing process. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 19. The decision whether to use key s depends on three factors: profit potential, learning benefits, and cost drivers associated with customers. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 20. Salesperson job satisfaction decreases when there is increased uncertainty about expectations and the length of the product line increases. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery SHORT ANSWER 1. Relationship marketing activities influence three important drivers of relationship marketing effectiveness including relationship____________________,____________________, and____________________. ANS: quality, breadth, composition breadth, composition, quality composition, quality, breadth PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 2. Relationship____________________represents the number of interpersonal ties that a firm has with an exchange partner. ANS: Breadth PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 3. Relationship____________________captures the ability of an interfirm relationship to achieve desired objectives. ANS:

efficacy PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 4. Relationship____________________represents the customer’s desire to engage in strong relationships with a current or potential supplier. ANS: orientation PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 5. Key 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 . ANS: value-added value added PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 7. Periodic training is required to sharpen the skills of experienced salespersons, especially when the firm’s environment is____________________. ANS: changing rapidly PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 8. Externally mediated rewards are controlled and offered by____________________or____________________, such as financial incentives, pay, or recognition. ANS: managers, customers customers, managers

PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media communications & delivery ESSAY 1. Key management strategies are emphasized by top-tier business marketing firms like 3M, IBM, and Dow Chemical. Compare and contrast a key with a regular . Next, describe how the sales strategy for a key differs from the traditional selling focus used for regular s. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 2. While key s 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 s must be chosen wisely. Describe the process, along with the specific criteria that the business marketing strategist should use, in selecting the right key s. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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 tradeoffs 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills

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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 5. Describe the factors that appear to influence the salesperson's satisfaction with the job and the work environment. ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 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: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 7. What roles do managers play in the selling organization? What are some of the characteristics and factors that separate high performing managers from other managers? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills 8. Why is training so important to selling organizations? What are some of the keys to effective salesperson training programs? ANS: n/a PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Strategic & systems skills

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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 audit b. marketing audit c. profit audit d. annual plan e. competitive audit ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

6. If a business marketer is particularly concerned with over- or under- spending on a particular marketing strategy element, such as advertising, which of the following tools would be most useful? a. expense-to-sales ratio analysis b. market share analysis c. sales analysis d. marketing audit e. profit analysis ANS: A PTS: 1 NAT: 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 analysis b. market potential analysis c. market share analysis d. sales analysis e. segmental analysis ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. ____ is an assessment of how the firm is doing relative to competition. a. Sales analysis b. Expense-to-sales analysis c. Profit analysis d. Market share analysis e. Segmental analysis ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 ratios b. profit c. market share d. distribution costs e. sales by channel type ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 analysis b. market share analysis c. expense-to-sales ratio analysis d. price analysis e. product analysis ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

11. _____ reveals the links between performing particular activities and the demands that those activities make on the organization's resources. a. A logistical cost system b. A supply-oriented cost system c. A demand-oriented cost system d. An activity-based cost system e. A controllable element cost system ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 resources by activities. d. all of the above e. (a) and (c) only ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 ing. b. an activity-based cost system. c. variable cost analysis. d. direct traceable costing. e. contribution costing. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 ability. e. competitive advantage. ANS: B PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 above e. (a) and (b) only ANS: E

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 16. Which of the following could assume a role in the marketing strategy center? a. technical service managers b. physical distribution managers c. research & development executives d. manufacturing executives e. all of the above ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 17. _____ provides a visual representation of the cause-and-effect relationships among the components of a company’s strategy. a. A Strategy Map b. Market Sensing c. Customer-Linking d. Building Blocks ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 18. Marketing managers who are flexible and intelligent in dealing with the firm's information and control systems are exhibiting good _____ skills. a. monitoring b. allocation c. interacting d. organizing ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 21. The _____ of the Balanced Scorecard describes the human capital, information capital, and organizational capital that must be aligned with strategy.

a. b. c. d.

financial perspective customer perspective internal perspective learning and growth perspective

ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 23. _____ represents the portion of total purchases in a product and service category that a customer makes from the firm. a. Share-of-wallet b. Market share c. Marketing reach d. Feedforward control ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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). ANS: C PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 s per time period. d. All of the above. e. Only (a) and (c). ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

27. The goal of _____ is to describe where the firm is making or losing money in of the important segments of its business. a. strategic control b. annual plan control c. efficiency and effectiveness control d. profitability control ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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). ANS: D PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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). ANS: E PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 30. The ____ of the Balanced Scorecard describes the expected outcomes of strategy, such as revenue growth or productivity improvements. a. financial perspective b. customer perspective c. internal perspective d. learning and growth perspective ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: A PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation TRUE/FALSE 1. The balanced scorecard attempts to keep the sales of a business unit in balance with profit growth.

ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 2. One component of the balanced scorecard centers on customer satisfaction while another centers on employee satisfaction. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 3. The central focus of a marketing audit is on the firm's cost ing system. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 4. Expense-to-sales ratios provide one measure of the efficiency of marketing operations. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 5. R&D, manufacturing, technical service, and other business functions play fundamental roles in the development and implementation of business marketing strategy. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 7. Warehousing costs fit into an activity-based cost system but advertising costs do not. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. Sales results provide an excellent benchmark against which to measure performance. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 10. Market share analysis is an attempt to determine why actual sales varied from planned sales. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

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." ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 12. The Balanced Scorecard measures performance from a learning and growth perspective. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 13. Marketing control is a process whereby management generates information on performance, such as efficient allocation of marketing effort. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 14. The efficiency of a marketing operation can be assessed via expense-to-sales ratios. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 15. In regard to profitability control, a segment can be a channel structure. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 16. Strategy maps can be used to align internal processes to different marketing strategies. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 17. The strategy map, when coupled with the measures and targets from the balanced scorecard, provides a valuable framework for the strategist. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 18. For customers with a transactional focus, business marketers should discontinue the use of expensive customer databases and set revenue targets and profit goals. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 19. Middle management typically has the primary responsibility for efficiency and effectiveness control. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 20. In annual plan control, the objectives specified in the annual plan become the performance standards that are compared to actual results. ANS: T

PTS: 1

NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 21. Relating sales revenues and marketing costs to market segments improves decision making. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 22. Important implementation skills for marketers include interacting, allocating, and monitoring. ANS: T PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 23. The strategy map provides a framework for highlighting the interdisciplinary role of marketing strategy and for exploring key implementation requirements. ANS: F PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 them. ANS: strategy map PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation

5. Strategic____________________focuses on assessing whether the strategy is being implemented as planned and whether it produces the intended results. ANS: control PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 6. Efficiency and effectiveness control is the primary responsibility of____________________management. ANS: middle PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 7. Expense-to-sales ratios are analyses of the____________________of marketing operations to determine whether the firm is overspending or underspending. ANS: efficiency PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 8. ____________________cost systems reveal the links between performing particular activities and the demands those activities make on the organization’s resources. ANS: Activity-based PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Managing strategy & innovation 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills 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: 1 NAT: 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 PTS: 1 NAT: AACSB Reflective Thinking | CB&E Model Strategy | R&D Strategic & systems skills