Marketing 2014 Pride 17th Edition Solutions Manual

Marketing 2014 Pride 17th Edition Solutions Manual
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CHAPTER 8
Business Markets and Buying Behavior
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource Location
Purpose and Perspective IRM, p. 156
Lecture Outline IRM, p. 157
Discussion Starters IRM, p. 164
Class Exercises IRM, p. 166
Chapter Quiz IRM, p. 168
Semester Project IRM, p. 169
Answers to Discussion and Review Questions IRM, p. 170
Answers to Application Questions IRM, p. 172
Answers to Internet Exercises IRM, p. 174
Answers to Developing Your Marketing Plan IRM, p. 175
Comments on the Cases IRM, p. 176
Case 8.1 IRM, p. 176
Case 8.2 IRM, p. 177
Examination Questions: Essay Testing CD
Examination Questions: Multiple-Choice Testing CD
Examination Questions: True-False Testing CD
PowerPoint Slides Instructor’s website
Note: Additional resources may be found on the accompanying student and instructor websites at
www.cengagebrain.com.
PURPOSE AND PERSPECTIVE

In this chapter, we first describe the major types of business markets, including producer, reseller,
government, and institutional markets. Next, we look at the major characteristics of business customers
and transactions with those customers. We also examine the attributes of business customers and some of
their primary concerns in making purchase decisions, business buying methods, and the major types of
business purchases. Then we discuss attributes of demand for business products. We also cover the
business (organizational) buying decision process. We analyze the major participants in business buying
decision processes through an examination of the buying center. Then we examine the stages of the
business buying decision process and the factors that affect that process. Finally, we discuss industrial
classification systems and their usefulness to business marketers in planning marketing strategies.
©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or poste d to a publicly accessible website, in whole or in part.
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Chapter 8: Business Markets and Buying Behavior 157
LECTURE OUTLINE
I. Business Markets
A. A business market (also called a business-to-business or B2B market) consists of individuals,
organizations, or groups who purchase a specific kind of product for resale, direct use in
producing other products, or use in general daily operations.
B. Although marketing to businesses employs the same concepts as marketing to ultimate
consumers, there are structural and behavioral differences in business markets.
1. A business marketer must understand how its product affects other organizations in the
marketing channel, such as resellers and other manufacturers.
2. Business products can be technically complex and can have a sophisticated buyer-market.
However, markets can be as small as a few customers.
3. Business marketing is often based on long-term mutually profitable relationships across
members of the marketing channel.
C. For most business marketers, the goal is to understand customer needs and provide a value-added
exchange which focuses on customer retention and relationship development.
D. Producer Markets
1. Producer markets are individuals and organizations which purchase products for the
purpose of making a profit by using these products to produce other products or by using
them within operations.
2. A wide range of industries make up producer markets, including agriculture, forestry,
fisheries, mining, construction, transportation, communication, and utilities.
E. Reseller Markets
1. Reseller markets consist of intermediaries who buy finished goods and resell them for profit.
2. Resellers do not change the physical characteristics of the product except for occasional
minor alterations.
3. Wholesalers purchase products for resale to retailers, to other wholesalers, and to producers,
governments, and institutions.
4. Retailers purchase products for resale to final consumers.
5. When making purchase decisions, resellers consider several factors.
a. Level of demand to determine quantity and price levels
b. Amount of space required for the product
c. Suppliers’ ability to provide adequate quantities when and where wanted
d. Ease of order placement
e. Availability of technical assistance and training programs
f. A product’s capacity to complement or compete with products the reseller currently
handles.
F. Government Markets
1. Government markets include federal, state, county, and local governments that buy goods
and services to support internal operations and provide products to their constituencies.
©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible web site, in whole or in part.
158 Chapter 8: Business Markets and Buying Behavior
2. Government contracts are awarded to firms of all sizes, although they most commonly are
given to large corporations.
3. Complex buying procedures necessitated by the government’s public accountability deter
many organizations from selling to government agencies.
4. Government purchases are made through bids or negotiated contracts.
5. When buying complex products, the government often uses a negotiated contract under which
the government selects a few firms and negotiates terms.
G. Institutional Markets
1. Institutional markets are organizations with charitable, educational, community, or other
non-business goals; examples include churches, colleges, hospitals, and civic clubs.
2. Marketers may use special marketing activities to serve institutions because they have
different goals and fewer resources than other markets.
II. Dimensions of Marketing to Business Customers
A. Characteristics of Transactions with Business Customers
1. Transactions between businesses tend to be much larger than individual consumer sales.
2. Suppliers often must sell products in large quantities to make profits; they prefer to sell to
customers who place large orders.
3. Some business purchases involve expensive items, such as computer systems, while others
require raw materials and component items that must be frequently replenished for use in
production.
4. Discussions and negotiations associated with business purchases can require considerable
marketing time and selling effort.
5. Purchasing decisions are often made by committee, orders are frequently large and expensive,
and products may be custom built.
6. Several people or departments in the purchasing organization may be involved.
7. Reciprocity is a practice whereby two organizations agree to buy from each other. It is
limited to situations where competition is not threatened.
B. Attributes of Business Customers
1. Business customers demand detailed information before buying to be sure products meet the
organization’s needs.
2. They seek psychological satisfaction from organizational advancement and financial rewards.
3. Agents who consistently exhibit rational business-buying behavior are likely to attain
personal goals. They perform in ways which help the organization achieve its objectives.
C. Primary Concerns of Business Customers
1. Price is very important to business customers.
a. Price influences operating cost and costs of goods sold, which in turn affects the selling
price and profit margin, and ultimately the organization’s ability to compete.
b. A business customer views price as the amount of investment necessary to obtain a
certain level of return or savings.
2. Level of product quality is also of concern.

a. A product must meet specifications so its use will not result in malfunction for the
ultimate consumer.
b. Obtaining a product which meets but does not exceed specifications is important to avoid
excess costs.
3. Business buyers value service.
a. Services offered by suppliers directly and indirectly influence customers’ costs, sales, and
profits.
b. Often the mix of services is likely to be the major avenue through which a marketer can
gain a competitive advantage.
c. Typical services desired by consumers include market information, inventory
maintenance, on-time delivery, and repair services.
4. Quality of service is critical because customers have higher service expectations than ever.
a. Marketers should aim for uniformity of service, simplicity, truthfulness, and accuracy.
b. Firms should monitor customer service programs to ensure customers are happy and
therefore remain loyal to the firm.
5. Business customers are concerned about the costs of developing and maintaining
relationships with their suppliers.
D. Methods of Business Buying
1. Most business buyers use description, inspection, sampling, or negotiation purchase methods.
2. Description is commonly used when products are standardized to certain characteristics and
are graded according to these standards.
3. Inspection is necessary when items have unique characteristics and vary in condition.
4. Sampling occurs when one item is taken from a lot and is assumed to represent the
characteristics of the entire lot.
5. Negotiation of contracts may be executed through several means.
a. Buyers provide a general description of the desired item.
b. Sellers submit bids and the buyer negotiates terms with those who submit the most
attractive bids.
c. Contracts may specify a base price and provisions for payment of additional costs and
fees.
E. Types of Business Purchases
1. Most business purchases are one of three types: new-task purchase, straight rebuy, or
modified rebuy.
2. In a new-task purchase, the organization makes an initial purchase of an item to be used to
perform a new job or solve a new problem.
a. A new-task purchase may require development of product specifications, vendor
specifications, and procedures for future purchases; the business buyer usually needs
much information.
b. If business buyers are satisfied with their new-task purchases, suppliers may be able to
sell buyers large quantities of them for many years.
3. A straight rebuy purchase is a routine purchase of the same products with approximately
the same contract terms.
a. For routine purchase decisions, buyers require little information and tend to use familiar
suppliers who have in the past provided satisfactory products.
b. Marketers use automated systems to make reordering easy and convenient for business
buyers; some monitor the business buyer’s inventory and predict which items should be
ordered based on projected inventory depletion.
4. In a modified rebuy purchase, a new-task purchase is changed on subsequent orders or
when the requirements of a straight-rebuy purchase are modified.
a. A business buyer might seek faster delivery, lower prices, or a different quality level of
product specifications.
b. A modified rebuy situation may cause regular suppliers to become more competitive to
keep the account, since other suppliers could obtain the business.
F. Demand for Business Products
1. Several characteristics distinguish demand for business products from consumer demand. The
demand for different types of business products also varies.
2. Derived demand is the demand for business products derived from the demand for consumer
products.
a. Business customers purchase products to be used directly or indirectly in the production
of goods and services to satisfy consumers’ needs.
b. When consumer demand for a product changes, a wave is set in motion that affects
demand for all firms involved in the production of that product.
3. Inelastic demand is a demand not significantly altered by a price increase or decrease.
a. When a sizable price increase for a component part represents a large proportion of the
product’s cost, demand may become more elastic; the price increase of the component
part causes the price at the consumer level to rise sharply.
b. The inelasticity characteristic applies to market or industry demand for the business
product, not to the demand from an individual supplier.
4. Joint demand involves two or more items used in combination to produce a product.
5. The demand for business products may fluctuate enormously because it is derived from
consumer demand.
a. When a business marketer’s customers change inventory policies, the organization may
notice substantial demand changes.
b. Significant price increases or decreases may lead to surprising short-run changes in
demand.
III. Business Buying Decisions
A. Business (organizational) buying behavior refers to the purchase behavior of producers,
government units, institutions, and resellers.
B. The Buying Center

1. The buying center is a group of people within an organization, including users, influencers,
buyers, deciders, and gatekeepers, who make business purchase decisions.
a. Users are organizational participants who actually use the product being acquired.
b. Influencers often are technical personnel who help develop the specifications and
evaluate alternative products for possible use.
c. Buyers select the suppliers and negotiate the terms of the purchases.
d. Deciders actually choose the products and vendors.
e. Gatekeepers control the flow of information to and among people who occupy the other
roles in the buying center.
2. The number and structure of an organization’s buying centers are affected by the
organization’s size, its market position, the volume and types of products purchased, and the
firm’s managerial philosophy.
3. A marketer attempting to sell to a business customer should determine who is in the buying
center, the types of decisions each individual makes, and which individuals are most
influential in the decision process.
C. Stages of the Business Buying Decision Process
1. First stage: One or more individuals in the business recognize that a problem or need exists.
2. Second stage: The development of product specifications requires that buying center
participants assess the problem or need and determine what will be necessary to resolve or
satisfy it.
3. Third stage: This stage involves searching for potential products to solve the problem and
locating suppliers of such products.
a. Some organizations engage in value analysis, an evaluation of each component of a
potential purchase: quality, design, materials, and so on.
b. Some vendors may be eliminated because they cannot supply needed quantities or
because they have poor delivery or service records.
c. A list of products generated in the search stage are evaluated to determine which products
(if any) meet the specifications; the organization uses vendor analysis to evaluate current
and potential suppliers.
4. Fourth stage: Results of deliberations and assessments from stage three are used to select the
product to be purchased and the supplier from which to buy it. The product is ordered.
a. Multiple sourcing is the selection and use of several suppliers.
b. Sole sourcing is the selection and use of only one supplier.
5. Fifth stage: Product quality and supplier performance is evaluated by comparing it with
specifications. The supplier’s performance is also evaluated at this stage.
D. Influences on the Business Buying Decision Process
1. Environmental factors are forces, such as competitive and economic factors, political forces,
legal and regulatory factors, technological changes, and sociocultural issues.
2. Organizational factors include the company’s objectives, purchasing policies, and resources
as well as the size and composition of the buying center.
3. Interpersonal factors include the relationships among people within the buying center.
4. Individual factors are the personal characteristics of participants in the buying center, such as
age, personality, education level, tenure, and position within the organization.
IV. Industrial Classification Systems
A. Much information about business customers is based on industrial classification systems.
1. In the U.S., marketers traditionally have relied on the Standard Industrial Classification (SIC)
system, which the federal government developed to classify selected economic characteristics
of industrial, commercial, financial, and service organizations.
2. The SIC system has been replaced by the North American Industry Classification System
(NAICS), a single industry classification system used by the United States, Canada, and
Mexico to generate comparable statistics among North American Free Trade Agreement
(NAFTA) partners.
a. The NAICS classification is based on the types of production activities performed.
b. NAICS is similar to the International Standard Industrial Classification (ISIC) system
used in Europe and other parts of the world.
c. NAICS divides industrial activity into 20 sectors and is comparatively more
comprehensive and up-to-date than SIC.
d. NAICS also provides more information about the service industry and high-tech
products.
B. Industrial classification systems are ready-made tools which allow marketers to divide
organizations into groups based mainly on the types of goods and services provided.
C. A marketer can take several approaches to determine the identities and locations of organizations
in specific groups.
1. One approach is to use state or commercial industrial directories, such as Standard and
Poor’s Register or Dun & Bradstreet’s Million Dollar Directory.
a. These publications contain information such as name, industrial classification, address,
telephone number, and annual sales.
b. Marketers can isolate business customers with industrial classification numbers,
determine locations, and develop lists of potential customers by desired geographic area.
2. An organization may also employ the services of a commercial data service.
a. This type of service is more expedient, but more expensive.
b. A commercial data company can provide, for every company on an industrial
classification list, its name, location, sales volume, number of employees, types of
products handled, names of executive officers, and other pertinent information.
D. In addition to deriving a list of potential customers, marketers must determine which ones to
pursue, a decision usually based on estimated purchase potential.
1. A marketer must verify the relationship between the size of potential customers’ purchases
and another variable available through industrial classification data, such as number of
employees.
2. Without experience in an industry, a marketer will need to establish a relationship between

purchase sizes and the number of employees.
E. After estimating purchase potential of prospect segments, the marketer selects potential customers
to include within the target market.
F. There are several limitations to the use of industrial classification data.
1. A few industries do not have designations.
2. Double counting may occur when products are shipped between two divisions within the
same organization.
3. Some business data may be understated as a result of Census Bureau limitations.
4. There is significant lag time between data collection and data availability.
DISCUSSION STARTERS
Discussion Starter 1: Sustainable Marketing
This discussion starter focuses on sustainable marketing (use the Going Green box on page 250 of the
text).
ASK: Why do you think more companies are “going green?”
Businesses generally make decisions based on profit potential. Many businesses are producing more
environmentally sustainable products than ever before, in spite of higher production costs, because
consumers demand them. Many consumers will even pay higher prices for products they know are
“green.” Businesses also understand that going green now will save them money in the long-term as
regulations become stricter and resources become ever scarcer.
Discussion Starter 2: The Products You Depend on from the Firms You Have Never Hear d of
ASK: Have you ever thought about where the products you consume come from?
Many of us will purchase a loaf of bread or a candy bar and never think about how it was made or the
origination of the ingredients. Yet, each product we purchase contains a variety of input goods.
Cargill supplies product ingredients that are common in processed foods you consume every day. It is
perhaps the largest company you may never have heard of.
http://www.cargill.com/
Cargill is one of the world’s largest ingredient makers for food products. It processes flour, sugar, corn
and other ingredients for food production, as well as biofuels, and pharmaceuticals.
Discussion Starter 3: Government Purchasing

ASK: What types of goods and services do governments purchase?
Governments, being extremely large institutions, require a wide variety of goods and services.
Governments must purchase everything from food and clothing, to aircraft parts, to education and
training services. All of these products and services must be purchased and distributed to the various
government agencies and entities.
The purchasing power of a government agency may be greatly increased through cooperative
purchasing agreements. These agreements may include local entities, agencies, or other buying
groups determined by the government. Organizations like U.S. Communities
(http://www.uscommunities.org/) help facilitate those agreements.
Discussion Starter 4: Business-to-Business Marketing and Universities

Recommended as a group activity
In this chapter we examined the world of business-to-business marketing and learned that all types of
organizations engage in marketing, even if they do not directly market to consumers. In this exercise we
will look at how universities acquire goods and services to deliver their product to the marketplace.
Step 1: Visit http://www.yale.edu/procurement/
Step 2: Explore the list of products and services (see the drop-down option) from the website. Are you
surprised by any of the items on the list?
Step 3: If your organization wanted to market to universities, what recommendations would you make?
Step 4: Increasingly, sustainability is a challenge on campuses. How is Yale addressing sustainability
through its purchasing practices?
CLASS EXERCISES
Class Exercise 1: Business Buying Behavior vs. Consumer Buying Behavior
The objective of this class exercise is to show students that business buying behavior has many
similarities to consumer buying behavior.
Prompt for Students:
Although business buying behavior might seem quite different from your buying behavior, the two are
more similar than you may think. As you answer the following questions, think about how similar or
dissimilar the business buying process is to your own.
1. When you buy a new shirt, hair dryer, MP3 player, television, or car, which of the following criteria
is important to you?
Quality Service
Product information Repair services
Product availability Credit
On-time delivery Price
2. Give examples of products that you buy (or may buy) based on
Description Inspection
Sampling Negotiation
3. Match the business purchase situation with the consumer goods buying situation. How or why are
they related?
New-task purchase Limited decision making
Modified rebuy Routine decision making
Straight rebuy Extended decision making
4. How is the buying center of a business similar to the following purchasing roles that family
members play?
Users Influencers
Buyers Deciders
Gatekeepers
Answers:
1. If you ask enough students, you will eventually have all of these criteria listed. Although businesses
are more likely to develop formal written specifications about these concerns, final consumers also
find these to be important concerns for nearly any high-involvement product category.
2. Examples might include the following:
• Description: mail-order products (clothing, personal computers)
• Inspection: car, furniture, house, or any used item
• Sampling: grocery food items, mail samples, ice cream
• Negotiation: car, house, or any used item
3. The situations roughly match as follows:
• New-task purchase: Extended decision making

• Modified rebuy: Limited decision making
• Straight rebuy: Routine decision making
4. You might want to ask “Who plays what roles in the family when a Wii video game console is
purchased?” Children (and perhaps their parents) are the users and influencers. The mother may be
the decider and the father the buyer. Older children may be the gatekeepers who control the flow of
information to the parents. Grandparents might also be the buyers, while the parents may play the
roles of deciders and gatekeepers. The point is that, to be successful, marketers must target the entire
buying center (or family). Focusing an entire sales presentation on the user may not be effective if the
decider is not persuaded.
Class Exercise 2: Inspection Methods

The purpose of this exercise is to allow students to demonstrate their understanding of different
purchasing methods. Each product is typically purchased by the following methods:
Business purchases can be made by several methods, including description, inspection, sampling, and
negotiation. Which method is most often used for each of the following products?
Question Answer
1. Grain sampling
2. Used vehicles inspection
3. Office space inspection, negotiation
4. Oranges description, sampling
5. Bulldozer negotiation
6. Computer and printer inspection
7. Office furniture inspection
8. Pens and pencils description
9. Eggs description
10. Assembly line equipment inspection, negotiation
CHAPTER QUIZ
1. Reseller markets consist mainly of ____________.
a. consumers
b. retailers
c. wholesalers and retailers
d. manufacturers
e. industrial users
2. Abbott's Office Supplies buys furniture and filing cabinets from Craine Furniture. Craine buys
paper, pens, and folders from Abbott's. The two firms are engaged in_____________.
a. cross-selling
b. tying agreements
c. producer marketing
d. reciprocity
e. competitive bidding
3. If a business owner buys parts by specifying the quantity, grade, and other attributes, which buying
method is he or she using?
a. Description
b. Sampling
c. Negotiation
d. Ordering
e. Inspection
4. Administrative assistants that control the flow of information to other people in the organization
often play the ________ role in the buying center.
a. gatekeeper
b. user
c. influencer
d. buyer
e. controller
Answers to Chapter Quiz: 1. c; 2. d; 3. a; 4. a.
SEMESTER PROJECT
Chapter 8 explains that different types of organizations market to each other. Business-to-business
marketing offers a wealth of career opportunities to marketing students. In this exercise, explore the
opportunities within this field.
Step 1: A frequent position within B2B marketing is purchasing manager. In this step, research the
position of purchasing manager. What types of firms hire purchasing managers?
Step 2: Many students do not consider the U.S. Government as a source for marketing positions, yet both
the Federal and State governments hire marketers. In this step, explore opportunities in the U.S.
Government. Visit http://www.usajobs.gov/.
Step 3: Write a brief description about the position of purchasing manager. Describe the training you
would need to become a purchasing manager. Also, list three potential job sources for purchasing
managers.
ANSWERS TO DISCUSSION AND REVIEW QUESTIONS

1. Identify, describe, and give examples of the four major types of business markets.
The four major types of business markets are producer markets, reseller markets, government
markets, and institutional markets.
The producer market consists of individuals and business organizations which purchase products to
make a profit by using them to produce other products or by using them in their operations. Farmers
are a producer market because they purchase farm machinery, fertilizer, seed, and livestock to carry
out their tasks.
The reseller market consists of intermediaries, such as wholesalers and retailers who buy finished
goods and resell them to make a profit. Sears is an example of a reseller.
Government markets consist of federal, state, county, and local governments which, taken together,
annually spend billions of dollars for goods and services to support internal operations and their
constituencies.
Institutional markets are organizations which seek to achieve goals other than the normal business
goals of profit, market share, or return on investment.
2. Why might business customers generally be considered more rational in their purchasing
behavior than ultimate consumers?
Business customers usually seek and obtain more information about the product before purchasing
than do ultimate consumers. They may give special attention to information about the product’s
functional features, specifications, and technical attributes. Most business customers seek
advancement within the organization and greater financial and psychological rewards. Business
buyers attain personal goals by performing the purchasing function in a way which helps their
organization achieve organizational objectives.
3. What are the primary concerns of business customers?
A business customer’s primary considerations when making purchasing decisions fall within the areas
of price, product quality, service, and supplier relationships. Price influences operating costs and costs
of goods sold, which affect the selling price and profit margin. Quality level is maintained by
purchasing a product which meets a set of delineated characteristics called specifications. Products
which exceed specifications may cost more without providing an offsetting benefit. A supplier’s’
service to business customers influences these customers’ costs, sales, and profits. Some of the most
commonly desired services include market information, maintaining an inventory, on-time delivery,
repair services, and replacement parts. Open communication channels are also important. Finally,
business customers are concerned about the costs of developing and maintaining relationships with
their suppliers.
4. List several characteristics that differentiate transactions involving business customers from
consumer transactions.
Business-customer transactions differ from consumer transactions in several ways. Orders tend to be
larger, there are longer negotiation periods, reciprocity sometimes plays a role in the process, and
business customers tend to be more informed about the products they purchase.
5. What are the commonly used methods of business buying?
Most business customers use one or more of the following methods: description, inspection,
sampling, and negotiation. Standardized products may be purchased on the basis of a description of
desired characteristics. Certain products, especially those which are large, expensive, and have unique
characteristics, require inspection by the purchasers before a decision is reached. When buying
decisions are based on sampling, the purchaser assumes the sample product taken from the lot is
representative of the entire lot. Negotiated contracts occur when sellers submit bids and the buyer
discusses terms with those who submit the most attractive bids.
6. Why do buyers involved in straight rebuy purchases require less information than those
making new-task purchases?
The straight rebuy purchase is a routine procedure. The specifications and terms are set and all major
problems are resolved. Conversely, a new-task purchase requires the business to develop product
specifications, vendor specifications, and procedures for future purchases before an initial purchase.
7. How does demand for business products differ from consumer demand?
Demand for business products differs from consumer demand in that it is (a) derived, (b) inelastic, (c)
joint, or (d) fluctuating.
8. What are the major components of a firm’s buying center?
The major components or roles of a buying center are users, influencers, buyers, deciders, and
gatekeepers. One person may perform several of these roles.
9. Identify the stages of the business buying decision process. How is this decision process used
when making straight rebuys?
The stages of the business buying decision process are (1) recognizing the problem, (2) establishing
product specifications to solve the problem, (3) searching for products and suppliers and evaluating
products with respect to specifications, (4) selecting and ordering the most appropriate product, and
(5) evaluating product and supplier performance. This decision process is not used for routine,
straight rebuy purchases.
10. How do environmental, business, interpersonal, and individual factors affect business
purchases?
The influence of these factors varies depending on different factors such as different buying
situations; the type of product being purchased; and whether the purchase is new-task, modified
rebuy, or straight rebuy.
11. What function does an industrial classification system help marketers perform?
An industrial classification system is a ready-made tool which allows marketers to divide
organizations into groups based on the types of goods and services provided.
ANSWERS TO APPLICATION QUESTIONS

1. Identify organizations in your area that fit each business market category: producer,
reseller, government, and institutional. Explain your classifications.
Student answers will vary, but they should fit the following general classifications described in
the text:
• Producer markets purchase products to use to produce other products.
• Reseller markets buy finished goods and resell them for profit.
• Government markets include federal, state, county, and local governments that buy goods
and services to support internal operations and provide products to their constituencies.
• Institutional markets are organizations with non-business goals.
2. Indicate the method of buying (description, inspection, sampling, or negotiation) an
organization would be most likely to use when purchasing each of the following items.
Defend your selections.
a. A building for the home office of a light bulb manufacturer: negotiation
b. Wool for a clothing manufacturer: inspection
c. An Alaskan cruise for a company retreat: description
d. One-inch nails for a building contractor: sampling
3. Purchases by businesses may be described as new-task, modified rebuy, or straight rebuy.
Categorize the following purchase decisions and explain your choices.
a. Bob has purchased toothpicks from Smith Restaurant Supply for 25 years and recently
placed an order for yellow toothpicks rather than the usual white ones.
This is a modified rebuy purchase because the purchase is changed on subsequent orders or
the requirements of a straight-rebuy purchase have been modified.
b. Jill’s investment company has been purchasing envelopes from AAA Office Supply for a
year and now needs to purchase boxes to mail year-end portfolio summaries to clients.
Jill calls AAA to purchase these boxes.
This is a straight rebuy purchase because it is a routine purchase of the same products with
approximately the same contract terms.
c. Reliance Insurance has been supplying its salespeople with small personal computers to
assist in their sales efforts. The company recently agreed to begin supplying them with
faster, more sophisticated computers.
This is a new task purchase because it is an initial purchase of an item to be used to perform a
new job or solve a new problem.
4. Identifying qualified customers is important to the survival of any organization. NAICS
provides helpful information about many different businesses. Find the NAICS manual at
the library or online at www.naics.com and identify the NAICS code for the following items.
a. Chocolate candy bars: 311320 or 311330
b. Automobile tires: 423130
c. Men’s running shoes: 316211 (which is difficult to find because athletic shoes are separate
from men’s shoes)
5. Using the prompt in the text, rank each of the following variables from 1 to 5 when
making the choice to produce and sell genetically modified (GMO) or non-GMO corn. 1
is the most important variable, whereas 5 is the least important. Based on health,
environment, and dependency on foreign energy sources, what would you do as a
farmer purchasing seed for next year’s crop?
This question helps students to understand the complexity of making business buying decisions.
Students are asked to consider five variables when making their decisions:
1. Safety to the environment
2. Ability to control production costs.
3. Impact on food prices.
4. Overall health concerns.
5. Contribution to reducing dependence on foreign energy sources.
Student answers will vary based on their personal values and their analysis of the different
business costs and societal costs. Students could make an argument for producing either kind of
corn based on any or all of the five factors, which could inspire lively class debates.
ANSERS TO INTERNET EXERCISE

Boeing is the world’s leading aerospace corporation and the largest manufacturer of commercial
and military aircraft. Visit the company’s website at www.boeing.com.
1. At what types of business markets are Boeing’s products targeted?
Boeing targets several B2B markets. With its commercial airplanes, it targets producer markets
because commercial airlines companies use the airplanes in day-to-day operations. With its
defense, space, and security products, Boeing targets government markets.
2. How does Boeing address some of the concerns of business customers?
The four primary concerns of business customers are price, quality, service, and supplier
relationships. Boeing has developed business units that help to reduce the concerns of business
customers. One business unit, Boeing Capital Corporation, “arranges, structures and/or provides
financing to facilitate the sale and delivery of Boeing commercial and military aircraft, satellites and
launch vehicles.” This helps its customers to deal with the high price of its product. To mitigate
quality and service concerns, Boeing provides “a broad range of services to support its aircraft --
from the time the airplane is delivered to the customer until the airplane goes out of service. These
services help our customers improve fleet utilization, reduce costs, manage information, upgrade or
reconfigure their airplanes, and ensure passenger well-being.” Boeing is also transparent and shares
information about its suppliers directly on the website.
3. What environmental factors do you think affect demand for Boeing products?
Demand for Boeing products could be influenced by several environmental factors. Student answers
may include the following:
• Political: government spending, debates over the role of aerospace, debates over government
support and/or management of commercial airline industry
• Economic: changes to the economy, business spending, consumer spending on travel
• Sociocultural: consumer support of the defense industry
• Technological: new technologies
• Legal and Regulatory: government support and/or management of the commercial airline
industry, pollution regulations, consumer safety regulations
• Environmental: pollution, airline efficiency
ANSWERS TO DEVELOPING YOUR MARKETING PLAN

The information obtained from these questions should assist students in developing various aspects of
your marketing plan found in the “Interactive Marketing Plan” exercise at www.cengagebrain.com.
1. What are the primary concerns of business customers? Could any of these concerns be
addressed with the strengths of your company?
Marketing to business customers involves the same groups and the same purposes, but there are
some key differences. A company that markets to another company must understand how its product
will affect other firms in the marketing channel, such as resellers and other manufacturers. Business
products can also be technically complex, and the market often consists of sophisticated buyers.
Because the business market consists of relatively smaller customer populations, a segment of the
market could be as small as a few customers. The first question also asks students if any of these
concerns can be addressed with strengths of their companies. Student responses will vary on this
question.
2. Determine the type of business purchase your customer will likely be using when purchasing
your product. How would this impact the level of information required by the business when
moving through the buying decision process?
The answers to this question will be as varied as the students’ products.
3. Discuss the different types of demand that the business customer will experience when
purchasing your product.
Again, the answers to this question will be as varied as the students’ products. Students can refer to
Figure 8.1 when seeking to answer this question.
COMMENTS ON THE CASES

VIDEO CASE 8.1: DALE CARNEGIE FOCUSES ON BUSINESS
CUSTOMERS
Summary
This case shows how a company that provides a valuable service thrives in the B2B market. Dale
Carnegie was a successful entrepreneur and speaker famous for his book, How to Win Friends and
Influence People. His self-named firm trains business people and members of the government on how to
connect with customers and colleagues. Dale Carnegie focuses on helping companies to develop powerful
business relationships by learning to listen and interact well, both face-to-face and through digital
communications.
Questions for Discussion
1. How would you apply Dale Carnegie’s methods if you were trying to make a sale to a
company with a large buying center?
The buying center is the group of people involved in making such purchase decisions. Dale
Carnegie’s philosophy is that a marketer trying to appeal to a large buying center should take the
time to listen to the concerns of users, influencers, buyers, deciders, and gatekeepers, connect with
all groups, and address all of their needs.
2. From a marketing perspective, why would people who work for the U.S. Department of
Veteran Affairs be as interested in taking a Dale Carnegie course as people who work for
American Express?
Government agencies such as the Department of Veterans affairs have customers too—the people
that they serve. Because of this, it is important for members of the government to understand how
to connect with their colleagues and with their constituencies.
3. Which concerns of business customers should Dale Carnegie’s marketers pay close attention
to when selling training services to a company like American Express?
Although all four concerns (price, quality, service, and supplier relationships) may have a role,
Dale Carnegie’s marketers should pay close attention to quality and service. They may be
searching for a great long-term customer service experience. Companies want to get the best
quality information and training and may want ongoing support when they deal with challenging
situations and hire new employees.
CASE 8.2: BOMBARDIER SERVES MULTIPLE BUSINESS

MARKETS
Summary
Founded over sixty years ago, Bombardier got its start selling Ski-Doo snowmobiles in Quebec
province, Canada. The machines are a winter transportation necessity in many parts of snowy
Canada. The company later branched out into water sports with its Sea-Doo brand. These days, the
company’s largest customers are governments and businesses in the aero-space and railroad
industries. These customers value Bombardier’s service and support after they purchase their
products.
Questions for Discussion
1. How does derived demand apply to the demand for commercial jets purchased by airlines?
What are the implications for Bombardier’s marketing efforts?
Demand for commercial jets purchased by airlines is related to demand for consumer air travel.
When demand for consumer air travel is up, demand for commercial jets (such as those made by
Bombardier) tends to be higher. As a result, Bombardier will want to have appropriate marketing
efforts in place as consumer demand starts to increase, so it is visible and available when airlines
recognize that they need aircraft, formulate specifications, and search for suppliers. Of course,
Bombardier should not halt its marketing when consumer air travel is low, because it wants to
keep its name and products in front of potential buyers even before they are researching a
purchase.
2. When an airline wants to order new jets to replace older jets in its fleet, do you think it
would approach the decision as a new-task purchase, a straight rebuy, or a modified rebuy
purchase? Explain. Also, which methods of business buying are Bombardier’s customers
most likely to use? Why?
An airline that plans to replace older jets with new jets should approach the purchase as a new -
task purchase. The reason is that jet technology is always advancing, jets are expensive and
complex products, and new global suppliers enter the market from time to time. Also, airlines’
needs are constantly changing as they add or shift routes, adapt to competitive moves, and
comply with the latest regulations. Therefore, the airline will have to carefully analyze its current
situation, develop all-new product specifications, and consider new vendor specifications as it
prepares to buy new jets. This may be true even if the airline is thinking about ordering updated
versions of the jets in its fleet. Students may make a case for approaching this as a modi fied
rebuy purchase. However, airlines will generally benefit from looking at jets from competing
vendors when they are considering a purchase—and using this as a negotiating tool.
3. In which stage of the business buying decision process is Bombardier’s repu tation likely to
have the most influence on a government that is considering the purchase of new subway
cars?
Bombardier’s reputation is especially important during the stage of the business buying decision
process when customers are searching for and evaluating possible suppliers. If Bombardier has a
good reputation, governments will at least consider buying its subway cars. On the other hand, if
Bombardier has a bad reputation (because of poor service or other problems), potential
government customers will probably eliminate the company from consideration and concentrate
on suppliers with better reputations. Reputations take time to earn but can be lost very quickly.
Ask students to suggest what steps Bombardier might take to further polish its reputation among
government buyers of subway cars.
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PURPOSE AND PERSPECTIVE

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2. Level of product quality is also of concern.

B. The Buying Center

2. Without experience in an industry, a marketer will need to establish a relationship between

Discussion Starter 3: Government Purchasing

Discussion Starter 4: Business-to-Business Marketing and Universities

• New-task purchase: Extended decision making

Class Exercise 2: Inspection Methods

Answers to Chapter Quiz: 1. c; 2. d; 3. a; 4. a.

ANSWERS TO DISCUSSION AND REVIEW QUESTIONS

ANSWERS TO APPLICATION QUESTIONS

ANSERS TO INTERNET EXERCISE

ANSWERS TO DEVELOPING YOUR MARKETING PLAN

COMMENTS ON THE CASES

Chapter 8: Business Markets and Buying Behavior 177

CASE 8.2: BOMBARDIER SERVES MULTIPLE BUSINESS

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