Chapter 7

Question 1

What is derived demand

Answer 1

The linkage between consumers’ demand for a company’s output and its purchase of necessary inputs to manufacture or assemble that particular output.

Question 2

What are the 4 types of business markets

Answer 2

1. Resellers
   Sell without altering form
   Retailers and wholesalers
2. Institutions
   Buying to function and on behalf of end users
   Hospitals, prisons, schools
3. Manufacturers/services
   Buy Raw materials/supplies
   Use materials in production or use supplies in provision of service
4. Government
   Buys a LOT
   Formal process with strict rules
   Price often key factor
   Some preference given to disadvantaged firms

Question 3

Explain the buying center and the various roles within it

Answer 3

Buying Center: the group of people typically responsible for the buying decisions in large organizations.

Initiators: Identify a need or problem to be solved

Users: Those who will use the product or service

Influencers: Help define specifications and provide information for evaluating alternatives

Buyers: Have formal authority to select the supplier and arrange terms of purchase

Deciders: Have formal or informal power to select and approve final supplies

Gatekeepers: Control the flow of information

Question 4

What are the 3 types of buying situations

Answer 4

Straight rebuy
Routine purchase decision (reorder with no changes)

Modified rebuy
Purchase decision that requires some research because the buyer wants to change the product specification, price, terms, or supplier

New buy
Purchase decision that requires thorough research because the firm is buying a new product- likely to include multiple people and all 6 steps of the business buying process