Final answer:
Preferred vendor status is when a vendor is guaranteed a large share of a buyer's business, often because of an established reputation for quality, price competitiveness or a strong brand presence. It is instrumental in industries where personal inspection of products isn't possible, with strategies like money-back guarantees reinforcing trust and quality assurances.
Step-by-step explanation:
In general, preferred vendor status means the vendor is assured of a large percentage of the buyer's business and will get the first opportunity to earn new business. This can occur in an industry where economies of scale are much smaller compared to the size of market demand, or in scenarios where a vendor has established a good reputation for adjusting to market dynamics, such as by slashing prices in response to new entry.
Furthermore, companies with a well-respected brand name that has been built up over many years can leverage this status to maintain a competitive edge. Offering a money-back guarantee is a strategy that plays into a company's reputation for quality and customer service, encouraging customers to make purchases online or through catalogs with greater confidence.