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NoreproductionordistributionwithoutthepriorwrittenonsentofMcGraw-HillEducation.
InternationalMarketing,18e(Cateora)
Chapter18PricingforInternationalMarkets
1)Settingtherightpriceforaproductcanbethekeytosuccessorfailureininternationalmarkets.
Answer:TRUE
Explanation:Settingtherightpriceforaproductorservicecanbethekeytosuccessorfailureininternationalmarkets.Evenwhentheinternationalmarketerproducestherightproduct,promotesitcorrectly,andinitiatestheproperchannelofdistribution,theeffortfailsiftheproductisnotproperlypriced.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
2)Companiesthatusepricingtoachievemarketingobjectivesusepricingasastaticelement.
Answer:FALSE
Explanation:Pricedecisionsareviewedtwoways:pricingasanactiveinstrumentofaccomplishingmarketingobjectives,orpricingasastaticelementinabusinessdecision.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
3)Aproductsoldinonecountrymaybeexportedtoanotherandundercutthepriceschargedinthatcountry.
Answer:TRUE
Explanation:Becauseofthedifferentpricespossibleindifferentcountrymarkets,aproductsoldinonecountrymaybeexportedtoanotherandundercutthepriceschargedinthatcountry.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
4)Thepossibilityofaparallelmarketoccurswhenpricedifferencesarelessthanthecostoftransportationbetweentwomarkets.
Answer:FALSE
Explanation:Aparallelmarket(graymarket)existswhenproductsintendedtobesoldinonemarket,exclusivelyataparticularlowprice,aresoldinasecondmarket(usuallyillegally)wheremarketpricesarehigher.Thepossibilityofaparallelmarketoccurswheneverpricedifferencesaregreaterthanthecostoftransportationbetweentwomarkets.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
5)Torestrictthegraymarket,companiesmustestablishandmonitorcontrolsthateffectivelypolicesaleschannels.
Answer:FALSE
Explanation:Companiesthatareseriousaboutrestrictingthegraymarketmustestablishandmonitorcontrolsthateffectivelypolicedistributionchannels.Insomecountriestheymaygethelpfromthecourts.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
6)Companiesshouldusethefull-costpricingapproachwhenithashighfixedcostsrelativetoitsvariablecosts.
Answer:FALSE
Explanation:Companiesfollowingthefull-costpricingphilosophyinsistthatnounitofasimilarproductisdifferentfromanyotherunitintermsofcostandthateachunitmustbearitsfullshareofthetotalfixedandvariablecost.Thisapproachissuitablewhenacompanyhashighvariablecostsrelativetoitsfixedcosts.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
7)Incountrieswherelargesharesofthepopulationaremovingintomiddle-incomeclasses,penetrationpricingwilldepressmarketgrowth.
Answer:FALSE
Explanation:Incountrymarketsexperiencingrapidandsustainedeconomicgrowth,andwherelargesharesofthepopulationaremovingintomiddle-incomeclasses,penetrationpricingmaybeusedtostimulatemarketgrowthevenwithminimumcompetition.Penetrationpricingmaybeamoreprofitablestrategythanskimmingifitmaximizesrevenuesasabaseforfightingthecompetitionthatissuretocome.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
8)Deflationresultsinever-decreasingprices,creatingapositiveresultforconsumers,butputtingpressureoneveryoneinthesupplychaintolowercosts.
Answer:TRUE
Explanation:Deflationresultsinever-decreasingprices,creatingapositiveresultforconsumers,butbothputpressuretolowercostsoneveryoneinthesupplychain.Inadeflationarymarket,itisessentialforacompanytokeeppriceslowandraisebrandvaluetowinthetrustofconsumers.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
9)Withdeflation,consumersfaceever-risingpricesthateventuallyexcludemanyofthemfromthemarket.
Answer:FALSE
Explanation:Deflationresultsinever-decreasingprices,creatingapositiveresultforconsumers,butputtingpressuretolowercostsoneveryoneinthesupplychain.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
10)WhentheU.S.dollarstrengthens,U.S.exportswilldecrease.
Answer:TRUE
Explanation:TheweakerU.S.dollar,comparedwithmostoftheworld'sstrongercurrencies,thatexistedinmid-2003stimulatedexportsfromtheUnitedStates.Consequently,whenthedollarstrengthens,U.S.exportswillsoften.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
11)Priceescalationcouldleadtothesalesofexportedgoodsbeingconfinedtoalimitedsegmentofwealthy,price-insensitivecustomers.
Answer:TRUE
Explanation:Unlesssomeofthecoststhatcreatepriceescalationcanbereduced,themarketerisfacedwithapricethatmayconfinesalestoalimitedsegmentofwealthy,price-insensitivecustomers.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
12)Theinternationalmarketermustrelyonexperienceandmarketingresearchtodeterminemiddlemancostsbecausenoconvenientsourceofdataonmiddlemancostsisavailable.
Answer:TRUE
Explanation:Theinternationalmarketermustrelyonexperienceandmarketingresearchtoascertainmiddlemancostsbecausenoconvenientsourceofdataonmiddlemancostsisavailable.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
13)Eliminatingcostlyfunctionalfeaturesofaproductorloweringoverallproductqualitycanreducepriceescalation.
Answer:TRUE
Explanation:Eliminatingcostlyfunctionalfeaturesorevenloweringoverallproductqualityisamethodofminimizingpriceescalation.Forexample,thequalityandadditionalfeaturesrequiredforthemoredevelopedhomemarketmaynotbenecessaryincountriesthathavenotattainedthesamelevelofdevelopmentorconsumerdemand.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
14)Longerchannelsofdistributionaremoreusefulforkeepingpricesundercontrolthanshorterchannelsofdistribution.
Answer:FALSE
Explanation:Shorterchannelscanhelpkeeppricesundercontrol.Designingachannelthathasfewermiddlemenmaylowerdistributioncostsbyreducingoreliminatingmiddlemanmarkups.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
15)Involvingfewermiddlemenindistributionmeanshigheroveralltaxes.
Answer:FALSE
Explanation:Besideseliminatingmarkups,fewermiddlemenmaymeanloweroveralltaxes.Somecountrieslevyavalue-addedtaxongoodsastheypassthroughchannels.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
16)Inafreetradezone,paymentofimportdutiesispostponeduntiltheproductleavesthefreetradezoneandentersthecountry.
Answer:TRUE
Explanation:InafreeportorFTZ,paymentofimportdutiesispostponeduntiltheproductleavestheFTZareaandentersthecountry.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
17)Forcountervailingdutiestobeinvoked,itmustbeshownthatpricesarehigherintheimportingcountrythanintheexportingcountry.
Answer:FALSE
Explanation:Forcountervailingdutiestobeinvoked,itmustbeshownthatpricesarelowerintheimportingcountrythanintheexportingcountryandthatproducersintheimportingcountryarebeingdirectlyharmedbythedumping.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
18)Gerardwasconcernedthathewouldnotbeabletogetmaintenanceandservicingonequipmentusedinhisoverseasoperation.LeasingtheequipmentwouldbethebestoptionforGerard.
Answer:TRUE
Explanation:Leasinghelpsguaranteebettermaintenanceandserviceonoverseasequipment.
Difficulty:2Medium
Topic:RequirementsofaGloballyDispersedProductionSystem
LearningObjective:18-03Priceescalationandhowtominimizeitseffect.
Bloom's:Apply
AACSB:KnowledgeApplication
Accessibility:KeyboardNavigation
19)Countertradingdoesnotbenefitcountriesthatfaceashortageofhardcurrencieswithwhichtotrade.
Answer:FALSE
Explanation:Corporatedebtstosuppliers,paymentsandservices,eventaxes—allhaveanoncashcomponentorareentirelybartered.Manycountriesconstantlyfaceashortageofhardcurrencieswithwhichtotradeandthusresorttocountertradeswhenpossible.
Difficulty:1Easy
Topic:Countertrade
LearningObjective:18-04Countertradinganditsplaceininternationalmarketingpractices.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
20)Barterhouseshelpcountriesnegotiatepricesforimportsandexportsandalsoprovidefacilitiesforcashpaymentsandreceipts.
Answer:FALSE
Explanation:Barterhousesspecializeintradinggoodsacquiredthroughbarterarrangementsandaretheprimaryoutsidesourceofaidforcompaniesbesetbytheuncertaintyofacountertrade.
Difficulty:1Easy
Topic:Countertrade
LearningObjective:18-04Countertradinganditsplaceininternationalmarketingpractices.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
21)Administeredpricingisanattempttoestablishpricesforanentiremarket.
Answer:TRUE
Explanation:Administeredpricingisanattempttoestablishpricesforanentiremarket.Suchpricesmaybearrangedthroughthecooperationofcompetitors;throughnational,state,orlocalgovernments;orbyinternationalagreement.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-05Themechanicsofpricequotations.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
22)Paul'soildeliverycompanywasstrugglingtomakeendsmeet,soitconspiredwiththeotheroildeliverycompaniesintheareatosetprices,allocatemarketterritories,andredistributeprofits.Bycontrollingthemarketinthisway,thecompaniescreatedacartel.
Answer:TRUE
Explanation:Acartelexistswhenvariouscompaniesproducingsimilarproductsorservicesworktogethertocontrolmarketsforthetypesofgoodsandservicestheyproduce.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-05Themechanicsofpricequotations.
Bloom's:Apply
AACSB:KnowledgeApplication
Accessibility:KeyboardNavigation
23)Cartelshavetheabilitytomaintaincontrolofmarketsforindefiniteperiods.
Answer:FALSE
Explanation:Oneimportantaspectofcartelsistheirinabilitytomaintaincontrolofmarketsforindefiniteperiods.Greedbycartelmembersandotherproblemsgenerallyweakenthecontrolofthecartel.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-05Themechanicsofpricequotations.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
24)DomesticcartelizationislegalintheUnitedStates.
Answer:FALSE
Explanation:Thelegalityofcartelsgloballyatpresentisnotclearlydefined.DomesticcartelizationisillegalintheUnitedStates.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-05Themechanicsofpricequotations.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
25)Lettersofcreditshiftthebuyer'screditrisktothebankissuingtheletterofcredit.
Answer:TRUE
Explanation:Lettersofcreditshiftthebuyer'screditrisktothebankissuingtheletterofcredit.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
26)Anirrevocable,confirmedletterofcreditmeansthataU.S.bankacceptsresponsibilitytopaythesellerregardlessofthefinancialsituationofthebuyerorforeignbank.
Answer:TRUE
Explanation:Anirrevocable,confirmedletterofcreditmeansthataU.S.bankacceptsresponsibilitytopayregardlessofthefinancialsituationofthebuyerorforeignbank.Fromtheseller'sviewpoint,thisstepeliminatestheforeignpoliticalriskandreplacesthecommercialriskofthebuyer'sbankwiththatoftheconfirmingbank.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
27)Exceptforcashinadvance,lettersofcreditaffordthegreatestdegreeofprotectionfortheseller.
Answer:TRUE
Explanation:Exceptforcashinadvance,lettersofcreditaffordthegreatestdegreeofprotectionfortheseller.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
28)Theportionofinternationalbusinesshandledonacash-in-advancebasisisnotlargeandthisistypicallyusedwhencreditisdoubtful.
Answer:TRUE
Explanation:Theportionofinternationalbusinesshandledonacash-in-advancebasisisnotlarge.Cashplacesunpopularburdensonthecustomerandtypicallyisusedwhencreditisdoubtful.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
29)Inbillsofexchange,thebuyerassumesalltheriskuntilthepaymentismade.
Answer:FALSE
Explanation:Inlettersofcredit,thecreditofoneormorebanksisinvolved,butwithbillsofexchange(alsoknownasdollardrafts),thesellerassumesallriskuntiltheactualdollarsarereceived.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
30)Salesonopenaccountsarerecommendedwhenshippingishazardous.
Answer:FALSE
Explanation:Salesonopenaccountsaregenerallynotrecommendedwhenthepracticeofthetradeistousesomeothermethod,whenspecialmerchandiseisordered,whenshippingishazardous,whenthecountryoftheimporterimposesdifficultexchangerestrictions,orwhenpoliticalunrestrequiresadditionalcaution.
Difficulty:1Easy
Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem
LearningObjective:18-06Themechanicsofgettingpaid.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
31)Assumingthataninternationalmarketerhasproducedtherightproduct,usedtheproperchannelofdistribution,andpromotedthegoodscorrectly,theeffortwillfailiftheinternationalmarketerfailsto
A)informthehostgovernmentaboutallitsmarketingobjectives.
B)settherightpriceforthegoodsorservices.
C)settheimporttariffforthegoodsorservices.
D)formajointventureinordertoselltheproduct.
E)workonafranchisebasisinthecountry.
Answer:B
Explanation:Evenwhentheinternationalmarketerproducestherightproduct,promotesitcorrectly,andinitiatestheproperchannelofdistribution,theeffortfailsiftheproductisnotproperlypriced.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
32)Ingeneral,pricedecisionsareviewedintwoways:pricingasastaticelementinabusinessdecision,andpricing
A)thatdependsonfactorsthatareoftenbeyondthecontrolofacompany.
B)asmoreaphenomenonofluckthanplanning.
C)asanactiveinstrumentofaccomplishingmarketingobjectives.
D)thatisdeterminedbylocalsalesmanagers.
E)thatisstaticnomatterthemarket.
Answer:C
Explanation:Ingeneral,pricedecisionsareviewedtwoways:pricingasanactiveinstrumentofaccomplishingmarketingobjectives,orpricingasastaticelementinabusinessdecision.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
33)Whatismostlikelytobetrueofacompanythatviewspricesasanactiveinstrumentofaccomplishingmarketingobjectives?
A)Thecompanysetspricestoachievespecificobjectives.
B)Thecompanyfollowsmarketpricestoachievespecificobjectives.
C)Thecompanyexportsonlyexcessinventory.
D)Thecompanyviewsitsexportsalesasaninsignificantsourceofrevenue.
E)Thecompanyplacesalowpriorityonforeignbusiness.
Answer:A
Explanation:Ifpricesareviewedasanactiveinstrument,thecompanysetsprices(ratherthanfollowingmarketprices)toachievespecificobjectives,suchasreturnsonprofitortargetedsalesvolumes.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
34)Acompanythatviewspricingasastaticelementinabusinessdecisionmostprobably
A)placesahighpriorityonforeignbusiness.
B)setspricestoachievespecificobjectivessuchastargetedreturnonprofit.
C)viewsexportsalesasactivecontributionstosalesvolume.
D)viewsdomesticsalesasaninsignificantsourceofrevenue.
E)placesalowpriorityonforeignbusiness.
Answer:E
Explanation:Thecompanythatfollowspricingasastaticelementprobablyexportsonlyexcessinventory,placesalowpriorityonforeignbusiness,andviewsitsexportsalesaspassivecontributionstosalesvolume.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-01Componentsofpricingascompetitivetoolsininternationalmarketing.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
35)GiftGroupInc.,animportingorganizationinNewYork,buysperfumefromacompanyinFrancefor$13aunit.UnknowntotheFrenchcompany,GiftGroupsellsthisproductintheUnitedStatesfor$19aunit.ThisleadstoalossofrevenuefortheFrenchcompanyasitalsosellsitsperfumeintheUnitedStatesbutforahigherpriceof$22.Whatconceptdoesthisdemonstrate??
A)black-listedimporting
B)indirectimporting
C)circularimporting
D)co-mingledimporting
E)parallelimporting
Answer:E
Explanation:Becauseofthedifferentpricespossibleindifferentcountrymarkets,aproductsoldinonecountrymaybeexportedtoanotherandundercutthepriceschargedinthatcountry,knownasaparallelmarket.AsGiftGrouphasboughtperfumefromtheFrenchcompanyandsolditintheUnitedStatesforalowerpricethanwhattheFrenchcompanysellsitforinordertoundercutthem,itispracticingparallelimporting.
Difficulty:3Hard
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Apply
AACSB:KnowledgeApplication
Accessibility:KeyboardNavigation
36)________distribution,apracticeoftenusedbycompaniestomaintainhighretailmarginstoencourageretailerstomaintaintheexclusive-qualityimageofaproduct,cancreateafavorableconditionforparallelimporting.
A)Exclusive
B)Speculative
C)Intensive
D)Lateral
E)Dual
Answer:A
Explanation:Exclusivedistribution,apracticeoftenusedbycompaniestomaintainhighretailmarginstoencourageretailerstoprovideextraservicetocustomers,tostocklargeassortments,ortomaintaintheexclusive-qualityimageofaproduct,cancreateafavorableconditionforparallelimporting.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
37)Firmsthatareunfamiliarwithoverseasmarketingandfirmsthatproduceindustrialgoodsorienttheirpricingsolelyonthebasisof
A)culturaldifferencesinperceptionsofpricing.
B)marketsegmentationfrommarkettomarket.
C)thecostsofproductionofthegoods.
D)marketsegmentationfromcountrytocountry.
E)competitivepricinginthemarket.
Answer:C
Explanation:Firmsunfamiliarwithoverseasmarketingandfirmsproducingindustrialgoodsorienttheirpricingsolelyonacostbasis.Firmsthatemploypricingaspartofthestrategicmix,however,areawareofsuchalternativesasmarketsegmentationfromcountrytocountryormarkettomarket,competitivepricinginthemarketplace,priceforstabilityofoperations,andothermarket-orientedpricingfactors,includingculturaldifferencesinperceptionsofpricing.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
38)In________pricing,afirmisconcernedonlywiththemarginalorincrementalcostofproducinggoodstobesoldinoverseasmarkets.
A)full-cost
B)fixed-cost
C)variable-cost
D)demand-based
E)premium
Answer:C
Explanation:Invariable-costpricing,afirmisconcernedonlywiththemarginalorincrementalcostofproducinggoodstobesoldinoverseasmarkets.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
39)Marianne'sChocolatessellwellintheU.S.atapriceof$24perpound,andshehasoverproducedonekindofchocolatebar.MariannehasdecidedtoseeifshecanselltheminMexico,soshesetsapricethatisjustoverhercost.Shefiguresifshemakesevenalittlemoney,itwouldbeworthit.Marianneisusing________pricing.
A)full-cost
B)fixed-cost
C)variable-cost
D)demand-based
E)premium
Answer:C
Explanation:Invariable-costpricing,thefirmisconcernedonlywiththemarginalorincrementalcostofproducinggoodstobesoldinoverseasmarkets.Suchfirmsregardforeignsalesasbonussalesandassumethatanyreturnovertheirvariablecostmakesacontributiontonetprofit.Variable-costpricingisapracticalapproachtopricingwhenacompanyhashighfixedcostsandunusedproductioncapacity.Anycontributiontofixedcostaftervariablecostsarecoveredisprofittothecompany.
Difficulty:2Medium
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:18-02Howtocontrolpricinginparallelimportorgraymarkets.
Bloom's:Apply
AACSB:KnowledgeApplication
Accessibility:KeyboardNaviga
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