Question 1

For years, Mercedes-Benz utilized a ________ pricing strategy; however, this created an opportunity for Toyota to introduce its luxury Lexus line and undercut Mercedes.

Accepted Answer

skimming

Question 2

If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as \"innovators\" and \"early adopters\" with relatively inelastic demand curves, the company should use the ________ pricing strategy.

Accepted Answer

skimming

Question 3

Two automakers that have joined the race to bring low-cost cars to the emerging market are:

Accepted Answer

Tata and Nissan

Question 4

When Sony introduced the first consumer VCRs in the 1970s, the retail price exceeded $1,000. Within a few years the price dropped well below $500. This is an example of:

Accepted Answer

skimming strategy

Question 5

A market ________ pricing strategy calls for setting price levels that are low enough to quickly build market share

Accepted Answer

penetration

Question 6

In India, consumers do not like to be locked in to long-term contracts, and Apple distributes its iPhone exclusively through stores operated by Airtel, an Indian carrier, and Vodaphone. This pricing is an example of:

Accepted Answer

razors and blades

Question 7

A firm without much export experience uses the rigid cost-based pricing method. Which of the following considerations is the exporter ignoring?

Accepted Answer

all of the above

Question 8

Mexican customers generally carry small coins. To keep prices of shampoo and detergent below 11 or 12 pesos, Procter & Gamble is using which method of pricing?

Accepted Answer

target costing

Question 9

As a starting point, firms that comply with Western cost-accounting principles typically use the pricing method known as:

Accepted Answer

full absorption cost

Question 10

Which pricing strategy has the advantage of being simple to calculate but has the disadvantage of ignoring demand and competitive conditions?

Accepted Answer

cost-based

Question 11

All of the following activities must be performed when goods cross international boundaries except

Accepted Answer

using cost-based pricing method

Question 12

A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to:

Accepted Answer

price escalation

Question 13

The following activities must be performed when goods cross international boundaries except

Accepted Answer

receiving payments

Question 14

If a distributor\'s margins are based on the \"landed\" price of an import shipment, they will be based on

Accepted Answer

all of the above

Question 15

Coffee bearing the Fairtrade label signifies that the coffee is:

Accepted Answer

purchased with farmers getting a fair share based on the quality

Question 16

Which of the following does not contribute to price escalation in global marketing?

Accepted Answer

different Incoterms as incentives

Question 17

In July 2001, the euro\'s value relative to the dollar was about â¬1.00 = $0.85. By November 2009, the euro had strengthened to â¬1.00 = $1.48. In February 2012, one euro was equal to $1.33. All other things being equal, if a European-based global company wants to preserve margins for goods exported to the U.S. market, the company should:

Accepted Answer

raise prices in dollars

Question 18

Which of the following would not be used by an exporter with a weak home-country currency?

Accepted Answer

Exploit marketing opportunities in all markets

Question 19

Suppose a company selling in various country markets makes statements such as \"we know what the customer wants, and he or she will have to pay for it.\" This is an indication of a(n) ________ approach to setting prices.

Accepted Answer

ethnocentric

Question 20

All of the listed advantages are for \"Extension or Ethnocentric\" pricing strategy except:

Accepted Answer

it does not respond to the competitive and market conditions of each national market

Question 21

If company managers decide to set the export price for a particular product at an amount equivalent to the home-country price, they would be using which approach to pricing?

Accepted Answer

ethnocentric

Question 22

Which of the following would not be taken into account by a company using an ethnocentric approach to pricing decisions?

Accepted Answer

None of the above would be taken into account by a company using ethnocentric pricing

Question 23

According to a recent study of European industrial exporters, companies that utilized independent distributors would be most likely to utilize:

Accepted Answer

polycentric pricing

Question 24

Parallel importing occurs when companies employ a(n) ________ multinational pricing policy that calls for setting different prices in different country markets.

Accepted Answer

polycentric

Question 25

Which automaker was described as using an ethnocentric approach to setting prices in the United States?

Accepted Answer

Mercedes

Question 26

The unauthorized distribution of trademarked goods to exploit price differentials in world markets is known as:

Accepted Answer

gray marketing

Question 27

When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers to purchase Tag Heuer products from authorized dealers only, the company is most likely attempting to combat the ________ problem.

Accepted Answer

gray marketing

Question 28

If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, then that company may be accused of:

Accepted Answer

gray marketing

Question 29

In the Uruguay round of GATT negotiations, many countries took issue with the U.S. system of laws, in part because historically the U.S. Commerce Department almost always ruled in favor of the U.S. company that filed the complaint. This was related to the laws pertaining to:

Accepted Answer

dumping

Question 30

________ occurs when a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained.

Accepted Answer

Vertical price fixing

Question 31

Germany\'s Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with Archer Daniels Midland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit?

Accepted Answer

price fixing

Question 32

Nintendo was fined nearly $150 million after it was determined that the video game company had colluded with European distributors. The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices. This is a classic example of:

Accepted Answer

price fixing

Question 33

Cost-based,\" \"market-based,\" and \"negotiated\" are three approaches to:

Accepted Answer

transfer pricing

Question 34

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25% of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing.

Accepted Answer

transfer pricing

Question 35

Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?

Accepted Answer

Bell Helicopter Textron

Question 36

Which of the following is true about proper use of the term \"countertrade\"?

Accepted Answer

\"Countertrade\" is a blanket term that refers to several different types of business transactions

Question 37

The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as:

Accepted Answer

countertrade

Question 38

One of the highest profile companies, PepsiCo, which has done business in the Soviet and post-Soviet market for decades, has used this form of countertrade:

Accepted Answer

barter

Question 39

The direct exchange of goods or services between parties in lieu of monetary payment is known as:

Accepted Answer

barter

Question 40

Which of the following forms of countertrade does not require use of money or credit between parties?

Accepted Answer

barter

Question 41

Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?

Accepted Answer

offset

Question 42

If a company\'s home currency strengthens, it is:

Accepted Answer

an unfavorable turn of events for the typical exporter

Question 43

To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the United Kingdom whose value was equivalent to 130% of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:

Accepted Answer

offset

Question 44

Givenchy and Christian Dior\'s Dune fragrance are two of the luxury perfume brands that are sometimes diverted from authorized channels for sale at mass-retail outlets. This practice is referred to as:

Accepted Answer

gray marketing

Question 45

Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:

Accepted Answer

compensation trading

Question 46

When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:

Accepted Answer

switch trader

Question 47

The country which has the highest rates of value-added tax (VAT) in the European Union is:

Accepted Answer

Denmark

Question 48

Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60% of LVMH\'s operating profit. On the other hand, Louis Vuitton spends $10 million annually combatting

Accepted Answer

counterfeiters in countries such as Turkey, South Korea, & Italy

Question 49

Luxury good marketers found a new way to combat gray market imports into the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume without permission. The distinctive packaging of the perfume is also protected by the U.S. Copyright law. The ruling implies that

Accepted Answer

Costco and Walmart will be able to sell Givenchy with authorization

Question 50

One of the reasons why the initial enthusiasm for OLPC [one laptop per child] did not translate into firm commitments for orders was

Accepted Answer

the higher price of computer XO

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