Chapter 11 Pricing Decisions, Chp. 12- MAR4156, Global Marketing 2

Which of the following most accurately describes the relative length of consumer and industrial distribution channels?

A) Consumer channels tend to be longer (consist of more intermediaries) than industrial channels.

When the seller has agreed to deliver the goods to the buyer at the place the buyer names in the country of import, with all costs, including duties paid is referred to as:

A) DDP.

________ is derived from the price required to be competitive in the global marketplace.

A) Market-based transfer price

Which of the following does not qualify as a "category killer?"

A) Victoria's Secret

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

A) barter

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

A) barter.

When British entrepreneur Richard Branson established the first Virgin Megastore in France, he invested a great deal of money to develop a retail space on the famous Champs-Elysées; Judging by the approach Branson used, he and his management team must have viewed France as:

A) culturally close and easy to enter.

"Containerization" refers to a company's:

A) designing attractive product packaging that will help a product "sell itself."

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?

A) ethnocentric

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.

A) ethnocentric

Which of the following correctly characterizes the retailing strategy of Benetton, IKEA, and Gap?

A) few product categories, own-label focus

All of the listed advantages are for "extension or ethnocentric" pricing strategy except:

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

Saks Fifth Avenue has ________ stores in the Middle East

A) licensed

"Organized retail" is a term used to describe:

A) modern chain stores.

Coca-Cola Company's global marketing leadership position is based in part on its ability to put Coke "within an arm's reach of desire"; in other words, it is the ability to create:

A) place utility.

In the axis which differentiates between retailers, IKEA falls in:

A) quadrant A.

In July 2001, the euro's value relative to the dollar was about €1.00 = $0.85. By November 2009, the euro had strengthened to €1.00 = $1.48. In February 2012, one euro was equal to $1.33 and in August 2015 €1.00 = $0.99 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:

A) raise prices in dollars.

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:

A) skimming strategy.

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:

A) switch trader.

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

B) Bell Helicopter Textron

Which country has the biggest market for Tupperware?

B) Indonesia

What solution did Andersen Consulting provide to the Moscow Bread Company to solve the problem of stale bread?

B) Package the bread in plastic bags.

An important new tool for inventory management is:

B) RFID.

Departmentalized, single-story retail establishments that offer food and nonfood items, mostly on a self-service basis are called:

B) Supermarkets.

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

B) an unfavorable turn of events for the typical exporter.

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.

B) barter.

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 battling.

B) counterfeiters in countries such as Turkey, South Korea, & Italy.

Peer-to-peer (p-to-p) marketing uses distribution channels through:

B) electronic commerce.

Which of the following correctly characterizes the retailing strategy shared by Toys "R" Us and Virgin Megastores?

B) few product categories, manufacturer brand focus

Historically, many companies that used the ________ for pricing were located in the Pacific Rim.

B) penetration strategy

Order processing, warehousing, and inventory management are all functions pertaining to:

B) physical distribution and logistics.

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

B) polycentric

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

B) polycentric pricing.

Marketing channels exist to create utility for customers; The major categories of channel utility include all of the following except:

B) price utility.

In less-developed countries the most important channel of distribution is:

B) public marketplaces.

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

B) skimming

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.

B) skimming.

By definition, ________ feature a narrow but deep merchandise mix and high levels of service

B) specialty retailers

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?

B) target costing

When a company uses intermodal or multimodal transportation, it is:

B) using land and water shipping.

The retail environment in developing countries presents challenges for marketing nonperishable items; In Mexico, Proctor & Gamble, Unilever, Colgate-Palmolive, and other global consumer product companies use ________ for their products

C) mom-and-pop stores

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

C) offset

eBay was a pioneer in a form of online marketing known as:

C) p-to-p.

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

C) penetration

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25 percent 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.

C) transfer pricing

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

C) transfer pricing.

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

C) using the cost-based pricing method.

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

D) "Countertrade" is a blanket term that refers to several different types of business transactions.

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

D) Denmark.

If a commodity raw material comes from Africa, gets refined in Asia, then shipped to South America for finishing, and finally transported to the Middle East and then sold around the world—this represents a similar process used for products marketed by:

D) IKEA.

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

D) Mercedes

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

D) Shift sourcing outside home-country market.

Which of the following transportation modes ranks lowest in capability?

D) air

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:

D) compensation trading.

When British entrepreneur Richard Branson established the first Virgin Megastore in Japan, he established a joint venture with the Marui retailing chain; Judging by the approach Branson used, he and his management team must have viewed Japan as:

D) culturally distant and difficult to enter.

When Walmart stores first expanded into Mexico, management established a joint venture with the country's largest retailer; Judging by the approach Walmart used, management must have viewed Mexico as:

D) culturally distant and difficult to enter.

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 that company may be accused of:

D) dumping.

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:

D) dumping.

When companies adopt "indirect involvement" channel they have all of the following activities except:

D) establish their own sales force.

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.

D) gray market

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:

D) offset.

For positive proof that dumping has occurred in the United States, both ________ and injury must be demonstrated.

D) price discrimination

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

D) price escalation.

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?

D) price fixing

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:

D) price fixing.

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:

D) razors and blades.

In exchange for a pledge to carry at least 40 different Procter & Gamble products, participating stores receive regula visits from P & G representatives who tidy and arrange display areas; This motivational program is referred to as:

E) "golden store" program.

Which of the following is an appropriate guideline for companies selecting independent distributors in international markets?

E) All of the above are appropriate guidelines.

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

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

Which of the following is the largest retailer in the world in terms of annual sales according to the top five global retailers, 2012?

E) Walmart

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

E) all of the above

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

E) all of the above

In spite of Walmart's potential to transform India's retail sector for the better, Indian activists and policy makers are worried because:

E) all of the above

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

E) cost-based

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

E) countertrade.

Physical distribution and logistics are concerned with all but one of the following:

E) designing in-store displays.

Inventory management is:

E) ensuring cost control.

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

E) full absorption cost.

Gray markets impose several costs or consequences on global marketers, which does not include:

E) increase product demand

All import charges are assessed against the

E) landed price

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

E) receiving payments.

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:

C) Costco and Walmart will be able to sell Givenchy with authorization.

Which personal computer company began life as a b-to-b marketer and then began marketing direct to the home PC market?

C) Dell

All of the following basic consideration questions are important for those whose responsibility includes setting prices on goods that cross borders except:

C) Does the local market use target costing?

Which of the following is not an appropriate guideline for companies selecting independent distributors in international markets?

C) Give local distributors control over marketing strategy.

When Walmart entered the German market, ________ were already entrenched

C) Hard discounters

Which of the following statements is not correct?

C) Home Depot pulled out of China.

All of the following stores are categorized as "superstores" except:

C) IKEA.

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

C) Tata and Nissan.

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

C) Vertical price fixing

Sales representatives in which Japanese industry cultivate close, long-term relations with customers by selling door-to-door?

C) automobiles

The entry global retailing market expansion strategies include all of the following except:

C) departmental stores.

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

C) different Incoterms as incentives

Some wine importers insist on shipping their wines in refrigerated containers to protect the wines from being damaged by high temperatures; Such importers are creating which kind of utility?

C) form utility

Which approach to retail expansion is most appropriate when targeting a country that management considers both culturally close and easy to enter?

C) franchise

To motivate shopkeepers to stock more of P & G's products, the company launched a:

C) golden store program.

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:

C) gray market.

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

C) gray marketing.

Channel decisions are important because:

C) it is expensive to terminate.

Which of the following categories best describes the approach of Britain's Marks & Spencer to global retailing?

C) many product categories, own-label focus