MAN 3600 Final Chapter 18

37) ________ refers to a marketing strategy in which the firm develops both the product and its marketing to evoke a distinct impression in the customer's mind, emphasizing differences from competitors' offerings. A) Positioning B) Standardization C) Diversifying D) Adaptation

A) Positioning

1) Frequent business travelers, who are also affluent and eager spenders, represent a global market segment.

True

11) Consumers prefer globally branded products because branding provides a sense of trust and confidence in their purchasing.

True

13) The strength of a global brand is best measured by its brand equity.

True

21) The root cause of gray market activity is a large enough difference in price of the same product between two countries.

True

23) International advertising expenditures vary depending on the size and extent of a firm's foreign operations.

True

25) Promotions usually require a high level of intermediary or retailer sophistication to succeed.

True

26) Most MNEs employ advertising agencies to create promotional content and select media for foreign markets.

True

28) Channel length refers to the number of distributors or other intermediaries that it takes to get the product from the manufacturer to the market.

True

3) In international business, marketing is concerned with identifying, measuring, and pursuing customer needs and market opportunities abroad.

True

30) Global account management means serving a key global customer in a consistent and standardized manner, regardless of where in the world it operates.

True

4) A reputed American automaker competes in the premium car market segment. It targets affluent buyers with refined tastes who would not mind paying several thousand dollars for a premium car. This is an example of positioning.

True

9) Varying income levels among nations usually necessitate that firms make price adjustments and product modifications for individual markets.

True

36) Which of the following is true with regard to a global market segment? A) A global market segment refers to a group of customers belonging to the same generational group within a country. B) Firms target global market segments by using a relatively uniform marketing strategy and programs. C) Buyers in a global market segment are typically characterized by low spending power. D) Buyers in a global market segment rarely buy products representing luxury and style.

B) Firms target global market segments by using a relatively uniform marketing strategy and programs.

39) Which of the following is true with regard to a global positioning strategy? A) A global positioning strategy does not address the shared expectations of a global customer market segment. B) More often than not, global positioning dilutes brand equity in the international market. C) A global positioning strategy reduces international marketing costs. D) Internationalizing firms rarely aim for a global positioning strategy.

C) A global positioning strategy reduces international marketing costs.

66) Galaxy Inc., a reputed global conglomerate, has suffered substantial losses in recent months owing to the problem of end-user prices shooting high up in the export market. In order to regain its competitive advantage abroad, Galaxy must ________. A) increase its budget on technical research B) hire a greater number of semi-skilled workers C) shorten the distribution channel D) centralize production and sourcing to a single location

C) shorten the distribution channel

43) A furniture company that makes its marketing program elements uniform, targeting entire regions with similar products, is demonstrating ________. A) product diversification B) customization C) standardization D) adaptation

C) standardization

International Price Setting (Scenario) The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market. 75) If CCC managers employ rigid cost-plus pricing they would most likely be disadvantaged because ________. A) rigid cost-plus pricing often fails to account for local market conditions B) through rigid cost-plus pricing, added costs of doing business abroad cannot be adjusted C) rigid cost-plus pricing overly focuses on the prevailing conditions in the local markets D) rigid cost-plus pricing is primarily driven by buyer demand in the local markets

A) rigid cost-plus pricing often fails to account for local market conditions

67) The practice of pricing intermediate or finished products exchanged among the subsidiaries and affiliates of the same corporate family located in different countries is known as ________. A) transfer pricing B) breakeven pricing C) premium pricing D) discounting

A) transfer pricing

60) A ________ is a group of managers within a firm that determines which elements of the product will be standardized and which will be adapted locally. A) research and development team B) global new-product planning team C) customer relations management D) talent management team

B) global new-product planning team

34) In international business, firms frequently formulate market segments by ________. A) selling only those products that create derived demand for other related products in the market B) grouping countries based on macro-level variables C) grouping competitors based on their hiring strategies D) grouping identical customers in underground economies

B) grouping countries based on macro-level variables

71) Gray marketers are ________. A) typically large business conglomerates B) unauthorized intermediaries C) authorized distributors D) a firm's most effective promotional channels

B) unauthorized intermediaries

88) ________ refers to the number of distributors or other intermediaries that it takes to get the product from the manufacturer to the market. A) Channel depth B) Marketing mix C) Channel length D) Social network

C) Channel length

41) Adaptation is defined as ________. A) the firm's efforts to make its marketing program elements uniform, with a view to targeting entire regions, or even the global marketplace, with the same product or service B) the firm's attempt at altering its organizational structure to facilitate internationalization C) the firm's efforts to modify one or more elements of its international marketing program to accommodate specific customer requirements in a particular market D) the firm's effort to minimize employee attrition by rewarding performance

C) the firm's efforts to modify one or more elements of its international marketing program to accommodate specific customer requirements in a particular market

90) Channel length can best be defined as ________. A) the number of products sold under a single brand name B) the number of transactions a business buyer makes in the market at a given point of time C) the number of intermediaries between the manufacturer and the retailer D) the length of time it takes for goods to be manufactured for sale

C) the number of intermediaries between the manufacturer and the retailer

58) An American automaker operating in the Asian and the European markets designs various models around a standardized platform. The firm adds parts, features, and regular units to this basic standardized platform according to the preferences of its customers. This exemplifies ________. A) segmentation B) customer relations management C) brand dilution D) modular architecture

D) modular architecture

72) Gray market activity is also called ________. A) market diversification B) target costing C) puffery D) parallel importation

D) parallel importation

International Advertising (Scenario) Quik-Vac Corporation, a U.S.-based company, manufactures small, inexpensive vacuum cleaners that work on rechargeable batteries. Quik-Vac customers typically live in small apartments where a large vacuum cleaner is neither necessary nor easy to use. Quik-Vac managers believe there is a market for the vacuum cleaners outside of the United States, especially in communities where living space is limited. The Quik-Vac marketing department has been assigned the task of creating an advertising campaign to introduce Quik-Vac's offerings to global consumers. 81) Before developing a print media campaign, which of the following must the marketing department of Quik-Vac determine about the company's target market? A) the number of homes with TVs B) the percentage of people owning radios C) the number of global ad agencies in the target market D) the literacy rate among the target population

D) the literacy rate among the target population

84) Many MNEs employ relatively standardized advertising around the world, primarily because by doing so ________. A) they can cater to a wide variety of audiences with different preferences B) they benefit from consumer inputs on effective marketing C) they are able to produce high-quality ads D) they are able to save costs

D) they are able to save costs

10) Adaptation is counterproductive in multidomestic industries.

False

12) A firm can reduce its marketing and advertising costs substantially by focusing on numerous national brands instead of a single global brand.

False

15) The degree of control management desires over price setting in foreign markets is considered to be an important external factor affecting international pricing.

False

16) Prices do not affect customers' perception of value.

False

17) Rigid cost-plus pricing is typically favored by highly experienced exporters.

False

19) When an exporter gains a price advantage because its home-country currency is weakening relative to its customer's currency, then it should consider lowering the prices of its products.

False

2) Branding refers to the process of dividing a firm's total customer base into homogeneous clusters in a way that allows management to formulate unique marketing strategies for each group.

False

22) Gray market activity often leads to enhanced brand equity.

False

24) Promotional activities are typically long-term marketing activities.

False

29) The longer the channel, the lesser intermediaries the firm must compensate.

False

5) Adaptation refers to the process of making the marketing program elements uniform, with a view to targeting entire regions, or even the global marketplace, with the same product or service.

False

6) A standardized marketing approach is inappropriate when products have universal specifications.

False

8) Commodities, industrial equipment, and technology products are difficult to standardize.

False

Refrigerator Adaptations (Scenario) Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm. 50) Which of the following most likely supports Cold-Aire implementing a regional strategy of refrigerator standardization? A) Refrigerator sizes within Latin America tend to be similar. B) Distribution channels in Asian countries are usually complicated. C) American kitchens are typically more spacious than Asian ones. D) Customers in Europe demand exterior ice and water dispensers.

A) Refrigerator sizes within Latin America tend to be similar.

International Price Setting (Scenario) The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market. 73) Which of the following questions would be the most important to evaluate initially before setting a price for the lounge chairs exported to England? A) What is the mark up price quoted by the London retailer for CCC's products? B) What is the average price that Londoners pay for upholstered chairs? C) How many lounge chairs are sold in London retail stores every year and at what price? D) Do many global market segments exist in the European Union?

A) What is the mark up price quoted by the London retailer for CCC's products?

35) A global market segment refers to ________. A) a group of customers who share similar characteristics across many national markets B) a group of customers belonging to the same generational group within a country C) a group of less-affluent customers in the global market D) a group of buyers in the international market who are largely unaffected by changes in pricing

A) a group of customers who share similar characteristics across many national markets

77) Manufacturers of branded products are concerned about gray market activity because it can lead to ________. A) a tarnished brand image B) empowerment of distributors C) lower quality outputs D) decreased productivity

A) a tarnished brand image

47) In which of the following industries is an adaptation strategy LEAST likely to be appropriate? A) consumer electronics B) publishing C) software D) television broadcasting

A) consumer electronics

63) All of the following refer to external factors that impact international pricing EXCEPT ________. A) cost of manufacturing B) value-added taxes C) shipping D) anticipated fluctuations in currency exchange rates

A) cost of manufacturing

79) Buyer receptiveness differs as a function of ________. A) culture and language B) lobbying C) media expenses D) product quality

A) culture and language

46) Adaptation is often necessitated due to ________. A) differences across countries in language, culture, economic conditions, and other factors B) unstable demand C) high import tariffs D) similarities in customer preferences across various demographic groups worldwide and the increased emphasis on the homogenization of global markets

A) differences across countries in language, culture, economic conditions, and other factors

87) Serving a key global customer in a consistent and standardized manner, regardless of where in the world it operates is known as ________. A) global account management B) offshoring C) marketing communications D) insourcing

A) global account management

64) The problem of end-user prices reaching exorbitant levels in the export market, caused by multilayered distribution channels, intermediary margins, tariffs, and other international customer costs is known as ________. A) international price escalation B) incremental pricing C) standardization D) puffery

A) international price escalation

69) A subsidiary is most likely to receive favorable treatment from an MNE if it is located in a country with ________. A) lower corporate income-tax rates B) significant restrictions on profit repatriation C) low tariffs for the product in question D) political instability

A) lower corporate income-tax rates

56) Brand equity can best be defined as the ________. A) market value of a brand B) attractiveness of a brand name C) durability of a brand D) lack of customer confidence in a brand

A) market value of a brand

Refrigerator Adaptations (Scenario) Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm. 51) Which of the following best supports Cold-Aire making fewer refrigerator adaptations? A) Adaptation caters to local consumer demands. B) Standardization reduces manufacturing expenses. C) Adaptation establishes a sense of buyer loyalty. D) Standardization limits choices available to consumers.

B) Standardization reduces manufacturing expenses.

54) Adaptation is more costly than standardization because ________. A) a firm that chooses adaptation over standardization is likely to lose customers in the long run B) adaptation often requires the firm to engage in substantial modifications to product design, manufacturing, pricing, distribution, and communications C) adaptation requires the firm to scale up production without regard to quality D) standardization holds no market risks

B) adaptation often requires the firm to engage in substantial modifications to product design, manufacturing, pricing, distribution, and communications

86) Promotional activities ________. A) are intended to stabilize the demand for consumer goods in advanced economies B) are short-term marketing activities intended to stimulate an initial purchase, immediate purchase, or increased purchases of the product C) do not include coupons and demonstrations D) are strategies designed to tap the market potential of products that have a short shelf life in emerging markets and developing economies

B) are short-term marketing activities intended to stimulate an initial purchase, immediate purchase, or increased purchases of the product

44) When managers attempt to standardize their international marketing program, they can expect ________. A) diminished efficiency B) cost reduction C) brand dilution D) very high profit margins

B) cost reduction

89) A firm that uses the Internet to provide detailed product information and the means for foreigners to buy offerings is using ________. A) modular architecture B) direct marketing C) lengthy distribution channels D) internal marketing

B) direct marketing

80) All of the following factors are important to consider about the target audience of an international advertising campaign EXCEPT ________. A) buying motivations B) entrepreneurial experiences of consumers C) purchasing power D) age and education

B) entrepreneurial experiences of consumers

31) In international business, marketing is concerned with ________. A) disseminating the organizational culture of a firm across global subsidiaries B) identifying, measuring, and pursuing customer needs and market opportunities abroad C) maintaining a steady flow of product-based innovations D) interacting with global business leaders

B) identifying, measuring, and pursuing customer needs and market opportunities abroad

61) Which of the following constitutes a major disadvantage for exporting firms that primarily use independent distributors based abroad? A) inability to monitor currency exchange rates B) lack of control over pricing C) absence of brand loyalty among customers D) limited access to low-cost labor

B) lack of control over pricing

International Advertising (Scenario) Quik-Vac Corporation, a U.S.-based company, manufactures small, inexpensive vacuum cleaners that work on rechargeable batteries. Quik-Vac customers typically live in small apartments where a large vacuum cleaner is neither necessary nor easy to use. Quik-Vac managers believe there is a market for the vacuum cleaners outside of the United States, especially in communities where living space is limited. The Quik-Vac marketing department has been assigned the task of creating an advertising campaign to introduce Quik-Vac's offerings to global consumers. 82) Standardized advertising, if used by Quik-Vac, would most likely ________. A) cater to customers with varied preferences worldwide B) simplify Quik-Vac's communications strategy and save costs C) appeal to the highly literate populations only D) make importation of raw materials mandatory for Quik-Vac

B) simplify Quik-Vac's communications strategy and save costs

55) Perhaps the most important distinction between standardization and adaptation is that ________. A) standardization helps the firm customize products according to customer preferences, while adaptation helps the firm save time B) standardization helps the firm cut costs, while local adaptation helps the firm more precisely cater to local needs and requirements C) standardization helps the firm cater to the needs of local customers, while adaptation helps the firm save costs through mass production D) standardization helps the firm upgrade quality to suit the unique tastes of consumers, while adaptation emphasizes uniformity

B) standardization helps the firm cut costs, while local adaptation helps the firm more precisely cater to local needs and requirements

59) All of the following are true of global new-product planning teams EXCEPT ________. A) they assemble employees with special knowledge and expertise B) they are responsible for global promotion of products and services C) they include geographically-diverse employees in team activities D) they determine which elements of the product will be standardized

B) they are responsible for global promotion of products and services

Refrigerator Adaptations (Scenario) Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm. 49) Which of the following questions would be the most important for Cold-Aire managers to evaluate when determining how the firm could reduce production costs in a single market? A) Has the demand for Cold-Aire refrigerators declined in recent years? B) Are customized Cold-Aire refrigerators as user friendly as the ones that are not? C) Can Cold-Aire standardize its refrigerators? D) Is Cold-Aire refrigerators likely to have greater demand in warmer countries than in colder regions?

C) Can Cold-Aire standardize its refrigerators?

Refrigerator Adaptations (Scenario) Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm. 52) Which of the following would most likely be a result of increased standardization of Cold-Aire refrigerators? A) Cold-Aire would stop exporting refrigerators completely. B) Cold-Aire would open a facility to produce customized refrigerator models. C) Cold-Aire would implement a uniform international marketing campaign. D) Cold-Aire would hire fewer workers and pay lower wages.

C) Cold-Aire would implement a uniform international marketing campaign.

33) ________ is the process of dividing the firm's total customer base into homogeneous clusters in a way that allows management to formulate unique marketing strategies for each group. A) Brand management B) Customer relationship management C) Market segmentation D) Market diversification

C) Market segmentation

53) Which of the following refers to an advantage for firms that adapt a unique marketing program for an individual market? A) By doing so, firms decrease their reliance on foreign market intermediaries for large sales. B) By doing so, firms scale up production substantially to meet the needs of a large and growing market. C) Products are tailored to specifically meet the exclusive needs of customers in that market. D) Governments provide heavy tax reliefs to firms that modify products and services.

C) Products are tailored to specifically meet the exclusive needs of customers in that market.

85) Which of the following is true with regard to global advertising agencies? A) They are also known as unauthorized intermediaries. B) They rarely offer additional services such as market research, publicity, and package design. C) They can create advertising that is both global and sensitive to local conditions. D) Typically, they do not cater to MNEs.

C) They can create advertising that is both global and sensitive to local conditions.

38) Which of the following is true with regard to positioning? A) Unlike branding, positioning is not intended to evoke the specific attributes that consumers associate with a product. B) More often than not, positioning dilutes brand equity. C) Through positioning, firms emphasize differences from competitors' offerings. D) Positioning refers to the process of scaling up production in a market characterized by high demand.

C) Through positioning, firms emphasize differences from competitors' offerings.

International Price Setting (Scenario) The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market. 74) Which of the following should most likely be considered by managers of CCC before setting the price for the lounge chairs manufactured by the company? A) In what other markets could CCC export its high-priced line of furniture? B) Would the London retailer be able to recommend appropriate intermediaries? C) What type of pricing strategy best corresponds to the corporate goals of CCC? D) Does CCC plan to implement product diversification in the future?

C) What type of pricing strategy best corresponds to the corporate goals of CCC?

48) Managers consider several different rationales when adapting marketing program elements, such as ________. A) high and relatively stable incomes of buyers belonging to the global market segment B) stable demand of consumer goods worldwide C) differences in living standards and economic conditions D) need for improved planning and control

C) differences in living standards and economic conditions

65) Which of the following refers to a key strategy used by corporations to combat international price escalation? A) lengthen the distribution channel B) ship assembled products to save additional labor costs C) redesign the product to remove costly features D) centralize production and sourcing to a single location

C) redesign the product to remove costly features

68) MNEs often engage in transfer pricing for ________. A) stabilizing their annual revenues B) generating additional sales by depressing prices in developing countries and increasing prices in advanced economies C) shifting profits out of a country that has high corporate income taxes into a country with low corporate income taxes to increase company-wide profitability D) boosting productivity and efficiency in the long run

C) shifting profits out of a country that has high corporate income taxes into a country with low corporate income taxes to increase company-wide profitability

57) Which of the following characterize the most successful global brands? A) low visibility B) narrow appeal C) status symbols D) highly complex product features

C) status symbols

International Advertising (Scenario) Quik-Vac Corporation, a U.S.-based company, manufactures small, inexpensive vacuum cleaners that work on rechargeable batteries. Quik-Vac customers typically live in small apartments where a large vacuum cleaner is neither necessary nor easy to use. Quik-Vac managers believe there is a market for the vacuum cleaners outside of the United States, especially in communities where living space is limited. The Quik-Vac marketing department has been assigned the task of creating an advertising campaign to introduce Quik-Vac's offerings to global consumers. 83) Which of the following can be reasonably inferred if Quik-Vac places increased emphasis on international promotional activities? A) that it intends to scale down production of vacuum cleaners B) that it is disinclined to enter emerging markets C) that it intends to stimulate an initial purchase, immediate purchase, or increased purchases of its products D) that it is overly dependent on foreign intermediaries

C) that it intends to stimulate an initial purchase, immediate purchase, or increased purchases of its products

78) Differences in culture, laws, and media availability imply ________. A) that culture is a weak determinant of buyer attitudes toward the role and function of advertising B) that international advertising expenditures tend to remain unchanged regardless of the firm's foreign operations C) that it is seldom possible to duplicate in foreign markets the type and mix of advertising used in the home market D) that it is difficult to influence buyer perception through media

C) that it is seldom possible to duplicate in foreign markets the type and mix of advertising used in the home market

45) A global brand can best be defined as ________. A) a brand with a complicated value-chain B) a brand that focuses on a single generational group within a country C) a brand that uses a variety of marketing campaigns in different markets D) a brand whose positioning, advertising strategy, look, and personality are standardized worldwide

D) a brand whose positioning, advertising strategy, look, and personality are standardized worldwide

76) The root cause of gray market activity is ________. A) a firm's inability to control production and distribution costs B) a significant difference in price between national distributors C) the dominance of substandard products in local markets D) a large enough difference in price of the same product between two countries

D) a large enough difference in price of the same product between two countries

62) Locating manufacturing in those countries with low-cost labor enables a firm to ________. A) charge premium prices B) create artificial demand C) standardize products D) charge lower prices

D) charge lower prices

70) Which of the following refers to an advantage of firms that enter new markets through FDI? A) low employee attrition B) minimal competition from other players in the market C) direct selling of products to consumers through the Internet D) control over pricing strategy

D) control over pricing strategy

42) In which of the following industries is standardization more likely to be pursued? A) local industries B) software C) publishing D) credit cards

D) credit cards

32) Which of the following best characterizes the purpose of a global marketing strategy? A) guides firms on hiring highly skilled resources B) provides managers with demographic data C) helps managers check high employee turnover D) guides firms in targeting the right customer segments

D) guides firms in targeting the right customer segments

40) Taken together, the key elements of a company's marketing program are known as the ________. A) product mix B) value chain C) product lifecycle D) marketing mix

D) marketing mix

14) Global new-product planning teams formulate best practices that the firm implements in all its units worldwide.

True

18) Incremental pricing refers to setting prices to cover only the firm's variable costs, but not its fixed costs.

True

20) MNEs typically centralize transfer pricing under the direction of the chief financial officer at corporate headquarters.

True

27) Direct marketing entails selling directly to end users.

True

7) A standardized marketing approach is appropriate when customers seek similar features in the product or service.

True