Question 1

As required levels of distribution increase, so do customer prices relative to the importer's price.

Accepted Answer

This is because as the product passes through more intermediaries (distributors, wholesalers, retailers), each one needs to add their own markup to cover their costs and make a profit. This ultimately results in a higher price for the end customer.

Question 2

Gray market activities harm distributor relations, tarnish the manufacturer's brand equity, and undermine the integrity of the distribution channel.

Accepted Answer

Gray market activities involve the sale of genuine products by unauthorized distributors or retailers in channels not intended by the manufacturer. This can lead to undercutting of prices, unfair competition between authorized and unauthorized distributors, and the presence of counterfeit or damaged products in the gray market. All these factors can harm the relationship between the manufacturer and its authorized distributors, damage the brand image of the manufacturer, and compromise the quality and safety of products sold through the distribution channel.

Question 3

Which of the following is likely if the distribution channel for a product in the foreign country is long?

Accepted Answer

If the distribution channel for a product in a foreign country is long, it is likely that the foreign country buyers will pay a high price. This is because each intermediary in the channel adds their own markup, leading to a higher final price for the product.

Question 4

Existence of gray markets leads to which of the following outcomes?

Accepted Answer

Gray markets create a free-rider problem, where legitimate distributors' investments in supporting a manufacturer's product become less productive as some customers buy their products through gray market channels instead. This reduces the incentives for legitimate distributors to invest in supporting the manufacturer's product.

Question 5

If a company charges its subsidiary in a foreign country too low a transfer price, it can be accused of dumping.

Accepted Answer

Dumping refers to a practice where a company exports its products to another country at a lower price than the price charged in its domestic market. If a company charges its subsidiary in a foreign country too low a transfer price, it can be accused of dumping, as the subsidiary can then sell the products at a lower price than local competitors in that country.

Question 6

If a society is collectivist, it would imply that the self-worth of the people is rooted in individual achievements.

Accepted Answer

A collectivist society values the group or community over the individual, and self-worth is rooted in collective achievements and contributions.

Question 7

Web-crawling technology searches for counterfeit storefronts and sales by detecting domain names similar to legitimate brands.

Accepted Answer

Web-crawling technology can detect domain names that are similar to legitimate brands and help in finding counterfeit storefronts and sales.

Question 8

Coors brand slogan "Turn it loose" translated into Spanish was interpreted as "suffer from diarrhea," which is an example of why marketers may need to change brand elements when they launch products and services globally.

Accepted Answer

The translation of Coors brand slogan "Turn it loose" into Spanish as "suffer from diarrhea" is an example of the difficulties faced by marketers regarding translating brand elements when launching products and services globally. They may need to change brand elements to avoid such misinterpretations.

Question 9

The use of media may require international adaptation because media availability varies from country to country.

Accepted Answer

Access to media varies depending on the country, therefore, different adaptations may be necessary to ensure effective communication and distribution of messages. This includes adapting to different languages, cultural norms, and media consumption habits.

Question 10

Straight extension means using an established product's brand name for a new item in the same product category.

Accepted Answer

The answer of Straight extension means using an established product's...

Question 11

In India, where people often buy items like cigarettes one at a time because incomes are low and people shop daily because homes lack storage and refrigeration, ________ remains an important function of intermediaries and helps perpetuate long channels of distribution.

Accepted Answer

Breaking bulk is the process of buying large quantities of goods from manufacturers or wholesalers and then selling them in smaller quantities to retailers or end consumers. In India, where people buy small quantities because of low income and limited storage space, breaking bulk remains an important function of intermediaries such as small retailers or street vendors. As a result, long channels of distribution are perpetuated, and there are more opportunities for middlemen to profit from the supply chain.

Question 12

If PepsiCo charges what each country could afford, ignoring cost differences from country to country, it would be using a(n) ________ price.

Accepted Answer

Market-based pricing involves setting prices based on what the market can bear, which aligns with the strategy of charging what each country could afford, rather than strictly on the cost of production or a uniform price across all markets.

Question 13

Forward invention refers to reintroducing earlier product forms that are well adapted to a foreign country's needs.

Accepted Answer

Forward invention involves creating new products or significantly modifying existing ones to meet the needs of a foreign market, not reintroducing earlier product forms.

Question 14

If Kellogg's offered different varieties of breakfast cereals in India as compared to Australia, and also positioned its products differently in the two countries, then Kellogg's would be engaging in dual adaptation.

Accepted Answer

Dual adaptation refers to the process of adapting a product to local market conditions and preferences in both product design and marketing. Since Kellogg's is offering different varieties of breakfast cereals and positioning its products differently in India and Australia, it is engaging in dual adaptation.

Question 15

Dumping occurs when a company ________.

Accepted Answer

Dumping occurs when a company enters a foreign market and charges either less than its costs or less than it charges at home. This is often done to gain a foothold in the new market and drive out competitors in the long term.

Question 16

Communication adaptation occurs when companies change marketing communications for each local market.

Accepted Answer

Communication adaptation is the process of modifying marketing communications to suit the unique preferences and cultural norms of different local markets. This may involve translating messages into different languages, using images and symbols that resonate with local audiences, and adjusting communication style and tone to align with cultural norms.

Question 17

When companies sell on the Internet, price becomes transparent, and price differentiation between countries declines.

Accepted Answer

With the ease of access to the internet and the availability of price comparison tools, customers can easily check prices of a particular product from different countries. This transparency in pricing reduces the price differentiation between countries as customers can easily compare prices and choose from where to buy a particular product.

Question 18

Product adaptation not only involves altering the product to meet local preferences, but also calls for a change in the communication strategy.

Accepted Answer

The answer of Product adaptation not only involves altering the...

Question 19

Various governments force companies to charge the ________ price, which is charged by other competitors for the same or a similar product.

Accepted Answer

Arm's-length price refers to the price at which independent parties would transact, ensuring fairness and competitiveness, often enforced in contexts to prevent tax evasion or ensure competitive practices.

Question 20

As people in developing countries often prefer to buy in smaller quantities, ________ is one of the most important functions of intermediaries in developing countries and helps perpetuate the long channels of distribution, which are a major obstacle to the expansion of retailing.

Accepted Answer

Breaking bulk refers to the process of intermediaries purchasing large quantities from manufacturers and then breaking them down into smaller quantities for sale to consumers. This is important in developing countries where consumers prefer to buy in smaller quantities. As a result, intermediaries play a crucial role in the distribution channel and this perpetuates the long channels of distribution, which can be a major obstacle to retail expansion.

Quiz 8: Tapping Into Global Markets