Question 1

Which of the following, because it encourages retailers to stock large assortments, often creates a favorable condition for parallel importing?

Accepted Answer

Exclusive distribution, a practice often used by companies to maintain high retail margins to encourage retailers to provide extra service to customers, to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing.

Question 2

The possibility of a _____ market occurs whenever price differences are greater than the cost of transportation between two markets.

Accepted Answer

The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets.

Question 3

Traditionally, the decision of which pricing policy firms should follow depends on all of the following EXCEPT:

Accepted Answer

Traditionally, the decision of which pricing policy to follow depends on the level of competition, the innovativeness of the product, market characteristics, and company characteristics.

Question 4

If a company has as its objective to reach a market segment that is relatively price insensitive and thus willing to pay a premium price for the value received, it will most likely use a pricing strategy called:

Accepted Answer

A company uses skimming when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received.

Question 5

In _____ pricing, the philosophy is that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost.

Accepted Answer

Companies following the full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost.

Question 6

Sales on open accounts are generally recommended when the country of the importer imposes difficult exchange restrictions.

Accepted Answer

Sales on open accounts are generally not recommended when the practice of the trade is to use some other method, when special merchandise is ordered, when shipping is hazardous, when the country of the importer imposes difficult exchange restrictions, or when political unrest requires additional caution.

Question 7

_____ pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity.

Accepted Answer

Variable-cost (or marginal-cost) pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity.

Question 8

Administered pricing is an attempt to establish pricing for an entire market.

Accepted Answer

Administered pricing is an attempt to establish prices for an entire market.

Question 9

The Floral Group, an importing organization in New York, has just bought an excessive amount of perfume from perfume manufacturer in Paris. Unknown to the perfume manufacturer, the Floral Group has sold 25 percent of its order to distributors in France that have been unable to purchase any products from the perfume manufacturer. Which of the following best describes the transaction that has just taken place?

Accepted Answer

Because of the different prices possible in different country markets, a product sold in one country may be exported to another and undercut the prices charged in that country, known as a parallel market.

Question 10

The company that follows the approach of pricing as a static element:

Accepted Answer

The company that follows pricing as a static element, probably exports only excess inventory, places a low priority on foreign business, and views its export sales as passive contributions to sales volume.

Question 11

One of the unscrupulous practices that allows parallel importing to function is when freight forwarders:

Accepted Answer

Freight forwarders can trick manufacturers into believing that the products they handle are destined for a certain market or region, only to divert those products to another market where they can be sold at a lower price through parallel importing. This is usually done by providing fake paperwork or false information to the manufacturer.

Question 12

Assuming that the international marketer has produced the right product, initiated the proper channel of distribution, and promoted goods and services correctly, the effort can fail badly if the international marketer fails to: (pick the best answer)

Accepted Answer

Even when the international marketer produces the right product, promotes it correctly, and initiates the proper channel of distribution, the effort fails if the product is not properly priced.

Question 13

Domestic cartelization is legal in the United States.

Accepted Answer

The legality of cartels at present is not clearly defined. Domestic cartelization is illegal in the United States.

Question 14

One of the primary functions of a cartel is to control markets for its goods and services.

Accepted Answer

A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce.

Question 15

Except for cash in advance, letters of credit afford the least degree of protection for the seller.

Accepted Answer

Except for cash in advance, letters of credit afford the greatest degree of protection for the seller.

Question 16

In _____ pricing, the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.

Accepted Answer

In variable-cost pricing, the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.

Question 17

Firms unfamiliar with overseas marketing and firms producing industrial goods orient their pricing solely on:

Accepted Answer

Firms unfamiliar with overseas marketing and firms producing industrial goods orient their pricing solely on a cost basis.

Question 18

This approach to pricing is suitable when a company has high variable costs relative to its fixed costs.

Accepted Answer

Full-cost pricing is suitable when a company has high variable costs relative to its fixed costs.

Question 19

In general, price decisions are viewed in two ways. Which of the following is one of them?

Accepted Answer

In general, price decisions are viewed two ways: pricing as an active instrument of accomplishing marketing objectives, or pricing as a static element in a business decision.

Question 20

The company that follows the approach of viewing prices as an active instrument:

Accepted Answer

If prices are viewed as an active instrument, the company sets prices (rather than following market prices) to achieve specific objectives, whether targeted returns on profit, targeted market shares, or some other specific goals.

Quiz 18: Pricing for International Markets