Question 1

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

Accepted Answer

Pricing is a key element of the marketing mix and can be used as an active instrument to accomplish marketing objectives such as increasing market share, maximizing profits, or positioning a product in the market. The other options are not accurate or do not fully capture the role of pricing in marketing decision-making.

Question 2

An Advanced Pricing Agreement is a requirement with the IRS and a taxpayer on transfer pricing methods that will be applied to the taxpayer's transactions with an affiliate.

Accepted Answer

An Advanced Pricing Agreement (APA) is a legal agreement between the IRS and a taxpayer that outlines the transfer pricing methods that will be applied to the taxpayer's transactions with an affiliate. It is a proactive measure taken by taxpayers to avoid disputes with the IRS regarding transfer pricing. Therefore, the statement is true.

Question 3

______________ imports develop when importers buy products from distributors in one country and sell them in another country to distributors who are not part of the manufacturer's regular distribution system.

Accepted Answer

Parallel imports refer to the importing of products from one country to another without the permission of the manufacturer but with the consent of the owner of the intellectual property rights. This type of import is also known as gray-market or parallel trade. Parallel imports can create price differences between different markets and can lead to legal disputes between importers and manufacturers.

Question 4

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 only takes into account the incremental cost of producing products for foreign markets, hence it is the best choice for this scenario. Full-cost pricing takes all costs (fixed and variable) into account, while fixed-cost pricing only looks at the fixed costs of production. Demand-based pricing takes into account the demand for the product, while supply-based pricing considers the supply of the product.

Question 5

If a U.S.firm sells Vietnamese producer equipment that is then used to make clothing that the United States agrees to buy back from Vietnam,the two companies most likely have entered into a countertrade arrangement called a product buy-back agreement.

Accepted Answer

A product buy-back agreement is a form of countertrade where a company sells equipment or technology to a foreign company in exchange for a commitment to buy the resulting products or services. In this case, the American firm sells equipment to a Vietnamese producer, which then uses it to manufacture clothing for the United States. The United States agrees to buy back the clothing, which fulfills the obligation of the product buy-back agreement.

Question 6

The Ryan 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 Ryan 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

This transaction is an example of parallel importing, which involves the unauthorized import of genuine branded products from one country to another without the permission of the brand owner. The Ryan Group purchased the perfume from the manufacturer in Paris and then sold it to distributors in France who were unable to purchase products directly from the manufacturer. This is considered parallel importing because the perfume is genuine and was not produced specifically for this market, but it was imported and sold without the brand owner's permission.

Question 7

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

Accepted Answer

Freight forwarders may send fake paperwork to manufacturers about the final destination of products they handle in order to divert them to a different market than originally intended, allowing for parallel importing to take place. This is an unscrupulous practice that undermines the manufacturer's ability to control distribution and pricing of their products.

Question 8

Another term for parallel importing is:

Accepted Answer

Parallel importing is also known as gray-market goods, which refer to products that are lawfully sold outside of the manufacturer's authorized distribution channels. This can occur when a product is sold in one country at a lower price than in another country, leading to individuals or companies importing the product and selling it in the higher-priced market.

Question 9

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

Accepted Answer

The answer of Which of the following,because it encourages retailers...

Question 10

Prices of goods transferred from a company's operations or sales units in one country to its units elsewhere may be adjusted to enhance the ultimate profit of the company as a whole.This is called intracompany pricing.

Accepted Answer

Intracompany pricing refers to the practice of adjusting prices of goods transferred between different units of the same company in different countries, with the purpose of maximizing the overall profits of the company. This is a common practice in multinational corporations, but it can also raise concerns about tax avoidance and transfer pricing manipulation.

Question 11

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

Accepted Answer

Cartels are formed to control the market for goods and services and to eliminate competition, allowing them to dictate prices and maximize profits.

Question 12

In most cases the reason that products which cost relatively little in one country cost more in another is:

Accepted Answer

The high costs of exporting can include transportation fees, taxes, tariffs, and other expenses that can drive up the cost of a product in another country. This is often the case with goods that are produced in one country but sold in another, and can lead to higher prices for consumers in the importing country.

Question 13

If a company has as its objective to stimulate market growth and capture market share by deliberately offering products at low prices,it will most likely use a pricing strategy called:

Accepted Answer

Penetration pricing is a pricing strategy that involves offering products at low prices to stimulate market growth and capture market share. It is often used by companies that are entering a new market or competing with established brands. This strategy is effective in attracting price-sensitive customers who are looking for a good deal, and can lead to increased sales volume and market share in the long term.

Question 14

Barter houses,which assist in some forms of countertrade,are found mostly in the United States.

Accepted Answer

Barter houses are found globally, not just in the United States. They assist in various forms of countertrade such as bartering goods and services without the use of cash or converting currency to facilitate trade.

Question 15

The added costs incurred as a result of exporting products from one country to another are called:

Accepted Answer

Price escalation refers to the added costs incurred in the exporting process, such as transportation fees, tariffs, and taxes. It can result in higher prices for the product in the importing country.

Question 16

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

Pricing is an important factor in determining the success of a product or service in the international market. If the price is too high, it may deter customers from purchasing the product, whereas, if the price is too low, it may undermine the quality of the product or service, and companies may not be able to recover their costs. Therefore, proper pricing is crucial for the success of international marketing efforts.

Question 17

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

Full-cost pricing assumes that every unit of a product bears its full share of both fixed and variable costs, and that no unit is different in terms of cost. This ensures that the overall cost of producing each unit is covered, and helps to ensure profitability by avoiding underpricing.

Question 18

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 19

As a form of countertrade,a compensation deal involves trading one set of goods for another.

Accepted Answer

The answer of As a form of countertrade,a compensation deal...

Question 20

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.

Quiz 18: Pricing for International Markets