Deck 14: Pricing Strategies and Tactics

Question 1

Factoring houses are places where customs affords reliable accounting of the dollar increment of actual purchasing power.

Answer 1

False

Question 2

Price is the only element of the marketing mix that is revenue generating.

Answer 2

True

Question 3

The cost-plus strategy is the true cost,fully allocating domestic and foreign costs to the product.

Answer 3

True

Question 4

When penetration pricing is used,the product is offered at a low price intended to generate volume sales and achieve high market share,which would compensate for a lower per-unit return.

Question 5

Price should be determined in isolation from the other marketing mix elements.

Question 6

As more segments of the market are targeted and more of a product is made available,the price is gradually increased.

Question 7

Reorganizing the channel of distribution can help overcome price escalation.

Question 8

Cost-plus pricing is favored by many constituents,such as governments,to ensure proper intracompany pricing.

Question 9

The most favorable term to the exporter is cash in advance.

Question 10

Political risk is a controllable variable,which the exporter controls through paying extra taxes or import duties.

Question 11

An option gives the holder the right to buy or sell foreign currency at a prespecified price on or up to a prespecified date.

Question 12

The costs of modifying the product for foreign markets are considered export-related costs.

Question 13

Product line pricing occurs typically in conjunction with positioning decisions.

Question 14

As the share of international sales and reach of companies increases,banking relationships become less important.

Question 15

Skimming is selling goods overseas for less than in the exporter's home market or at a price below the cost of production,or both.

Question 16

Incoterms are the terms agreed upon by nation states that allow for the incorporation of companies as recognized globally.

Question 17

The most favorable term to the importer is consignment selling,which allows the importer to defer payment until the goods are actually sold.

Question 18

If similar products already exist in the target market,market pricing is used.

Question 19

Once under price controls,the global marketer has to operate as it would in a regulated industry.

Question 20

As in all marketing decisions,the marketing intermediaries establish the basic premise for pricing.

Question 21

_____ pricing calls for pricing exports according to the dynamic conditions of the marketplace.

A) Marginal
B) Market-differentiated
C) Isolation
D) Cost-plus

Question 22

_____ pricing is set regardless of the buyer or may be based on average unit costs of fixed,variable,or export-related costs.

A) Dual
B) Export variable
C) Standard worldwide
D) Market-differentiated

Question 23

When _____ is used,the product is offered at a low price intended to generate volume sales and achieve high market share,which would compensate for a lower per-unit return.

A) market pricing
B) skimming
C) penetration pricing
D) isolation pricing

Question 24

For an exporter to use the _____ approach,the product has to be unique,and some segments of the market must be willing to pay the high price.

A) extinction pricing
B) skimming
C) penetration pricing
D) market pricing

Question 25

Which of the following can marketers use to discourage other marketers from entering the market?

A) Cost-plus pricing
B) Changing pricing
C) Multiple-product pricing
D) Penetration pricing

Question 26

Which of the following is considered as an internal factor in setting the export price?

A) Nature of demand
B) Exchange rate stability
C) Distribution system
D) Company's customers

Question 27

Which of the following allows an exporter to be refunded up to 99 percent of duties paid on imported goods when they are incorporated in articles that are subsequently exported within five years of the importation?

A) Foreign sourcing
B) Skimming
C) Duty drawbacks
D) Forfaiting

Question 28

_____ system differentiates between domestic and export prices.

A) Dual pricing
B) Bilateral pricing
C) Semi-pricing
D) Isolation pricing

Question 29

Which of the following is a strategy to compensate for price escalation?

A) Weeding out government controls and avoiding them by entering markets through third parties
B) Reorganizing the channel of distribution
C) Reassessing customer needs by conducting market research
D) Assembling products made with domestic components

Question 30

Price changes are called for when:

A) the value of the billing currency is stable.
B) there is a change in the internal situation.
C) a change occurs in a particular market segment.
D) the costs of production are relatively constant.

Question 31

The combined effect of both clear-cut and hidden costs results in export prices that far exceed domestic prices.This cause is known as:

A) cost overrun.
B) seamless integration.
C) relationship pricing.
D) price escalation.

Question 32

Cost-driven and market-driven approaches to pricing products for export are associated with:

A) standard worldwide pricing.
B) dual pricing.
C) market-differentiated pricing.
D) single pricing.

Question 33

The marginal cost method of pricing considers the direct costs of producing and selling products for export as the floor beneath which prices cannot be set.What costs need to be excluded in these direct costs?

A) Variable costs and product costs
B) Shipment costs and manufacturing costs
C) Fixed costs, R&D, and domestic overhead
D) Inventory costs and production costs

Question 34

Which of the following is a reactive approach that may lead to problems if sales volumes never rise to sufficient levels to produce a satisfactory return?

A) Market pricing
B) Penetration pricing
C) Multiple-product pricing
D) Isolation pricing

Question 35

Which of the following statements about pricing is true?

A) It cannot determine the long-term viability of an enterprise.
B) It should be determined in isolation from the other marketing mix elements.
C) It is a major competitive tool in meeting and beating close rivals and substitutes.
D) It is the only element in the marketing mix that produces fixed costs.

Question 36

In first-time pricing,the objective of _____ is to achieve the highest possible contribution in a short time period.

A) market pricing
B) skimming
C) penetration pricing
D) predatory pricing

Question 37

Market-differentiated pricing calls for export pricing according to the dynamic conditions of the marketplace.What are the three changes which might affect this type of pricing?

A) Pre-, present, or post-fluctuations
B) Competition, exchange rates, or environment
C) Space, time, or utility
D) Operations, media, or markets

Question 38

Which of the following is a drawback of the cost-plus method?

A) The final price may be so high that the firm's competitiveness is compromised.
B) It is so variable that the actual price cannot be substantiated.
C) There is a high turnover of product resulting in cost fluctuations.
D) It is a time-consuming method.

Question 39

In setting export prices,which of the following is an attribute of pricing policy determination?

A) Flexibility
B) Decision control
C) Competitive posture
D) Market-based differentiation

Question 40

Which of the following is considered as an external factor in setting the export price?

A) Promotion needs
B) Overall price position of firm
C) Distribution system
D) Exchange rate stability

Question 41

_____ is a form of barter aimed at reducing the effect of the immediacy of the transaction.

A) Offset
B) Parallel barter
C) Buyback
D) Clearing arrangements

Question 42

According to the new rules drawn by the ICC,all letters of credit are considered _____ unless otherwise stated.

A) irrevocable
B) inconclusive
C) reversible
D) transitional

Question 43

What is a letter of credit?

A) It is an instrument issued by a bank at the request of a buyer in which the bank promises to pay a specified amount of money on presentation of documents stipulated in the letter.
B) It is a letter which states that after the seller ships the goods, the shipping documents and the draft demanding payment should be presented to the importer through banks acting as the seller's agent.
C) It is a set of instructions given to shipping companies who have a line of vessels.
D) It is an instrument of currency issued by a foreign government to the exporter.

Question 44

Arm's-length pricing:

A) becomes difficult when sales to outside parties occur in a product category.
B) is the price that unrelated parties would have reached on the same transaction.
C) does not ensure proper intracompany pricing.
D) is the discounted "dealer" price derived from end-market prices.

Question 45

Which of the following statements is true of delivered at place (DAP)?

A) The seller delivers the goods with import duties paid.
B) The seller typically handles the cost of unloading and wharfage.
C) The seller and buyer should agree which party will be responsible for unloading.
D) The seller's risk and responsibility for the condition of the cargo end when the goods are delivered to the first carrier.

Question 46

Why has price become such a dynamic element of the marketing mix?

Question 47

Destination-specific adjustment of markups in response to exchange-rate changes are referred to as:

A) pass-through.
B) markup via commercialization.
C) prime manipulation.
D) pricing-to-market.

Question 48

Under _____ to a named overseas port of import,the seller quotes a price for the goods including the cost of transportation to the named port of debarkation.The cost of insurance and the choice of insurer are left to the buyer.

A) delivered duty paid
B) cost and freight
C) free on board
D) free alongside ship

Question 49

Free on board (FOB):

A) means that the buyer usually quotes a price for the goods.
B) applies only to vessel shipments.
C) means that the price is decided only upon delivery.
D) applies only at a designated inland shipping point.

Question 50

What is a skimming price strategy?

Question 51

Which of the following is a weak exporter strategy used under varying currency conditions?

A) Speed repatriation
B) Export prioritization
C) Using nonprice competition
D) Buying needed services abroad

Question 52

What is the process of setting an export price?

Question 53

_____ is a compensation arrangement where one party agrees to supply technology or equipment that enables the other party to produce goods with which the price of the supplied products or technology is repaid.

A) Clearing arrangements
B) Buyback
C) Switch trading
D) Offset

Question 54

What are the two forms of risk which might affect an export transaction?

A) Inward and outbound
B) Unilateral and bilateral
C) Commercial and political
D) Contact and expatriate

Question 55

_____ are frequently used as a basis for price determination largely because they are easily measured and provide a floor under which prices cannot go in the long term.

A) Costs
B) Corporate objectives
C) Demand factors
D) Competitive factors

Question 56

Which of the following provides the exporter with a complete financial package that combines credit protection,accounts-receivable bookkeeping,and collection services to take away many of the challenges that come with doing business overseas?

A) Forfaiting
B) Factoring
C) Invoice discounting
D) Leasing

Question 57

Which of the following is true of carriage and insurance paid to (CIP)?

A) The buyer is responsible to provide insurance.
B) The maximum burden is on the seller.
C) The seller is obligated to provide minimum insurance only.
D) The buyer must bear all transportation costs.

Question 58

Which of the following is true about the transfer pricing methods of determining an arm's-length price?

A) The arm's-length standard is only applicable for commodities businesses.
B) The resale method is most applicable for transfers of components or unfinished goods to overseas subsidiaries.
C) The cost-plus approach usually applies best to transfers to sales subsidiaries for ultimate distribution.
D) The starting point for testing the appropriateness of transfer prices is a comparison with comparable uncontrolled transactions involving unrelated parties.