Deck 14: International Pricing for Profit

Question 1

Culture can play a role in the setting of a firm's product price in an overseas market.

Answer 1

True

Question 2

A culturally influenced aspect of pricing is that the price of a product can be viewed as a surrogate indicator of:

A) cost.
B) quality.
C) time.
D) money.
E) status.

Answer 2

B

Question 3

The role of price is an important element in a firm's international marketing mix because price will:

A) help to produce profit for the firm.
B) affect demand for a product.
C) generate revenue for the firm.
D) affect the perceived value of the product.
E) all of the above.

Answer 3

E

Question 4

When determining the final price in international marketing, which of the following needs to be factored in?

A) terms of sales
B) terms of payment
C) consistency with other elements of the marketing mix
D) all of the above
E) options B and C only

Question 5

Which of the following statements related to the role of pricing and distribution in an overseas country is NOT true?

A) The selected channels of distribution often dictate export pricing.
B) Reducing the number of intermediaries reduces the international escalation of price.
C) The length of the distribution channel varies from country to country, which can add to the cost of the price charged for a product.
D) The costs and margins of a given channel vary from country to country.
E) When a firm has a subsidiary in an overseas market it is able to exert less control on the price charged for the product in that market.

Question 6

When setting prices for international markets it is necessary to take into account:

A) substitute products.
B) competitor prices.
C) availability of products.
D) all of the above.
E) options A and C only.

Question 7

The use of the internet to remove parts of the distribution channel is known as:

A) optimisation.
B) disengaging.
C) disintermediation.
D) customisation.
E) direct distribution.

Question 8

Which of the following is NOT a component of price setting in the international market environment?

A) portfolio mix factors
B) exchange rates
C) inflation
D) interest rates
E) employment

Question 9

An international price skimming strategy attempts to achieve:

A) the largest market share in the quickest possible time.
B) the highest possible return in the quickest possible time.
C) the highest level of brand awareness in the short term.
D) the highest possible return in the long term.
E) none of the above.

Question 10

In some cultures, everything is negotiable and no one believes that the first price offered is anything but a negotiating ploy. In these cultures, the initial offer by the buyer is treated as:

A) a ceiling price that can be negotiated downward.
B) a floor price that can be negotiated downward.
C) a ceiling price that can be negotiated upwards.
D) a floor price that can be negotiated upwards.
E) none of the above.

Question 11

Price is the only marketing variable that generates revenue.

Question 12

For a market penetration pricing strategy to be successful in international markets, it is necessary to have:

A) highly differentiated products.
B) specialised distribution channels.
C) mass markets and price-sensitive consumers.
D) a niche segment of the market in the overseas country.
E) wealthy consumers who can afford the product.

Question 13

With the internet, government power over prices is increased.

Question 14

The only variable that can be changed in the international market at short notice is distribution.

Question 15

The price that an international buyer pays for the product, or sees being demanded for a product, becomes the ________ price against which other products are likely to be evaluated.

A) hidden
B) seasonal
C) reference
D) comparative
E) discount

Question 16

The internet can reduce costs and therefore price due to:

A) removal of physical distribution.
B) trade portals.
C) disintermediation.
D) all of the above.
E) options A and C only.

Question 17

Discuss the concept of reference prices in international marketing. What non-price factors of the marketing mix help to differentiate the pricing of products away from the core reference price held in the mind of the market?

Question 18

The internet reduces the exporter's ability to extract price premiums from buyers.

Question 19

Discuss how the internet has impacted pricing in international markets. Illustrate your answer with examples.

Question 20

Which of the following statements is true about the role culture plays in price setting?

A) Culture influences the style of goods, which in turn impact on the cost of production and therefore overall cost.
B) Culture influences the acceptability of practices including the loading of the price to cater for various pay-offs in order to get the business.
C) Culture determines social priorities and the relative value of different types of goods.
D) Culture dictates the acceptability of charging different prices to different market segments.
E) All of the above statements about culture and price setting are true.

Question 21

The shipment on consignment terms of payment method presents the HIGHEST level of risk for the overseas buyer.

Question 22

Optimal pricing for a product can be obtained by developing a price between the ceiling price, which is based on cost-plus pricing, and the floor price, which is based on marketplace pricing.

Question 23

Who would be most likely to request a letter of credit to be issued by a bank?

A) seller
B) buyer and seller
C) freight provider
D) buyer
E) all of the above

Question 24

Discuss the various methods of terms of payment, and highlight the benefits and disadvantages of each from a seller's perspective.

Question 25

An irrevocable letter of credit cannot be changed without the agreement of the:

A) exporter.
B) agent.
C) importer.
D) government.
E) all of the above.

Question 26

Which of the following would NOT be a part of the assessment for marginal costing?

A) low product differentiation
B) competitive intensity high
C) price sensitivity high
D) high excess capacity
E) competitive intensity low

Question 27

An issue to determine in advance of calculating the price to be charged in the overseas market is:

A) objectives of pricing policy.
B) ability of the market to pay.
C) complexity of the distribution chain.
D) the cost recovery strategy to be adopted.
E) the level of profit desired.

Question 28

From the buyer's perspective, which method of payment is the most advantageous?

A) cash in advance
B) documents against acceptance
C) open account
D) letter of credit
E) consignment

Question 29

In order to achieve an optimum price for the product in an international market, which of the following pricing methods should a firm use?

A) cost-plus pricing
B) marketplace pricing
C) full-cost recovery
D) marginal cost recovery
E) options A and B in combination

Question 30

In deciding which method of payment to accept, the exporter should consider:

A) the creditworthiness of the importer.
B) the credit terms offered by competitors.
C) the previous track record of the importer in meeting payment obligations.
D) all of the above.
E) options A and B only.

Question 31

Traditionally, there are two approaches to setting international prices, cost-plus and marketplace pricing.

Question 32

How important is preliminary planning in the setting of an international price structure? What are the most important factors that need to be taken into account by the organisation?

Question 33

For terms of sale, ex-works (EXW) is the price of the product at the point of origin.

Question 34

How important are environmental factors in determining an international price structure? Illustrate your answer with examples taken from a specific country or product.

Question 35

The most likely reason an organisation in the international market would reduce the number of intermediaries in the distribution channel is:

A) to reduce the cost of goods.
B) to establish a sales office.
C) in response to price changes.
D) all of the above.
E) options A and B only.

Question 36

A marketplace-based approach to price setting in new international markets starts with knowledge of:

A) competitors' costs.
B) the level of consumer demand.
C) the price of competitive products in the overseas market.
D) the firm's internal cost structure.
E) the product's research and development capabilities.

Question 37

Market skimming pricing is where products are offered at a high price in an effort to rapidly recover costs.

Question 38

Which of the following is NOT a strategy for Australian exporters to cope with currency fluctuations when the dollar is strong?

A) Stress price benefits.
B) Shift sourcing overseas.
C) Improve productivity and engage in cost reduction.
D) Improve quality, delivery and after-sales service.
E) Shift manufacturing offshore.

Question 39

Ways of responding to price changes in international markets often focus on reducing the cost of goods as supplied to the market. Ways of achieving reduced costs include:

A) manufacturing the product in the overseas country.
B) assembling the product in the overseas market using local labour.
C) eliminating costly product features.
D) reducing the number of international intermediaries.
E) all of the above.

Question 40

From the overseas buyer's perspective, a cash-in-advance basis presents the HIGHEST level of payment risk.

Question 41

Mergers or consolidations and export or import cartels are regarding as being restrictive trade practices.

Question 42

Explain how a business firm can utilise transfer pricing to gain benefit, and highlight any outcomes that might produce a negative result for any parties affected by the transfer pricing process.

Question 43

Transfer pricing occurs only when a firm is able to take advantage of financial incentives offered by a host government.

Question 44

Export incentive schemes such as the Export Expansion Grant Schemes are NOT regarded as being part of the dumping approach.

Question 45

Discuss the different approaches to international price setting and the importance of maintaining consistent pricing.

Question 46

In international markets, dumping refers to the practice of selling products overseas at a price:

A) lower than the cost of production.
B) higher than the current domestic value in the country of origin.
C) lower than the current domestic value in the country of destination.
D) higher than the current domestic value in the country of destination.
E) lower than the current domestic value in the country of origin.

Question 47

When a foreign firm intentionally sells at a loss in another country this form of dumping is referred to as ________ dumping.

A) internationally
B) sporadic
C) unintentional
D) intentionally
E) predatory

Question 48

Sporadic dumping is where a firm attempts to solve excess inventory problems in the home market by selling at whatever price it can get in an overseas market.

Question 49

An Australian firm is not always free to set the prices it wishes to charge in international markets. Discuss the main constraints on pricing that Australian firms must generally adhere to but cannot control.

Question 50

Discuss the marketing strategies an Australian firm may need to adopt to manage a high Australian dollar.

Question 51

Global pricing strategies are most suited to products targeted at affluent consumers and those with a technical edge.

Question 52

There are four possible methods of transfer pricing between national divisions of a country, one of which is arm's length sales.

Question 53

Where there are currency fluctuations and the Australian dollar is weak, emphasising price benefits and expanding the product line or adding product features are valid strategies in a foreign market.

Question 54

Restrictive trade practices that affect pricing in an overseas market can take various forms. These include:

A) mergers and consolidations.
B) monopolies.
C) export and import cartels.
D) vertical price setting.
E) all of the above.

Question 55

Revaluation of the importing country's currency causes Australian goods to be more expensive in the importing country.

Question 56

What are the additional costs over a domestic price that need be factored into an export price to cover export activity?

Question 57

When considering a global pricing strategy, which one of the following is NOT a consideration for devising the firm's strategy?

A) transfer pricing
B) standard world prices
C) market-differentiated prices
D) modified pricing policy
E) none of the above

Question 58

There are five possible methods of transfer pricing between national divisions of a company, which are:

A) sale at the local competitive cost, sale at the local manufacturing cost plus a standard mark-up, sale at the cost of the most efficient producer in the company plus a standard mark-up, sale at negotiated prices on those prevailing in the foreign market and arm's length sales using the same prices as quoted to independent customers.
B) sale at the local manufacturing cost, sale at the local manufacturing cost plus a standard mark-up, sale at the cost of the most efficient distributor in the company plus a standard mark-up, sale at negotiated prices on those prevailing in the foreign market and arm's length sales using the same prices as quoted to independent customers.
C) sale at the local manufacturing cost, sale at the local manufacturing cost plus a standard mark-up, sale at the cost of the most efficient producer in the company plus a standard mark-up, sale at competitive prices on those prevailing in the foreign market and arm's length sales using the same prices as quoted to independent customers.
D) sale at the local manufacturing cost, sale at the local manufacturing cost plus a standard mark-up, sale at the cost of the most efficient producer in the company plus a standard mark-up, sale at negotiated prices on those prevailing in the foreign market and arm's length sales using the same prices as quoted to independent customers.
E) sale at the local manufacturing cost, sale at the local manufacturing cost plus a standard mark-up, sale at the cost of the most efficient producer in the company plus a standard mark-up, sale at negotiated prices on those prevailing in the foreign market and arm's length sales using the same prices as quoted to dependent customers.