Deck 12: Global Pricing

Question 1

When demand is highly price sensitive, the company needs to consider how it can _____ from a global perspective.

A)lower prices
B)lower service
C)raise quality
D)reduce costs

Answer 1

E

Question 2

With _____, prices are adjusted to market conditions in the host market.

A)rigid cost-plus pricing
B)flexible cost-plus pricing
C)dynamic incremental pricing
D)revenue share pricing
E)fixed pricing

Answer 2

B

Question 3

With _____, the export price is set by adding all costs accrued in selling the product to the international market and a gross margin.

A)rigid cost-plus pricing
B)flexible cost-plus pricing
C)dynamic incremental pricing
D)revenue share pricing
E)fixed pricing

Answer 3

A

Question 4

Countries with low per-capita incomes pose a dilemma for marketers from higher-income economies._____ are often a major hurdle for most consumers in these markets.

A)high expectations
B)sales channels
C)price premiums
D)language barriers

Question 5

When developing a pricing strategy for its global markets, one of the first steps that a company must go through is to decide:

A)what the actual price should be.
B)how high or low to price.
C)how much money will the price bring in.
D)what it wants to accomplish with its strategy.
E)what form of controls will regulate price.

Question 6

All of the following are drivers that govern global pricing decisions except:

A)Company
B)Customers
C)Controls
D)Competition
E)Channels

Question 7

Customers' _____ is a key consideration in pricing decisions.

A)location
B)buying power
C)decision power
D)thinking power
E)none of the above

Question 8

_____ costs change with sales volume.

A)Demand
B)Supply
C)Derived
D)Fixed
E)Variable

Question 9

When Leonidas, a Belgian brand of chocolates sold in the home country as a mainstream brand, decides to sell with a premium image and prices in some overseas markets, this is an example of:

A)country objective
B)positioning strategy
C)consumer objective
D)monopoly objectives
E)none of the above

Question 10

_____ costs do not vary with sales volume changes.

A)Demand
B)Supply
C)Derived
D)Fixed
E)Variable

Question 11

In the international marketplace, _____ pricing adds international costs and a mark-up to the domestic manufacturing cost.

A)dynamic incremental pricing
B)export price
C)import price
D)cost-plus price
E)target-return price

Question 12

When making pricing decisions, _____ set(s) the floor.

A)profits
B)costs
C)demand
D)supply
E)service

Question 13

With _____, prices are arrived at after removing domestic fixed costs.

A)rigid cost-plus pricing
B)flexible cost-plus pricing
C)dynamic incremental pricing
D)revenue share pricing
E)fixed pricing

Question 14

According to a research, all of the following are examples of important pricing objectives except:

A)drive competition out of business.
B)to achieve a satisfactory return on investment.
C)maintain market share.
D)expand market share.
E)to meet a specified profit goal.

Question 15

_____ is the only marketing mix instrument that creates revenues.

A)Product
B)Price
C)Place
D)Promotion
E)People

Question 16

The most important pricing objectives of companies doing business in the United States (including foreign-based firms) are(is) to:

A)achieve a satisfactory return on investment.
B)maintain market share.
C)meet a specified profit goal.
D)all of the above.

Question 17

In the international marketplace, _____ pricing arrives at a price after removing domestic fixed costs.Only variable export costs generated by the exporting effort and a portion of the overhead load should be recuperated by the pricing effort (according to this method).

A)dynamic incremental pricing
B)export price
C)import price
D)cost-plus price
E)target-return price

Question 18

In many countries, multinationals' pricing decisions are impacted by:

A)break-even analysis
B)regression functions
C)supply and service curves
D)government policies
E)business ethics

Question 19

Examples of exporting-related _____ include manufacturing costs, shipping expenses, insurance, and overseas promotional costs.

A)incremental costs
B)demand costs
C)fixed costs
D)target costs
E)service costs

Question 20

A company's pricing policy is a highly _____ process based on inputs from various departments.

A)under-functional
B)low-functional
C)geo-functional
D)bi-functional
E)cross-functional

Question 21

An example of nonprice competition that is faced in some markets is:

A)retailer sales.
B)discounts.
C)coupons.
D)advertising.
E)cents-off deals.

Question 22

Inflation in an economy is an example of a(n) _____ impact on pricing decisions.

A)direct
B)indirect
C)artificial
D)planned
E)uncontrollable

Question 23

There are two ways to deal with the price escalation phenomenon.One of these methods is to cut the export price.The other is to:

A)change the promotion strategy.
B)position the product as a (super) premium brand.
C)position the product as a lower quality brand.
D)reduce retailer margins.
E)reduce distances that the good must be shipped.

Question 24

If a firm decide to penetrate the Japanese consumer market through direct marketing (such as catalog or telemarketing sales).Which of the following strategies best describes this option for lowering the price of an exported product?

A)rearrange the distribution channel.
B)eliminate costly features (or make them optional).
C)downsize the product.
D)expand the warranty categories to give incentive for higher quality.
E)assemble or manufacture the product in foreign markets.

Question 25

The danger of _____ is when high-income customer switch to cheaper products in a firm's product line.

A)dilution
B)cannibalism
C)trading
D)brand confusion

Question 26

All of the following are options that might be followed if the firm wished to lower its export price on a product except:

A)rearrange the distribution channel.
B)eliminate costly features (or make them optional).
C)downsize the product.
D)expand the warranty categories to give incentive for higher quality.
E)assemble or manufacture the product in foreign markets.

Question 27

All of the following are reasons that competitive situations vary from country to country (with respect to the competitive environment) except:

A)the number of competitors varies from country to country.
B)the nature of competition changes.
C)the presence of counterfeit products.
D)the presence of gray markets.
E)the competitive position of a firm changes from one country to another.

Question 28

Huge government deficits are examples of a(n) _____ impact on pricing decisions.

A)direct
B)indirect
C)artificial
D)planned
E)uncontrollable

Question 29

To cover the incremental costs (such as shipping), the final foreign retail price will often be much higher than the domestic retail price.This phenomenon is known as _____.

A)inflation.
B)the price deflator.
C)price escalation.
D)price sensitivity.
E)global arbitrage.

Question 30

Large cross-country price gaps open up arbitrage opportunities that lead to _____ imports from low-price countries to high-price ones.

A)black market
B)white market
C)zero market
D)smuggled
E)parallel

Question 31

One alternative for successful marketing to the price sensitive low per-capita income market is to produce a _____ product or lower product quality.

A)downsized
B)upgraded
C)synthetic
D)copy
E)parallel

Question 32

Sales tax rates, tariffs, and price controls are all examples of _____ that can have a direct or indirect impact on the pricing policies of a firm in the international marketplace.

A)sales volume policies
B)price policies
C)government policies
D)restrictions
E)punishments

Question 33

According to textbook, _____ by and large charges the same price worldwide.

A)Starbucks
B)IBM
C)Coca-Cola
D)Toyota
E)BMW

Question 34

Which of the following would be a good option to follow if lowering the export price were the firm's objective?

A)rearrange the distribution channel.
B)change the promotion.
C)change the warranty provisions.
D)give more of the product in the package as an incentive to purchase.
E)study the demand curve.

Question 35

Countries with low per-capita income are more _____ than in developed countries.

A)promotion sensitive
B)price sensitive
C)need sensitive
D)demand sensitive
E)service sensitive

Question 36

When McDonald's first opened their restaurants in Russia in 1990, the Big Mac meal cost 6 rubles.Three years later, the same meal cost 1,100 rubles.This would be an example of how:

A)demand can change.
B)how premium pricing can damage a product.
C)price elasticity works.
D)inflation can damage a market.
E)service is what matter the most to the average customer.

Question 37

When the U.S.levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover changed the weight of Range Rover models so they could be classed as a truck and thereby avoid the luxury status, the company was attempting to follow which of the price strategies listed below for lowering the price of an exported product?

A)rearrange the distribution channel.
B)eliminate costly features (or make them optional).
C)downsize the product.
D)adapt the product to escape tariffs or tax levies.
E)assemble or manufacture the product in foreign markets.

Question 38

One of the risks of dynamic incremental pricing (in the case where the export list price is far below the domestic price) that _____ can be triggered in the export market.

A)high profit potential
B)dumping charges or accusations
C)falling profits
D)falling quality
E)falling service

Question 39

LEGO, the Danish toymaker, rather than worrying about finding ways to lower the price of its product in foreign markets has chosen (most LEGO sets are sold from $6-$223) to adopt a _____ strategy position.

A)demand-based
B)premium pricing
C)elastic pricing
D)promotion-related pricing
E)sensitivity-based

Question 40

Wide gaps in the price sensitivity between countries for the same product may create conditions that promote _____ markets.

A)backward
B)gray
C)white
D)demand
E)forward

Question 41

With respect to currency quotation when preparing for buying and selling transactions, buyers and sellers generally prefer to quote in:

A)a world currency.
B)the seller's currency.
C)the buyer's currency.
D)their own currency.
E)the dollar.

Question 42

The most drastic reaction to government-imposed price controls is to:

A)adapt the product line.
B)shift target segments or market.
C)negotiate with the government.
D)launch a variant of an existing product.
E)leave the country.

Question 43

All of the alternatives listed below are ways to safeguard against inflation except:

A)modify components, ingredients, parts and/or packaging materials.
B)source materials from low-cost suppliers.
C)lengthen credit terms.
D)include escalator clauses in long-term contracts.
E)quote prices in a stable currency.

Question 44

_____ reflect how much one currency is worth in terms of another currency.

A)Interest rates
B)Credit rates
C)Bond rates
D)Inflation rates
E)Exchange rates

Question 45

When exporters lower their mark-ups in a more price-conscious export market than in a price-sensitive market, with respect to exchange rate movements this is called_____.

A)local-currency price stability (LCPS)
B)pricing-to-market (PTM)
C)transfer pricing
D)countertrade pricing
E)demand mark-up pricing

Question 46

All of the following are considered to be exporter strategies when the domestic currency is strong except:

A)conduct conventional cash-for-goods trade.
B)engage in nonprice competition by improving quality, delivery, and after sale service.
C)improve productivity and engage in vigorous cost reduction.
D)shift sourcing and manufacturing overseas.
E)give priority to exports to relatively strong-currency countries.

Question 47

If a company that is threatened with price controls diversifies into product lines that are relatively free of price controls, the firm would be following which of the following strategies?

A)adapt the product line.
B)shift target segments or market.
C)negotiate with the government.
D)launch a variant of an existing product.
E)predict the incidence of price controls.

Question 48

Which of the following are considered to be exporter strategies when the domestic currency is weak?

A)conduct conventional cash-for-goods trade.
B)engage in nonprice competition by improving quality, delivery, and after sale service.
C)improve productivity and engage in vigorous cost reduction.
D)shift sourcing and manufacturing overseas.
E)give priority to exports to relatively strong-currency countries.

Question 49

A strengthening of the U.S.dollar relative to the Japanese yen has the effect of:

A)strengthening the Japanese position in the United States.
B)strengthening the U.S.position in Japan.
C)weakening the dollar in Europe.
D)strengthening the yen in Europe.
E)all positions remain unchanged.

Question 50

Two major issues confronting international marketers result from currency movement.The first of these is in which currency do we quote our prices? The second is:

A)how much of the loss or gain (because of pass through) should be passed to consumers?
B)how much should we invest in the local currency?
C)how much should we invest in our own currency?
D)what role should the central bank play in currency movement?
E)should we trust international arbitrage as a means of settling currency value?

Question 51

When an exporter uses the _____ method, the effect can be negative.Frequent adjustments of prices in response to currency movements will distress local channels and customers.

A)local-currency price stability (LCPS)
B)pricing-to-market (PTM)
C)transfer pricing
D)countertrade pricing
E)demand mark-up pricing

Question 52

_____ inflation also mandates rapid inventory turnarounds.

A)High
B)Low
C)Visible
D)Hyper
E)Slow

Question 53

_____ is a special form of pricing where mark-ups are adjusted to stabilize prices in the buyer's currency.This method helps to create stability in the local currency.

A)Local-currency price stability (LCPS)
B)Pricing-to-market (PTM)
C)Transfer pricing
D)Countertrade pricing
E)Demand mark-up pricing

Question 54

To combat hyperinflation, many governments occasionally impose _____ controls.

A)commodity
B)inflation
C)margin
D)discount
E)price

Question 55

When considering the currency pass-through phenomenon, all of the following factors give an indication as to the appropriate action except:

A)the customer's price sensitivity.
B)government actions.
C)the impact of dollar appreciation on the firm's cost structure.
D)the impact of dollar depreciation on the firm's cost structure.
E)the amount of competition in the export market.

Question 56

All of the following are exporter strategies when the domestic currency is weak except:

A)stress price benefits.
B)engage in nonprice competition by improving quality, delivery, and after sale service.
C)expand the product line and add more.
D)shift sourcing and manufacturing to domestic market.
E)exploit export opportunities in all markets.

Question 57

One of the ways that a weakening of the U.S.dollar relative to the Japanese yen may not necessarily be a benefit to a U.S.firm is that:

A)the government may not allow the pass through.
B)the government might erect tariff barriers.
C)Japanese parts might become more expensive and when imported for inclusion into an exported product, prices might actually rise.
D)other currencies might be the ones actually traded.
E)costs can be cut in other ways.

Question 58

Which of the following are exporter strategies when the domestic currency is strong?

A)stress price benefits.
B)engage in nonprice competition by improving quality, delivery, and after sale service.
C)expand the product line and add more.
D)shift sourcing and manufacturing to domestic market.
E)exploit export opportunities in all markets.

Question 59

Relying on expatriate managers from Latin America, and inspired by experience in Brazil, McDonald's dealt with Russia's runaway inflation by using which strategy mentioned in the text

A)made loans to local franchise investors to bring them past hard times.
B)encouraged customers to use credit cards
C)negotiated separate inflation rates with each supplier 

D)none of the above

Question 60

A weakening of the U.S.dollar relative to the Japanese yen has the effect of:

A)strengthening the Japanese position in the United States.
B)strengthening the U.S.position in Japan.
C)weakening the dollar in Europe.
D)strengthening the yen in Europe.
E)all positions remain unchanged.

Question 61

The only consideration of companies doing business in the United States (including foreign-based firms) is to achieve a satisfactory return on investment.

Question 62

There are a series of key drivers behind transfer pricing decisions of U.S.-based multinationals.Which of the following is not one of those drivers?

A)U.S.federal income taxes
B)Customs duties
C)Reasonable profit for foreign affiliate
D)Political stability
E)Taxation in the foreign country

Question 63

When sales take place between related entities of the same company, _____is often used.

A)local-currency price stability (LCPS)
B)transfer pricing
C)countertrade pricing
D)demand mark-up pricing

Question 64

In the area of transfer pricing, experts suggest to set transfer prices that are as close as possible to the _____.

A)Balanced Arm's Length Standard
B)Building Arm's Length Standard
C)Best Arm's Length Standard
D)Branding Arm's Length Standard
E)Basic Arm's Length Standard

Question 65

Starbucks charges by and large the same price worldwide, whether its coffee is sold in wealthy Western markets or poorer countries such as Thailand or China.

Question 66

Domestic fixed costs are sunk costs.

Question 67

To reduce exposure and risk of antidumping actions, the exporter can follow any of the following marketing strategies except:

A)trading-up
B)service enhancement
C)distribution
D)government intervention
E)communications

Question 68

_____ uses the market mechanism as a cue for setting transfer prices.

A)Local-currency price stability (LCPS) pricing
B)Pricing-to-market (PTM)
C)Market-based pricing
D)Countertrade pricing
E)Nonmarket-based pricing

Question 69

Price is the only marketing mix instrument that creates revenues.

Question 70

Customers' buying power is the only major consideration when making a pricing decision.

Question 71

In the area of price coordination, the following considerations matter except:

A)nature of customer
B)amount of product differentiation
C)nature of channels
D)nature of competition
E)role of the World Bank

Question 72

When Tesla dropped its prices in China, its customers were extremely happy.

Question 73

_____ simply adds a mark-up to the cost of the goods.

A)Demand-based pricing
B)Negotiated pricing
C)Cost-based pricing
D)Markup-based pricing
E)Target return pricing

Question 74

To conduct _____, conflicts between country affiliates are resolved through mutual discussion of the transfer pricing problems.

A)demand-based pricing
B)negotiated pricing
C)cost-based pricing
D)markup-based pricing
E)target return pricing

Question 75

Transfer pricing decisions in an international context need to balance off the interests of a broad range of stakeholders.All of the following would be examples of those stakeholders except:

A)the parent company.
B)the competition.
C)local country managers.
D)host government(s).
E)the domestic government.

Question 76

In international marketing, purchasers often demand _____ from their suppliers.

A)uniform-pricing contracts
B)diverse-pricing contracts
C)bilateral-pricing contracts
D)global-pricing contracts
E)local-pricing contracts

Question 77

According to the textbook, factors that impact global pricing decisions include company, customers, competition, and technology.

Question 78

_____ occurs when imports are being sold at an "unfair" price.

A)Price fixing
B)Dumping
C)Gray marketing
D)Countertrade
E)Predatory pricing

Question 79

There are a series of key drivers behind transfer pricing decisions of U.S.-based multinationals.The most important of these drivers is thought to be:

A)competition in the foreign country.
B)economic conditions in the foreign country.
C)price controls.
D)exchange controls.
E)market conditions in the foreign country.

Question 80

Cost differentials do not lead to wide price gaps.