Question 1

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

Accepted Answer

This statement does not make sense and it is unclear what is meant by "factoring houses". Additionally, it is not necessarily true that customs (presumably referring to customs agencies) provide accounting of the dollar increment of actual purchasing power.

Question 2

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

Accepted Answer

Price is the element of the marketing mix that directly affects revenue generation. The other elements of the marketing mix (product, promotion, and place) can indirectly impact revenue but do not directly generate revenue.

Question 3

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

Accepted Answer

The cost-plus strategy involves calculating the true cost of a product and fully allocating both domestic and foreign costs to it. Therefore, the statement is 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.

Accepted Answer

Penetration pricing is a pricing strategy in which a product or service is offered at a low price to attract customers and gain market share. The goal is to generate high volume sales and build brand awareness, which can compensate for a lower profit margin on each unit sold. As the market share and customer base grow, the company may gradually increase the price of the product or service.

Question 5

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

Accepted Answer

Price should not be determined in isolation, as it needs to be considered in conjunction with other marketing mix elements (product, promotion, and place) to ensure a coherent and effective marketing strategy. The pricing decision should take into account factors such as product features, target market, competition, and promotion strategy, among others.

Question 6

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

Accepted Answer

The statement is false. As more segments of the market are targeted and more of a product is made available, the price may not necessarily be gradually increased. It depends on various factors such as competition, demand, and supply. The price may also be decreased to attract more customers to the product.

Question 7

Reorganizing the channel of distribution can help overcome price escalation.

Accepted Answer

By reorganizing the channel of distribution, businesses can eliminate intermediaries and shorten the supply chain, which can reduce costs and eliminate price escalation. This can lead to a more efficient and cost-effective system for both manufacturers and consumers.

Question 8

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

Accepted Answer

The answer of Cost-plus pricing is favored by many constituents,such...

Question 9

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

Accepted Answer

Cash in advance is the most favorable term for exporters as it guarantees payment before shipment and reduces the risk of non-payment or delayed payment. With this term, the exporter has no risk in the transaction and can easily manage their cash flow. However, for the importer, it may not be the most favorable term as they have to make the payment before receiving the goods.

Question 10

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

Accepted Answer

Political risk refers to the risk of loss or disadvantageous change resulting from political factors such as changes in government policy or regulations, political instability or violence. It is not controllable by the exporter 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.

Accepted Answer

This is a correct definition of an option.

Question 12

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

Accepted Answer

Export-related costs are the costs incurred in modifying the product for foreign markets, including packaging, labeling, translation, and legal fees. These costs are necessary to meet the specific requirements of different countries and to ensure that the product complies with local regulations and standards.

Question 13

Product line pricing occurs typically in conjunction with positioning decisions.

Accepted Answer

Product line pricing involves setting prices for a group of products that have similarities in terms of target market, features, and benefits. Therefore, it is essential to consider the positioning of the product line to determine the appropriate pricing strategy.

Question 14

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

Accepted Answer

As the share of international sales and reach of companies increases, banking relationships become more important as they help facilitate international transactions and manage currency exchange risks.

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.

Accepted Answer

Skimming refers to setting high prices when a product is introduced to capitalize on the willingness of customers to pay a premium for a new or innovative product. Selling goods overseas for less than in the exporter's home market or at a price below the cost of production is known as dumping.

Question 16

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

Accepted Answer

Incoterms are not terms agreed upon by nation states, but rather are commercial terms established by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. They are used to facilitate global trade by providing a common language and set of rules for the transportation, delivery, and transfer of goods.

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.

Accepted Answer

Consignment selling allows the importer to display and sell the goods without upfront payment, thus deferring payment until the goods are sold. Therefore, it is favorable to the importer.

Question 18

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

Accepted Answer

If similar products already exist in the market, market pricing is usually used to set the price of the new product. This helps ensure that the price is competitive and aligns with customer expectations.

Question 19

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

Accepted Answer

Price controls limit the ability of businesses to freely set their prices, similar to regulations in other industries. As a result, global marketers must navigate and strategize within these limitations to maintain profitability and competitiveness.

Question 20

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

Accepted Answer

Pricing decisions are primarily made by the company and are based on various factors such as production costs, competition, target market, and desired profit margins. While marketing intermediaries such as retailers and distributors may provide input and influence pricing, they do not establish the basic premise for pricing.

Quiz 14: Pricing Strategies and Tactics