Question 1

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.

Accepted Answer

LEGO has chosen a premium pricing strategy position by pricing its products higher than its competitors and valuing its brand name as an indication of quality. As a result, the company has successfully differentiated itself as a high-end product, maintaining its image as a high-quality brand. The company is not adopting a demand-based pricing strategy because it's not lowering the price of its product to stimulate demand. LEGO is not following an elastic pricing strategy either, because the company's sales are not subject to sudden and extreme changes in demand in response to price changes. LEGO is not using a promotion-related pricing strategy because its high-quality product itself is the biggest promotion. Lastly, LEGO is not using a sensitivity-based pricing strategy because such pricing strategies rely on the price sensitivity of consumers, which is not the case with LEGO's premium positioning strategy.

Question 2

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

Accepted Answer

Advertising is an example of nonprice competition as it is a method of promoting a product or service without changing the price. Other options like retailer sales, discounts, coupons, and cents-off deals all involve changes in price to encourage consumers to buy.

Question 3

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.

Accepted Answer

Sales tax rates, tariffs, and price controls are all examples of government policies that can affect a firm's pricing policies in the international marketplace. These policies are imposed by governments to achieve specific economic or political goals, such as protecting domestic industries or increasing government revenue. Firms must take these policies into account when setting prices and developing pricing strategies to remain competitive and comply with legal requirements.

Question 4

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

Accepted Answer

Huge government deficits are an indirect impact on pricing decisions because they can affect the economy and consumer behavior, which can ultimately impact pricing decisions. For example, if the government deficit results in high inflation rates, businesses may increase their prices to make up for the increased costs of production.

Question 5

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

Accepted Answer

Expanding warranty categories to give incentive for higher quality would not necessarily lower the export price of the product, as it would involve additional costs for the firm. The other options involve reducing costs in some way to lower the export price.

Question 6

According to the text,once brand loyalty has been established,_____________ will play less of a role as a purchase criterion.

Accepted Answer

Once brand loyalty has been established, price will play less of a role as a purchase criterion. This is because loyal customers are willing to pay a premium price for a product they trust and are loyal to.

Question 7

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?

Accepted Answer

Land Rover is adapting the product (Range Rover) to escape tariffs or tax levies by changing the weight of the models to classify them as trucks, which are exempt from the luxury tax.

Question 8

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

Accepted Answer

The term "parallel imports" refers to the goods that are imported from low-price countries to high-price ones to take advantage of the price gap. These imports are legal and legitimate, but they are not authorized by the manufacturer or distributor of the goods in the higher-price country.

Question 9

___________ inflation also mandates rapid inventory turnarounds.

Accepted Answer

High inflation usually leads to a rapid increase in prices, which in turn creates a sense of urgency among buyers who try to purchase goods as quickly as possible to avoid further price increases. This increases demand while the supply of goods remains constant, causing prices to rise even higher. To keep up with this rapid demand, businesses must ensure rapid inventory turnarounds to avoid stockouts and maintain their market share.

Question 10

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

Accepted Answer

Inflation is an indirect impact on pricing decisions, as it is a macroeconomic factor that affects the overall market conditions, rather than a direct cost or expense for a specific product or service. Pricing decisions may need to be adjusted in response to inflation, but it is not a direct input for determining the price of a specific product or service.

Question 11

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

Accepted Answer

Lengthening credit terms does not safeguard against inflation, but rather puts a strain on cash flow which can be affected by inflation. The other options listed can all potentially safeguard against inflation by reducing the cost of materials or locking in prices for the long term.

Question 12

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

Accepted Answer

The answer of Which of the following would be a...

Question 13

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

Accepted Answer

The answer of All of the following are reasons that...

Question 14

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

Accepted Answer

Gray markets refer to the flow of products through unofficial channels or third-party vendors, which occurs due to the price discrepancies between different regions or countries. Wide gaps in the price sensitivity between countries for a particular product create opportunities for such gray market activities, as consumers in high-price regions can purchase the same product from low-price regions through unauthorized channels.

Question 15

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:

Accepted Answer

The drastic increase in price of the Big Mac meal in just three years indicates that inflation had severely damaged the market, which caused the ruble to lose its value rapidly. This shows how huge fluctuations in the economy can affect the price of goods and services.

Question 16

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?

Accepted Answer

The answer of If a firm decide to penetrate the...

Question 17

Differences in the competitive situation across countries will usually lead to:

Accepted Answer

When there are differences in the competitive situation across countries, companies will adjust their prices to remain competitive. This can lead to cross-border price differentials, as prices in one country may be lower or higher than prices in another country to reflect the competitive situation in each market. Local price differentials, domestic price differentials, intra-company price differentials, and company-based price differentials may also occur, but they are not as directly related to differences in the competitive situation across countries.

Question 18

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
______________________.

Accepted Answer

Price escalation occurs when the final foreign retail price is higher than the domestic retail price due to additional expenses such as shipping, taxes, tariffs, and other costs associated with exporting and importing goods. This makes the foreign products more expensive for consumers, leading to price escalation.

Question 19

Once brand loyalty has been established,price will play less of a role as a purchase criterion,and the firm may be able to institute a ________________
Strategy.

Accepted Answer

Premium pricing strategy can be used once brand loyalty has been established because customers are willing to pay a higher price for the trusted brand. This strategy can be effective in maintaining profitability and reinforcing the brand's premium image.

Question 20

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:

Accepted Answer

Positioning the product as a premium or super-premium brand can help justify a higher price point, as consumers may be willing to pay more for perceived quality or prestige. This can also help differentiate the product from competitors and appeal to a specific target market. Cutting the export price may not be sustainable in the long-term and could potentially harm the profitability of the company. The other options listed may not address the issue of price escalation directly.

Quiz 12: Global Pricing

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.

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

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.

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

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

According to the text,once brand loyalty has been established,_____________ will play less of a role as a purchase criterion.

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

___________ inflation also mandates rapid inventory turnarounds.

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

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

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

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

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

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:

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?

Differences in the competitive situation across countries will usually lead to:

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 ______________________.

Once brand loyalty has been established,price will play less of a role as a purchase criterion,and the firm may be able to institute a ________________ Strategy.

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: