11

Global Marketing, 6e (Keegan/Green)
Chapter 11 Pricing Decisions

1) Price floor and price ceiling are two basic factors which determine the boundaries within
which prices should be set.
Answer: TRUE
Diff: 1
Page Ref: 330- 331
2) Price can be used as a strategic variable to achieve specific goals, including ROI, profit, and
rapid recovery of product development costs.
Answer: TRUE
Diff: 2
Page Ref: 332
AACSB: Analytic Skills
3) The market skimming pricing strategy is a part of a deliberate attempt to reach a market
segment that is willing to pay a premium price for a particular brand or for a specialized or
unique product.
Answer: TRUE
Diff: 2
Page Ref: 332
AACSB: Reflective Thinking
4) "Market skimming" is a strategy that uses low prices as a competitive weapon to gain market
position.
Answer: FALSE
Diff: 2
Page Ref: 332
5) The skimming pricing strategy is appropriate in the mature phase of the product life cycle.
Answer: FALSE
Diff: 2
Page Ref: 332
6) When Apple introduced iPhone in the United States in the summer of 2007 with a sale price of
$ 599 it used skimming pricing strategy.
Answer: TRUE
Diff: 2
Page Ref: 332
7) Price can be used as a competitive weapon to gain or maintain market position.
Answer: TRUE
Diff: 2
Page Ref: 333
1
Copyright 2011 Pearson Education, Inc.
8) A market penetration pricing strategy calls for setting price levels that are high enough to
quickly build market share.
Answer: FALSE
Diff: 2
Page Ref: 333
9) Penetration prices often mean that the product may be sold at a loss for a certain period of
time.
Answer: TRUE
Diff: 2
Page Ref: 333
10) Sony used penetration pricing when it launched the Walkman personal stereo in 1979.
Answer: TRUE
Diff: 2
Page Ref: 333
11) Hewlett-Packard is the world's leading marketer of inkjet printers. H-P's printers are priced
very low and margins are slim; by contrast, the company enjoys healthy margins on sales of
replacement ink cartridges. This approach is sometimes known as "razors and blades" pricing.
Answer: TRUE
Diff: 2
Page Ref: 333-334
12) Toyota, Sony, Olympus, and Komatsu are some of the well-known Japanese companies that
use target costing, a process which is also known as "design to cost."
Answer: TRUE
Diff: 3
Page Ref: 334
13) Vodaphone, AT&T and other cellular service providers buy handsets at prices set by
Motorola, Nokia, and other manufacturers, and then subsidize the cost by offering significant
discounts.
Answer: TRUE
Diff: 2
Page Ref: 334
14) If the terms of trade for an export transaction specify "ex-works," the exporter/seller pays all
expenses incurred until the product is delivered to the importer/buyer's warehouse.
Answer: FALSE
Diff: 3
Page Ref: 338-339
15) To protect against possible losses from currency exchange rates, exporters add a charge
known as "CIF" to the ex-works price of most export shipments.
Answer: FALSE
Diff: 2
Page Ref: 338-339
2
16) With a free on board (FOB) named port, the responsibility and liability of the seller ends at
the docking point at the port.
Answer: FALSE
Diff: 2
Page Ref: 338
17) Currency fluctuations mean that companies doing business in global markets should
regularly review prices and make adjustments when conditions dictate.
Answer: FALSE
Diff: 3
Page Ref: 340-341
18) Suppose the Japanese yen is weak in relation to the U.S. dollar. Japanese firms should be
able to stress price benefits for products exported to the U.S.
Answer: TRUE
Diff: 2
Page Ref: 340-341
19) Suppose the Japanese yen is weak in relation to the U.S. dollar. Rather than stressing price
benefits, Japanese companies exporting to the U.S. should emphasize quality improvements and
after-sales service.
Answer: FALSE
Diff: 2
Page Ref: 340-341
20) Within the Euro zone price transparency means that buyers will be able to comparison shop
easily because goods are priced in euros as opposed to marks, francs, or lira.
Answer: TRUE
Diff: 2
Page Ref: 342
21) When domestic currency is weak, it is advisable to speed repatriation of foreign-earned
income and collections.
Answer: TRUE
Diff: 2
Page Ref: 342
22) When domestic currency is strong, expenditures in the local (host country) should be
minimized.
Answer: FALSE
Diff: 2
Page Ref: 342
23) When domestic currency is weak, it is advisable to bill foreign customers in the domestic
currency.
Answer: FALSE
Diff: 2
Page Ref: 342
3
24) Improved price transparency in the Euro zone leads to greater price disparities.
Answer: FALSE
Diff: 2
Page Ref: 342
25) In countries where high inflation is the rule, companies should make price adjustments to
maintain operating margins.
Answer: TRUE
Diff: 2
Page Ref: 344-345
26) Louis Vuitton executives raised prices in 2008 and sales continued to increase.
Answer: TRUE
Diff: 2
Page Ref: 361-362
27) Germany has traditionally severely restricted competition in a number of industries.
Answer: TRUE
Diff: 2
Page Ref: 346
28) The video piracy problem is not confined to emerging markets. In the United States, losses
from piracy exceed $1 billion each year for the movie industry as a whole.
Answer: TRUE
Diff: 2
Page Ref: 346
29) In some instances, deregulation represents a quid pro quo that will allow German companies
wider access to other country markets.
Answer: TRUE
Diff: 2
Page Ref: 346
30) The open-skies agreement between the United States and Germany would allow Lufthansa to
fly more routes within the United States.
Answer: TRUE
Diff: 1
Page Ref: 346
31) In the United States, Levi Strauss & Company has to face competitive behavior since
JCPenny and Sears are both aggressively marketing their own brands.
Answer: TRUE
Diff: 2
Page Ref: 347
4
32) Marketers of domestically manufactured finished products may be forced to switch to

offshore sourcing of certain components to keep costs and prices competitive.
Answer: TRUE
Diff: 2
Page Ref: 348
33) Dieter Zietsche, sales chief at Germany's Mercedes-Benz, once said that, in setting prices,
"We know what the customer wants, and he will have to pay for it." This is an example of an
ethnocentric pricing policy.
Answer: TRUE
Diff: 2
Page Ref: 348
34) When subsidiary country managers are given broad discretion to set prices in their markets, a
polycentric pricing strategy is in evidence.
Answer: TRUE
Diff: 2
Page Ref: 348-349
35) In global marketing, there is no such thing as a "normal" margin for pricing.
Answer: TRUE
Diff: 2
Page Ref: 350
36) The terms "parallel importing" and "gray marketing" mean the same thing.
Answer: TRUE
Diff: 2
Page Ref: 350-351
37) A global company that uses market skimming as a pricing strategy is likely to invite charges
of "dumping" by competitors in host-country markets.
Answer: FALSE
Diff: 2
Page Ref: 352-354
38) According to current GATT standards, governments cannot penalize foreign companies for
dumping if the export price of a given product differs from the domestic price by less than 2
percent.
Answer: TRUE
Diff: 2
Page Ref: 353
39) Transfer pricing is a term that applies to transactions between different divisions or units of
the same company.
Answer: TRUE
Diff: 2
Page Ref: 354-355
5
40) Lockheed and other military aircraft marketers are likely to face requests for offsets before
closing a sale in the Middle East.
Answer: TRUE
Diff: 2
Page Ref: 357-358
41) Which pricing strategy would be most appropriate for a marketer of luxury designer brands?
A) gray market
B) skimming
C) penetration
D) market holding
E) cost based
Answer: B
Diff: 2
Page Ref: 332
42) If the manufacturer of a sophisticated new consumer electronics product determines that
many target consumers qualify as "innovators" and "early adopters" with relatively inelastic
demand curves, the company should use the ________ pricing strategy:
A) gray market
B) skimming
C) penetration
D) market holding
E) cost based
Answer: B
Diff: 2
Page Ref: 332
43) Which pricing strategy did Sony use when launching the Walkman personal stereo?
A) gray marketing
B) skimming
C) penetration
D) market holding
E) cost based
Answer: C
Diff: 2
Page Ref: 333
6
44) In India, consumers do not like to be locked in to long-term contracts and Apple distributes
its iPhone exclusively through stores operated by Airtel, an India carrier, and Vodaphone. This is
an example of:
A) gray market.
B) price bundling.
C) market skimming.
D) razors and blades.
E) cost-based.
Answer: D
Diff: 2
Page Ref: 333-334
45) Excelsior Corp. launches a new hand-held personal digital assistant (PDA) for busy
corporate executives. The initial retail price is set at $699. One year later, in an effort to reach a
broader market, the price is lowered to $299. Which of the following describes the pricing
strategies used by Excelsior Corp?
A) skimming strategy followed by penetration strategy
B) penetration strategy followed by cost based strategy
C) penetration strategy followed by skimming strategy
D) penetration strategy only
E) skimming strategy only
Answer: A
Diff: 2
Page Ref: 332-334
46) A firm without much export experience uses the rigid cost-based pricing method. Which of
the following considerations is the exporter ignoring?
A) Is the price competitive in view of local market conditions?
B) Does the price reflect the product's quality?
C) Will authorities in export markets view the price as reasonable or exploitative?
D) Does the price take antidumping laws into consideration?
E) all of the above
Answer: E
Diff: 2
Page Ref: 335-337
47) Which pricing strategy has the advantage of being simple to calculate but the disadvantage of
ignoring demand and competitive conditions?
A) gray marketing
B) skimming
C) penetration
D) market holding
E) cost based
Answer: E
Diff: 2
Page Ref: 335-337
7
48) Which of the following incoterms apply to all modes of transportation?

A) ex-works
B) FAS
C) delivered duty paid
D) FOB
E) both A and C
Answer: E
Diff: 3
Page Ref: 338
49) A manufacturer attempting to set prices for its products in export markets must realize that
CIF, VAT, and distributor markup all lead to:
A) currency devaluations.
B) dumping charges.
C) market skimming.
D) price escalation.
E) market penetration.
Answer: D
Diff: 2
Page Ref: 338-339
50) If a distributor's margins are based on the "landed" price of an import shipment, they will be
based on:
A) ex-works price.
B) transportation costs.
C) insurance costs.
D) VAT.
E) all of the above
Answer: E
Diff: 2
Page Ref: 338-340
51) Which of the following does not contribute to price escalation in global marketing?
A) shipping and insurance charges
B) value added taxes (VAT)
C) different Incotherms as incentives
D) duties and tariffs
E) fluctuating exchange rates
Answer: C
Diff: 2
Page Ref: 338-340
8
52) In July 2001, the euro's value relative to the dollar was about 1.00 = $0.85. By November
2009 the euro had strengthened to 1.00 = $1.48. All other things being equal, if a Europeanbased global company wants to preserve margins for goods exported to the U.S. market, the
company should:
A) raise prices in dollars.
B) switch to cost-based pricing.
C) adopt a policy of market penetration pricing.
D) reduce prices in dollars.
E) use skimming pricing.
Answer: A
Diff: 3
Page Ref: 340-343
53) Which of the following would not be used by an exporter with a weak home country
currency?
A) Expand product line and add more costly features.
B) Speed repatriation of foreign-earned income.
C) Buy advertising, insurance, and other services in home country market.
D) Shift sourcing outside home country market.
E) Exploit marketing opportunities in all markets..
Answer: D
Diff: 2
Page Ref: 342
54) Suppose a company selling in various country markets makes statements such as "we know
what the customer wants, and he or she will have to pay for it." This is an indication of a(n)
________ approach to setting prices.
A) ethnocentric
B) polycentric
C) regiocentric
D) geocentric
E) adaptation
Answer: A
Diff: 2
Page Ref: 348
55) According to a recent study of European industrial exporters, companies that utilized
independent distributors would be most likely to utilize:
A) ethnocentric pricing.
B) polycentric pricing.
C) regiocentric pricing.
D) geocentric pricing.
E) extension pricing.
Answer: B
Diff: 2
Page Ref: 349-350
9
56) Which automaker was described as using an ethnocentric approach to setting prices in the
United States?
A) Toyota
B) Nissan
C) Volkswagen
D) Mercedes
E) Lexus
Answer: D
Diff: 3
Page Ref: 348
57) Which of the following pricing strategies recognizes both local market differences and the
importance of headquarters input into pricing decisions?
A) ethnocentric pricing
B) polycentric pricing
C) geocentric pricing
D) rigid cost-based pricing
E) extension pricing
Answer: A
Diff: 2
Page Ref: 348
58) Which of the following would NOT be taken into account by a company using an
ethnocentric approach to pricing decisions?
A) the possibility of implementing a penetration strategy
B) profitable price points that could be tied to local sourcing as opposed to home-country
sourcing
C) integration of price with other marketing mix elements
D) factors unique to individual country markets
E) none of the above would be taken into account by a company using ethnocentric pricing
Answer: E
Diff: 2
Page Ref: 348-349
59) If company managers decide to set the export price for a particular product at an amount
equivalent to the home country price, they would be using which approach to pricing?
A) ethnocentric
B) polycentric
C) regiocentric
D) geocentric
E) extension pricing
Answer: A
Diff: 2
Page Ref: 348-349
10
60) The unauthorized distribution of trademarked goods to exploit price differentials in world
markets is known as:
A) market skimming.
B) black marketing.
C) gray marketing.
D) dumping.
E) licensing.
Answer: C
Diff: 2
Page Ref: 350-351
61) When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers
to purchase Tag Heuer products from authorized dealers only, the company is most likely
attempting to combat the ________ problem.
A) countertrade
B) market holding
C) price escalation
D) gray market
E) market skimming
Answer: D
Diff: 2
Page Ref: 350-351
62) In the early 1990s, the U.S. International Trade Commission ruled that several Japanese
manufacturers were selling active-matrix flat panel display screens in the U.S. at less than fair
value and thereby injuring the sole U.S. producer of similar screens. The ITC's ruling concerned:
A) black marketing.
B) market skimming.
C) gray marketing.
D) dumping.
E) licensing.
Answer: D
Diff: 2
Page Ref: 350-351
63) Following the 1997 currency crisis in Asia, which American industry appealed to President
Clinton for protection from foreign producers that were allegedly "dumping" products in the
United States:
A) auto industry.
B) computer industry.
C) steel industry.
D) photo products industry.
E) restaurant industry.
Answer: C
Diff: 2
Page Ref: 353
11
64) If a company sells products in export markets at prices that are below fair market value and
that can harm producers in the export market, that company may be accused of:
A) market skimming.
B) using offsets.
C) pursuing artificially high margins.
D) dumping.
E) gray marketing.
Answer: D
Diff: 2
Page Ref: 352-354
65) Germany's Bayer Group was fined millions of dollars to settle a lawsuit alleging it had
conspired with ArcherDanielsMidland and other global companies to set prices for an enzyme
used in animal feeds. What was the issue in this lawsuit?
A) price skimming
B) market penetration
C) price bundling
D) price fixing
E) dumping
Answer: D
Diff: 2
Page Ref: 354
66) Nintendo was fined nearly $ 150 million after it was determined that the video game
company had colluded with European distributors. The distributors in countries with lower retail
prices had agreed not to sell to retailers in countries with high prices. This is a classic example
of:
A) price skimming.
B) market penetration.
C) price bundling.
D) price fixing.
E) transfer pricing.
Answer: D
Diff: 2
Page Ref: 354
67) "Cost-based," "market-based," and "negotiated" are three approaches to:
A) dumping.
B) gray marketing.
C) transfer pricing.
D) price skimming.
E) counter trade.
Answer: C
Diff: 1
Page Ref: 354-355
12
68) Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25
percent of U.S. merchandise exports represent shipments by American companies to their foreign
affiliates and subsidiaries. This situation underscores the importance of ________ in global
marketing.
A) dumping
B) gray marketing
C) transfer pricing
D) price skimming
E) price fixing
Answer: C
Diff: 2
Page Ref: 354
69) Which of the following is true about proper use of the term "countertrade?"
A) The term "countertrade" is interchangeable with "offsets."
B) The term "countertrade" is interchangeable with "barter."
C) The term "countertrade" is interchangeable with "counterpurchase."
D) "Countertrade" is a blanket term that refers to several different types of business transactions.
E) The term "countertrade" is interchangeable with "dumping."
Answer: D
Diff: 2
Page Ref: 356-357
70) The most general term for the global phenomenon involving reciprocal business interactions
between parties in various countries is known as:
A) switch trading.
B) barter.
C) offset.
D) compensation trading.
E) countertrade.
Answer: E
Diff: 2
Page Ref: 356-357
71) In the 1970s and 1980s, the arrangement by which PepsiCo received payment for soft drink
products sold to the Soviet Union was:
A) switch trading.
B) barter.
C) offset.
E) counterpurchase.
Answer: B
Diff: 2
Page Ref: 357
13
72) The direct exchange of goods or services between parties in lieu of monetary payment is
known as:
A) barter.
B) switch trading.
C) offset.
E) counterpurchase.
Answer: A
Diff: 2
Page Ref: 357
73) Which of the following forms of countertrade does not require use of money or credit
between parties?
A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above
Answer: A
Diff: 2
Page Ref: 357
74) Which type of countertrade arrangement is required by governments seeking to reduce the
budgetary impact of expenditures for defense or telecommunications?
A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above
Answer: C
Diff: 2
Page Ref: 357-358
75) To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing
agreed to purchase products from the UK whose value was equivalent to 130 percent of the
contract. This type of pricing arrangement, which is common when the customer is a foreign
government and the product has military applications, is known as:
A) barter.
B) switch trading.
C) compensation trading.
D) offset.
E) dumping.
Answer: D
Diff: 3
Page Ref: 357-358
14
76) When one of the parties to a barter transaction is not willing to accept the goods included in
the transaction, that party is likely to utilize the services of a:
A) switch trader.
B) Foreign Trade Organization.
C) Foreign Sales Corporation.
D) Mittelstand owner.
E) broker.
Answer: A
Diff: 3
Page Ref: 358
77) Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If
World Corp. signs a second contract agreeing to take partial payment for the plant in the form of
lumber products produced at the plant, it is engaging in:
A) barter.
B) switch trading.
C) offset.
E) a hybrid countertrade arrangement.
Answer: D
Diff: 3
Page Ref: 358
78) Which of the following companies would be most likely to use some form of countertrade
when selling its products in developing countries?
A) Procter & Gamble
B) Bell Helicopter Textron
C) Nokia
D) Mercedes-Benz
E) Coca-Cola
Answer: B
Diff: 3
Page Ref: 357
79) Despite the high expenses associated with operating elegant stores and purchasing
advertising space in upscale magazines, the premium retail prices that luxury goods like Louis
Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60
percent of LVMH's operating profit. On the other hand, Louis Vuitton spends $ 10 million
annually battling:
A) EU regulations.
B) counterfeiters in countries such as Turkey, South Korea, & Italy.
C) competitors in European countries.
D) suppliers of needed materials.
E) export freight and taxes.
Answer: D
Diff: 2
Page Ref: 361
15
16

11

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

11

Transféré par

Droits d'auteur :

Formats disponibles

Global Marketing, 6e (Keegan/Green)

Chapter 11 Pricing Decisions

32) Marketers of domestically manufactured finished products may be forced to switch to

48) Which of the following incoterms apply to all modes of transportation?

Vous aimerez peut-être aussi