84.
A pull strategy should be used when:
A.
the firm is selling industrial products.
B.
the distribution channels are short.
C.
the distribution channels are long.
D.
few print or electronic media are available.
Pull strategies tend to be emphasized for consumer goods, when
distribution channels are long, and when sufficient print and electronic
media are available to carry the marketing message.
85.
Which of the following is an argument that supports global advertising?
A.
Standardized advertising lowers the costs of value creation by spreading
the fixed costs of developing the advertisements over many countries.
B.
Because of concerns about the scarcity of creative talent, some feel that
smaller efforts will produce better results than one large effort to develop
a campaign.
C.
Even though there are cultural differences between nations, a single
advertising theme that is effective worldwide can be easily developed.
D.
Standardized advertising may be implemented even in the face of
advertising regulations.
The support for global advertising is threefold. First, standardized
advertising lowers the costs of value creation. Second, there is the concern
that creative talent is scarce and so one large effort to develop a campaign
will produce better results than 40 or 50 smaller efforts. A third justification
for a standardized approach is that many brand names are global.
86.
When a company charges whatever the market will bear, the company is
using:
A.
strategic pricing.
B.
price discrimination.
C.
a push strategy.
D.
a pull strategy.
Price discrimination exists whenever consumers in different countries are
charged different prices for the same product or for slightly different
variations of the product.
87.
In order for price discrimination to be successful:
A.
there must be a strong case for arbitrage.
B.
national markets must be kept separate.
C.
demand must be very elastic.
D.
a large change in demand must be triggered by a small change in price.
In order for price discrimination to be successful, a firm must be able to
keep its national markets separate. If a firm cannot do this, individuals or
businesses may undercut its attempt at price discrimination by engaging in
arbitrage.
88.
____ occurs when an individual or business capitalizes on a price differential
for a firm’s product between two countries by buying the product in the
country where the price is low and reselling it in the country where prices
are higher.
A.
Arbitrage
B.
Strategic pricing
C.
Price discrimination
D.
Market pricing
Two conditions are necessary for profitable price discrimination. First, the
firm must be able to keep its national markets separate. If it cannot do this,
individuals or businesses may undercut its attempt at price discrimination
by engaging in arbitrage.
89.
A measure of the responsiveness of demand for a product to change in
price is referred to as:
A.
arbitrage demand.
B.
predatory pricing.
C.
price elasticity of demand.
D.
experience curve pricing.
The price elasticity of demand is a measure of the responsiveness of
demand for a product to change in price The elasticity of demand for a
product in a given country is determined by a number of factors, of which
income level and competitive conditions are the two most important.
90.
If a ____ change in a price produces a ____ change in demand, then demand
is said to be elastic.
A.
small; large
B.
small; small
C.
large; small
D.
large; large
Demand is said to be elastic when a small change in price produces a large
change in demand; it is said to be inelastic when a large change in price
produces only a small change in demand.
91.
Which of the following statements about price discrimination is true?
A.
It exists whenever consumers in a country are charged different prices
for the same product.
B.
A necessary condition for profitable price discrimination is different price
elasticities of demand in different countries.
C.
It is the use of price as a competitive weapon to drive weaker
competitors out of a national market.
D.
It makes economic sense to charge the same prices across countries.
A necessary condition for profitable price discrimination is different price
elasticities of demand in different countries. The price elasticity of demand
is a measure of the responsiveness of demand for a product to change in
price.
92.
Which of the following is one of the important factors in determining the
elasticity of demand for a product in a given country?
A.
Personal selling
B.
Logistics
C.
Operating revenue
D.
Income level
Price elasticity tends to be greater in countries with low income levels.
Consumers with limited incomes tend to be very price conscious; they have
less to spend, so they look much more closely at price.
93.
In a country where competition is limited, ____.
A.
prices will be low.
B.
there will be low elasticity of demand.
C.
prices will be high.
D.
consumers’ bargaining power rises.
When competitors are limited, consumers’ bargaining power is weaker and
price is less important as a competitive weapon. Thus, a firm may charge a
higher price for its product in a country where competition is limited than in
one where competition is intense.
94.
____ pricing is the use of price as a competitive weapon to drive weaker
competitors out of a national market.
A.
Multipoint
B.
Value-based
C.
Experience curve
D.
Predatory
Once the competitors have left the market, the firm can raise prices and
enjoy high profits. For such a pricing strategy to work, the firm must
normally have a profitable position in another national market, which it can
use to subsidize aggressive pricing in the market it is trying to monopolize.
95.
____ refers to the fact a firm’s pricing strategy in one market may have an
impact on its rivals’ pricing strategy in another market.
A.
Multipoint pricing
B.
Experience curve pricing
C.
Predatory pricing
D.
Competitive pricing
Aggressive pricing in one market may elicit a competitive response from a
rival in another market.
96.
Many firms pursuing a(n) ____ pricing strategy on an international scale will
price low worldwide in attempting to build global sales volume as rapidly as
possible, even if this means taking large losses initially.
A.
multipoint
B.
experience curve
C.
predatory
D.
competitive
Many firms pursuing an experience curve pricing strategy on an
international scale will price low worldwide in attempting to build global
sales volume as rapidly as possible, even if this means taking large losses
initially. Such a firm believes that in several years, when it has moved down
the experience curve, it will be making substantial profits and have a cost
advantage over its less-aggressive competitors.
97.
____ occurs whenever a firm sells a product for a price that is less than the
cost of producing it.
A.
Resale
B.
Plunging
C.
Bootlegging
D.
Dumping
Both predatory pricing and experience curve pricing can run afoul of
antidumping regulations. Dumping occurs whenever a firm sells a product
for a price that is less than the cost of producing it.
98.
The ____ industry is often thought of as one in which global standardization
of the marketing mix is the norm.
A.
financial services
B.
IT
C.
telecommunication
D.
manufacturing
The financial services industry is often thought of as one in which global
standardization of the marketing mix is the norm.
99.
Other things being equal, the rate of new-product development seems to be
greater in countries where:
A.
less money is spent on basic and applied R&D.
B.
consumers are affluent.
C.
underlying demand is weak.
D.
competition is mild.
Basic and applied research and development discovers new technologies
and then commercializes them. Strong demand and affluent consumers
create a potential market for new products. Intense competition between
firms stimulates innovation as the firms try to beat their competitors and
reap potentially enormous first-mover advantages that result from
successful innovation.
100.
Tight cross-functional integration between R&D, production, and marketing
can help a company to ensure that all of the following take place except:
A.
time to market is minimized.
B.
development costs are kept in check.
C.
new products are designed for ease of manufacture.
D.
product development projects are driven by internal needs.
Tight cross-functional integration between R&D, production, and marketing
can help a company ensure that product development projects are driven by
customer needs.
Essay Questions
101.
What is Theodore Levitt’s contribution to international business?
Theodore Levitt wrote about the globalization of world markets in a now–
classic
Harvard Business Review
article. Levitt suggested that due to
technology, the world was moving toward a converging commonalty and the
emergence of global markets for standardized consumer products.
According to Levitt, this convergence creates an opportunity for the global
corporation to serve the entire world as if it were a single entity, or in other
words, sell the same thing in the same way everywhere. Most academics
believe that Levitt has overstated his case, that globalization in consumer
products is probably the exception rather than the rule. Furthermore,
cultural and economic differences between countries will continue to limit
the effects of any movement toward the standardization of consumer
preferences and tastes. In addition, trade barriers and differences in
product and technical standards will also constrain a firm’s ability to sell
standardized products to global markets using a standardized marketing
strategy.