Deck 16: Marketing in the Global Firm

Question 1

Which of the following is TRUE with regard to a global positioning strategy?

A) A global positioning strategy does not address the shared expectations of a global customer market segment.
B) More often than not, global positioning dilutes brand equity in the international market.
C) A global positioning strategy reduces international marketing costs.
D) Internationalizing firms rarely aim for a global positioning strategy.

Answer 1

C

Question 2

In which of the following industries is standardization more likely NOT to be pursued?

A) aircraft manufacturing
B) pharmaceuticals
C) publishing
D) credit cards

Answer 2

C

Question 3

Popular consumer electronics such as Apple's iPhone, Samsung's Galaxy smartphone, and Canon digital cameras, as well as well-known fashion accessories such as Rolex watches and Michael Kors handbags, are demonstrating ________.

A) product diversification
B) customization
C) standardization
D) adaptation

Answer 3

C

Question 4

Market segmentation refers to the process of dividing a firm's total customer base into homogeneous clusters in a way that allows management to formulate unique marketing strategies for each group.

Question 5

Explain the importance of a global market strategy. How does a global market strategy affect the choice of adaption versus standardization for an international marketing program?

Question 6

In international business, marketing is concerned with identifying, measuring, and responding to market opportunities abroad.

Question 7

A reputed American automaker competes in the premium car market segment. It targets affluent buyers with refined tastes who would not mind paying several thousand dollars for a premium car. This is an example of both market segmentation and product positioning.

Question 8

What is market segmentation? In a short essay, discuss how international firms use market segmentation.

Question 9

Which of the following best characterizes the purpose of a global marketing strategy?

A) guides firms on hiring highly skilled resources
B) provides managers with demographic data
C) helps managers check high employee turnover
D) a plan of action the firm develops for foreign markets that guides managerial decision making on how to position itself and its offerings and which customer segments to target.

Question 10

In international business, firms frequently formulate market segments by ________.

A) selling only those products that create derived demand for other related products in the market
B) grouping countries based on variables, such as level of economic development or cultural dimensions
C) grouping competitors based on their hiring strategies
D) grouping identical customers in underground economies

Question 11

Which of the following is TRUE with regard to positioning?

A) Unlike branding, positioning is not intended to evoke the specific attributes that consumers associate with a product.
B) More often than not, positioning dilutes brand equity.
C) Firms develop both the product and its marketing to evoke a distinct impression in the customer's mind.
D) Positioning refers to the process of scaling up production in a market characterized by high demand.

Question 12

A global market segment refers to ________.

A) a group of customers who share similar characteristics across many national markets
B) a group of customers belonging to the same generational group within a country
C) a group of less-affluent customers in the global market
D) a group of buyers in the international market who are largely unaffected by changes in pricing

Question 13

________ refers to a marketing strategy in which the firm develops both the product and its marketing to evoke a distinct impression in the customer's mind, emphasizing differences from competitors' offerings.

A) Positioning
B) Standardization
C) Diversifying
D) Adaptation

Question 14

Explain the purpose of positioning. How does a global positioning strategy assist firms participating in international business? What benefit does a global positioning strategy offer?

Question 15

Which of the following is TRUE with regard to a global market segment?

A) A global market segment refers to a group of customers belonging to the same generational group within a country.
B) Firms target global market segments by using a relatively uniform marketing strategy and programs.
C) Buyers in a global market segment are typically characterized by low spending power.
D) Buyers in a global market segment rarely buy products representing luxury and style.

Question 16

Taken together, the key elements of a company's marketing program are known as the ________.

A) product mix
B) value chain
C) product lifecycle
D) marketing mix

Question 17

Frequent business travelers, who are also affluent and eager spenders, represent a global market segment.

Question 18

In international business, marketing is concerned with ________.

A) disseminating the organizational culture of a firm across global subsidiaries
B) identifying, measuring, and pursuing customer needs and market opportunities abroad
C) maintaining a steady flow of product-based innovations
D) interacting with global business leaders

Question 19

________ is the process of dividing the firm's total customer base into homogeneous clusters in a way that allows management to formulate unique marketing strategies for each group.

A) Brand management
B) Customer relationship management
C) Market segmentation
D) Market diversification

Question 20

Adaptation is defined as ________.

A) the firm's efforts to make its marketing program elements uniform, with a view to targeting entire regions, or even the global marketplace, with the same product or service
B) the firm's attempt at altering its organizational structure to facilitate internationalization
C) the firm's efforts to modify one or more elements of its international marketing program to accommodate specific customer requirements in a particular market
D) the firm's efforts to minimize employee attrition by rewarding performance

Question 21

Adaptation is often necessitated due to ________.

A) differences across countries in language, culture, economic conditions, and other factors
B) unstable demand
C) high import tariffs
D) similarities in customer preferences across various demographic groups worldwide and the increased emphasis on the homogenization of global markets

Question 22

Managers consider several different rationales when adapting marketing program elements, such as ________.

A) high and relatively stable incomes of buyers belonging to the global market segment
B) stable demand of consumer goods worldwide
C) differences in living standards and economic conditions
D) need for improved planning and control

Question 23

Standardization refers to the process of making the marketing program elements uniform, with a view to targeting entire regions, or even the global marketplace, with the same product or service.

Question 24

Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm.
Which of the following questions would be the most important for Cold-Aire managers to evaluate when determining how the firm could reduce production costs in a single market?

A) Has the demand for Cold-Aire refrigerators declined in recent years?
B) Are customized Cold-Aire refrigerators as user friendly as the ones that are not?
C) Can Cold-Aire standardize its refrigerators?
D) Are Cold-Aire refrigerators likely to have greater demand in warmer countries than in colder regions?

Question 25

A standardized marketing approach is appropriate when customers seek similar features in the product or service.

Question 26

Perhaps the most important distinction between standardization and adaptation is that ________.

A) standardization helps the firm customize products according to customer preferences, while adaptation helps the firm save time
B) standardization helps the firm cut costs, while local adaptation helps the firm more precisely cater to local needs and requirements
C) standardization helps the firm cater to the needs of local customers, while adaptation helps the firm save costs through mass production
D) standardization helps the firm upgrade quality to suit the unique tastes of consumers, while adaptation emphasizes uniformity

Question 27

Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm.
Which of the following would most likely be a result of increased standardization of Cold-Aire refrigerators?

A) Cold-Aire would stop exporting refrigerators completely.
B) Cold-Aire would open a facility to produce customized refrigerator models.
C) Cold-Aire would implement a uniform international marketing campaign.
D) Cold-Aire would hire fewer workers and pay lower wages.

Question 28

Adaptation is useful in multidomestic industries such as publishing and software, which tailor their offerings to suit individual markets.

Question 29

Briefly discuss the principal advantages of standardization.

Question 30

Adaptation is more costly than standardization because ________.

A) a firm that chooses adaptation over standardization is likely to lose customers in the long run
B) adaptation often requires the firm to engage in substantial modifications to product design, manufacturing, pricing, distribution, and communications
C) adaptation requires the firm to scale up production without regard to quality
D) standardization holds no market risks

Question 31

Commodities, industrial equipment, and technology products lend themselves to a high degree of standardization.

Question 32

Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm.
Which of the following best supports Cold-Aire making fewer refrigerator adaptations?

A) Adaptation caters to local consumer demands.
B) Standardization reduces manufacturing expenses.
C) Adaptation establishes a sense of buyer loyalty.
D) Standardization limits choices available to consumers.

Question 33

In which of the following industries is an adaptation strategy LEAST likely to be appropriate?

A) consumer electronics
B) publishing
C) furniture
D) television broadcasting

Question 34

Varying income levels among nations usually necessitate that firms make price adjustments and product modifications for individual markets.

Question 35

Discuss four factors that would persuade firms to adapt elements of their marketing programs for individual markets. Provide suitable examples.

Question 36

A global brand can best be defined as ________.

A) a brand with a complicated value-chain
B) a brand that focuses on a single generational group within a country
C) a brand that uses a variety of marketing campaigns in different markets
D) a brand whose positioning, advertising strategy, look, and personality are standardized worldwide

Question 37

When managers attempt to standardize their international marketing program, they can expect ________.

A) diminished efficiency
B) cost reduction
C) brand dilution
D) very high profit margins

Question 38

A standardized marketing approach is appropriate when products have universal specifications.

Question 39

Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm.
Which of the following refers to an advantage for firms that adapt a unique marketing program for an individual market?

A) By doing so, firms decrease their reliance on foreign market intermediaries for large sales.
B) By doing so, firms scale up production substantially to meet the needs of a large and growing market.
C) Products are tailored to specifically meet the exclusive needs of customers in that market.
D) Governments provide heavy tax relief to firms that modify products and services.

Question 40

Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm.
Which of the following most likely supports Cold-Aire implementing a regional strategy of refrigerator standardization?

A) Refrigerator sizes within Latin America tend to be similar.
B) Distribution channels in Asian countries are usually complicated.
C) American kitchens are typically more spacious than Asian ones.
D) Customers in Europe demand exterior ice and water dispensers.

Question 41

When is a standardized marketing approach the most appropriate? Define global brand.

Question 42

Consumers prefer globally branded products because branding provides a sense of trust and confidence in their purchasing.

Question 43

The problem of end-user prices reaching exorbitant levels in the export market, caused by multilayered distribution channels, intermediary margins, tariffs, and other international customer costs is known as ________.

A) international price escalation
B) incremental pricing
C) standardization
D) puffery

Question 44

The weakness of a global brand is best measured by its brand equity.

Question 45

The practice of pricing intermediate or finished products exchanged among the subsidiaries and affiliates of the same corporate family located in different countries is known as ________.

A) transfer pricing
B) breakeven pricing
C) premium pricing
D) discounting

Question 46

A firm can reduce its marketing and advertising costs substantially by focusing on numerous national brands instead of a single global brand.

Question 47

Locating manufacturing in countries with low-cost labor enables a firm to ________.

A) charge premium prices
B) create artificial demand
C) standardize products
D) charge lower prices

Question 48

Which of the following refers to a key strategy used by corporations to combat international price escalation?

A) lengthen the distribution channel
B) ship assembled products to save additional labor costs
C) redesign the product to remove costly features
D) centralize production and sourcing to a single location

Question 49

Brand equity can best be defined as the ________.

A) market value of a brand
B) attractiveness of a brand name
C) durability of a brand
D) lack of customer confidence in a brand

Question 50

Which of the following constitutes a major disadvantage for exporting firms that primarily use independent distributors based abroad?

A) inability to monitor currency exchange rates
B) lack of control over pricing
C) absence of brand loyalty among customers
D) limited access to low-cost labor

Question 51

In a short essay, explain why a "one offering-one world" marketing strategy is difficult, and cite an example of an industry that has attempted a "one offering-one world" approach. How does culture affect variances in marketing programs around the world?

Question 52

Global new-product planning teams formulate best practices that the firm implements in all its units worldwide.

Question 53

All of the following refer to external factors that impact international pricing EXCEPT ________.

A) cost of manufacturing
B) value-added taxes
C) shipping
D) anticipated fluctuations in currency exchange rates

Question 54

In a short essay, explain why consumers prefer global brands. What are some of the important characteristics of the most successful global brands?

Question 55

All of the following are true of global new-product planning teams EXCEPT ________.

A) they assemble employees with special knowledge and expertise
B) they are responsible for global promotion of products and services
C) they include geographically diverse employees in team activities
D) they determine which elements of the product will be standardized

Question 56

Which of the following characterize the most successful global brands?

A) low visibility
B) narrow appeal
C) status symbols
D) highly complex product features

Question 57

Which of the following refers to the price charged for products sold between a company's divisions or subsidiaries?

A) dual pricing
B) transfer price
C) price skimming
D) arm's length price

Question 58

Galaxy Inc., a reputed global conglomerate, has suffered substantial losses in recent months owing to the problem of end-user prices shooting high up in the export market. In order to regain its competitive advantage abroad, Galaxy must ________.

A) increase its budget on technical research
B) hire a greater number of semiskilled workers
C) shorten the distribution channel
D) decentralize production and sourcing to a single location

Question 59

A ________ is a group of managers within a firm that determines which elements of the product will be standardized and which will be adapted locally.

A) research and development team
B) global new-product planning team
C) customer relations management
D) talent management team

Question 60

An American automaker operating in the Asian and the European markets designs various models around a standardized platform. The firm adds parts, features, and regular units to this basic standardized platform according to the preferences of its customers. This exemplifies ________.

A) segmentation
B) customer relations management
C) brand dilution
D) modular architecture

Question 61

Differences in culture, laws, and media availability imply ________.

A) that culture is a weak determinant of buyer attitudes toward the role and function of advertising
B) that international advertising expenditures tend to remain unchanged regardless of the firm's foreign operations
C) that it is seldom possible to duplicate in foreign markets the type and mix of advertising used in the home market
D) that it is difficult to influence buyer perception through media

Question 62

When an exporter gains a price advantage because its home-country currency is weakening relative to its customer's currency, then it should consider raising the prices of its products.

Question 63

Rigid cost-plus pricing is typically favored by highly experienced exporters.

Question 64

A subsidiary is most likely to receive favorable treatment from an MNE if it is located in a country with ________.

A) lower corporate income-tax rates
B) significant restrictions on profit repatriation
C) low tariffs for the product in question
D) political instability

Question 65

Rigid cost-plus pricing refers to setting prices to cover only the firm's variable costs, but not its fixed costs.

Question 66

In a short essay, discuss the three common pricing strategies. How do firms employ each strategy? What are the main advantages and disadvantages of using such strategies?

Question 67

International Price Setting (Scenario)
The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market.
Which of the following should most likely be considered by managers of CCC before setting the price for the lounge chairs manufactured by the company?

A) In what other markets could CCC export its high-priced line of furniture?
B) Would the London retailer be able to recommend appropriate intermediaries?
C) What type of pricing strategy best corresponds to the corporate goals of CCC?
D) Does CCC plan to implement product diversification in the future?

Question 68

Prices can affect customers' perception of value.

Question 69

International Price Setting (Scenario)
The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market.

-If CCC managers employ rigid cost-plus pricing they would most likely be disadvantaged because ________.

A) rigid cost-plus pricing often fails to account for local market conditions
B) through rigid cost-plus pricing, added costs of doing business abroad cannot be adjusted
C) rigid cost-plus pricing overly focuses on the prevailing conditions in the local markets
D) rigid cost-plus pricing is primarily driven by buyer demand in the local markets

Question 70

Gray marketers are ________.

A) typically large business conglomerates
B) unauthorized intermediaries
C) authorized distributors
D) a firm's most effective promotional channels

Question 71

Which of the following refers to an advantage of firms that enter new markets through FDI?

A) low employee attrition
B) minimal competition from other players in the market
C) direct selling of products to consumers through the Internet
D) control over pricing strategy

Question 72

The root cause of gray market activity is ________.

A) a firm's ability to control production and distribution costs
B) a difference in price between national distributors
C) the dominance of substandard products in local markets
D) a significant difference in price of the same product between two countries

Question 73

MNEs typically centralize transfer pricing under the direction of the chief financial officer at corporate headquarters.

Question 74

International Price Setting (Scenario)
The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market.
Which of the following questions would be the most important to evaluate before setting a price for the lounge chairs exported to England?

A) What is the mark-up price quoted by the London retailer for CCC's products?
B) What is the average price that Londoners pay for upholstered chairs?
C) How many lounge chairs are sold in London retail stores every year and at what price?
D) Do many global market segments exist in the European Union?

Question 75

Gray market activity often leads to enhanced brand equity.

Question 76

Manufacturers of branded products are concerned about gray market activity because it can lead to ________.

A) a tarnished brand image
B) empowerment of distributors
C) higher quality outputs
D) increased productivity

Question 77

Define international price escalation. Discuss how distribution channel length affects international business transactions.

Question 78

The root cause of gray market activity is a large enough difference in price of the same product between two countries.

Question 79

Incremental pricing refers to setting prices to cover only the firm's variable costs, but not its fixed costs.

Question 80

Gray market activity is also called ________.

A) market diversification
B) target costing
C) puffery
D) parallel importation