Baack - International Marketing Test Bank

1. Which of the following factors is not a factor that complicates the task of setting prices in
foreign markets?
A) Payment systems
B) Discounting programs
C) Currency types and value fluctuations
D) Methods of payment
E) Promotion cost

2. Which of the following three factors influence consumer price perceptions as discussed in
the text?
A) Value considerations, distribution considerations, and emotional considerations
B) Value considerations, situational factors, and emotional considerations
C) Value considerations, situational factors, and distribution considerations
D) Situational factors, emotional considerations, and image considerations
E) Image considerations, situational factors, and distribution considerations

3. Which of the following is not a common pricing objective?

A) Profitability
B) Market share
C) Enticing new customers
D) Retaining current customers
E) Estimating brand awareness

4. Which of the following is not one of the pricing methods that may be used to help a firm
reach its pricing goals?
A) Cost-based pricing
B) Demand/supply pricing
C) Competition-based pricing
D) Distribution-plus pricing
E) Profit-based pricing

5. If the fixed costs associated with a product is 80,000,000 KES (Kenya shilling), the price
per unit is 10,000 KES, and the variable costs per unit is 6000 KES, then the break-even
point would be:
A) 5000 units
B) 10,000 units
C) 15,000 units
D) 20,000 units
E) 25,000 units

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6. Using a cost-plus pricing strategy, and given the following information, what would be
the final unit selling price for a product if a manufacturer believes that it can sell 5000
units of a product and desires a margin of 18%? Assume total fixed costs = 50,000,000
Rp and total variable costs = 12,200,000 Rp.
A) 10,000 + 60 + 1810.8 = 11,870.80 Rp
B) 10,000 + 2440 + 1810.8 = 14,250.80 Rp
C) 10,000 + 2440 + 2239.2 = 14,679.20 Rp
D) 12,000 + 3600 + 12,440 = 28,040.00 Rp
E) 12,000 + 6000 + 12,440 = 30,440.00 Rp

7. Which pricing technique offers a straightforward pricing method that adds a standard
markup to costs assigned to a product?
A) Cost-based pricing
B) Cost-plus pricing
C) Markup pricing
D) Demand-/supply-based pricing
E) Target ROI pricing

8. What reflects the intersection of the demand and supply curves?

A) Demand point
B) Break-even point
C) Equilibrium point
D) Supply-based point
E) Market intersection point

9. Which of the following reveals that consumers are not strongly affected by price?
A) Elastic demand
B) Inelastic demand
C) Market demand
D) Supply-based demand
E) Supply-market demand

10. What occurs when consumers are extremely price sensitive?

A) Highly elastic demand
B) Highly inelastic demand
C) Market equilibrium demand
D) Market-based demand
E) Price-based demand

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11. If the percentage change in quantity demanded is 10% and the percentage change in price
is 20%, what is the price elasticity?
A) 2
B) 1.5
C) 1
D) .5
E) .25

12. If the percentage change in quantity demanded is 20% and the percentage change in price
is 10%, what is the price elasticity?
A) 2
B) 1.5
C) 1
D) .5
E) .25

13. A value below 1 indicates:

A) Inelastic demand
B) Unitary demand
C) Elastic demand
D) Perfect demand
E) Perfect elasticity

14. Big-box retailers such as Carrefour often price using which technique?
A) Below-industry-average pricing
B) At industry-average pricing
C) Above-industry-average pricing
D) Supplier-based pricing
E) Market equilibrium pricing

15. Which technique represents an attempt to recover start-up costs as quickly as possible?
A) Skimming pricing
B) Penetration pricing
C) Cost-plus pricing
D) Markup pricing
E) Cost-based pricing

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16. By pricing products as high as the market would bear, Sony used which method when
pricing its PlayStation consoles internationally?
A) Skimming pricing
B) Penetration pricing
C) Cost-plus pricing
D) Markup pricing
E) Cost-based pricing

17. What technique is used when an international marketer sets the lowest possible price in
order to end a market?
A) Skimming pricing
B) Penetration pricing
C) Cost-plus pricing
D) Markup pricing
E) Cost-based pricing

18. By pricing items as low as possible, Zeebo, the low-cost, emerging-market gaming devise
marketer, selected which strategy when it introduced its product into the Brazilian
market?
A) Skimming pricing
B) Penetration pricing
C) Cost-plus pricing
D) Markup pricing
E) Cost-based pricing

19. Which pricing strategy makes it more difficult for the international marketer to recover
start-up costs quickly?
A) Skimming pricing
B) Penetration pricing
C) Cost-plus pricing
D) Markup pricing
E) Cost-based pricing

20. Which of the following is a condition that favors the use of profit-based pricing in
international markets?
A) The company operates in an oligopolistic environment.
B) The company does not seek to recover start-up costs quickly.
C) Prices are set to achieve a balance between demand and costs.
D) The company operates in a monopolistic environment.
E) Information on elasticity has been gathered.

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21. Using a target ROI pricing strategy, and given the following information, what would be
the final unit selling price for a product if a manufacturer invests $1,000,000 (U.S.) in a
product with unit costs of $10 each, expected sales of 20,000 units, and has a desire to
achieve 8% ROI?
A) $11
B) $12
C) $13
D) $14
E) $15

22. Using a target ROI pricing strategy, and given the following information, what would be
the final unit selling price for a product if a manufacturer invests ₤2,000,000 (U.K.) in a
product with unit costs of ₤20 each, expected sales of 10,000 units, and has a desire to
achieve 6% ROI?
A) ₤24
B) ₤30
C) ₤32
D) ₤35
E) ₤42

23. Which of the following is not one of the major pricing discount methods used by
international marketers?
A) Loss leaders
B) Seasonal discounts
C) Quantity discounts
D) Early-payment discount
E) Differentiation discounts

24. Which pricing technique relies on regular prices for other products in order for an overall
profit to be realized?
A) Loss leader
B) Seasonal
C) Quantity
D) Early discount
E) Differentiation

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25. Which term refers to the power to use goods and services in the satisfaction of wants and
needs?
A) Capacity to buy
B) Capacity to use
C) Capacity to consume
D) Capacity to need
E) Capacity to want

26. Seasonal discounts are often associated with what kinds of industries in international
marketing?
A) Manufacturing and producing
B) Financial and accounting
C) Medical and personal health
D) Tourism and hospitality
E) Distribution and logistics

27. Manufacturers most often offer quantity discounts to which groups?

A) Customers and consumers
B) Governments and affinity groups
C) Wholesalers and retailers
D) Buying groups and wholesale clubs
E) Loyalty groups and membership clubs

28. The phrase “2/10 net 30” reflects which of the following?
A) Early payment discount
B) Consumer club discount
C) Wholesale distribution discount
D) Prompt action discount
E) Accounting terms discount

29. A price discount provided to all countries of the Pacific Rim based on shipping costs
represents what type of discount?
A) Early payment discount
B) Channel discount
C) Quantity-based discount
D) Seasonal discount
E) Loss leader discount

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30. Which of the following factors is not included in the text as a factor that should be
considered when changing prices in international markets?
A) Actions or reactions of competitors
B) Company status
C) Impact on brand image
D) Impact on revenues and gross margin
E) Impact on company reputation

31. The finding that it takes a price change of 10% in order for consumers to notice the
change and to act is called which of the following?
A) Pavlov's Law
B) Skinner's Law
C) Madrid's Law
D) Weber's Law
E) Thomson's Law

32. In international markets, if an oligopoly sets prices at a uniform level, the members are
likely to be found guilty of which of the following?
A) Loss leader pricing
B) Price setting
C) Collusion
D) Predatory pricing
E) Monopolization

33. Smaller companies in an international market can sometimes be forced out of the market
if a competitor uses which of the following?
A) Loss leader pricing
B) Price setting
C) Predatory pricing
D) Price determination policy
E) Price discrimination

34. When an international marketer promotes one price but does not include hidden charges
and add-ons, the company is guilty of which of the following?
A) Loss leader pricing
B) Price setting
C) Predatory pricing
D) Price discrimination
E) Deceptive pricing

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 Baack - International Marketing Test Bank

35. The practice of selling goods in a foreign country at prices that are below cost is:
A) Price fixing
B) Price discrimination
C) Predatory pricing
D) Dumping
E) Pricing stabilizing

36. Which Indian company is the world's largest producer of steel?

A) Mottel Limited
B) Mittal Steel
C) Moffit Limited
D) Morlan Steel
E) Mittalle Limited

37. If Sony introduces a new television in Nigeria at a price below its production and
shipping costs, in order to gain in-roads against local manufacturers, the company is
guilty of:
A) Price fixing
B) Price discrimination
C) Predatory pricing
D) Dumping
E) Pricing stabilizing

38. Which of the following early payment terms would offer the smallest price reduction?
A) 1/10, net 20
B) 2/5, net 20
C) 2/4, net 30
D) 3/8, net 30
E) 3/10, net 30

39. Which of the following early payment discounts would offer the biggest overall price
reduction?
A) 1/10, net 20
B) 1/20, net 40
C) 2/10, net 30
D) 2/10, net 40
E) 3/10, net 20

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 Baack - International Marketing Test Bank

40. What kind of price discount in international markets takes the form of a price reduction
associated with a holiday?
A) Loss leader
B) Predatory
C) Introductory
D) Promotional
E) Reduced

41. What kinds of packages match the needs of bottom-of-the-pyramid consumers well?
A) Family sized
B) Single serve
C) Multi-unit
D) Bulk
E) Containerized

42. What kinds of packages are much more prevalent in less-developed countries?
A) Family sized
B) Single serve
C) Multi-unit
D) Bulk
E) Containerized

43. A common measure of the profitability pricing objective includes all of the following
except:
A) Total dollar profit
B) Return on investment
C) Contribution to overhead
D) Market share attained
E) Cost reduction

44. A common measure of the market share pricing objective includes all of the following
except:
A) Product market share
B) Product line share
C) Company market share
D) Return on investment per share
E) Cost reduction

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45. What represents the amount of items that are purchased at various price levels?
A) Demand
B) Supply
C) Equilibrium
D) Market intersection
E) Marketability

46. The equilibrium point reflects which of the following in an international market?
A) Market intersection
B) Intersection of supply and demand curves
C) Demand quotient
D) Supply/demand point
E) Market point

47. Which method of international pricing typically features a percentage as the margin of
profit per good?
A) Cost plus
B) Cost based
C) Market equilibrium
D) Markup
E) Target ROI

48. Creating which of the following allows the international marketing team to see a visual
portrayal of the relationships between price, quality, image, and/or other variables?
A) Pricing perceptual map
B) Pricing market share map
C) Pricing marketing map
D) Pricing image map
E) Pricing promotion map

49. What represents the first thoughts a buyer may have about the prices of a product and
whether the amount represents a reasonable portrayal of value?
A) Cost considerations
B) Market considerations
C) Value considerations
D) Product considerations
E) Promotion considerations

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 Baack - International Marketing Test Bank

50. Capacity to consume consists of all of the following except:

A) Wants
B) Goods and services available
C) Time and energy
D) Purchasing power
E) Consumer personality

51. True or False. Culture affects methods of setting prices, methods of bargaining, and
perceptions regarding what price indicates.
A) True
B) False

52. True or False. For products moving through an international market channel, the first
price will be the one offered by a manufacturer to middlemen.
A) True
B) False

53. True or False. The price perceptual map depicts companies or products along two
dimensions, typically price and quality.
A) True
B) False

54. True or False. Many goods and services contain emotional components that affect value
judgments and influence purchase decisions.
A) True
B) False

55. True or False. Situational factors can affect price perceptions.

A) True
B) False

56. True or False. Ensuring profitability is one of the most common pricing objectives.
A) True
B) False

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57. True or False. Cost-based pricing begins with a careful assessment of market conditions
as they pertain to supply and demand.
A) True
B) False

58. True or False. A typical break-even analysis begins with an assessment of consumer
price elasticity.
A) True
B) False

59. True or False. Cost-plus pricing involves setting a product's price based on fixed costs,
variable costs, plus the desired profit margin for each item.
A) True
B) False

60. True or False. Markup pricing is best suited for retailers and manufacturers that sell or
produce a small number of products.
A) True
B) False

61. True or False. Markup pricing is usually most useful when consumers are not strongly
affected by price.
A) True
B) False

62. True or False. The equilibrium point reflects the intersection of the demand and supply
curves.
A) True
B) False

63. True or False. Inelasticity demand occurs when consumers are highly sensitive to price
changes.
A) True
B) False

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 Baack - International Marketing Test Bank

64. True or False. Elastic demand occurs when consumers are not sensitive to price
changes.
A) True
B) False

65. True or False. In international markets, demand, supply, and elasticity are all affected
by local conditions.
A) True
B) False

66. True or False. International marketers realize that there is generally a great diversity in
consumer demand in international markets.
A) True
B) False

67. True or False. Adaptation of products to local markets generally increases international
marketing costs.
A) True
B) False

68. True or False. International big-box retailers, such as Vishal Mart and Carrefour, often
follow below the industry-average pricing.
A) True
B) False

69. True or False. Pricing against foreign competitors rarely occurs when international bids
for contracts are made.
A) True
B) False

70. True or False. Skimming represents an attempt to recover start-up costs as quickly as
possible.
A) True
B) False

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 Baack - International Marketing Test Bank

71. True or False. Penetration pricing occurs when an international marketer sets prices as
low as possible in an attempt to enter a market.
A) True
B) False

72. True or False. Profit-based pricing may work well in situations in which prices are set to
achieve a balance between demand and supply while generating optimal profits.
A) True
B) False

73. True or False. With target ROI pricing, the first piece of information needed is
consumer price elasticity.
A) True
B) False

74. True or False. In general, setting prices in international markets is less complex than
setting them for domestic markets.
A) True
B) False

75. True or False. Governmental regulations complicate pricing decisions in international

markets.
A) True
B) False

76. True or False. Capacity to consume refers to the power to use goods and services in the
satisfaction of human needs.
A) True
B) False

77. True or False. Ensuring capacity to consume is an important part of marketing to

bottom-of-the-pyramid consumers.
A) True
B) False

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 Baack - International Marketing Test Bank

78. True or False. According to the text, providing credit to bottom-of-the-pyramid

consumers can be an effective international marketing technique.
A) True
B) False

79. True or False. Sell cars at a loss can attract new customers and maintain customer
loyalty.
A) True
B) False

80. True or False. International marketers use quantity discounts to build relationships.
A) True
B) False

81. True or False. International marketers often take advantage of regional channel
discounts.
A) True
B) False

82. True or False. Increased competition can trigger a permanent price reduction for
international marketers.
A) True
B) False

83. True or False. Decreased competition can trigger a permanent price reduction for
international marketers.
A) True
B) False

84. True or False. Informing business customers about potential price increases is an
important part of establishing trust in international marketing relationships.
A) True
B) False

85. True or False. Raising prices without announcing such increases demonstrates Weber's
Law.
A) True
B) False

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86. True or False. Weber's Law applies equally to all cultures.

A) True
B) False

87. True or False. Predatory pricing is an overt attempt to drive competitors out of a market.
A) True
B) False

88. True or False. Dumping is the practice of selling goods below cost in a foreign country.
A) True
B) False

89. True or False. The World Trade Organization has outlawed dumping.
A) True
B) False

90. True or False. Dumping accusations usually originate from a foreign government, not
from foreign competitors.
A) True
B) False

91. Discuss how value considerations, emotional factors, and situational factors affect price
perceptions in international markets. Use an example of a product to illustrate your
response.

92. Describe the various types of pricing objectives as they pertain to international
marketing. Discuss how an international marketer could use these objectives when
developing prices for international markets.

93. Describe the various types of international pricing discounts and how an international
marketer could use each when developing an international marketing campaign.

94. Discuss the major categories of ethical issues that international marketers sometimes face
when they market their products in foreign countries.

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95. Draw and discuss a pricing perceptional map for a product of your choice that is
marketed internationally. Use brands and/or companies of your choice. What
conclusions can you make from the map? How could an international marketer use this
information?

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Answer Key
1. E
2. B
3. E
4. D
5. D
6. C
7. C
8. C
9. B
10. A
11. D
12. A
13. A
14. A
15. A
16. A
17. B
18. B
19. B
20. D
21. D
22. C
23. E
24. A
25. C
26. D
27. C
28. A
29. B
30. E
31. D
32. C
33. C
34. E
35. D
36. B
37. D
38. A
39. E
40. D
41. B
42. B
43. D
44. D

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45. A
46. B
47. D
48. A
49. C
50. E
51. A
52. A
53. A
54. A
55. A
56. A
57. B
58. B
59. A
60. B
61. A
62. A
63. B
64. B
65. A
66. A
67. A
68. A
69. B
70. A
71. A
72. A
73. B
74. B
75. A
76. A
77. A
78. A
79. A
80. A
81. A
82. A
83. B
84. A
85. B
86. B
87. A
88. A
89. A
90. B

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91. Varies
92. Varies
93. Varies
94. Varies
95. Varies

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