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1 Chapter 18 Global Marketing and R&D True / False Questions 1. The set of choices the firm offers to its targeted markets is known as the marketing mix. True False 2. The marketing mix is comprised of product attributes, distribution strategy, communication strategy, and pricing strategy. True False 3. The process of identifying distinct groups of consumers whose purchasing behavior differs from others in important ways is known as consumer behavior analysis. True False

2 4. Markets can be segmented in only one way: by socio-cultural factors. True False 5. The goal of market segmentation is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix, thereby maximizing sales to that segment. True False 6. The structure of market segments may differ significantly from country to country. True False 7. Products sell well when their attributes match consumer needs. True False 8. Firms based in less-developed nations tend to build a lot of extra performance attributes into their products. True False 9. Consumers in the most developed countries are typically willing to sacrifice their preferred product attributes for lower prices. True False

3 10. Differences in technical standards constrain the globalization of markets. True False 11. If a firm manufactures its product in a particular country, it can sell directly to the consumer, to the retailer, or to the wholesaler. The same options are not available to a firm that manufactures outside the country. True False 12. The four main differences between distribution systems are retail concentration, channel length, channel exclusivity, and channel quality. True False 13. In a concentrated retail system, there are many retailers but none of them have a significant share of the market. True False 14. There is a tendency for greater retail concentration in developing countries. True False

4 15. An increase in car ownership, the number of two-income households, and the number of households with a refrigerator have all contributed to the more fragmented retail system found in developed countries. True False 16. The number of intermediaries between the producer and the consumer is known as the channel length. True False 17. A channel is considered to be long if the producer sells directly to the consumer. True False 18. Concentrated retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels. True False 19. The more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer. True False

5 20. Countries with fragmented retail systems tend to have long channels of distribution. True False 21. The entry of large discount superstores such as Tesco and Carrefour have shortened channel length in some countries. True False 22. An exclusive distribution channel is one that is difficult for outsiders to access. True False 23. One benefit of a shorter channel is that it cuts selling costs when the retail sector is very fragmented. True False 24. Import agents are typically limited to independent trading houses. True False 25. The best way for a firm to overcome cultural barriers is to develop cross-cultural literacy. True False

6 26. Source effects occur when the receiver of the message evaluates the message based on the status or image of the sender. True False 27. Source effects and country of origin effects are always negative. True False 28. A company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy. True False 29. When a company emphasizes personal selling, the company is probably using a push strategy. True False 30. A push strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market. True False 31. A push strategy makes sense when distribution channels are short. True False

7 32. A firm may be prevented from using standardized advertising because of advertising regulations. True False 33. In a competitive market, prices have to be higher than in a market where the firm has a monopoly. True False 34. When a small change in price produces a large change in demand, demand is said to be inelastic. True False 35. The use of price as a competitive weapon to drive weaker competitors out of a national market is known as predatory pricing. True False 36. Pricing decisions around the world must be delegated to the managers of various national subsidiaries. True False

8 37. The increasing pace of technological change has resulted in a dramatic shortening of product life cycles. True False 38. To design the product so that it can be manufactured in a cost-effective manner, the firm needs to build close links between R&D, marketing, and manufacturing. True False 39. The rate of new-product development seems to be lesser in countries where more money is spent on basic and applied research and development. True False 40. New-product development has a high failure rate. True False 41. Tight cross-functional integration between R&D, production, and marketing maximizes the time to market. True False

9 42. Designing for manufacturing increases not only product quality, but also costs involved. True False 43. For a product development team to function effectively and meet all its development milestones, the team should be composed of at least one member from each key function. True False 44. The need to integrate R&D and marketing to adequately commercialize new technologies poses special problems in the international business because commercialization may require different versions of a new product to be produced for various countries. True False Multiple Choice Questions

10 45. Which of the following is one of the four elements that constitute a firm's marketing mix? A. Inventory accounting B. Product reengineering C. Reverse engineering D. Distribution strategy 46. The set of choices the firm offers to its targeted market is known as the. A. marketing mix B. marketing concept C. marketing strategy D. market promotion 47. Research has long maintained that a major factor of success for new products is the closeness of the relationship between: A. finance and marketing. B. marketing and R&D. C. finance and materials management. D. finance and R&D.

11 48. According to Levitt, which of the following statements is true? A. Technology drives the world toward a converging commonalty. B. There are accustomed differences in national preferences. C. The multinational corporation operates in a number of countries at low relative costs. D. The global corporation operates with resolute consistency at high relative costs. 49. The continuing persistence of differences between nations acts as a major brake on any trend toward global consumer tastes and preferences. A. technological and industrial B. institutional and political C. cultural and economic D. GNP level and growth rate 50. The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as. A. market segmentation B. market penetration C. diversification strategy D. differentiation

12 51. If market segments transcend national borders: A. the company should develop unique products for each national market. B. the company can view the global market as a single entity and pursue a global strategy. C. a localization strategy would be appropriate. D. consumers will have differing purchasing behavior in different nations. 52. The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of. A. values B. traditions C. norms D. attitudes 53. Consumers in highly developed countries value as compared to their counterparts in less developed nations. A. product price B. product reliability C. product attributes D. product value

13 54. Contrary to Levitt's suggestions, consumers in the most developed countries are often: A. willing to sacrifice their preferred attributes for lower prices. B. not willing to pay more for products that have additional features customized to their tastes. C. not willing to sacrifice their preferred attributes for lower prices. D. willing to accept globally standardized products that have been developed with the lowest common denominator in mind. 55. The means a firm chooses for delivering the product to the consumer is its. A. communication strategy B. segmentation strategy C. product attributes D. distribution strategy 56. The way a product is delivered is determined by: A. the firm's entry strategy. B. the firm's product positioning. C. the target market. D. the market segments.

14 57. In a concentrated retail system: A. there are many retailers who have a major share of the market. B. there are many retailers, no one of which has a major share of the market. C. a few retailers supply a small segment of the market. D. a few retailers supply most of the market. 58. A country with high car ownership, a large number of households with refrigerators, and a large number of two-income families tend to have: A. retail division. B. retail dispersion. C. retail concentration. D. retail fragmentation. 59. A retail system is one in which there are many retailers, no one of which has a major share of the market. A. concentrated B. consolidated C. focused D. fragmented

15 60. Which of the following statements about retail systems is true? A. One factor contributing to greater retail concentration is an increase in car ownership. B. The number of households with refrigerators leads to lesser retail concentration in developed countries. C. There is a tendency for greater retail concentration in many developing countries. D. Retail systems are very fragmented in developed countries. 61. Which of the following countries has a concentrated retail system? A. China B. USA C. Japan D. India 62. refers to the number of intermediaries between the producer (or manufacturer) and the consumer. A. Channel length B. Channel exclusivity C. Channel quality D. Channel speed

16 63. If a producer sells through an import agent, a wholesaler, and a retailer, then: A. a long channel exists. B. the retail system must be concentrated. C. the internet probably plays a big role in the economy. D. there is no channel. 64. The most important determinant of channel length is the degree to which a retail system is. A. concentrated B. fragmented C. decentralized D. globalized

17 65. Which of the following statements about fragmented retail systems is true? A. Countries with fragmented retail systems tend to have short channels of distribution. B. The more fragmented the retail system, the less expensive it is for a firm to make contact with each individual retailer. C. Fragmented retail systems tend to promote the growth of wholesalers to serve retailers. D. When the retail sector is very fragmented, it makes sense for the firm to deal directly with retailers. 66. What kind of retail systems do rural India and China have? A. Fragmented B. Direct C. Indirect D. Concentrated 67. With a concentrated retail sector: A. a relatively large sales force is required. B. the orders generated from each sales call can be large. C. there are long channels of distribution. D. it is expensive for the firm to make contact with each individual retailer.

18 68. A(n) distribution channel is one that is difficult for outsiders to access. A. selective B. intensive C. exclusive D. multi-channel 69. When a channel is exclusive: A. the firm sells and distributes only high-end products. B. it is controlled by market leaders or by firms who have a niche market. C. the firm's products are focused only on the elite, upper class customers. D. it is often difficult for a new firm to get access to shelf space in supermarkets. 70. refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses. A. Channel exclusivity B. Channel knowledge C. Channel quality D. Channel skill

19 71. Which of the following statements about the choice of distribution strategy is true? A. The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product. B. If price is an important competitive weapon and if the firm does not want to see its profit margins squeezed, other things being equal, the firm would prefer to use a longer channel. C. The shorter a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product. D. An international business must use shorter channels in countries where the retail sector is fragmented and longer channels in countries where the retail sector is concentrated.

20 72. In the 1960s, the Swedish vacuum manufacturer Electrolux successfully marketed vacuums in the United Kingdom with the slogan "Nothing sucks like an Electrolux". The informal US meaning of the word sucks' was already well known in the UK at the time, and the company hoped the slogan, with its possible double entendre, would gain attention. When this slogan was used in the American market, it was a catastrophe. This is an example of: A. cultural differences. B. religious differences. C. source effects. D. noise levels. 73. To overcome cultural barriers, companies should: A. develop products specifically for each market. B. focus on universal needs. C. focus only on international market segments. D. develop cross-cultural literacy.

21 74. When the receiver of a message evaluates a message based on the status or image of the sender, are said to have occurred. A. sender effects B. noise effects C. source effects D. communication effects 75. The extent to which the place of manufacturing influences product evaluations is known as. A. source effects. B. country of origin effects. C. noise effects. D. location effects. 76. The "Swiss Made" label has leveraged several watch-making companies (for example, TAG Heuer) for decades now. This is an example of a effect. A. linguistic B. country of origin C. noise D. cultural

22 77. Which of the following is an example of a positive source effect? A. A 3M Post-it note B. A Dell laptop C. An Audi R8 D. An Apple ipod 78. The probability of effective communications is reduced by: A. noise. B. location effects. C. country of origin effects. D. source effects. 79. Which of the following statements about barrier to international communication is true? A. Source effects occur when the receiver of the message evaluates the message on the basis of the location of the sender. B. The best way for a firm to overcome cultural barriers is to use local input. C. Source effects and country of origin effects are always negative. D. Noise is extremely high in highly developed countries such as the United States.

23 80. When a firm emphasizes personal selling rather than mass media advertising in the promotional mix, the firm is using a: A. standardized strategy. B. pull strategy. C. push strategy. D. localized strategy. 81. Which of the following statements is true? A. Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a push strategy. B. Mass communication has cost advantages for firms in consumer goods industries that are trying to sell to a large segment of the market. C. Direct selling may be the only way to reach consumers in poor nations with low literacy levels. D. Firms that sell industrial products or other complex products favor a pull strategy.

24 82. A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using a: A. pull strategy. B. push strategy. C. standardized strategy. D. localized strategy. 83. A push strategy is appropriate when: A. there are many choices of electronic media. B. the firm is selling consumer goods. C. distribution channels are long. D. the firm is selling complex new products. 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.

25 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. 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.

26 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. 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 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.

27 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 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.

28 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 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. 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

29 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 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 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

30 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 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 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.

31 Essay Questions 101. What is Theodore Levitt's contribution to international business? 102. Define market segmentation. What is its goal?

32 103. What are the two main issues that managers must be aware of when considering market segmentation in foreign countries? 104. Discuss the notion of a product being a bundle of attributes. How can approaching a product in this manner help a firm reach its target market?

33 105. How do levels of economic development affect consumer behavior? What are the implications for marketing strategy? 106. Explain the difference between a concentrated retail system and a fragmented one. Why is this distinction important to international businesses?

34 107. What are the four main differences between distribution systems across countries? 108. What are the three factors that contribute to the trend toward greater retail concentration in developed countries? How have these factors promoted retail concentration?

35 109. What is channel length? What is the most important determinant of channel length? Mention two factors that shorten channel length Describe an exclusive distribution channel. Consider the implications of channel exclusivity for outside firms.

36 111. What factors affect the success of a firm's international communications? 112. Compare and contrast push strategies and pull strategies What are the arguments for standardized advertising across international markets?

37 114. Explain the concept of price elasticity of demand. What are its determining factors? 115. What is predatory pricing? Describe how a firm might use predatory pricing Differentiate between multipoint pricing and experience curve pricing strategies.

38 117. Explain briefly the regulatory influences on pricing What factors affect the rate of new-product development in countries?

39 119. Discuss the notion of cross-functional teams and their role in cross-functional integration. What are the attributes that make a product development team successful?

40 Chapter 18 Global Marketing and R&D Answer Key True / False Questions 1. The set of choices the firm offers to its targeted markets is known as the marketing mix. TRUE The marketing mix is the set of choices the firm offers to its targeted markets. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Introduction 2. The marketing mix is comprised of product attributes, distribution strategy, communication strategy, and pricing strategy. TRUE The four elements that constitute a firm's marketing mix: product attributes, distribution strategy, communication strategy, and pricing strategy.

41 Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Introduction 3. The process of identifying distinct groups of consumers whose purchasing behavior differs from others in important ways is known as consumer behavior analysis. FALSE Market segmentation refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation 4. Markets can be segmented in only one way: by socio-cultural factors. FALSE Markets can be segmented in numerous ways: by geography, demography (sex, age, income, race, education level, etc.), sociocultural factors (social class, values, religion, lifestyle choices), and psychological factors (personality). Blooms: Remember

42 Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation 5. The goal of market segmentation is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix, thereby maximizing sales to that segment. TRUE The goal is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix, thereby maximizing sales to that segment. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation 6. The structure of market segments may differ significantly from country to country. TRUE An important market segment in a foreign country may have no parallel in the firm's home country, and vice versa. Blooms: Remember Difficulty: 1 Easy

43 Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation 7. Products sell well when their attributes match consumer needs. TRUE Products sell well when their attributes match consumer needs (and when their prices are appropriate). Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes 8. Firms based in less-developed nations tend to build a lot of extra performance attributes into their products. FALSE Firms based in highly developed countries tend to build a lot of extra performance attributes into their products. These extra attributes are not usually demanded by consumers in less developed nations, where the preference is for more basic products. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes

44 9. Consumers in the most developed countries are typically willing to sacrifice their preferred product attributes for lower prices. FALSE Consumers in most developed countries are often not willing to sacrifice their preferred attributes for lower prices. Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes 10. Differences in technical standards constrain the globalization of markets. TRUE Differing government-mandated product standards can rule out mass production and marketing of a standardized product. Differences in technical standards also constrain the globalization of markets. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes

45 11. If a firm manufactures its product in a particular country, it can sell directly to the consumer, to the retailer, or to the wholesaler. The same options are not available to a firm that manufactures outside the country. FALSE The same options are available to a firm that manufactures outside the country. Plus, the firm may decide to sell to an import agent, which then deals with the wholesale distributor, the retailer, or the consumer. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 12. The four main differences between distribution systems are retail concentration, channel length, channel exclusivity, and channel quality. TRUE The four main differences between distribution systems are retail concentration, channel length, channel exclusivity, and channel quality. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy

46 13. In a concentrated retail system, there are many retailers but none of them have a significant share of the market. FALSE In a concentrated retail system, a few retailers supply most of the market. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 14. There is a tendency for greater retail concentration in developing countries. FALSE There is a tendency for greater retail concentration in developed countries. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy

47 15. An increase in car ownership, the number of two-income households, and the number of households with a refrigerator have all contributed to the more fragmented retail system found in developed countries. FALSE There is a tendency for greater retail concentration in developed countries. Three factors that contribute to this are the increases in car ownership, number of households with refrigerators and freezers, and number of two-income households. All these factors have changed shopping habits and facilitated the growth of large retail establishments sited away from traditional shopping areas. Blooms: Understand Difficulty: 2 Medium Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 16. The number of intermediaries between the producer and the consumer is known as the channel length. TRUE Channel length refers to the number of intermediaries between the producer (or manufacturer) and the consumer. Blooms: Remember

48 Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 17. A channel is considered to be long if the producer sells directly to the consumer. FALSE If the producer sells directly to the consumer, the channel is very short. If the producer sells through an import agent, a wholesaler, and a retailer, a long channel exists. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 18. Concentrated retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels. FALSE Fragmented retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries.

49 Topic: Distribution Strategy 19. The more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer. TRUE The more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 20. Countries with fragmented retail systems tend to have long channels of distribution. TRUE Countries with fragmented retail systems tend to have long channels of distribution, sometimes with multiple layers. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy

50 21. The entry of large discount superstores such as Tesco and Carrefour have shortened channel length in some countries. TRUE The business model of these retailers is in part based upon the idea that in an attempt to lower prices, they cut out wholesalers and instead deal directly with manufacturers. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 22. An exclusive distribution channel is one that is difficult for outsiders to access. TRUE An exclusive distribution channel is one that is difficult for outsiders to access. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy

51 23. One benefit of a shorter channel is that it cuts selling costs when the retail sector is very fragmented. FALSE One benefit of a longer channel is that it cuts selling costs when the retail sector is very fragmented. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy 24. Import agents are typically limited to independent trading houses. FALSE Import agents are not limited to independent trading houses; any firm with a strong local reputation could serve as well. Blooms: Remember Difficulty: 1 Easy Learning Objective: Recognize why and how a firm's distribution strategy might vary among countries. Topic: Distribution Strategy

52 25. The best way for a firm to overcome cultural barriers is to develop crosscultural literacy. TRUE The best way for a firm to overcome cultural barriers is to develop crosscultural literacy. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy 26. Source effects occur when the receiver of the message evaluates the message based on the status or image of the sender. TRUE Source effects occur when the receiver of the message evaluates the message on the basis of the status or image of the sender. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy

53 27. Source effects and country of origin effects are always negative. FALSE Source effects and country of origin effects are not always negative. French wine, Italian clothes, and German luxury cars benefit from nearly universal positive source effects. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy 28. A company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy. FALSE A push strategy emphasizes personal selling rather than mass media advertising in the promotional mix. A pull strategy depends more on mass media advertising to communicate the marketing message to potential consumers. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy

54 29. When a company emphasizes personal selling, the company is probably using a push strategy. TRUE A push strategy emphasizes personal selling rather than mass media advertising in the promotional mix. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy 30. A push strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market. FALSE Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a pull strategy. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy

55 31. A push strategy makes sense when distribution channels are short. TRUE Push strategies tend to be emphasized for industrial products or complex new products or when distribution channels are short and when few print or electronic media are available. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy 32. A firm may be prevented from using standardized advertising because of advertising regulations. TRUE Advertising regulations may block implementation of standardized advertising. Blooms: Remember Difficulty: 1 Easy Learning Objective: Identify why and how advertising and promotional strategies might vary among countries. Topic: Communication Strategy

56 33. In a competitive market, prices have to be higher than in a market where the firm has a monopoly. FALSE Price discrimination involves charging whatever the market will bear; in a competitive market, prices may have to be lower than in a market where the firm has a monopoly. Blooms: Understand Difficulty: 2 Medium Learning Objective: Explain why and how a firm's pricing strategy might vary among countries. Topic: Pricing Strategy 34. When a small change in price produces a large change in demand, demand is said to be inelastic. FALSE 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. Blooms: Understand Difficulty: 2 Medium Learning Objective: Explain why and how a firm's pricing strategy might vary among countries. Topic: Pricing Strategy

57 35. The use of price as a competitive weapon to drive weaker competitors out of a national market is known as predatory pricing. TRUE Predatory pricing is the use of price as a competitive weapon to drive weaker competitors out of a national market. Once the competitors have left the market, the firm can raise prices and enjoy high profits. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why and how a firm's pricing strategy might vary among countries. Topic: Pricing Strategy 36. Pricing decisions around the world must be delegated to the managers of various national subsidiaries. FALSE Pricing decisions around the world need to be centrally monitored though it is tempting to delegate full responsibility for pricing decisions to the managers of various national subsidiaries, thereby reaping the benefits of decentralization. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why and how a firm's pricing strategy might vary among countries. Topic: Pricing Strategy

58 37. The increasing pace of technological change has resulted in a dramatic shortening of product life cycles. TRUE The pace of technological change has accelerated since the Industrial Revolution in the eighteenth century, and it continues to do so today. The result has been a dramatic shortening of product life cycles. Blooms: Understand Difficulty: 2 Medium Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development 38. To design the product so that it can be manufactured in a cost-effective manner, the firm needs to build close links between R&D, marketing, and manufacturing. TRUE The firm must apply technology to develop products that satisfy consumer needs, and it must design the product so that it can be manufactured in a costeffective manner. To do that, the firm needs to build close links between R&D, marketing, and manufacturing. Blooms: Understand Difficulty: 2 Medium

59 Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development 39. The rate of new-product development seems to be lesser in countries where more money is spent on basic and applied research and development. FALSE The rate of new-product development is greater in countries where more money is spent on basic and applied research and development. Blooms: Understand Difficulty: 2 Medium Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development 40. New-product development has a high failure rate. TRUE Although a firm that is successful at developing new products may earn enormous returns, new-product development has a high failure rate. Blooms: Remember Difficulty: 1 Easy Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development

60 41. Tight cross-functional integration between R&D, production, and marketing maximizes the time to market. FALSE Tight cross-functional integration between R&D, production, and marketing can help a company to ensure that time to market is minimized. Blooms: Remember Difficulty: 1 Easy Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development 42. Designing for manufacturing increases not only product quality, but also costs involved. FALSE Designing for manufacturing can lower costs and increase product quality. Blooms: Remember Difficulty: 1 Easy Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development

61 43. For a product development team to function effectively and meet all its development milestones, the team should be composed of at least one member from each key function. TRUE For effective functioning, a product development team should be composed of at least one member from each key function. Blooms: Remember Difficulty: 1 Easy Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development

62 44. The need to integrate R&D and marketing to adequately commercialize new technologies poses special problems in the international business because commercialization may require different versions of a new product to be produced for various countries. TRUE The need to integrate R&D and marketing to adequately commercialize new technologies poses special problems in the international business because commercialization may require different versions of a new product to be produced for various countries. To do this, the firm must build close links between its R&D centers and its various country operations. Blooms: Remember Difficulty: 1 Easy Learning Objective: Describe how the globalization of the world economy is affecting new-product development within the international business firm. Topic: New-Product Development Multiple Choice Questions

63 45. Which of the following is one of the four elements that constitute a firm's marketing mix? A. Inventory accounting B. Product reengineering C. Reverse engineering D. Distribution strategy The four elements that constitute a firm's marketing mix are product attributes, distribution strategy, communication strategy, and pricing strategy. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Introduction

64 46. The set of choices the firm offers to its targeted market is known as the. A. marketing mix B. marketing concept C. marketing strategy D. market promotion The marketing mix is the set of choices the firm offers to its targeted markets. Many firms vary their marketing mix from country to country, depending on differences in national culture, economic development, product standards, distribution channels, and so on. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Introduction

65 47. Research has long maintained that a major factor of success for new products is the closeness of the relationship between: A. finance and marketing. B. marketing and R&D. C. finance and materials management. D. finance and R&D. Only marketing can tell R&D whether to produce globally standardized or locally customized products. Research has long maintained that a major contributor to the success of new-product introductions is a close relationship between marketing and R&D. Blooms: Remember Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Introduction

66 48. According to Levitt, which of the following statements is true? A. Technology drives the world toward a converging commonalty. B. There are accustomed differences in national preferences. C. The multinational corporation operates in a number of countries at low relative costs. D. The global corporation operates with resolute consistency at high relative costs. Levitt says that a powerful force drives the world toward a converging commonalty, and that force is technology. It has proletarianized communication, transport, and travel. Blooms: Understand Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: The Globalization of Markets and Brands

67 49. The continuing persistence of differences between nations acts as a major brake on any trend toward global consumer tastes and preferences. A. technological and industrial B. institutional and political C. cultural and economic D. GNP level and growth rate The continuing persistence of cultural and economic differences between nations acts as a brake on any trend toward the standardization of consumer tastes and preferences across nations. Some writers have argued that the rise of global culture doesn't mean that consumers share the same tastes and preferences. Rather, people in different nations, often with conflicting viewpoints, are increasingly participating in a shared "global" conversation, drawing upon shared symbols that include global brands. Blooms: Remember Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: The Globalization of Markets and Brands

68 50. The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as. A. market segmentation B. market penetration C. diversification strategy D. differentiation Market segmentation refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways. Markets can be segmented in numerous ways: by geography, demography, sociocultural factors, and psychological factors. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation

69 51. If market segments transcend national borders: A. the company should develop unique products for each national market. B. the company can view the global market as a single entity and pursue a global strategy. C. a localization strategy would be appropriate. D. consumers will have differing purchasing behavior in different nations. The existence of market segments that transcend national borders clearly enhances the ability of an international business to view the global marketplace as a single entity and pursue a global strategy, selling a standardized product worldwide and using the same basic marketing mix to help position and sell that product in a variety of national markets. AACSB: Reflective Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Market Segmentation

70 52. The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of. A. values B. traditions C. norms D. attitudes The most important aspect of cultural differences is probably the impact of tradition. Tradition is particularly important in foodstuffs and beverages. For historical and idiosyncratic reasons, a range of other cultural differences exist between countries. Blooms: Remember Difficulty: 1 Easy Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes

71 53. Consumers in highly developed countries value as compared to their counterparts in less developed nations. A. product price B. product reliability C. product attributes D. product value Firms based in highly developed countries such as the United States tend to build a lot of extra performance attributes into their products. Consumers in less developed nations, where the preference is for more basic products, do not usually demand these extra attributes. Blooms: Remember Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes

72 54. Contrary to Levitt's suggestions, consumers in the most developed countries are often: A. willing to sacrifice their preferred attributes for lower prices. B. not willing to pay more for products that have additional features customized to their tastes. C. not willing to sacrifice their preferred attributes for lower prices. D. willing to accept globally standardized products that have been developed with the lowest common denominator in mind. Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind. They are willing to pay more for products that have additional features and attributes customized to their tastes and preferences. AACSB: Reflective Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: Explain why it might make sense to vary the attributes of a product from country to country. Topic: Product Attributes

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