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Chapter 17 - Global Marketing and R&D

Chapter 17
Global Marketing and R&D
True / False Questions
1. (p. 592) The set of choices the firm offers to its targeted markets is known as the marketing
mix.
TRUE

Difficulty: Easy

2. (p. 592) The marketing mix is comprised of product attributes, distribution strategy,
communication strategy and pricing strategy.
TRUE

Difficulty: Easy

3. (p. 593) Most academics support Theodore Levitt's assertion that global markets are becoming
more standardized.
FALSE

Difficulty: Medium

4. (p. 593) The process of identifying distinct groups of consumers whose purchasing behavior
differs from others in important ways is known as the marketing mix.
FALSE

Difficulty: Easy

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5. (p. 594) 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

Difficulty: Medium

6. (p. 594) The structure of market segments may differ significantly from country to country.
TRUE

Difficulty: Easy

7. (p. 595) Products sell well when their attributes match consumer needs.
TRUE

Difficulty: Easy

8. (p. 595) The most important aspect of cultural differences is values.


FALSE

Difficulty: Medium

9. (p. 596) Firms based in less-developed nations tend to build a lot of extra performance
attributes into their products.
FALSE

Difficulty: Medium

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10. (p. 597) Consumers in the most developed countries are typically willing to sacrifice their
preferred product attributes for lower prices.
FALSE

Difficulty: Easy

11. (p. 597) Differences in technical standards can prevent a firm from standardizing products
across markets.
TRUE

Difficulty: Easy

12. (p. 597) The four main differences between distribution systems are retail concentration,
channel length, channel exclusivity and channel quality.
TRUE

Difficulty: Medium

13. (p. 597-598) In a concentrated retail system, there are many retailers, no one of which has a
significant share of the market.
FALSE

Difficulty: Medium

14. (p. 598) Developing countries tend toward greater retail concentration.
FALSE

Difficulty: Easy

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15. (p. 598) 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

Difficulty: Medium

16. (p. 598) The number of intermediaries between the producer and the consumer is known as
the channel length.
TRUE

Difficulty: Medium

17. (p. 598) A channel is considered to be long when a producer sells through an import agent, a
wholesaler and a retailer.
TRUE

Difficulty: Easy

18. (p. 599) The most important determinant of channel length is the degree to which the retail
system is concentrated.
FALSE

Difficulty: Medium

19. (p. 599) Countries with fragmented retail systems tend to have long channels of distribution.
TRUE

Difficulty: Easy

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20. (p. 599) The entry of large discount superstores such as Tesco and Carrefour have shortened
channel length in some countries.
TRUE

Difficulty: Easy

21. (p. 600) One benefit of a shorter channel is that it cuts selling costs when the retail sector is
very fragmented.
FALSE

Difficulty: Medium

22. (p. 600) Import agents are typically limited to independent trading houses.
FALSE

Difficulty: Medium

23. (p. 602) Source effects occur when the receiver of the message evaluates the message based
on the status or image of the sender.
TRUE

Difficulty: Medium

24. (p. 604) Source effects and country of origin effects are always negative.
FALSE

Difficulty: Medium

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25. (p. 604) A company that depends on mass media advertising to communicate its marketing
message to potential consumers is using a push strategy.
FALSE

Difficulty: Medium

26. (p. 604) When a company emphasizes personal selling, the company is probably using a push
strategy.
TRUE

Difficulty: Medium

27. (p. 604) A push strategy is generally favored by consumer goods firms that are trying to sell
to a large segment of the market.
FALSE

Difficulty: Medium

28. (p. 606) A push strategy makes sense when distribution channels are short.
TRUE

Difficulty: Medium

29. (p. 607) A firm may be prevented from using standardized advertising because of advertising
regulations.
TRUE

Difficulty: Easy

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Chapter 17 - Global Marketing and R&D

30. (p. 608) Price discrimination involves charging whatever the market will bear.
TRUE

Difficulty: Easy

31. (p. 608) When a small change in price produces a large change in demand, demand is said to
be inelastic.
FALSE

Difficulty: Easy

32. (p. 609) The use of price as a competitive weapon to drive weaker competitors out of a
national market is known as predatory pricing.
TRUE

Difficulty: Easy

33. (p. 610) Pricing decisions around the world must be delegated to the managers of various
national subsidiaries.
FALSE

Difficulty: Medium

34. (p. 612) The "customization versus standardization" debate is an all or nothing issue.
FALSE

Difficulty: Medium

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35. (p. 613) 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

Difficulty: Medium

36. (p. 614) Over the past 20 years, the U.S. monopoly on new-product development has
strengthened significantly.
FALSE

Difficulty: Medium

37. (p. 614) New-product development has a high failure rate.


TRUE

Difficulty: Easy

38. (p. 615) A company's customers can be a primary source of new-product ideas.
TRUE

Difficulty: Easy

39. (p. 615) Designing for manufacturing increases not only product quality, but also costs
involved.
FALSE

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

40. (p. 616) One solution many international businesses adopt for allocating product
development responsibilities to various centers involves establishing a global network of
R&D centers.
TRUE

Difficulty: Easy

Multiple Choice Questions


41. (p. 592) Which of the following is not an element that constitutes a firm's marketing mix?
A. Product attributes
B. Communication strategy
C. Reverse engineering
D. Distribution strategy

Difficulty: Easy

42. (p. 592) 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

Difficulty: Easy

43. (p. 592) 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

Difficulty: Medium

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44. (p. 592) 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

Difficulty: Medium

45. (p. 593) 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

Difficulty: Medium

46. (p. 593) 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

Difficulty: Medium

47. (p. 595) 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

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

48. (p. 595) 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

Difficulty: Medium

49. (p. 596) Consumers in highly developed countries value _____ as compared to their
counterparts in less developed nations.
A. Price
B. Product reliability
C. Product attributes
D. Standardized products

Difficulty: Medium

50. (p. 596) Which of the following statements is false?


A. Product reliability may be a more important attribute in most advanced countries
B. Consumers in highly developed countries tend to build a lot of extra performance attributes
into their products
C. Consumers in the most developed countries are often not willing to sacrifice their preferred
attributes for lower prices
D. Consumers in the most advanced countries often shun globally standardized products that
have been developed with the lowest common denominator in mind

Difficulty: Medium

51. (p. 597) 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

Difficulty: Medium

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52. (p. 597) The way a product is delivered is determined by


A. A firm's entry strategy
B. A firm's product positioning
C. The target market
D. Market segmentation

Difficulty: Medium

53. (p. 597) 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

Difficulty: Hard

54. (p. 597) 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

Difficulty: Medium

55. (p. 598) By acquiring retailers in different countries, large global retailers such as Carrefour
and Wal-Mart have increased
A. Retail concentration
B. Retail fragmentation
C. Retail dispersion
D. Retail crowding

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

56. (p. 598) 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

Difficulty: Medium

57. (p. 597) In a _____ retail system, a few retailers supply most of the market.
A. Fragmented
B. Dispersed
C. Focused
D. Concentrated

Difficulty: Medium

58. (p. 597) Which of the following is not a key difference between distribution systems in
different countries?
A. Channel speed
B. Channel length
C. Channel exclusivity
D. Channel quality

Difficulty: Medium

59. (p. 597-598) 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

Difficulty: Medium

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60. (p. 598) 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

Difficulty: Hard

61. (p. 598) In terms of retail concentration, developed countries tend to have a higher degree of
concentration than developing countries for all of the following reasons except
A. Number of households with refrigerators and freezers
B. Tradition of established local neighborhoods in which people walk to stores
C. Increase in car ownership
D. Number of two-income households that accompany development

Difficulty: Medium

62. (p. 598) Developed countries are more likely to have a


A. Concentrated retail system
B. Fragmented retail system
C. Crowded retail system
D. Dispersed retail system

Difficulty: Medium

63. (p. 598) The number of intermediaries between the manufacturer and the consumer is
referred to as
A. Channel reach
B. Channel concentration
C. Channel exclusivity
D. Channel length

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

64. (p. 598) 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

Difficulty: Medium

65. (p. 599) The most important determinant of channel length is the degree to which a retail
system is
A. Concentrated
B. Fragmented
C. Decentralized
D. Globalized

Difficulty: Medium

66. (p. 599) 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

Difficulty: Hard

67. (p. 599) What kind of retail systems do rural India and China have?
A. Fragmented
B. Direct
C. Indirect
D. Concentrated

Difficulty: Hard

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68. (p. 599) 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

Difficulty: Hard

69. (p. 599) A(n) _____ distribution channel is one that is difficult for outsiders to access.
A. Selective
B. Intensive
C. Exclusive
D. Multichannel

Difficulty: Easy

70. (p. 599) When a channel is exclusive


A. It carries only high-end products
B. It is controlled by market leaders or by firms who have a niche market
C. It focuses on only on elite customers
D. It is often difficult for a new firm to get access to shelf space in supermarkets

Difficulty: Medium

71. (p. 600) The expertise, competencies and skills of established retailers in a nation and their
ability to sell and support the products of international businesses is
A. Channel exclusivity
B. Channel knowledge
C. Channel quality
D. Channel skill

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

72. (p. 601) Which of the following does not affect a firm's international communication?
A. Cultural barriers
B. Source effects
C. Channel exclusivity
D. Noise levels

Difficulty: Medium

73. (p. 602) To overcome cultural barriers, companies should


A. Develop products specifically for each market
B. Focus on universal needs
C. Focus only on market segments that transcend national boundaries
D. Develop cross-cultural literacy

Difficulty: Easy

74. (p. 602) 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

Difficulty: Medium

75. (p. 602) 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

Difficulty: Easy

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76. (p. 604) The probability of effective communications is reduced by


A. Noise effects
B. Location effects
C. Country of origin effects
D. Source effects

Difficulty: Easy

77. (p. 604) 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

Difficulty: Hard

78. (p. 604) 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

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

79. (p. 604) 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

Difficulty: Hard

80. (p. 604) 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

Difficulty: Medium

81. (p. 604) Factors that determine the relative attractiveness of push and pull strategies include
all of the following except
A. Product type relative to consumer sophistication
B. Channel length
C. Noise levels
D. Media availability

Difficulty: Medium

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82. (p. 604) When firms in the consumer goods industry are trying to sell to a large segment of
the market they favor a
A. Push strategy
B. Pull strategy
C. Standardized strategy
D. Localized strategy

Difficulty: Medium

83. (p. 604) A(n) _____ strategy is favored by firms that sell industrial products or other
complex products.
A. Localized
B. Indirect
C. Push
D. Pull

Difficulty: Medium

84. (p. 606) If media availability is limited, a firm should


A. Use a push strategy
B. Use a pull strategy
C. Consider a longer channel
D. Consider a shorter channel

Difficulty: Medium

85. (p. 606) When distribution channels are short, firms should
A. Use a direct channel
B. Use a push strategy
C. Focus on consumer products or other standardized products
D. Focus on industrial products or other complex products

Difficulty: Medium

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86. (p. 606) 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

Difficulty: Medium

87. (p. 606) If a firm is facing long distribution channels, the firm should choose a _____
strategy.
A. Competitive advertising
B. Price discrimination
C. Predatory pricing
D. Pull

Difficulty: Medium

88. (p. 606) 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

Difficulty: Hard

89. (p. 608) 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

Difficulty: Easy

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90. (p. 608) In order for price discrimination to be successful


A. There must be a strong case for arbitrage
B. 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

Difficulty: Medium

91. (p. 608) If a _____ change in a price produces a _____ change in demand, then price is
elastic.
A. Small; large
B. Small; small
C. Large; small
D. Large; large

Difficulty: Medium

92. (p. 608) 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

Difficulty: Easy

93. (p. 608) _____ 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

Difficulty: Easy

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94. (p. 608) 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. It involves charging whatever the market will bear
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

Difficulty: Hard

95. (p. 608) What is the most important factor in determining the elasticity of demand for a
product in a given country?
A. Personal selling
B. Logistics
C. Operating revenue
D. Income level

Difficulty: Medium

96. (p. 608) Which of the following statements is false?


A. The lesser the number of competitors, the higher the elasticity of demand
B. When competitors are limited, consumers' bargaining power is weaker
C. A firm may charge a higher price for its product in a country where competition is limited
than in one where competition is intense
D. When there is high elasticity of demand and a firm raises its prices above those of its
competitors, consumers will switch to the competitors' products

Difficulty: Hard

97. (p. 609) 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

Difficulty: Medium

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98. (p. 609) For _____ to work, the firm must normally have a profitable position in another
national market, which it can use to subsidize aggressive pricing in the market it is trying to
monopolize.
A. Multipoint pricing
B. Value-based pricing
C. Experience curve pricing
D. Predatory pricing

Difficulty: Medium

99. (p. 609) This refers to impact a firm's pricing strategy in one market may have on its rivals'
pricing strategy in another market.
A. Multipoint pricing
B. Experience curve pricing
C. Predatory pricing
D. Competitive pricing

Difficulty: Easy

100. (p. 615) 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

Difficulty: Medium

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Essay Questions
101. (p. 592-593) What is Theodore Levitt's contribution to international business?
Theodore Levitt wrote about the globalization of world markets in a now-classic Harvard
Business Review article. Levitt suggested that due to technology, the world was moving
toward a converging commonalty and the emergence of global markets for standardized
consumer products. According to Levitt, this convergence creates an opportunity for the
global corporation to serve the entire world as if it were a single entity or in other words, sell
the same thing in the same way everywhere. Most academics believe that Levitt has
overstated his case, that globalization in consumer products is probably the exception rather
than the rule. Furthermore, cultural and economic differences between countries will continue
to limit the effects of any movement toward the standardization of consumer preferences and
tastes. In addition, trade barriers and differences in product and technical standards will also
constrain a firm's ability to sell standardized products to global markets using a standardized
marketing strategy.

Difficulty: Hard

102. (p. 593-594) Define market segmentation. What is its goal?


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, social-cultural factors and psychological factors. 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.

Difficulty: Medium

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103. (p. 594-595) What are the two main issues that managers must be aware of when considering
market segmentation in foreign countries?
There are two key issues that managers must be aware of when using market segmentation in
foreign countries. First, managers must consider the differences between countries in the
structure of market segments, which may differ significantly from country to country. The
firm may have to develop a unique marketing mix to appeal to the purchasing behavior of a
certain segment in a given country. Second, managers must be aware of the existence of
segments that transcend national borders. Such segments would enhance the ability of a
company to view the global marketplace as a single entity and pursue a global strategy.

Difficulty: Medium

104. (p. 595) 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?
A product can be viewed as a bundle of product attributes. Products sell when their attributes
match consumer needs. For example, BMW recognizes that its consumers have a need for
luxury, quality and performance. Accordingly, the company builds these attributes into its
cars. If consumer needs were the same across the world, the firm could simply sell the same
product worldwide. However, because consumer needs vary by country depending on culture
and the level of economic development, a firm's ability to sell the same product will be
constrained.

Difficulty: Hard

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105. (p. 596-597) How do levels of economic development affect consumer behavior? What are
the implications for marketing strategy?
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. In response to this behavior, firms marketing to consumers in highly developed
markets tend to build a lot of extra performance attributes into their products. In contrast,
consumers in less-developed countries typically demand a more basic product. In addition,
product reliability becomes more important as the purchase may account for a greater share of
a consumer's income than for the advanced country consumer. Consequently, products sold in
developing countries typically lack many of the features found in products sold in advanced
countries.

Difficulty: Hard

106. (p. 597-598) Explain the difference between a concentrated retail system and a fragmented
one. Why is this distinction important to international businesses?
In some countries the retail system is very concentrated, where just a few retailers supply
most of the market. Other countries have a fragmented system in which there are many
retailers, no one of which has a major share of the market. In the U.S., for example, the retail
system is a concentrated one where there are large stores or shopping malls. In contrast,
Japan's more fragmented retail system involves many small stores that serve local
neighborhoods.

Difficulty: Medium

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107. (p. 597-600) What are the four main differences between distribution systems across
countries?
The four main differences between distribution systems are retail concentration, channel
length, channel exclusivity and channel quality. Retail concentration refers to how many
retailers supply most of the market. Channel length refers to the number of intermediaries
between the producer and the consumer. Channel exclusivity refers to how difficult it is for
outsiders to access the channel. Finally, channel quality 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.

Difficulty: Medium

108. (p. 598) What are the three factors that contribute to the trend toward greater retail
concentration in developed countries? How have these factors promoted retail concentration?
There are three factors that contribute to the greater retail concentration in developed
countries. First is the increase in car ownership. Second is the increase in the number of
households with refrigerators and freezers. Third is the increase in the number of two-income
households. All of these factors have changed shopping habits and facilitated the growth of
large retail establishments sited away from traditional shopping areas.

Difficulty: Medium

109. (p. 598-599) What is channel length? What is the most important determinant of channel
length? Mention two factors that shorten channel length.
Channel length refers to the number of intermediaries between the producer and the
consumer. The most important determinant of channel length is the degree to which the retail
system is fragmented. Fragmented retail systems tend to promote the growth of wholesalers to
serve retailers, which lengthens channels. However, the internet and the entry of large
discount superstores have served to shorten channel lengths.

Difficulty: Medium

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Chapter 17 - Global Marketing and R&D

110. (p. 599-600) Describe an exclusive distribution channel. Consider the implications of channel
exclusivity for outside firms.
An exclusive distribution channel is one that is difficult for outsiders to access. Channel
exclusivity is very high in Japan, which makes the Japanese market so difficult to penetrate
effectively. In Japan, relationships between manufacturers, wholesalers and retailers often go
back decades. Many of these relationships are based on the understanding that distributors
will not carry the products of competing firms. Firms from other countries may find it very
difficult to break into the Japanese market as a result of this exclusivity.

Difficulty: Medium

111. (p. 601-604) What factors affect the success of a firm's international communications?
The effectiveness of a firm's international communications can be jeopardized by three critical
variables: cultural barriers, source effects and noise levels. Cultural barriers can make it
difficult to communicate messages across cultures. Source effects occur when the receiver of
the message evaluates the message based on the status or image of the sender. Finally, noise
refers to the amount of other messages competing for a potential consumer's attention.

Difficulty: Medium

112. (p. 604) Compare and contrast push strategies and pull strategies.
When developing its communications strategy, a firm must decide between a push and a pull
strategy. A push strategy emphasizes personal selling rather than mass media advertising in
the promotional mix. This type of strategy requires intensive use of a sales force and is
relatively costly. In contrast, a pull strategy depends more on mass media advertising to
communicate the marketing message to potential customers.

Difficulty: Easy

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Chapter 17 - Global Marketing and R&D

113. (p. 606-607) What are the arguments for standardized advertising across international
markets?
There are three main arguments supporting the notion of standardized advertising across
markets. First, such a campaign has significant economic advantages because it lowers the
cost of value creation by spreading the fixed costs of developing the advertisements across
many countries. Second, because of concerns about the scarcity of creative talent, one large
effort to develop a campaign will produce better results than 40 or 50 smaller efforts. Finally,
many brand names are global.

Difficulty: Medium

114. (p. 609) What is predatory pricing? Describe how a firm might use predatory pricing.
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. For such a pricing strategy to work the firm must normally have a
profitable position in another national market, which it can use to subsidize aggressive pricing
in the market it is trying to monopolize.

Difficulty: Medium

115. (p. 615-616) 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?
A firm can achieve cross-functional integration by establishing cross-functional product
development teams comprised of representatives from R&D, marketing and production. The
objective of the team should be to take a product development project from the initial concept
development to market introduction. The success of such teams is dependent on three
attributes. First, the team should be led by "heavyweight" managers who have high status
within the organization and who have the power and authority required to get the financial
and human resources the team needs to succeed. Second, the team should be comprised of at
least one member from each key function. Finally, the team should physically be in one
location if possible to create a sense of camaraderie and to facilitate communication.

Difficulty: Medium

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