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Section No. I II III IV V
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Section I: Multiple choice questions (20×1’=20’)
e. All of the above are reasons why Safeway would use product groups.
2. Superba Cravats is a major marketer of men's bow ties. It estimates there are 20 million
buyers of bow ties each year, that the average wearer of bow ties purchases 4 ties per year,
and that the average price per bow tie is $10. Superba Cravats has a market share of 20
percent. The market (or industry) potential for bow ties is:
a. $200 million.
b. $800 million.
c. $400 million.
d. $80 million.
e. $160 million.
3. The General Mills Betty Crocker brand of Original Supreme brownie mix with Hershey’s
chocolate is branded using which strategy?
a. manufacturer branding
b. generic branding
c. co-branding
d. mixed branding
e. multiproduct branding
4. Mattel has contractually agreed to let Colgate use the Barbie name and image on kids'
toothpaste and toothbrushes. Colgate pays Mattel a fee for the use of the Barbie name and
image. This is an example of:
a. manufacturer branding.
b. generic branding.
c. reseller branding.
d. mixed branding.
e. licensing.
5. You are president of a manufacturer of small electronic appliances. You want to reduce
your break-even quantity. Other things equal, you can do this by:
a. increasing the quantity sold, while keeping price unchanged.
b. reducing marginal revenue.
c. increasing fixed cost.
d. reducing unit variable cost.
e. doing all of the above.
6. Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $5
million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell
750,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million?
The Examination Paper for International Marketing (course title) of JNU
a. $3.58
b. $7.58
c. $12.15
d. $15.00
e. $17.90
7. Different brands within a company’s product line generally have different profit margins;
higher price lines have higher profit margins. For example, Nike Variety tennis shoes have
variable costs of $6 and sell for $24; whereas, Nike Wimbleton tennis shoes have variable
costs of $10 and sell for $48. It must be true that:
a. demand is unrelated to price.
b. Nike is using a cost-plus percentage-of-cost pricing strategy.
c. Nike is using a product-line pricing strategy.
d. demand is unrelated to product quality.
e. consumers do not use price as an indication of quality.
8. When Teresa went into the furniture store to buy a new sleeper sofa, she thought the prices
quoted by the salesperson were too high, so she prepared to leave. As she neared the door, the
salesperson asked if she would be interested in buying the sofa if the price was $150 lower.
Teresa returned to the store, purchased the sofa, and felt like she had gotten a good deal. The
furniture store uses:
a. price lining.
b. customary pricing.
c. discretionary pricing.
d. price fixing.
e. a flexible-price policy.
9. Wal-Mart is a channel power because of their strong image, number of outlets, and
purchasing volume.The source of Wal-Mart’s power is:
a. its economic influence.
b. its expertise.
c. its identification with a particular channel member.
d. its legitimate rights through contracts.
e. all of the above.
10. While reading the newspaper, Belinda noticed an advertisement containing manufacturer's
coupons from Kodak redeemable only at Target stores. This ad is an example of:
a. a finance allowance.
b. a case allowance.
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c. cooperative advertising.
d. a merchandise allowance.
e. specialty advertising.
11. If you ever talk to anyone who has flown on Singapore Air, you will no doubt hear that
The Examination Paper for International Marketing (course title) of JNU
individual praise the food that was served during the flight, the friendliness of the air
stewards, and the comfortable surroundings. From this description, you can surmise
Singapore Air creates customer value by providing its customers with:
a. the best service.
b. the most convenient flight schedules.
c. the best price.
d. the best airport experience.
e. all of the above
13. Men’s Wearhouse (MW) caters to the man who doesn’t necessarily enjoy shopping. The
stores are located in outdoor shopping centers so that customers can get in and out quickly.
Additionally the MW targets the budget-conscious consumer with suit prices ranging from
$250-300. Earnings rose 23% in 2003, indicating that the location of the stores and the
pricing strategy both are part of the MW:
a. a competitive advantage.
b. benchmarking expertise.
c. a tactical innovation.
d. leapfrogging capabilities.
e. a viable mission.
14. In 2003 Kodak had a very flat level of sales revenue. The CEO did not like the no-growth
results and instead forecasted an increase in sales revenue based on new plans and actions.
The difference between the existing flat level of sales revenue and the increased level is
known as:
a. the contribution margin.
b. a marginal analysis.
c. the product differentiator.
d. the planning gap.
e. a tactical analysis.
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15. There are many diet aids on the market. They promise immediate weight loss without
exercise or a change in diet. Each is accompanied by a testimonial from a satisfied user. If
you pay close attention, you will notice that each ad also contains the statement, “Results may
vary.” More than likely, this statement is included to prevent the FTC from requiring the
dietary aid distributor from having to:
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a. guarantee truth-in-advertising.
b. engage in competitive advertising.
c. run corrective advertising.
d. prevent comparative advertising.
e. engage in self-regulation.
16. Your company is introducing a new line of activewear for teenagers and invites the
members of the cheerleading squad to a private display of the line. This group consists of
__________ for activewear clothing.
a. syncratic decision makers
b. aspirational
c. opinion leaders
d. autonomous leaders
e. joint decision makers
17. Tums antacid stresses the fact that it is a calcium supplement in its advertisements. It also
stresses the health benefits of calcium. Most people already know Tums contains calcium.
The new promotion is trying to change the attitude toward Tums by:
a. lowering the price.
b. adding a new attribute to the product.
c. changing the basic product.
d. adding a new attribute and re-positioning the product.
e. changing the perceived importance of the attribute.
18. Comparative advertising in which one brand is compared to another is intended to cause
consumers to perceive differences between the products featured in the advertising.
Marketers who use comparative advertising are trying to use __________ to make consumers
believe that its product is better than the other one.
a. cognitive dissonance
b. stimulus discrimination
c. selective comprehension
d. stimulus generalization
e. selective retention
19. The concept in organizational buying that corresponds most closely to a consumer's
consideration set in consumer buying is the:
a. buying center.
b. seven buying criteria.
c. type of buying situation.
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d. bidder's list.
e. NAICS code.
20. The office of SFX Entertainment, a talent promoter, needs a new fax machine that will
print at three seconds a page instead of five seconds per page like the one it is using now and
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that has both local and network printing capabilities. Its purchase of a replacement fax
machine would be an example of a:
a. new buy.
b. straight rebuy.
c. modified rebuy.
d. make-buy.
e. standard buy.
Rationale:
2. Some singers sing a great song that shoots to the top of the chart. The singers go on tour
and have sold-out concerts everywhere they appear. Just as quickly (particularly if they are
unable to follow their first hit song with a second one), they are singing to half-filled concerts
and then to smaller clubs, and eventually no one wants to hear them perform. Such one-hit
singers are most likely categorized as fad products. 【 】
Rationale:
3. Todd Harris and Associates, a New York sales promotion agency, discovered from analysis
of its files that one-fifth of its clients accounted for more than three-quarters of its fees and
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commissions. This is an example of the 80/20 rule. 【 】
Rationale:
The Examination Paper for International Marketing (course title) of JNU
Rationale:
5. Market segmentation would be used to group consumers for soda on the basis of whether
they wanted sugar-free and caffeine-free, caffeine-free but with sugar, or regular with sugar
and caffeine. 【 】
Rationale:
6. DuPont assigned chemists, sales and marketing executives, and regulatory specialists to
create an herbicide for corn growers that recorded sales of $57 million in its first year. This
type of sales approach is called adaptive selling. 【 】
Rationale:
7. An ad for Mercedes Benz cars showed a heart-shaped box of chocolates with one of the
chocolates topped with the well-recognized Mercedes logo. There was no mention of the
company name or sign of a product in the ad. This ad was an example of reminder
institutional advertising. 【 】
Rationale:
Rationale:
The Examination Paper for International Marketing (course title) of JNU
9. The channel strategy demonstrated when Hallmark sells its Hallmark brand greeting cards
through Hallmark stores and its Ambassador brand of cards through discount and drugstore
chains is called parallel distribution. 【 】
Rationale:
10. When a firm is hired to construct a custom home, it is a one-of-a-kind project and often
requires unforeseen expenses. Companies that contract to build custom homes typically add a
fixed percentage to the total unit cost to take care of these unplanned costs. This pricing
method is called cost-plus-fixed-fee pricing. 【 】
Rationale:
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Section III: Calculation (3×5’=15’)
1. A custom tailor wishes to use target profit pricing to establish a price for a custom designed
business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and a target profit
of $50,000 on a volume of 50 suits is desired? What should be charged for a typical custom
suit?
2. Within the channel of distribution for certain types of imported furniture, the typical trade
terms are 40/15/10. If a dining room table has a list price of $1000, how much would the
manufacturer sell the table to a jobber for?
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The Examination Paper for International Marketing (course title) of JNU
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Section IV: Short essay questions (2×10’=20’)
1. Try to find out the differences between three types of vertical marketing systems.
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The Examination Paper for International Marketing (course title) of JNU
2. What are some similarities and differences between skimming pricing, prestige pricing,
and above-market pricing?
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Section V: Case analysis (25’)
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less-expensive, mass-produced ones. The modern Washburn International started in 1977, at that
time, annual revenues of the company were $300,000 for sale of about 2,500 guitars. Today, the
company sells about 250,000 guitars a year. Annual sales exceed $50 million. All this resulted
from Washburn’s aggressive marketing strategies to develop product lines with different price
points targeted at musicians in distinctly different market segments.
THE PRODUCTS AND MARKET SEGMENTS
Arguably the most trendsetting guitar developed by the modern Washburn company appeared in
1980. This was the Festival Series of cutaway, thin-bodied flattops, with built-in bridge pickups
and controls, which went on to become the virtual standard for live performances. John Lodge of
the Moody Blues endorsed the 12-string version---his gleaming white guitar appearing in both
concerts and ads for years. In the time since the Festival Series appeared, countless rock and
country stars have used these instruments including Bob Dylan, Dolly Parton, Greg Allman, and
the late George Harrison of the Beatles.
Until 1991, all Washburn guitars were manufactured in Asia. That year Washburn started
building its high-end guitars in the United States. Today, Washburn marketing executives divide its
product line into four levels. From high end to low end these are:
One-of-a-kind, custom units.
Batch-custom units.
Mass-customized units.
Mass-produced units.
The one-of-a-kind custom units are for the many stars that use Washburn instruments. The
mass-produced units targeted at first-time buyers are still manufactured in Asian factories.
PRICING ISSUES
Setting prices for its various lines presents a continuing challenge for Washburn. Not only do the
prices have to reflect the changing tastes of its various segments of musicians, but the prices must
also be competitive with the prices set for guitars manufactured and marketed globally. In fact,
Washburn and other well-known guitar manufacturers have a prestige-niche strategy. For
Washburn this involves endorsements by internationally known musicians who play its
instruments and lend their names to lines of Washburn signature guitars. This has the effect of
reducing the price elasticity or price sensitivity for these guitars. Stars playing Washburn guitars
like Nuno Bettencourt, formerly of Pink Floyd now with Population1; Dimebag Darrell of
Damageplan; Joe Perry of Aerosmith; and Darryl Jones of the Rolling Stones have their own
lines of signature guitars---the “batch-custom” units mentioned earlier.
Joe Baksha, Washburn’s executive vice president, is responsible for reviewing and approving
prices for the company’s lines of guitars. Setting a sales target of 2,000 units for a new line of
guitars, he is considering a suggested retail price of $329 per unit for customers at one of the
hundreds of retail outlets carrying the Washburn line. For planning purposes, Baksha estimates
half of the final retail price will be the price Washburn nets when it sells its guitar to the
wholesalers and dealers in its channel of distribution.
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Looking at Washburn’s financial data for its present Chicago plant, Baksha estimates that this
line of guitars must bear these fixed costs:
Rent and taxes=$12,000
Depreciation of equipment=$4,000
Management and quality control program=$20,000
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2. For Washburn, what are examples of (a) shifting the demand curve to the right to get a
higher price for a guitar line (movement of the demand curve) and (b) pricing decisions
involving moving along a demand curve.
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The Examination Paper for International Marketing (course title) of JNU
3. In Washburn’s Chicago plant, what is the break-even point for the new line of guitars if
the retail price is (a) $329? Also, (b) if Washburn achieves the sales target of 2,000 units at
the $329 retail price, what will its profit be?
4.Assume that Washburn moves its production to Nashville and that the costs are reduced as
projected in the case. Then, what will be the (a) new break-even point at a $329 retail price
for this line of guitars and (b) the new profit if it sells 2,000 units?
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The Examination Paper for International Marketing (course title) of JNU
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