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Part One Questions 1-7. (21 points)
Read the following passage and then match the statements (1-7) to the letter (A, B, C or D).
In addition to categorizing by type of offering, most products intended for consumer use can be further categorized by how frequently and where they are purchased.
A
Convenience Products – These are products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Examples include most household items such as food, cleaning products, and personal care products. Because of the high purchase volume, pricing per item tends to be relatively low and consumers often see little value in shopping around since additional effort yields minimal savings. From the marketer’s perspective the low price of convenience products means that profit per unit sold is very low. In order to make high profits marketers must sell in large volume. Consequently, marketers attempt to distribute these products in mass through as many retail outlets as possible.
B
Shopping Products – These are products consumers purchase and consume on a less frequent schedule compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because these may possess additional psychological benefits for the purchaser, such as raising their perceived status level within their social group. Examples include many clothing products, personal services, electronic products, and household furnishings. Because consumers are purchasing less frequently and are willing to shop to locate these products, the target market is much smaller than that of convenience goods. Consequently, marketers often are more selective when choosing distribution outlets to sell their products.
C
Specialty Products – These are products that tend to carry a high price tag relative to convenience and shopping products. Consumption may occur at about the same rate as shopping products but consumers are much more selective. In fact, in many cases consumers know in advance which product they prefer and will not shop to compare products. But they may shop at retailers that provide the best value. Examples include high-end luxury automobiles, expensive champagne, and celebrity hair care experts. The target markets are generally very small and outlets selling the products are very limited to the point of being exclusive.
D
In addition to the three main categories above, products are classified in at least two additional ways:
Emergency Products – These are products a customer seeks due to sudden events and for which pre-purchase planning is not considered. Often the decision is one of convenience (e.g., whatever works to fix a problem) or personal fulfillment (e.g., perceived to improve purchaser’s image).
Unsought Products – These are products whose purchase is unplanned by the consumer but occurs as a result of marketer’s actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salesperson’s persuasion or purchase incentives like special discounts offered to certain online shoppers. These promotional activities often lead customers to engage in Impulse Purchasing.
1. In order to make high profits, marketers must sell in large volume of these products.
2. These products tend to carry a higher price tag than the other two main types of products.
3. Customers buy these products when they are exposed to promotional activities.
4. Consumers are willing to spend more time locating these products both because they are more expensive and possess additional psychological benefits.
5. Customers buy these products because of sudden events.
6. In many cases consumers know in advance which product they prefer and will not shop to compare products.
7. Most household items such as food and cleaning products belong to this group.
Part Two Questions 8-14. (21 points)
Read the following passage and choose the best sentence (A-H) to fill each of the gaps. There is one extra sentence.
Types of International Business
Merchandise Exports and Imports
Merchandise exports are goods sent out of a country, whereas merchandise imports are goods brought in. Since these are tangible goods that visibly leave and enter countries, they are sometimes referred to as visible exports and imports. (8)……….
Exporting and / or importing of goods are the major sources of international revenue and expenditure for most countries. Among companies engaged in some form of international business, more are involved in importing and exporting than in any other type of transaction.
Importing and or exporting is usually, but not always, the first type of foreign operations in which a firm gets involved. (9)………. For example, firms may be able to export by using excess capacity thus limiting the need to invest more capital. Firms may be able to use the services of trade intermediaries who, for a fee, will take on the export-import functions, thus eliminating the need to have trained personnel and a department to carry out foreign sales or purchases.
Service Exports and Imports
Service exports and imports refer to international earnings other than those from goods sent to another country. (10)………ices are also referred to as invisible. International business comprises many different types of services.
A. Travel, Tourism, and Transportation
Earnings from transportation and from foreign travel can be an important source of revenue for international airlines, shipping companies, reservation agencies, and hotels. (11)………. The Bahamas earns much more from foreign tourists than it earns from exporting merchandise.
B. Performance of Activities Abroad
(12)………. Engineering services are often handled through turn-key operations, contracts for the construction of operating facilities that are transferred to the owner when the facilities are ready to begin operations. Fees for management services are often the result of management contracts, arrangements through which one firm provides management personnel to perform general or specialized management functions for another firm.
C. Use of Assets From Abroad
Royalties are the payment for use of assets from abroad, such as for trademarks, patents, copyrights, or other expertise under contracts known as licensing agreements. (13)……… addition, the franchisor assists on a continuing basis in the operation of the business, such as by providing components, managerial services, or technology.
Firms often move to foreign licensing or franchising after successfully building exports to a market. (14)……… greater involvement occurs because the firm commonly has to send technicians to the foreign country to assist the licensee or franchisee in establishing and adapting its production facilities for the new product.
A On a national level, such countries as Greece and Norway depend heavily on revenue collected from carrying foreign cargo on their ships.
B This move usually involves a greater international commitment than in the early stages of exporting.
C This is because at an early stage of international involvement these operations usually take the least commitment and least risk of a firm’s resources.
D Fees are payments for the performance of certain activities abroad, such services as banking, insurance, rentals (e.g. the Star Wars film), engineering, and management.
E When two or more organizations share in the ownership of a direct investment, the operation is known as a joint venture.
F The terms exports or imports are used frequently yet in reality the reference is only to the merchandise exports or imports.
G Royalties are also paid for franchising, a way of doing business in which one party (the franchisor) sells an independent party (the franchisee) the use of a trademark that is an essential asset for the franchisee’s business.
H Receipt of these earnings is considered a service export, whereas payment is considered a service import.
