Importing and Exporting - Module 2: Select Products and Supplier

Which type of imported product is attractive to customers because it is different from the standardized products available in the domestic market?

• Less Expensive Products

• Products of Better Quality

• Unique Products

• Available Products

Answer explanation

The answer is Unique Products. Customers are often drawn to imported goods that offer something different from what's readily available locally. This could be due to cultural differences, specialized craftsmanship, or innovative designs. The other options, while sometimes true of imports, do not specifically address the draw of being different.

What can help capture a significant share of the domestic market for an imported product?

• Higher quality

• Unique design

• Significantly lower price

• Better availability

Answer explanation

The best answer is: Significantly lower price.

Price is a powerful driver of consumer behavior. If an imported product is significantly cheaper than comparable domestic products, it can attract a large customer base, even if it lacks certain features or has slightly lower quality.

In many markets, especially those with price-sensitive consumers, a lower price can outweigh other factors like brand loyalty or minor quality differences. While other factors like quality, design, and availability are important, a drastically lower price is the most likely to capture a "significant share" of the market quickly.

Which element is used to find, evaluate, and select the right product for importation by using primary and secondary sources?

• Foreign Travel

• Trade Fairs and Shows

• Domestic Market Research

• Trade Publications

Answer explanation

The best answer that encompasses using both primary and secondary sources is Domestic Market Research. This involves a comprehensive analysis of the target market within your own country. It utilizes both primary sources (e.g., surveys, interviews, focus groups) to gather firsthand information about consumer preferences and needs. It also employs secondary sources (e.g., industry reports, government statistics, market analysis publications) to understand market trends, competitive landscapes, and potential demand.

What is an effective way for exporters to promote their products and for importers to find potential products?

• Trade Publications

• Domestic Market Research

• Foreign Travel

• Trade Fairs and Shows

Answer explanation

The most effective way for both exporters to promote and importers to find products is Trade Fairs and Shows. These events bring together exporters and importers in a centralized location, creating a marketplace for products and services. Exporters can showcase their products, demonstrate their features, and interact directly with potential buyers.  Importers can explore a wide range of products from various suppliers, compare offerings, and establish relationships.  

They offer direct contact, and the opportunity to see and touch products. It is a place where many business deals get started.

Which factor is NOT typically considered when evaluating and choosing a supplier for importation?

• Delivery time

• Supplier reliability

• Intellectual property protection

• The number of employees

Answer explanation

The factor that is NOT typically considered when evaluating and choosing a supplier for importation is The number of employees. While the size of a company can sometimes give an indication of its capacity, the number of employees itself is not a primary factor in evaluating a supplier for importation.

What does the term "FOB" (Free On Board) imply regarding costs and risks?

• The seller covers all costs and risks until the goods are loaded onto the ship or plane.

• The buyer covers all costs and risks until the goods are loaded onto the ship or plane.

• The seller covers all costs and risks until the goods are off-loaded at the destination terminal.

• The buyer covers all costs and risks until the goods are off-loaded at the destination terminal.

Answer explanation

The correct answer is: The seller covers all costs and risks until the goods are loaded onto the ship or plane. Free On Board (FOB): This is an international trade term (Incoterm) that defines the point at which the responsibility for goods transfers from the seller to the buyer. Specifically, the seller is responsible for all costs and risks associated with getting the goods to the named port of shipment and loading them onto the vessel (ship or plane). Once the goods are on board, the responsibility shifts to the buyer, who then bears all subsequent costs and risks, including freight, insurance, and unloading.

Which pricing method includes the responsibility for the cost of transporting goods from the manufacturing plant to the delivery address?

• Purchase Price

• Freight Costs

• Insurance

• Customs Duty

Answer explanation

The answer is: Freight Costs. This specifically refers to the expenses associated with the transportation of goods. It directly includes the cost of moving products from the manufacturing plant to the delivery address.

What is essential to determine before deciding to import a product to ensure the correct duty tax is paid?

• Correct tariff code

• Total demand for the product

• Intellectual property rights

• Product compliance

Answer explanation

The most essential factor to determine before importing a product to ensure the correct duty tax is paid is the correct tariff code. Tariff codes (also known as Harmonized System or HS codes) are used to classify products for international trade.  Each code is associated with a specific duty rate, which is the tax applied to the imported goods.   Using the wrong tariff code can lead to: Paying incorrect duty amounts (either too much or too little); Delays in customs clearance; Penalties from customs authorities. Therefore, accurately identifying the tariff code is crucial for calculating the precise duty tax and ensuring compliance with customs regulations.

Which import marketing channel involves the foreign producer exporting through a subsidiary or joint venture representative?

• Direct Channel of Distribution

• Indirect Channel of Distribution

• Electronic Bulletin Boards

• Trade Publications

Answer explanation

The answer is Direct Channel of Distribution. This channel involves the foreign producer having direct control over the distribution process in the importing country. Using a subsidiary or joint venture representative means the producer is directly involved in sales and distribution, rather than relying on independent intermediaries. In this manner, the company has direct control of it's products within the intended marketplace.

Which option is a feature of an indirect channel of distribution?

• The foreign producer exports directly to the consumer.

• The foreign producer uses a commission agent or import merchant.

• The product is manufactured entirely within the importing country.

• The product is sold only through direct retail outlets.

Answer explanation

The correct answer is: The foreign producer uses a commission agent or import merchant.

Indirect Channel of Distribution involves intermediaries between the foreign producer and the end consumer. Commission agents and import merchants are examples of these intermediaries. They facilitate the import process without the producer having direct contact with the final consumer.