IM_Ch11

7/21/2019 IM_Ch11

http://slidepdf.com/reader/full/imch11 1/34

© 2005 Prentice Hall 11-1

Chapter 11

Pricing Decisions

Power Point

By

Kristopher Blanchard North Central University

7/21/2019 IM_Ch11


© 2005 Prentice 11-2

managing

marketing

fr om global headquar ters

©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.

International Marketing Mix DecisionsStrategic lternatives in international and

glo!al "ar#eting "i$ decisions. %anagerial iss&es

'nternational Pricing considerations

Glo!al (ricing is one o) t*e "ost critical andco"(le$ iss&es in international "ar#eting.

Price is t*e only "ar#eting "i$ instr&"ent t*atcreates reven&es. ll ot*er ele"ents entailcosts.

co"(any+s glo!al (ricing (olicy "ay "a#eor !rea# its overseas e$(ansion e))orts.

%&ltinationals also )ace t*e c*allenges o) *oto coordinate t*eir (ricing across di))erentco&ntries.

7/21/2019 IM_Ch11


© 2005 Prentice 11-

InternationalInternational

PricingPricing

StrategiesStrategies

Analytic

Dimensions

Decision-

Making

Decision-

Making

Company Internal

Factors

ProfitabilityTransports CostsTariffsTaxesProduction CostsCannel Costs

International Pricing Strategies

Market Factors

Income !e"elsCompetition

Customers# Culture

$n"ironmental

Factors

Foreign $xcange%atesInflation %atesPrice Controls%egulations

Market-by-Market

Pricing&niform Pricing

Managerial

Issues

Transfer PricingForeign CurrenciesParallel Imports'(reyMarkets

$xport Price $scalation(lobal Pricing Strategies

Financing International

Transaction

%isksCustomer-Arranged "s)Supplier-Arranged

Source of Financing

Commercial *anks(o"ernments+on-cas Transactions,Counter-trading

So&rce /eannet Hennessey, 2001

7/21/2019 IM_Ch11



Te (aps tat te $uro Could ClosePrices on selected goods and ser"ices .//012

All prices in 1! U"#

a $wo door %odel

& 'odel (50( in "pain) 22(0 elsewhere

c 'ercedes C-class witho*t ins*rance

ateora G*a&ri, 'nternational %ar#eting, 3&ro(ean 3dition, © 2000 %cGra-Hill

7/21/2019 IM_Ch11



managing

marketing

fr om global headquar ters

©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.

International Marketing Mix DecisionsStrategic lternatives in international and

glo!al "ar#eting "i$ decisions. %anagerial iss&es

Prices for a

Volkswagen Golf*

4R''6 71,00

8'696D :,2;0

8R63 10,510

G3R%6< 11,00

'9< 10,=;0

'nternational Pricing co"(arisons

7/21/2019 IM_Ch11


© 2005 Prentice 11-=

United States>> 72.5 2.5

rgentina Peso2.50 2.50 0.;: 1.00 -2

&stralia 7.00 1.52 1.1: 1.;: -0

4ra?il Real.=0 1.= 1.2 2.1; -54ritain @1.;; 2.:5 1.2:>> 1.>> 12

anada 7. 2.1 1.1 1.5= -1=

*ile Peso12=0 2.10 ;= =01 -1A

*ina <&an;.;0 1.20 .;0 :.2: -5

?ec* Re( Bor&na5=.00 1. 22.00 ;.0 -

Den"ar# DBr2.A5 2.; ;.A :.= 15

3&ro area 2.5A 2.2A 0.;; C 0.:: C -11

8rance 88r1:.5 2.; A.2: A. -2

Ger"any D%5.10 2.0 2.01 2.22 -;

'taly 9ire00 1.;= 1=; 21;5 -2 S(ain Pta;5 2.0; 15= 1:; -1:

Hong Bong HB710.A0 1.A .21 A.:0 -=

H&ngary 8o;; 1.2 15A 0 -:

'ndonesia R&(ia*1A00 1.5 5A:A 10:55 -A

/a(an 2; 2.: 11= 12 -=

%alaysia %7.52 1.1; 1.A: .:0 -5

%e$ico Peso21.; 2.= :.=2 ;.2; -A

6e ealand 67.=0 1.= 1.2 2.A -

P*ili((ines Peso 5;.00 1.1A 2.2 50. -5

Poland loty5.;0 1.= 2.2 .0 -2R&ssia Ro&!le5.00 1.21 1.: 2:.; -52

Singa(ore S7.0 1.:2 1.0 1.:1 -2:

So&t* )rica Rand;.A0 1.1; .:2 :.1 -5

So&t* Borea Eon000 2.2A 11:1 125 -11

Seden SBr2.0 2. ;.5 10.2: -:

Sit?erland S8r=.0 .=5 2.: 1.A

aian 67A0.0 2.1 2A.= 2.; -1=

*ailand 4a*t55.0 1.21 21.A 5.5 -52

The Hamburger Standard Under +-,

over +.,

val*ation

/ocal C*rrency ollars %plied PPP Act*al # e3chan4e a4ainst the

o the dollar rate 160(01 dollar 7

7/21/2019 IM_Ch11

http://slidepdf.com/reader/full/imch11 7/34© 2005 Prentice 11-A

Basic Pricing Concepts

$he 8lo&al 'ana4er %*st develop syste%s

and policies that address

9 Price :loors 9 Price Ceilin4s

9 ;pti%*% Prices

'*st &e consistent with 4lo&alopport*nities and constraints

7/21/2019 IM_Ch11

http://slidepdf.com/reader/full/imch11 8/34© 2005 Prentice 11-:

Global Pricing Objectives and

Strategies'ana4ers %*st deter%ine the o&<ectives or the

pricin4 o&<ectives

9 Unit "ales

9 'ar=et "hare

9 >et*rn on invest%ent

$hey %*st then develop strate4ies to achieve those

o&<ectives 9 Penetration Pricin4

9 'ar=et "=i%%in4

7/21/2019 IM_Ch11

http://slidepdf.com/reader/full/imch11 9/34© 2005 Prentice 11-;

Market Skimming and Financial

Objectives'ar=et "=i%%in4

9 Char4in4 a pre%i*%

price

9 'ay occ*r at theintrod*ction sta4e o

prod*ct lie cycle

"ony Ad? or ca%corders

7/21/2019 IM_Ch11

http://slidepdf.com/reader/full/imch11 10/34© 2005 Prentice 11-10

Penetration Pricing and Non

Financial ObjectivesPenetration Pricin4

9 Char4in4 a low price in

order to penetrate

%ar=et @*ic=ly 9 Appropriate to sat*rate

%ar=et prior to

i%itation &y

co%petitors

16 "ony al=%an

7/21/2019 IM_Ch11


© 2005 Prentice 11-11

Companion Prod!cts

Prod*cts whose sale is

dependent *pon the sale o

pri%ary prod*ct

9 ideo 4a%es are dependent*pon the sale o the 4a%e

Console

yo* %a=e %oney on

the &lades yo* can 4ive

away the raDors?E

F-Bo3 8a%e "yste% and "ports 8a%e

7/21/2019 IM_Ch11


© 2005 Prentice 11-12

"arget Costing # $ %!estions

1? oes the price relect the prod*ctGs @*ality2? s the price co%petitive 4iven local %ar=et conditions

I? "ho*ld the ir% p*rs*e %ar=et penetration) %ar=ets=i%%in4) or so%e other pricin4 o&<ective

(? hat type o disco*nt +trade) cash) @*antity, and allowance+advertisin4) trade-o, sho*ld the ir% oer itsinternational c*sto%ers

5? "ho*ld prices dier with %ar=et se4%ent

J? hat pricin4 options are availa&le i the ir%Gs costsincrease or decrease s de%and in the international %ar=etelastic or inelastic

6? Are the ir%Gs prices li=ely to &e viewed &y the host-co*ntry 4overn%ent as reasona&le or e3ploitative

!? o the orei4n co*ntryGs d*%pin4 laws pose a pro&le%

7/21/2019 IM_Ch11



D!mping

n international trade) this occ*rs when one

co*ntry e3ports a si4niicant a%o*nt o

4oods to another co*ntry at prices %*chlower than in the do%estic %ar=et

httpen?wi=ipedia?or4wi=i*%pin4L

72!pricin4Lpolicy72

7/21/2019 IM_Ch11



"arget Costing

Cost-Based Pricin4 is &ased on an analysis

o internal and e3ternal cost

:ir%s *sin4 western cost acco*ntin4 principles *se the F!ll absorption cost

method

9 Per-*nit prod*ct costs are the s*% o all past orc*rrent direct and indirect %an*act*rin4 and

overhead costs

7/21/2019 IM_Ch11


© 2005 Prentice 11-15

"arget Costing

&igid costpl!s pricing %eans that

co%panies set prices witho*t re4ard to the

ei4ht o*ndational pricin4 considerations Fle'ible costpl!s pricing ens*res that

prices are co%petitive in the contest o the

partic*lar %ar=et environ%ent

7/21/2019 IM_Ch11


© 2005 Prentice 11-1A

"erms o( the Sale

ncoter%s %a=e international trade easierand help traders in dierent co*ntries to*nderstand one another? $hese standard

trade deinitions that are %ost co%%only*sed in international contracts are protected &y ICC copyrigt 9 M3-wor=s 9 seller places 4oods at the disposal o the

&*yer at the ti%e speciied in the contract &*yer ta=esdelivery at the pre%ises o the seller and &ears all ris=sand e3penses ro% that point on?

9 elivery d*ty paid 9 seller a4rees to deliver the 4oodsto the &*yer at the place he or she na%es in the co*ntry

o i%port with all costs) incl*din4 d*ties) paid?

7/21/2019 IM_Ch11


© 2005 Prentice 11-1:

)nvironmental *n(l!ences on Pricing

DecisionsC*rrency :l*ct*ations

nlationary Mnviron%ent

8overn%ent Controls) "*&sidies)>e4*lations

Co%petitive Behavior

"o*rcin4

7/21/2019 IM_Ch11


© 2005 Prentice 11-1;

Global Pricing+ "hree Polic,

-lternativesM3tension

Adaptation

8eocentric

7/21/2019 IM_Ch11


© 2005 Prentice 11-20

Gra, Market Goods

$rade%ar =ed prod*cts are e3ported ro%

one co*ntr y to another where they are sold

&y *na*thoriDed persons or or4aniDations;cc*rs when prod*ct is in short s*pply)

when prod*cers *se s=i%%in4 strate4ies in

so%e %ar=ets) and when 4oods are s*&<ect

to s*&stantial %ar=-*ps

7/21/2019 IM_Ch11


© 2005 Prentice 11-21

D!mping

"ale o an i%ported prod*ct at a price lower thanthat nor%ally char4ed in a do%estic %ar=et orco*ntry o ori4in?

;cc*rs when i%ports sold in the U" %ar=et are priced at either levels that represent less than thecost o prod*ction pl*s an !7 proit %ar4in or atlevels &elow those prevailin4 in the prod*cin4

co*ntries$o prove) &oth price discri%ination and in<*ry %*st &e shown

7/21/2019 IM_Ch11


© 2005 Prentice 11-22

Price Fi'ing

>epresentatives o two or %ore co%paniessecretly set si%ilar prices or their prod*cts 9 lle4al act &eca*se it is antico%petitive

HoriDontal price i3in4 occ*rs when co%petitorwithin an ind*stry that %a=e and %ar=et the sa%e

prod*ct conspire to =eep prices hi4h

ertical price i3in4 occ*rs when a %an*act*re

conspires with wholesalersretailers to ens*recertain retail prices are %aintained

7/21/2019 IM_Ch11



"rans(er Pricing

Pricin4 o 4oods) services) and intan4i&le property &o*4ht and sold &y operatin4 *nitsor divisions o a co%pany doin4 &*sinesswith an ailiate in another <*risdiction

ntra-corporate e3chan4es 9 Cost-&ased transer pricin4

9 'ar=et-&ased transer pricin4 9 Ne4otiated transer pricin4

7/21/2019 IM_Ch11



Co!ntertrade

Co*ntertrade occ*rs when pay%ent is %ade in so%e or%

other than %oney

;ptions

9 Barter 9 Co*nter-p*rchase

9 ;set

9 Co%pensation tradin4

9 Cooperation a4ree%ents

9 "witch tradin4

7/21/2019 IM_Ch11


© 2005 Prentice 11-25

Barter

$he least co%ple3 and oldest or% o

&ilateral) non-%onetary co*nter-trade

A direct e3chan4e o 4oods or services &etween two parties

7/21/2019 IM_Ch11


© 2005 Prentice 11-2=

.ooking -head

Chapter 12 8lo&al 'ar=etin4 Channels and

Physical istri&*tion

7/21/2019 IM_Ch11


© 2005 Prentice 11-2A

*ncoterms

:A" +ree alon4side ship, na%ed port o destination 9

seller places 4oods alon4side the vessel or other %ode o

transport and pays all char4es *p to that point

:;B +ree on &oard, 9 sellerGs responsi&ility does not end*ntil 4oods have act*ally &een placed a&oard ship

C: +cost) ins*rance) rei4ht, na%ed port o destination 9

ris= o loss or da%a4e o 4oods is transerred to &*yer once

4oods have passed the shipGs railC:> +cost and rei4ht, 9 seller is not responsi&le at any

point o*tside o actory

>et*rn

7/21/2019 IM_Ch11


© 2005 Prentice 11-2:

)'tension

Mthnocentric

Per-*nit price o an ite% is the sa%e no

%atter where in the world the &*yer islocated

%porter %*st a&sor& rei4ht and i%port

d*ties:ails to respond to each national %ar=et

>et*rn

7/21/2019 IM_Ch11


© 2005 Prentice 11-2;

-daptation

Polycentric

Per%its ailiate %ana4ers or independent

distri&*tors to esta&lish price as they eel is%ost desira&le in their circ*%stances

"ensitive to %ar=et conditions &*t creates

potential or 4ray %ar=etin4

>et*r n

7/21/2019 IM_Ch11



Geocentric

nter%ediate co*rse o action

>eco4niDes that several actors are relevant

to pricin4 decision 9 /ocal costs

9 nco%e levels

9 Co%petition 9 /ocal %ar=etin4 strate4y

>et*rn

7/21/2019 IM_Ch11



C!rrenc, Fl!ct!ations

>et*rn

7/21/2019 IM_Ch11



*n(lationar, )nvironment

eined as a persistent *pward chan4e in

price levels

9 Can &e ca*sed &y an increase in the %oneys*pply

9 Can &e ca*sed &y c*rrency deval*ation

Mssential re@*ire%ent or pricin4 is the

%aintenance o operatin4 %ar4ins

>et*rn

7/21/2019 IM_Ch11



Government Controls/ S!bsidies/

and &eg!lations

$he types o policies and re4*lations that

aect pricin4 decisions are

9 *%pin4 le4islation 9 >esale price %aintenance le4islation

9 Price ceilin4s

9 8eneral reviews o price levels

>et*r n

7/21/2019 IM_Ch11



Competitive Behavior

co%petitors do not ad<*st their prices in

response to risin4 costs it is diic*lt to

ad<*st yo*r pricin4 to %aintain operatin4%ar4ins

co%petitors are %an*act*rin4 or

so*rcin4 a lower-cost co*ntry) it %ay &e

necessary to c*t prices to stay co%petitive

>et*r n

7/21/2019 IM_Ch11


© 2005 Prentice 11 5

0sing So!rcing as a Strategic

Pricing "ool

'ar=eters o

do%estically

%an*act*red inished

prod*cts %ay %ove tooshore so*rcin4 o

certain co%ponents to

=eep costs down and

prices co%petitive

>et*rn

Can yo* stay co%petitivewhile stayin4 local

Date post:	21-Mar-2016
Category:	Documents
Upload:	aditya-modi
View:	212 times
Download:	0 times

IM_Ch11

Documents