Pricing Decisions Chapter 11

“Law of ___________ Price” All customers in the market could get the _______ product available for the _________ price. For which of the following products does a true global market exist such that the “Law of __________ Price” holds true: Beer c. Commercial aircraft Compact discs d. Prescription drugs

Pricing issues unique to global marketing: Pricing strategy for a particular product ______________ from country to country. A product may be ________________ as a low-priced, mass-market product in some countries and a premium-priced, _________________ product in others. Pricing objectives may also vary depending on a _________________ stage & country-specific competitive situation.

______________-Based Objectives Market _____________________: used to ___________________ financial profit and seek quick _____________ for a new product. Target consumers qualify as ________________________ and __________________________.

Profit-Based Objectives Market ___________________: Relatively __________________ demand curves. Most appropriate for a market of ____________ designer brands.

TAGHeuer

Sales-Based Objectives _______________________ Pricing: Using price as a ________________ weapon to ________ market position. Prices are set __________ to quickly build _______________________. i.e., used by ____________ when launching the _________________ personal stereo.

Skimming followed by Penetration: PDA: initial retail price = $699, one year later lowered the price to $299 to reach a broader market. ____________ _________ $699 $299 Price

Companion Products: “___________ & _________” Pricing Price dropping on _______ item, but still significant margins on _____________.

_____________-Based Pricing Defines cost as the sum of all past or current ________ & ___________ manufacturing and overhead costs. Adv.: simple to ________________ Disadv.: ignoring ___________ and ___________________ conditions.

Price ____________________ The phrase global marketers use to describe price ______________ that result from the costs associated with _________________ products across borders.

Factors that Contribute to Price Escalation? Duties and _________________ ______________________ Costs __________________________ Fluctuating __________________ Varying ______________ Values ______________________ Cost  _____________ and Insurance Charges

Export Price Escalation Price Esc. Results in products costing ___________ in _________ markets than in the producer’s ____________ market. Price Esc. Can be the result of ________ distribution channels required for exporting. The producer may ______________ the product’s price in export markets to remain competitive.

A manufacturer concerned about price escalation in export markets can: _____________ the product to a host-country manufacturer Develop a ________________ with a host-country manufacturer. Switch to _______________ sourcing Attempt to __________________ distribution channels.

Ethnocentric (______________) Pricing: set the export price for a particular product at an amount __________ to the home country price. Attitude: “We know what the customer wants, and he or she will have to pay for it.”

Polycentric (__________________)Pricing: this policy permits _________________ managers to establish whatever price they feel is most desirable in their circumstances. One study of European industrial exporters found that companies utilizing independent _______________________ were the most likely to utilize ___________________________ pricing.

__________________ Pricing It is more _______________ and _________________________ that the other two pricing strategies. It recognizes both _________ market differences and the importance of ____________________________ input into pricing decisions.

_______________ Marketing The _________________ distribution of trademarked goods to exploit _______ differentials in world markets. Manufacturer sell to domestic distributor for $_____ & $_____ to a distributor in Asia. Unauthorized, the Asian distributor resells the club to a retailer in the U.S. for $____________

To combat the __________ market problem, _________ ______________ takes out newspaper ads urging consumers to purchase Tag Heuer products from _____________ dealers only.

Dumping If a company sells products in _______ markets at prices that are below ___________ value and that can harm producers in the __________ market.

__________ Marketing: In the early 90s, the U. S __________ Marketing: In the early 90s, the U.S. ___________ ____________ ruled that several ________________ manuf. were selling flat panel screens in the U.S. at less than fair value & thereby injuring the sole U.S. producer of similar screens.

_____________________ Pricing: Transactions between buyers and sellers that have the same ____________________. It refers to pricing decisions for _____________________________ sales. i.e., _____________ subsidiaries sell to, and buy from, each other. Approached to Transfer Pricing: ________-Based, ________-Based, & ____________

A situation that underscores the importance of transfer pricing in global marketing. Recent trade data indicate that about _____% of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries.

Countertrade A _________ term that refers to several different types of business transactions. Taking _______________________ payment in some form other than money.

Countertrade is the most general term for the global phenomenon involving ___________ business interactions between parties in various countries. Types of Countertrade: ________; _______________; __________; _________________ Trading; & _________________ Trading

______________: The direct exchange of goods or services between parties in lieu of ________________ payment. i.e., 1970s & 80s: ____________ & the _______________________: Soft-drink syrup concentrate for _____________________

2. ____________: is required by governments seeking to ______ the budgetary impact of expenditures for ___________ or telecommunications. “If you want us to spend government money on your _______, you must ______ products from our country.”

Offset: to win a contract to supply the _______________ with AWACS aircraft, ________ agreed to purchase products from the _______ whose value was equivalent to _______ % of the contract.

3. Compensation Trading (___________): It involves _________ separate and parallel contracts. i.e., _____ contract: I agree to _________ a lumber processing plant in your country. _______ Contract: I agree to take _______ payment for the plant in the form of lumber products produced in the plant.

_______________ Trading (________________ trade or swap) In this arrangement, a professional ______ trader or ________ steps into a simple barter or other countertrade arrangement when one of the parties is ____________ to accept all the goods received in a transaction.