Muhammad Waqas Pricing for International and Global Markets Lecture 23

Muhammad Waqas Recap New Product Development Processes for Global Markets Introducing new Products to Global Markets

Muhammad Waqas Learning Objectives Differentiate between full-cost pricing and marginal-cost pricing and explain the implications of both to global marketers. Note how international transportation costs, tariffs, taxes, local production, and channel costs all affect pricing decisions. Explain how different income levels, buyer power, and competitive situations in national markets can require different pricing strategies across these markets. Compare and contrast the ways in which exchange rate fluctuations and inflation rates complicate global pricing. List various examples of government price controls that global marketers might encounter.

Muhammad Waqas Learning Objectives Define dumping and describe how it can constrain pricing strategies. Understand how the credit and collection infrastructure of a country can affect pricing decision in that country. Describe how global marketers can manage export price escalation, determine transfer prices, and effectively quote prices in foreign currencies. Define parallel imports, explain their causes, and list ways in which they may be controlled. Understand how the credit and collection infrastructure of a country can affect pricing decisions in that country. Differentiate among various forms of countertrade and balance the risk and opportunities of dealing with noncash exchanges

Muhammad Waqas Chapter Outline Profit and cost factors that affect pricing Market factors that affect pricing Environmental factors that affect pricing Managerial issues in global pricing

Muhammad Waqas Profit and Cost Factors Fixed costs – Do not change over a given range of output Variable costs – Vary directly with output Marginal profit – Amount in excess of variable costs

Muhammad Waqas Profit and Cost Factors Transportation Costs Tariffs Taxes Local production costs Channel costs

Muhammad Waqas Market Factors Income level – GNP per capita – GDP per capita – Disposable income – Price elasticity High income = lower elasticity Lower income = higher elasticity – Importance of reassessing income level in developing countries

Muhammad Waqas Market Factors Culture Buyer Power Competition

Muhammad Waqas Environmental Factors Exchange rate fluctuations Inflation rates Price controls Dumping Credit and collection infrastructure

Muhammad Waqas Summary Profit and cost factors that affect pricing Market factors that affect pricing Environmental factors that affect pricing

Muhammad Waqas References Gillespie, K., Jeannet, J.P. and Hennessey, H.D. (2004), Global Marketing: An Interactive Approach, Houghton Mifflin, Boston, NY.