Documentos de Académico
Documentos de Profesional
Documentos de Cultura
International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham
Pricing
for
International Markets
McGraw-Hill/Irwin
International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights
reserved
Global Perspective –
the Price War
• Setting the right price for a product or service
– Key to success or failure
• An offering’s price
– Must reflect the quality and value the consumer perceives in the
product
• Globalization of world markets
– Intensifies competition among multinational and home-based
companies
• The marketing manager’s responsibility
– To set and control the actual price of goods in different markets in
which different sets of variables are to be found
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Pricing Policy
Pricing Objectives
• Pricing as an active instrument of accomplishing
marketing objectives
– The company uses price to achieve a specific objective
• Pricing as a static element in a business decision
– Exports only excess inventory
– Places a low priority on foreign business
– Views its export sales as passive contributions to sales volume
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Pricing Policy
Parallel Imports
• Parallel imports
– Develop when importers buy products from distributors in one
country and sell them in another to distributors who are not part of
the manufacturer’s regular distribution system
• Occur whenever price differences are greater
than cost of transportation between two markets
• Major problem for pharmaceutical companies
.
• Exclusive distribution
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Full-Cost Versus
Variable-Cost Pricing
• Variable-cost pricing
– Firm is concerned only with the marginal or incremental cost of
producing goods to be sold in overseas markets
• Full-cost pricing
– Companies insist that no unit of a similar product is different
from any other unit in terms of cost
– Each unit must bear full share of the total fixed and variable cost
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Skimming Versus
Penetration Pricing
• Skimming
– Used by a company when the objective is to reach a segment of
the market that is relatively price insensitive
– Market is willing to pay a premium price for the value received
• Penetration pricing policy
– Used to stimulate market and sales growth by deliberately offering
products at low prices
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Price Escalation
• Costs of exporting
– Price escalation
• Taxes, tariffs, and administrative costs
– Taxes include tariffs
– Tariff – fee charged when goods are brought into a country from
another country
– Administrative costs
► Include export and import licenses
► Other documents
► Physical arrangements for getting the product from port of entry to the buyer’s
location
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Price Escalation
• Inflation
– In countries with rapid inflation or exchange variation, the selling
price must be related to the cost of goods sold and the cost of
replacing the items
• Deflation
– In a deflationary market, it is essential for a company to keep
prices low and raise brand value to win the trust of consumers
• Exchange rate fluctuations
– No one is quite sure of the future value of currency
– Transactions are increasingly being written in terms of the vendor
company’s national currency
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Price Escalation
• Varying currency values
– Changing values of a country’s currency relative to other
currencies
– Cost-plus pricing
• Middleman and transportation costs
– Channel diversity
– Underdeveloped marketing and distribution channel infrastructures
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Approaches to Lessening
Price Escalation
• Lowering cost of goods
– Manufacturing in a third country
– Eliminating costly functional features
– Lowering overall product quality
• Lowering tariffs
– Reclassifying products into a different, and lower customs
classification
– Modify product to qualify for a lower tariff rate within classification
– Requiring assembly or further processing
– Repackaging
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Approaches to Lessening
Price Escalation
• Lowering distribution costs
– Shorter channels
– Reducing or eliminating middlemen
• Using foreign trade zones to lessen price
escalation
– Establish free trade zones (FTZs) or free ports
► Tax-free enclave not considered part of country
► Postpones payment of duties and tariffs
• Dumping
– Use of marginal (variable) cost pricing
– Selling goods in foreign country below the price of the same goods
in the home market
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Price Quotations
• May include specific elements affecting the price
– Credit
– Sales terms
– Transportation
– Currency
– Type of documentation required
• Should define quantity and quality
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Administered Pricing
• Cartels
– Exist when various companies producing similar products or
services work together
► To control markets for the types of goods and services they produce
– May use formal agreements
► To set prices
► Establish levels of production and sales for participating countries
► Allocate market territories
► Redistribute profits
► May take over entire selling function
– Examples
► OPEC
► The Trans-Atlantic Conference Agreement
► De Beers
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Administered Pricing
• Government-influenced pricing
– Establishes margins
– Sets prices and floors or ceilings
– Restricts price changes
– Competes in the market
– Grants subsidies
– Acts as a purchasing monopsony or selling monopoly
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Thank You
@RamyKhodeir
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