International Pricing Chapter 18 Pricing Policy Pricing Objectives

International Pricing Chapter 18

Pricing Policy • Pricing Objectives • Parallel Imports – How does it affect a company? – Exclusive distribution – How to prevent it

Approaches to International Pricing • Full-cost v. Variable-cost Pricing • Price skimming v. Penetration Pricing • Market still sets price!!! – Effects of growth and wealth

Price Escalation • What is it? • What are its effects? • What causes it? – Costs of exporting – Taxes, tariffs, and administrative costs – Inflation – Deflation – Exchange rate fluctuations – Carrying currency values – Middleman & Transportation costs

Lessening Price Escalation • Lower COGS • Lowering Tariffs • Lowering Distribution Costs • Free Trade Zones • Dumping – What is it? – Countervailing duty

Countertrade • Pepsi example • Types of Countertrade – – Barter Comprehensive deals Counterpurchase Product Buy-Back Agreement • Problems • Internet • Proactive Countertrade Strategy

Transfer Pricing Strategies • Definition • Branch shows no profit • Advanced Pricing Agreement

Price Quotations • Should list: – Quality – Quantity – Transportation – Responsibility

Administered Pricing • How destructive is competition? • Cartels – OPEC – De. Beers • Government-induced Pricing