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19 Cards in this Set

  • Front
  • Back
Global Pricing
*the most critical and complex issues in international marketing
*price is the only marketing mix instruemtn that creates revenues. All other elements entail cost.
*a company's global pricing policy may make or break its overseas expansion efforts
*there are challenges of how to coordinate theirpricing across different countries
Drivers affecting global pricing
*company goals
*company costs
*customer demand
*distribution channels
*government policies
Company Goals
drivers affecting global pricing
*what do they want to achieve
*satisfactory ROI
*Market share
*specified product goal
Company Costs
drivers affecting global pricing
*costs set the floor: the company wants to set at least a price that will cover all cost need to make and sell its products.
*Cost-plus pricing: most popular. adds international costs and a markup to the domestic manufacturing cost.
*Dynamic Incremental Pricing: arrives at a price after removing domestic fixed costs
*Incremental Costs
Customer Demand
drivers affecting global pricing
*sets a ceiling to the price
*comsumer demand is a function of buying power, tests, habits and substitutes.
drivers affecting global pricing
*will usually lead to cross-border price differentials.
*nonprice competition: advertising, channel coverage
Distribution Channels
drivers affecting global pricing
*variations in trade margins and length margins
Government Policies
drivers affecting global pricing
*direct impact: sales tax rates, tariffs, and price controls
*indirect impact
Price excalation
*the final foreign retail price will often be much higher than the domestic retail price.
*Must confront:
-will our foreign customers be willing to pay the inflated price for our product
-will this price make our product less competitive
Options to lower export price
*rearrange the distribution channel
*eliminate costly features (or make them optional)
*downsize the product
*assemble or manufacture the product in foreign markets
*adapt the product to escape tariffs or tax levies.
Currency Gain/Loss Pass-through
global pricing and currency movement
*Pass-through issue:
*pricing-to-market (PTM):adjustments ofmarkups in response to exchange rate movements
*Local-currency price stability: markups are adjusted to stabalize prices in the buyer's currency
Currency Quotation
global pricing and currency movement
*sellers and buyers usually prefer a quote in their domestic currency.
*that way, the other party will have to bear currency risks.
Price coordination
*issue is critical for global brands that are marketed with no or very few cross-border variations.
Considerations for developing a global pricing strategy
*nature of customers
*amount of product differentiation
*nature of channels
*nature of competition
*market integration
*internal organization
*government regulations
Aligning Pan-Regional Prices
price coordination
*pricing corridor: to find the middle ground by upping prices in low-price countries and cutting them in high-price countries
Steps to determining the pan-regional prices
*determine optimal price for each country
*find out whether parallel imports (gray markets) are likely to occur at these prices
*set a pricing corridor
*an umbrella term used to describe unconventional trade-fiancing transactions that involve some form of noncast compensation
Forms of Countertrade
*simple barter:swap of one product for another
*clearing agreement: 2 gov't agree to import a set specified value of goods from one another
*switch trading: a third party is involved
*Buyback (compensation): the sellers provides equipment and agress to be paid by the products resulting from using the equipment
*counterpurchase: most popular. same as clearing agreement - gov't
*offset: the seller agress to "offset" the purchase price by sourcing from the importer's country or trandsferring technology to the other party's country.
Motives behind countertrade
*gain access to new or difficult markets
*overcome exchange rate controls or lack of hard currency
*overcome low coutnry credit worthiness
*increase sales volume
*generate long-term customer goodwill