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24 Cards in this Set
- Front
- Back
Determinations of an Export Price: What are the basic factors for setting an export price?
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-Costs
-Market conditions and customer behavior (demand or value) -Competition -Legal and political issues -General company policies |
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Cost pricing suggest fairness and reasonableness.
Any consideration of costs requires knowledge about volume |
True
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Value to purchasers (demand) set a _____ _______.
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price ceiling
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Demand may be determined by:
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Asking people, barter experiment, test market pricing, comparison to substitute products, statistical analysis.
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Competition: More significant barriers = what?
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More pricing freedom
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Competition: Increased competition results in what?
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price cuts (EU market)
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Law against selling in foreign markets at prices below those in the home country market.
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Antidumping legislation
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Product decisions affect both what?
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Costs and what consumer is willing to pay.
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What sets price ceiling?
What sets costs? |
Value to customer sets price ceiling; price floor set by costs
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Fundamental Export Pricing Strategy:
________ _____ (____ ____) based on expected decline in costs as accumulated volume increases. |
Experience curve (learning curve)
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Fundamental Export Pricing Strategy:
What is starting with a high price, lower as small market at top is exhausted, and repeat? |
Skimming the market
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Fundamental Export Pricing Strategy:
What is it called when a company reduces prices faster and further in order to establish itself in the market? |
Sliding down the demand curve
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Fundamental Export Pricing Strategy:
Setting price lower; assumes high degree of price elasticity of demand |
Expansionist pricing
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Fundamental Export Pricing Strategy:
This strategy discourages potential competitors and takes advantage of experience curves. |
Pre-emptive pricing
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Fundamental Export Pricing Strategy:
This strategy eliminates existing competitors and may involve dumping, legal problems. |
Extinction pricing
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Fundamental Export Pricing Strategy:
High or low price determined by: |
-Product, characteristics
-Present and future foreign market: projected size and acceptance of product -Financial and technical ability of exporter to meet demand. |
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Relation of Export to Domestic Price Policies:
What happens when Export Prices are lower than Domestic? |
-Product is less known in foreign markets; to secure market acceptance and initial purchase the lowest possible price should be quoted.
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Relation of Export to Domestic Price Policies:
What happens when Export Prices are higher than Domestic? |
-Extra investment is needed to enter foreign markets; extra expenses; slower turnover; risk
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Relation of Export to Domestic Price Policies:
What happens when Export Prices are on par with Domestic? |
-Permits pricing felt to be necessary and fair.
-Gives a feeling of safety when inadequate information is available. -To avoid antidumping problems |
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Relation of Export to Domestic Price Policies:
______ ______ is for setting a different price to each market. Effective separation of markets is necessary condition! |
Differential pricing
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Relation of Export to Domestic Price Policies:
For differential elasticity of demand, high price elasticity suggests low prices; price inelasticity suggests high prices. |
True
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Relation of Export to Domestic Price Policies:
Differential pricing is appropriate for what? |
Varying market strategies; product line considerations; product line pricing; modification requirements
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Sources of Information on Transfer Pricing:
-Limited flexibility in setting transfer prices. -May be limited by law, used for managerial control, or to influence location of recorded profits. |
Decentralization and profit centers
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Sources of Information on Transfer Pricing:
Transfer prices affect customs duty and location of profits. |
True
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