Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 7- Pricing decision (GLOBAL PRICING OBJECTIVES & STRATEGIES…
CHAPTER 7- Pricing decision
GLOBAL PRICING OBJECTIVES & STRATEGIES
calculating prices
export price escalation- increase in the final selling price of goods traded across borders
cost-plus pricing- based on an analysis of internal and external cost
market skimming & financial objectives
charging premium price
luxury goods marketers use price to differentiate
: Mercedes-Benz
Penetration pricing & non-financial objectives
charging low price to penetrate market quickly
appropriate to saturate market prior to imitation by competitors
target costing : determine the segment to be targeted, prices that customers in this segment will be willing to pay
INCOTERMS
FAS (free alongside ship)
requiring the seller to deliver goods to a named port alongside a vessel designed for the buyer
FOB (free on board)
indicates whether the seller or the buyer is liable for goods that are damaged/ destroyed during shipping
CIF (cost, insurance, freight)
named port of destination- risk of loss or damage of goods is transferred to buyer once goods have passed the ship rail
CFR ( cost & freight)
seller is not responsible at any point outside of factory
ENVIRONMENTAL INFLUENCES ON PRICING DECISION
government control, subsidiaries & regulations
currency fluctuation
inflationary environment
competitive behavior
DUMPING
sale of an imported product at a price lower than that normally changed in a domestic market
GLOBAL PRICING: 3 POLICY ALTERNATIVE
Adaptation pricing
permits affiliate managers or independent distributors to establish price as they feel is most desirable in their circumstances
Extension pricing
per-unit price of an item is the same no matter where in the world the buyer is located
Geocentric pricing
based on the realization that unique local market factors should be recognized when arriving at pricing decisions
TRANSFER PRICING
pricing of goods by operating units / division of a company doing business with an affiliate in another jurisdiction