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CHAPTER 7: Pricing Decision (global pricing objectives and strategies…
CHAPTER 7: Pricing Decision
global pricing objectives and strategies
market skimming and financial objectives
charging premium price
luxury goods marketers use price to differentiate product
example: mercedes-benz
penetration pricing and non-financial objectives
charging low price in order to penetrate market quickly
appropriate to saturate market prior to imitation by competitors
target costing
determine the segment to be targeted, as well as the prices that customers in this segment ill be willing to pay
calculating prices: cost-plus pricing and export price escalation
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
incoterms
FAS (free alongside ship)
seller places goods alongside the vessel or other mode of transport and pays all charges up to that point
FOB (free on board)
seller responsibility does not end until goods have actually been placed aboard ship
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 and freight)
seller is not responsible at any point outside of factory
environmental influences on pricing decision
currency fluctuation
inflationary environment
government control, subsidies, and regulations
competitive behavior
global pricing: 3 policy alternative
extension pricing
per-unit price of an item is the same no matter where in the world the buyer is located
adaptation pricing
permits affiliate managers or independent distributors to establish price as they feel is most desirable in their circumstances
dumping
sale of an imported product at a price lower than that normally charged in a domestic market
transfer pricing
pricing of goods by operating units or division of a company doing business with an affiliate in another jurisdiction