Chapter 5 Flashcards
Int. price management
What is one of the environmental influences on int. pricing?
fluctuating value of currency
What is one of the ways to cushion risks posed by exchange rate fluctuations
to produce locally
What are the tasks of int. price management
-take into account price variations/adjustments for local and international products
-determine pricing strategy to be pursued across different consumer groups in different countries , considering foreign exchange rate
- establish measure to ensure strict enforcement of pricing policies in target markets.
What are int. pricing management goals?
Goals with explicit profit orientation:
-absolute profit goals: imputed profit targets, capital gains target, contribution margin targets
-relative profit targets: return on sales targets, return on equity targets, ROI targets
Goals without explicit profit orientation
-market share targets, sales targets, price image/ positioning targets, liquidity targets, employment targets, price stability targets, price competition targets, cost targets, amortization targets, market stabilization targets
What factors should be taken into consideration in int. pricing policy?
-price level for a product in a country
-country-specific price variations
pricing strategy in individual countries
-international price differentiations
-price enforcement in the processed countries
What objectives does int. price management have to align with to meet target?
-higher-level branding objectives
-top-level corporate objectives
What are the factors influencing int. price management?
-internal factors: goals, costs (R&D marketing, administrative, transport & distribution costs) marketing-mix, structure of organization, transfer price
-external factors: state influence on pricing (taxes, fair trading regulations, subsidies) , demand situation, market structure (monopoly/oligopoly/gray markets), competition situation, distribution structure, exchange rates (inflation)
What are gray markets?
flow of goods that are not directed by manufacturer and are caused by arbitrage behavior
-flow of goods in gray markets: parallel imports, reimports, lateral gray imports
What are the two groups in int. price management?
-international pricing policy
-international conditions policy
What are possible pricing strategies?
-standardization (pros: uniform image position, avoidance of uncertainty and annoyance among retailers & customers, reduction in intra-company competition (gray markets); cons: profit potential loss, due determinants not taken into account)
-price differentiation (pros: prices are adapted to market conditions cons: resistance from national/supranational organizations and cross-border protection associations)
-price corridor strategy: synthesis of standardization and differentiation; based on reference price (domestic price) allowed to move within range (pros: subsidiaries given leeway by parent company to adjust prices to market conditions cons: can be problematic since indiv. countries and profit targets have to be taken into account)
-price penetration strategy: low brand entry prices with option of increasing later pros: draw customer attention away from rivals, if entry barriers are low, company can easily sell. pre-requisite: no price-quality correlation, long term commitment, critical size effects (requirement of minimum sales volume in distributions)
What does international terms and conditions policy include?
-international terms of delivery
-international payment terms
-international credit policy
-international discount policy
-General terms and Conditions
What are factors to consider regarding delivery conditions?
-delivery time/frequency
-delivery location
-delivery method
-delivery cost
-delivery risks
-regulations concerning terms of delivery
What are advantageous conditions in int. terms and conditions?
-suppliers who don’t offer lowest pricing are preferred, because conditions policy correlates to supplier policy.
(low prices are possible, if conditions (discounts) are not offered at all or are designed to be less customer friendly
