Global Pricing

Question 1

static pricing

Answer 1

company tends to follow competitors prices and is generally used if a company is just exporting excess inventory and places low priority on foreign business

Question 2

active pricing

Answer 2

company uses prices to achieve objectives and goals. it sets prices rather than follows prices

Question 3

What is not a global price consideration

Answer 3

inert pricing (lacking the ability or strength to move)

Question 4

parallel imports

Answer 4

international transactions in which importers buy products from distributors in one country and sell them to distributors in another country

Question 5

when do parallel imports occur?

Answer 5

Whenever price differences are greater than the cost of transportation between two markets

Question 6

exclusive distribution

Answer 6

can create a favorable condition for parallel importing

Question 7

full cost

Answer 7

based on the view that no unit of a similar product is different from any other unit of a similar product and that each unit must bears it full share of the total and fixed and variable cost whether sold in home market or abroad

Question 8

variable cost

Answer 8

a method of pricing goods in foreign markets in which a company is concerned only with the marginal or incremental costs of producing goods for sale in those markets. the company views foreign sales as bonus sales and assumes any return over variable costs makes a contribution to net profit

Question 9

with target costing, companies should….

Answer 9

• determine the segments to be targeted and price willing to pay
• compute overall target costs
• allocate that target cost to products various function s and calculate gap between target and actual
• obey cardinal rule

Question 10

market skimmig

Answer 10

A price strategy designed to reach consumers willing to pay a premium price for a particular brand or for a specialized product

Question 11

penetration pricing

Answer 11

a pricing strategy that calls for setting price levels that are low enough to quickly build market share

Question 12

market holding strategy

Answer 12

a pricing strategy that allows management to maintain market share; prices are adjusted up or down as competitive or economic conditions change

Question 13

price escalation

Answer 13

products are priced higher in foreign markets than in the domestic market because of the added costs involved in exporting products

Question 14

causes of price escalation

Answer 14

cost of exporting, taxes, tariffs, admin cost, inflation, deflation, exchange rates, currency

Question 15

dumping

Answer 15

export practice, generally prohibited by laws and subjects to penalties and fines, defined by some as the selling of products in foreign markets below the cost of production and below same goods in the market

Question 16

sporadic dumping

Answer 16

selling at a low price because the manufacture wants to get rid of excess merchandise

Question 17

predatory dumping

Answer 17

selling at a loss to gain access to market and possibly drive out compeition

Question 18

persistent dumping

Answer 18

consistent selling in foreign markets at lower prices in one market than others

Question 19

reverse dumping

Answer 19

selling at home for lower price

Question 20

countertrade

Answer 20

exchanging goods or services which are paid for, in whole or part with other goods and services, rather than with money. can cause a COMPETITIVE advantage

ex: trade soda for liquor

Question 21

extension pricing

Answer 21

practice of extending a products home-country price to all country markets

Question 22

adaptation pricing

Answer 22

the practice of setting different price levels for a given product in different country markets

Question 23

geocentric pricing

Answer 23

the practice of using both extension and adaptation pricing policies in different markets