Lecture 6 Flashcards
What are the key characteristics of services?
Intangible, perishable, heterogeneous, and inseparable from the provider.
Why are services hard to market internationally?
Due to cultural differences, government restrictions, and nationalism.
What elements are added to the traditional marketing mix in services?
People, process, and physical evidence.
How can services be standardized?
By using service manuals to ensure consistent delivery.
What are the basic pricing concepts in international marketing?
Costs, experience curve, competition, and demand.
What environmental factors affect pricing decisions?
Currency fluctuations, inflation, and government controls.
How can businesses combat currency fluctuations?
Hedging, exchange rate clauses, fixed pricing, and billing in stable currencies.
What are common pricing strategies in global marketing?
Market skimming, market penetration, market holding, and cost-plus pricing.
What is gray market (parallel importing)?
Trademarked goods sold by unauthorized persons, often at lower prices.
What is dumping?
Selling products in foreign markets at lower prices than the home market, often seen as unfair competition.
What is transfer pricing?
Pricing transactions between units of the same company, often to shift profits to low-tax countries.
What are common bases for transfer pricing?
Marginal costs, market-based costs, and negotiated costs.
What is the ‘arm’s length principle’ in transfer pricing?
Setting prices as if the units were independent companies.
What are ways to reduce international pricing pressures?
Rearrange channels, remove frills, manufacture abroad, quote in stable currency, and use rapid inventory turnover.
What are the three global pricing policy alternatives?
Extension (ethnocentric), adaptation (polycentric), and invention (geocentric).
