Презентация, доклад lnternational Marketing lnternational Marketing Chapter 9 Global Price Decision
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lnternational Marketing lnternational Marketing Chapter 9 Global Price Decision
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Global pricing Global pricing strategies Global pricing decisions
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A. Global Pricing What is price? The amount of money charged for a product or service,or the sum of the values that consumers exchange for the benefits of having or using the product or service.
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Global pricing is one of the most critical and Global pricing is one of the most critical and complex issues that a global firms face. Price is the only marketing mix instrument that creates revenues. All other elements entail costs.A company’s global pricing policy may make or break its overseas expansion efforts. Multinationals also face the challenge of how to coordinate their pricing policy across different countries.
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Factors affecting global price B E C D A Pricing objectives Cost Demand Environ-ment Competi-tors
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1.Pricing objectives Pricing objectives give direction to the whole pricing process. Determining what your objectives are is the first step in pricing. When deciding on pricing objectives you must consider: the overall financial, marketing, and strategic objectives of the company; the objectives of your product or brand; consumer price elasticity and price points; and the resources you have available.
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enhance the image of the firm, brand, or product enhance the image of the firm, brand, or product maximize short-run profit increase sales volume (quantity) increase market share company growth maintain price leadership desensitize customers to price discourage new entrants into the industry
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2. Cost Include fix and viriable costs associated with the product. Exporting involves more steps and substantially higher risks than domestic marketing. To cover the incremental costs (shipping, insurance, labor,promotion etc), the final foreign retailprice will often be much higher than the domestic retail price.
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3.Demand Demand is a important element of global pricing If demand of the host country is strong. The price of product might be higher in that country.
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4. Competitors Pricing decisions are also bounded by competitive action. If competitors are manufacturing or sourcing in a lower costs country, it may be necessary to cut prices to stay competitive.
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5. Environment Currency fluctuations (exchange rate) Inflation Government policy (tariff )
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When currency fluctuation occurs, there are two options for pricing: one is to fix the price of products in country target market. In this case, any appreciation or depreciation of the value of the currency in the country of production will lead to gain or losses for the seller. When currency fluctuation occurs, there are two options for pricing: one is to fix the price of products in country target market. In this case, any appreciation or depreciation of the value of the currency in the country of production will lead to gain or losses for the seller. The other option is to fix the price of products in home country currency. If it is done, any appreciation or depreciation of the home country currency will result in price increases or decreases for customers and no immediate consequences for the seller.
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Inflation is a worldwide phenomenon. Inflation requires periodic adjustments. These adjustments are caused by rising costs that must be covered by increased selling prices. Inflation is a worldwide phenomenon. Inflation requires periodic adjustments. These adjustments are caused by rising costs that must be covered by increased selling prices. An essential requirement when pricing in an inflationary environment is the maintenance of operating profit margins.
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Tariff A tariff is a tax placed on imported goods. Each country has separate tariff regulations. WHY? Tariff increases government funds. For example, countries that do not grow bananas may create a tariff on importing bananas. The government would then make money from businesses that import bananas.
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It is also used to raise the price of imported goods . It is also used to raise the price of imported goods . A higher tariff allows a local company to compete with foreign competition. When no tariff or other restrictions are placed on imported goods, it is called free trade.
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CASE 1 175+ 10% tariff+ 30%Consumption tax tax+ others=275 275+ 5%Operation tax+17%Value added tax+others=540
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B. Global pricing strategies Cost -Based Pricing Demand-Based Pricing Competition-Based Pricing
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1. Cost -Based Pricing Cost – plus pricing First calculates the cost of the product, then includes an additional amount to represent profit. (average variable cost + allocation of fixed costs)*(1+ markup%).