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Chap18

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  • 1.
    • Identify the factors that must be considered by businesses when setting prices.
    • Describe pricing methods used by businesses.
    • Discuss some pricing factors that are unique to global markets.
    INTERNATIONAL PRICING ACTIVITIES LESSON 18-1 GOALS
  • 2. Price Planning for Int’l Marketing
    • Every business must decide what amount to charge.
    • Must decide how to get goods and services to customers.
      • Factors: Export costs, foreign currencies, availability
    • Price is the monetary value of a good or service.
  • 3. Price Planning for International Marketing
    • Three main factors influence the price a company charges for goods & services:
      • Costs
      • Consumer demand
      • Competition
  • 4. Costs
    • The cost to modify a product to meet cultural or legal restrictions.
    • Tariffs and other taxes that must be paid when selling to customers in another country.
    • Fees to acquire export or import licenses
    • Expenses for the preparation of export documents.
    • Changes in the exchange rate for a nation’s currency.
    • Transportation costs due to selling to buyers at a great distance.
  • 5. Consumer Demand
    • When prices are high, consumers tend to buy less than when prices are low.
    • Lower incomes, higher prices, and needs for other items result in reduced demand for a good or service.
  • 6. Competition
    • If many companies are selling an identical product, consumers have more choices.
    • Competition keeps prices _______.
  • 7. Price Selection Methods
    • Markup Pricing
    • New Product Pricing
    • Psychological Pricing
    • Discount Pricing
  • 8. Markup Pricing
    • Markup is the amount added to the cost of the product to determine the selling price .
    • Example:
    • Percentage × Cost = Markup
    • 40% × $50.00 = $20.00
    • Cost + Markup = Selling Price
    • $50.00 + $20.00 = $70.00
  • 9. New Product Pricing
    • Competitive pricing -Sell at a comparable price if there is already competition in mkt.
      • Examples: gas, pizza, groceries
    • Skim pricing -sets a relatively high introductory price. Attracts buyers who are not concerned with price.
      • Examples: MP3 players & Tivo when 1 st introduced.
    • Penetration pricing -setting a relatively low introductory price for a new product. Gains strong acceptance. Takes away sales from the competition.
  • 10. Psychological Pricing
    • Promotional pricing
      • Loss leader – very low-priced items to attract customers to come and make other purchases
    • Odd-even pricing –
      • $4.95 and $9.99 Bargain Oriented
      • $175 and $12.50 Quality Conscious
    • Prestige pricing – set high prices to project status, influence, and power.
    • Price lining-All merchandise in a category is same price. All CD’s $12.99. All Suits $150
  • 11. Discount Pricing
    • Seasonal discounts
    • Cash discounts – discount for paying bills quickly or on time.
    • Quantity discounts – encourages more sale.
      • Different price for amounts 1-4, 5-9, 10 or more
    • Trade discounts -
      • Manufacturer to distributor discount.
  • 12. Pricing in Global Markets
    • Difficult to set prices across national borders.
      • Setting prices high enough to cover unexpected fluctuation in exchange rates is common.
      • Two additional methods IB’s use to minimize risk.
      • Countertrade
        • Direct exchange of products or services between companies in different countries minimizes these risks.
      • Dumping
        • Set prices extremely low, lower than what is charged in home country. This drives out competition.
        • Dumping is not good for economy.
  • 13. Assignment Due on Thursday (20 Points)
    • Bring in an example of the following pricing methods (LABEL each).
      • Promotional Pricing
      • Odd-Even Pricing
      • Prestige Pricing
      • Price Lining
      • BONUS: Any of the Discount Pricing methods will be bonus.
  • 14.
    • Contrast direct and indirect channels of distribution.
    • Describe the activities of agents, wholesalers, and retailers.
    • Explain the role played by global intermediaries.
    GLOBAL DISTRIBUTION ACTIVITIES LESSON 18-2 GOALS
  • 15. Distribution Channels
    • Distribution Channel - the path taken by a good or service to get from producer to final user .
      • When to use wholesalers? Retailers?
        • Depends on product and customer.
      • Direct Distribution Channel –
      • Indirect Distribution Channel –
      • Intermediary –
  • 16. Common Distribution Channels
    • Channel A
    Channel B Channel C Channel D Consumer Consumer Consumer Consumer Producer Producer Producer Retailer Wholesaler Agent Retailer Retailer Wholesaler Producer Intermediaries
  • 17. Distribution Channel Members
    • Agent ( broker ) - *does not take ownership.
    • Wholesaler – *buys large quantities, sells to retailers.
      • 5 main functions:
        • Provide information -
        • Processing orders -
        • Storing and transporting -
        • Financing and taking possession -
        • Promoting -
  • 18. Distribution Channel Members
    • Retailer – *store or business, sells directly to final users.
    • Serve customers 5 ways:
      • Product Selection –
      • Convenience –
      • Product Quality –
      • Sales Staff Assistance –
      • Special Services –
  • 19. Retailers
    • Convenience stores
    • General merchandise retailers
    • Specialty stores
    • Direct sellers
    • Online retailers
    • Automatic vending
  • 20. International Retailing Activities
    • Vehicles converted to mini-restaurants allow companies to serve customers at temporary locations.
      • Sporting events
      • Parks
      • Fairs,
      • Concerts
    • ATMobiles (portable cash machines)
    • Sidewalk merchants/vendors
  • 21. Global Intermediaries
    • Export management company (EMC)
    • Export trading company (ETC)
    • Freight forwarder
    • Customs broker
  • 22.
    • Summarize the shipping requirements for international distribution.
    • Compare transportation modes available to international distributors.
    MOVING GOODS AROUND THE WORLD LESSON 18-3 GOALS
  • 23. Preparing for Shipping
    • Packing
      • Avoid breakage
      • Maintain the lowest possible weight and volume
      • Provide moisture-proof surroundings
      • Minimize theft
  • 24. Preparing for Shipping
    • Labeling
      • Name and address of the shipper
      • Country of origin
      • Container’s weight
      • Size, # of packages, destination
      • Labels for hazardous material
  • 25. Documentation
    • Bill of lading
        • Contract between the exporter and the transporter.
          • Contains….
    • Certificate of origin
      • Documents the country in which the goods were produced.
    • Export declaration
      • US Dept of Commerce if more that $500.
    • Destination control statement
      • Verifies the country to which the goods are being shipped.
    • Insurance certificate
        • Amount of insurance coverage for fire, theft, water damage.
  • 26. Transportation in the Global Market
    • Physical Distribution
    • Motor carrier
    • Railroad
    • Waterway
    • Pipeline
    • Air carrier
    • Intermodal movement