Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.



Published on

Published in: Business
  • Be the first to comment

  • Be the first to like this


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