International Pricing

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International Pricing-15
What is a Price?
* Revenue received by a business in exchange for benefits provided * Customers give-up in exchange for the benefits they receive * Costs include: money, time effort, opportunities
General Factors in Price Determination
* True markets (customers have options) price determined by a combo of cust/co. issues including: * Pricing obj. of business, business constraints, gen pricing strategies, customer influences, competitive forces, legal & reg constraints Pricing Objectives

* Image projection, profit maximization, mkt share, vol., specific profit goals, other goals (ROI, IRR, ROS) Company Constraints
* Price floor-bound by cost; price ceiling- bound by: competition, will to pay, regulation * Optimal Price: b/w max profit & max mkt penetration etc. General Pricing Strategies
* Market point pricing: competitive or reactive pricing
* Penetration pricing: growth share & volume, enter channels * Skimming pricing: high price/high quality positioning- used at intro stage of PLC Customer Influences
* Price sensitivity & purchasing behavior
Legal & Regulatory Constraints
* Direct policy influences: Taxes, price freezes or limits, collusion or price fixin * Indirect policy influences: inflation, interest rates
International Pricing Issues
* Currency exchange, Country pricing relationships, channel issues, multiple price schedule, terms of sale, transfer pricing, gray mkts, dumping, countertrade * Cost escalation to buyer: packaging, handling, shipping, duties, taxes, fees Transfer Pricing

* The price paid by another part of the organization when the product crosses national borders (or internal org. boundary) 1. Market based: “arms length price”(unrelated-diff. to find right benchmarks) 2. Non-market based: cost based/negotiated (related to tax liabilities in business) TP Issues

* Subsidiary / JV objective: profits & where? Tax...
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