INTERNATIONAL MARKETING 6e Chapter 11 Export Pricing Strategies Copyright 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777
Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777. INTERNATIONAL MARKETING 6e Export Pricing Strategies Chapter 11
Price Pricing is the only revenue generating element of the marketing mix Pricing is a means of attracting and communicating an offer to a potential buyer Pricing is a competitive tool Pricing can be used to position the product or service in the marketplace Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 11-2 Price Pricing is the only revenue generating element of the marketing mix. Pricing is a means of attracting and communicating an offer to a potential buyer. Pricing is a competitive tool. Pricing can be used to position the product or service in the marketplace
Pricing Challenges /strategies Skimming Using high-priced unique products to achieve the highest possible contribution in a short initial time period, then gradually lowering the price as the market Market Pricing Following competitive pricing in the target market, adjusting production and marketing mix to competitive conditions Penetration Pricing Offering low pricing to generate volume sales which hopefully will compensate for low margins Copyright 2001 by Harcourt, Inc. All rights reserved 11-3
Copyright © 2001 by Harcourt, Inc. All rights reserved. 11-3 Pricing Challenges/Strategies Skimming • Using high-priced unique products to achieve the highest possible contribution in a short initial time period, then gradually lowering the price as the market. Market Pricing • Following competitive pricing in the target market; adjusting production and marketing mix to competitive conditions. Penetration Pricing • Offering low pricing to generate volume sales which hopefully will compensate for low margins
Ae Setting of Export prices Factors affecting Stages in Setting customer purchasing of Prices decisions Stage 1 Target Market Analysis ability to pay price-quality relationship Stage 2 Market Mix Composition reaction to marketing mix Stage 3 market support Pricing Policy Selection Stage 4 Pricing Policy Determination Stage 5 Selecting the Specific Price Source: Reprinted by permission of Harvard Business Revew. An excerpt from Alfred R. Oxenfeldt, "Multistage Approach to Pricing Copyright 2001 by Harcourt, Inc. All rights reserved Harvard Business Review 38 (July-August 1960): 126 CopyrightC.11-4 by the President and Fellows of Harvard College; all rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 11-4 The Setting of Export Prices Factors affecting customer purchasing decisions • ability to pay • price-quality relationship • reaction to marketing mix • market support Stage 5 Selecting the Specific Price Stage 4 Pricing Policy Determination Stage 3 Pricing Policy Selection Stage 2 Market Mix Composition Stage 1 Target Market Analysis Stages in Setting of Prices Source: Reprinted by permission of Harvard Business Review. An excerpt from Alfred R. Oxenfeldt, “Multistage Approach to Pricing,” Harvard Business Review 38 (July-August 1960): 126. Copyright © by the President and Fellows of Harvard College; all rights reserved
Export Pricing Strategy n Cost-oriented pricing Standard worldwide price- regardless of buyer's location in the market(s) Dual pricing differentiates between domestic and export prices Cost-plus method allocates domestic and foreign costs to the product Marginal cost method considers direct costs of producing and selling exports as floor(lowest) price Market-differentiated pricing based on the dynamics of the marketplace changes in competition, exchange rates, etc Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 11-5 Export Pricing Strategy Cost-oriented pricing • Standard worldwide price- regardless of buyer’s location in the market(s) • Dual pricing differentiates between domestic and export prices – Cost-plus method allocates domestic and foreign costs to the product. – Marginal cost method considers direct costs of producing and selling exports as floor (lowest) price. Market-differentiated pricing • based on the dynamics of the marketplace – changes in competition, exchange rates, etc