International Pricing
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 &
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 &