Chapter 18 - Pricing for international markets. What you should learn from chapter 18: Components of pricing as competitive tools in international marketing, how to control pricing in parallel import or gray markets, price escalation and how to minimize its effect, countertrading and its place in international marketing practices, the mechanics of price quotations, the mechanics of getting paid. | International Marketing 15th edition Philip R. Cateora, Mary C. Gilly, and John L. Graham Pricing Policy Parallel Imports Parallel imports Develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer’s regular distribution system Occur whenever price differences are greater than cost of transportation between two markets Major problem for pharmaceutical companies Exclusive distribution . Roy Philip Variable-cost pricing Firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets Full-cost pricing Companies insist that no unit of a similar product is different from any other unit in terms of cost Each unit must bear full share of the total fixed and variable cost Full-Cost Versus Variable-Cost Pricing Roy Philip Skimming Versus Penetration Pricing Skimming Used by a company when the objective is to reach a segment of the market that is relatively price insensitive Market is willing to pay a premium price for the value received Penetration pricing policy Used to stimulate market and sales growth by deliberately offering products at low prices Roy Philip Sample Causes and Effects of Price Escalation Roy Philip Exhibit Approaches to Lessening Price Escalation (1 of 2) Lowering cost of goods Manufacturing in a third country Eliminating costly functional features Lowering overall product quality Lowering tariffs Reclassifying products into a different, and lower customs classification Modify product to qualify for a lower tariff rate within classification Requiring assembly or further processing Repackaging Roy Philip Approaches to Lessening Price Escalation (2 of 2) Lowering distribution costs Shorter channels Reducing or eliminating middlemen Using foreign trade zones to lessen price escalation Establish free trade zones (FTZs) or free ports Tax-free enclave not considered part of | International Marketing 15th edition Philip R. Cateora, Mary C. Gilly, and John L. Graham Pricing Policy Parallel Imports Parallel imports Develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer’s regular distribution system Occur whenever price differences are greater than cost of transportation between two markets Major problem for pharmaceutical companies Exclusive distribution . Roy Philip Variable-cost pricing Firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets Full-cost pricing Companies insist that no unit of a similar product is different from any other unit in terms of cost Each unit must bear full share of the total fixed and variable cost Full-Cost Versus Variable-Cost Pricing Roy Philip Skimming Versus Penetration Pricing Skimming Used by a company when the objective is to reach a segment of the market
