International Pricing
Chapter 18
Pricing Policy
• Pricing Objectives
• Parallel Imports
– How does it affect a company?
– Exclusive distribution
– How to prevent it
Approaches to International Pricing
• Full-cost v. Variable-cost Pricing
• Price skimming v. Penetration Pricing
• Market still sets price!!!
– Effects of growth and wealth
Price Escalation
• What is it?
• What are its effects?
• What causes it?
– Costs of exporting
– Taxes, tariffs, and
administrative costs
– Inflation
– Deflation
– Exchange rate fluctuations
– Carrying currency values
– Middleman &
Transportation costs
Lessening Price Escalation
• Lower COGS
• Lowering Tariffs
• Lowering Distribution Costs
• Free Trade Zones
• Dumping
– What is it?
– Countervailing duty
Countertrade
• Pepsi example
• Types of Countertrade
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–
–
–
Barter
Comprehensive deals
Counterpurchase
Product Buy-Back Agreement
• Problems
• Internet
• Proactive Countertrade Strategy
Transfer Pricing Strategies
• Definition
• Branch shows no profit
• Advanced Pricing Agreement
Price Quotations
• Should list:
– Quality
– Quantity
– Transportation
– Responsibility
Administered Pricing
• How destructive is competition?
• Cartels
– OPEC
– DeBeers
• Government-induced Pricing