Page 159 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes 8.6 Keywords

Cheaper Price for Original Equipment and Higher Price for Spare Parts: To quote lower prices
for the original equipment and charging higher prices for spares and replacement parts to be
exported later as and when required.
Differential Trade Margins Strategy: Variation in trade margins is adopted by the exporter as
the pricing strategy in foreign market.
Factors affecting Pricing decisions: Characteristics of the product, nature of its demand and
philosophy of its management and the market characteristics.
Follow the Leader Pricing Strategy: Comparing its product with that of the leader and fixing the
price of its product.

Marginal Cost Pricing: Determining the price based on the variable cost or direct cost.
Penetration pricing: Under this strategy, exporters offer a very low introductory price to speed
up their sales.

Skimming pricing: Under this pricing, a very high introductory price is fixed to skim the cream
of the demand at the very outset.
Standard Export Pricing Strategy: Exporter quotes the standard price or list price that is one
price for all.

8.7 Review Questions

1. Discuss the price factors and non-price factors.
2. Explain different types of cost based pricing.

3. What are the factors that affect the pricing strategy of an international firm? What different
pricing strategies can the firms adopt?
4. Are price distortions always bad? Justify your answer.

5. What is counter-trade and what are various types of counter-trade?
6. Explain the term counter-trade and counter purchase.
7. What is dumping? When does it become illegal? What can a seller do to circumvent
anti-dumping regulations?
8. What is transfer price? What are the methods for determining transfer prices?
9. What is the effect of term of delivery on the price to be quoted by an exporter? Explain by
giving an example.
Answers: Self Assessment

1. Demand and Supply force 2. Costs
3. Supply 4. Short-term
5. Inelastic 6. True
7. False 8. True

9. False 10. Goods received

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