Quiz 2 international marketing

Cost-plus pricing

the cost of producing goods plus standard markup

Full-cost pricing

no unit of a similar product is different in cost from others; each must bear share of fixed and variable costs

variable-cost pricing

only concerned with the incremental variable cost of producing goods to be sold in overseas markets

components of a variable-cost price

production costs, market costs, packaging costs, profit margin

components of a full-cost price

production costs, marketing costs, allocated other production costs, other overheads, profit margin

market-based method

affordable unit price- margin = target cost

value-based method

focuses on consumer’s perceived values of the product/servince rather than product costs

tiered pricing

pricing different levels of products/services; attract customer segment with different purchasing power

price skimming

charge the highest initial price customers will pay and lower it over time

penetration pricing

offering products a low prices for a new produc to enter a foreign market

what is the problem with penetration pricing

may be subject to anti-dumping regulations if below “normal value”

psychological pricing

left-digit effect, prices that appear lower than they are

decoy effect

phenomenon in which consumers show different preferences for existing choice alternatives when a decoy option is added to their choice set

implications of undervalued/weak currency

makes exports cheaper, more foreign demand, makes imports more expensive, more domestic demand

implications of overvalued/strong currency

makes exports more expensive, less foreign demand, makes imports cheaper, less domestic demand

export price escalation

pricing disparity in which goods are priced higher in a foreign market than in the home market; caused by exporting costs

inflation

causes higher cost of product and replacement, raised price of good

types of export price escalations

exchange rate fluctuation, varying currency values, inflation, tax/tariff/administrative costs, intermediary and transportation costs

arrangements for foreign commerical payments

cash in advance, letters of credit, bills of exchange, open accounts

cash in advance

importer pays an exporter for merchandise before it is shipped

letters of credit

export/import financing in which the importer’s bank issues a document stating that the bank will pay the exporter when the exporter fulfills terms

bills of exchange

a written order binding an importer to pay an exporter a specified sum of money at a specified time; seller assumes all risk

open accounts

goods are shipped and delivered before payment is due at a future date; used with customers with good credit

provenance paradox

a product’s country of origin establushes its authenticity

five steps for overcoming provenance paradox

stick to colonial history, build brand for long haul, flaunt country of origin, downplay country of origin, hide behind front country

nonmarket strategy

recognizes that businesses are social and political beings, not just economic agents

What does CPA stand for

Corporate poltiical activityW

What does CSR stand for

corporate social responsibility

(IA)³ framework

structured tool for managing a company’s nonmarket environment

(IA)³ framework components

issues, actors, interests, arenas, information, and assets

ABCS for corporate leaders

access, basic needs, crisis response, disability and veteran community, economic status

reccommendations for corporate leaders

create, prioritize, frame inclusivity, speak