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Global_Pricing

Global_Pricing - Marketing Strategy Global Pricing Outline...

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Marketing Strategy -- Global Pricing
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Outline Global Pricing Basics Global Pricing Issues Global Pricing Strategies
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Same Set of Factors Market/industry (external) Demand Competition Firm (internal) Costs Experience Curve May have different implications in Global Pricing Basic Factors in Pricing
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Market Factors Demand The strength of demand tends to vary with the PLC stage, the growth stage typically showing strongest demand. PLC can be very different in different countries for the very same product
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Market Factors Competition Perfect competition: infinite many sellers sell identical products (e.g., commodity market, financial market) Monopolistic competition: many sellers sell differentiated products (Most Product markets)
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Implications on Pricing Perfect competition Price takers Monopolistic competition Price setters The premium price differential refers to the degree to which the firm might be granted a higher price by the market because of the particular strengths of its product (e.g, Competitive Value Pricing : Setting a price premium on the basis of direct comparisons with competition) Because of competition, prices in foreign market are sometimes lower than at home, contrary to the price escalation effect.
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Firm Factors Cost Factors production, tariff, ... Implication: The standard pricing procedure for exporting consists of A cost-plus formula Price escalation : The added costs in exporting mean that export prices tend to escalate over the domestic prices (we discussed this issue in Module III) Unfair competition
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UNIT COST P** BREAKEVEN TIME PROFIT MARGIN < 0 PROFIT MARGIN > 0 ACCUMULATED PRODUCTION = q Firm Factors The Experience Curve Effect The experience curve shows how unit costs go down as successively more units of a product are produced
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Outline Global Pricing Basics Global Pricing Issues/strategies Global Pricing Strategies
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