Typically price elasticitys are greater in countries with lower income levels

Typically price elasticitys are greater in countries

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Typically, price elasticity’s are greater in countries with lower income levels and larger numbers of competitorsoStrategic Pricing Contains 3 aspects1.Predatory Pricing :involves using the profit gained in one market to support aggressive pricing designed to drive competitors out in another marketAfter the competitors have lefts, the firm willraise prices2. Multi-point Pricing :refers to the fact that a firm’s pricing strategy in one market may have an impact on a rival’s pricing strategy in another marketAggressive pricing in one market may elicit a competitive response from a rival in another critical marketFor managers, it is important to centrally monitor pricing decisions around the worldAggressive pricing in one market may elicit a response from rivals in another market3.Experience Curve PricingFirms that are further along the experience curve have a cost advantage relative to firms further up the curveFirms pursuing an experience curve pricing strategy price low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initiallyThe firm believes that several years in the future, when it has moved down the experience curve, it will be making substantial profits and have a cost advantage over its less aggressive competitorsoRegulatory Influences on Prices
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The use of either price discrimination or strategic pricing may be limited by national or international regulationsA firm’s ability set its own prices may be limited by1.Antidumping RegulationsDumping occurs whenever a firm sells a product for a price that is less than the cost of producing itAntidumping rules set a floor under export prices and limit a firm’s ability to pursue strategic pricing2. Competition PolicyMost industrialized nations have regulations designed to promote competition and restrict monopoly practicesThe regulations can be used to limit the prices that a firm can charge°Configuring the Marketing MixStandardization versus customization is not an all or nothing conceptoMost firms standardize some things and customize othersoFirms should consider the costs and benefits of standardizing and customizing each element of the marketing mix °New Product MixoProduct life cycle are often very short because of technological innovation oNew innovations can make existing products obsoleteAt the same time, open the door to a host of new opportunities oFirms today need to make product innovation a priority oThis requires close links between R&D, Marketing, and manufacturing
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The Location of R&DoNew product ideas come from the interactions of scientific research, demand conditions, and competitive conditionsoThe rate of new product development is greater in countries where:more money is spent on basic and applied research and developmentDemand is strongConsumers are affluent
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