Podcast
Questions and Answers
Which of the following product categories are likely to be affected by grey markets?
Which of the following product categories are likely to be affected by grey markets?
What is the main challenge associated with international price discrimination?
What is the main challenge associated with international price discrimination?
What is a grey market?
What is a grey market?
Which of the following is NOT a strategy for combating grey markets?
Which of the following is NOT a strategy for combating grey markets?
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Which of the following is a legal measure that companies can use to combat grey markets?
Which of the following is a legal measure that companies can use to combat grey markets?
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What is one potential consequence of international price discrimination?
What is one potential consequence of international price discrimination?
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Why might it be challenging to determine the optimal price corridor for different countries?
Why might it be challenging to determine the optimal price corridor for different countries?
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Which factor is NOT typically considered when determining price elasticity in different countries?
Which factor is NOT typically considered when determining price elasticity in different countries?
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What is the primary focus of price differentiation in international pricing?
What is the primary focus of price differentiation in international pricing?
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Under which condition is price standardization preferred?
Under which condition is price standardization preferred?
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What might lead to large price differences in country markets when using price differentiation?
What might lead to large price differences in country markets when using price differentiation?
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What is a key implication of high arbitrage activities in international pricing?
What is a key implication of high arbitrage activities in international pricing?
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Which of the following is NOT a consequence of employing price differentiation?
Which of the following is NOT a consequence of employing price differentiation?
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What is the total cost after the customs fees are added?
What is the total cost after the customs fees are added?
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Which factor does NOT affect international pricing according to cost-based factors?
Which factor does NOT affect international pricing according to cost-based factors?
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What is the total price after adding inspection and accessories?
What is the total price after adding inspection and accessories?
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What amount is attributed to distributor fees in the itemized list?
What amount is attributed to distributor fees in the itemized list?
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What is the breakdown of costs before shipping is factored in?
What is the breakdown of costs before shipping is factored in?
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Which cost adjustment has the highest monetary value in the escalation list?
Which cost adjustment has the highest monetary value in the escalation list?
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Which of the following is included in the final sticker price?
Which of the following is included in the final sticker price?
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How much is the final sticker price after all adjustments are included?
How much is the final sticker price after all adjustments are included?
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What is one reason why Schauma Shampoo is cheaper in Tunisia than in Europe?
What is one reason why Schauma Shampoo is cheaper in Tunisia than in Europe?
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Which product's differentiation is affected by regional power systems?
Which product's differentiation is affected by regional power systems?
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What adaptation is made to address local food preferences in product differentiation?
What adaptation is made to address local food preferences in product differentiation?
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Why might Hewlett-Packard printers be considered regionally differentiated?
Why might Hewlett-Packard printers be considered regionally differentiated?
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What is an example of a technical barrier in product differentiation?
What is an example of a technical barrier in product differentiation?
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Which of the following products was noted to be cheaper in the U.S. compared to Europe?
Which of the following products was noted to be cheaper in the U.S. compared to Europe?
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What is NOT a common factor in international product differentiation as illustrated?
What is NOT a common factor in international product differentiation as illustrated?
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Which aspect of product differentiation involves overcoming language barriers?
Which aspect of product differentiation involves overcoming language barriers?
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What is the purpose of price adjustment in international markets?
What is the purpose of price adjustment in international markets?
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What does the profit equation P = p * q - c represent?
What does the profit equation P = p * q - c represent?
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In the equation for profit, what does 'c' represent?
In the equation for profit, what does 'c' represent?
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What is the result when p = 5 in the given equations?
What is the result when p = 5 in the given equations?
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What is indicated by the elasticity of demand in international pricing?
What is indicated by the elasticity of demand in international pricing?
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What does the term 'optimal inter-country price' refer to?
What does the term 'optimal inter-country price' refer to?
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Which stage is NOT part of the international price discrimination process?
Which stage is NOT part of the international price discrimination process?
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What happens to the profit if the cost of production 'c' increases?
What happens to the profit if the cost of production 'c' increases?
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What is likely the main advantage of price differentiation in this scenario?
What is likely the main advantage of price differentiation in this scenario?
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What is the optimal uniform price identified in the example provided?
What is the optimal uniform price identified in the example provided?
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What is the total profit when price differentiation is applied?
What is the total profit when price differentiation is applied?
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How does consumer surplus behave for Consumer A in this scenario?
How does consumer surplus behave for Consumer A in this scenario?
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What role do the variable costs play in the analysis of price discrimination here?
What role do the variable costs play in the analysis of price discrimination here?
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What situation leads to Consumer B being indifferent between purchase and no purchase?
What situation leads to Consumer B being indifferent between purchase and no purchase?
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Which statement best describes the effect of optimal price differentiation on total profit?
Which statement best describes the effect of optimal price differentiation on total profit?
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What consumer behavior does price differentiation primarily seek to exploit?
What consumer behavior does price differentiation primarily seek to exploit?
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Study Notes
International Marketing - Pricing Decisions
- Agenda topics for the presentation include introduction to international marketing, market selection/entry, cultural role, product/branding decisions, international pricing, international distribution, international communication/advertising.
Entering New Markets - Pricing Approaches
- Penetration pricing: A low price to quickly enter a market and saturate it before competitors can copy.
- Skimming: A high price at the product introduction phase, often decreasing over time.
Agenda, Pricing Decisions
- 5.1 Price-Value Positions: Understanding the relationship between price and customer value in different market segments.
- 5.2 Price Determination: Methods for establishing pricing strategies.
- 5.3 International Price Discrimination: Differences in pricing based on customer segments and regions.
- 5.4 Price Monitoring: Tracking pricing changes, market responses, and competitor actions to adapt pricing strategies.
The International Price Management Process
- This consists of four sequential processes: Strategy Development, Analysis, Price Decision, and Implementation.
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- Strategy Development: Defining the desired price objectives and strategies.
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- Analysis: Evaluating current market situations and competition.
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- Price Decision: Determining the optimal pricing strategy and structure.
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- Implementation: Putting the chosen pricing strategy into practice.
Four Price Positioning Strategies (Price-Value)
- A visual representation showing four price positioning strategies based on relative value and quality, including:
- High Relative Quality/High Relative Price (Premium Price): Examples include luxury products and high-tech items.
- Middle Relative Quality/Middle Relative Price: Products of average quality and price fall into this category.
- Low Relative Quality/Low Relative Price (Discounting): Products and services aimed at price-conscious buyers.
- Low Relative Quality/High Relative Price: products with poor quality yet high price.
Example Honda in Vietnam
- Honda, once the dominant motorbike brand in Vietnam (90% market share in the 1990s) adopted a lower pricing strategy for their motorbike models to counter the rise of competitors. They subsequently launched new models in line with prices in 2001 which succeeded in driving competitors away from the market by providing similar quality at a lower price point.
International Transportation Costs and Incoterms
- International Commercial Terms (Incoterms) are standard frameworks for handling transport costs and risks in international trade, with clearly defined liabilities and costs for each stakeholder. Specific terms mentioned include EXW, FCA, FOB, CFR, and CIF to define who bears the risk and cost at different stages of transport.
Incoterms Example
- The presentation provides an example of an American Jeep Grand Cherokee imported to Japan with cost breakdown from the initial factory price to the final price, including components like exchange rate adjustments, shipping, customs, and distribution fees.
Cost-Based Factors for Prices
- International price differences can be caused by varying tax rates, transportation costs, fluctuations in currency exchange rates, and trade barriers.
Price Discrimination - Idea
- A visual representation of the concept of price discrimination, contrasting uniform pricing with price differentiation, highlighting the potential for additional profit from customer segmentation.
Price Discrimination Example
- An example using a fictional scenario with two consumers to illustrate how optimal pricing based on willingness to pay can maximize profit compared to a uniform pricing strategy. The example involves calculating an optimal uniform price and differentiated prices.
Negative Impacts of Price Discrimination
- Adidas faced backlash in New Zealand for charging significantly higher prices on their merchandise compared to other countries. This led to customer protests, boycotting, and negative publicity, illustrating the negative consequences of inconsistent and perceived unfair pricing in different regions.
Different Price Tags (Multi Currency)
- Retailers face challenges with price tags, especially when displaying product prices in multiple currencies across different countries. Pricing strategies need to account for regional consumer perception of cost. There are issues with unnecessary or misleading data.
International Price Discrimination Process: Stages
- Stage 1: Identify whether price differences exist between countries.
- Stage 2: Determine whether these price differences can be sustained.
- Stage 3: Estimate the price elasticity in different countries.
- Stage 4: Establish the optimal pricing strategy on an international level.
- Stage 5: Determine a suitable price corridor range across countries.
- Specific stages of the process and strategic considerations for navigating price discrepancies in various regions and maintaining a price corridor.
2. Stage - International Product Differentiation (1/2)
- Product differentiation (like branding, additional services, quality/performance) in international markets to cater to varying consumer demands in different countries. Examples mentioned include package sizes, flavors, or additional services.
- A brief overview of approaches to successfully differentiate products regionally.
2. Stage - International Product Differentiation (2/2)
- Further examples of product differentiation in international markets such as package sizes, flavor preferences, product ingredients and technical standards.
Product Differentiation - Examples
- This section illustrates how product differentiation is used in international markets. Examples include the variation in the functions of technological products such as iMac, Hewlett-Packard printers, and Nintendo’s Gameboy Advanced (depending on whether they are used for personal or regional/international use).
Price Monitoring, International Conditions
- Pricing changes need to be monitored (in international contexts), considering factors such as regional market size, political stability, technological changes, and economic downturns to forecast product performance and optimize pricing decisions.
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Description
Explore the critical aspects of pricing decisions in international marketing. This quiz covers strategies like penetration pricing and skimming, along with understanding price-value positions, price determination methods, and international price discrimination. Test your knowledge of how pricing affects market entry and consumer behavior across various cultures.
