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1、1 International MarketingLecture 10Instructor Li ZhihongSept.2009 Business Institute, Jiang Han University2Chapter 10 Export Pricing 1. Teaching and learning Targets. After studying this chapter, you should be able to: (1) Propose scenarios in which export prices are higher/lower than domestic price
2、s. (2) Discuss the use of the currency of quotation as a competitive tool. (3) Suggest different importer reactions to a price offer and how you, as an exporter, could respond to them.3 2. The Setting of Export Prices The process to set the export price (1) Assessment of pricing environments: extern
3、al as market-related factors and industry-related factors; internal as marketing mix, company characteristics and management attitudes. (2) Pricing policy selection: objectives, competitive posture, decision control and flexibility. (3) Pricing strategy determination: standard worldwide price, diffe
4、rentiation. (4) Setting of specific price 4 3. Export Pricing Strategy (1) The standard worldwide price. It may be the same price regardless of the buyer or may be based on average unit costs of fixed, variable, and export-related costs. Uniform pricing is advisable when customers worldwide are awar
5、e of the prices charged, and when there is little chance of differentiating the product or the service to warrant price differences. (2)Dual pricing. Domestic and export prices are differentiated, and two approaches to pricing products for export are available: cost-driven and market-driven methods.
6、 6 (1) The cost of modifying the product for foreign markets; (2)Operational costs of the export operation: personnel, market research, additional shipping and insurance costs, communications costs with foreign customers, and overseas promotional costs; (3) Costs incurred in entering the foreign mar
7、kets; tariffs and taxes; risks associated with a buyer in a different market; and risks from dealing in other than the exporters domestic currency, i.e., foreign exchange risk. 4. Export-Related Costs75. Strategies Overcoming the Price Escalation (1) Reorganize the channel of distribution; (2) Adapt
8、 the product; (3) Use new or more economical tariff or tax classifications;(4) Assemble or produce overseas 9 (3) The “C” terms: the seller has to contract for carriage but without assuming the risk of loss or damage to the goods or additional costs after the dispatch; (4) The “D” terms: the seller
9、has to bear all costs and risks to bring the goods to the destination determined by the buyer. 107. Terms of Payment (1) Factors to be considered in negotiating terms of payment by exporter - the amount of payment and the need for protection; - terms offered by competitors; - practices in the indust
10、ry; - capacity for financing international transactions; - relative strength of the parties involved. (2) Methods of payment for exports: cash in advance, confirmed letter of credit, letter of credit, documents against payment, documents against acceptance, open account, consignment.117. Discussion (1) Propose scenarios in which export prices are higher/lower than domestic prices. (2) Discuss the us
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