0. International Marketing: Chapter 18 Key Concepts
Approaches to international pricing
Four factors that affect international pricing policy
Parallel imports or gray markets
Sources of price escalation
Incentives for price escalation
Strategies for lessening price escalation
Foreign trade zones
Leasing in international markets
Four types of countertrade
International transfer pricing

1. Full Cost vs. Variable Cost
Products made for foreign markets should be priced to cover the full cost of production and marketing
Variable Cost
Products made for foreign markets should only be priced the additional (variable) cost of marketing it overseas—not the full cost

2. Skimming vs. Penetration Strategy
Skimming Strategy
Enter the market with a high price
Modern sector in emerging markets
Penetration Strategy
Enter the market with a low price
Traditional sector in emerging markets

3. Factors that Impact International Pricing Policy
Pricing objectives
Parallel imports or gray markets
Price escalation
Countertrade.

4. Factors That Impact International Pricing Policy: Parallel Imports
Authentic, legitimate
trademark items
that are
produced and purchased abroad
but
imported or diverted
into the United States
by bypassing
authorized
channels of distribution.

5. Incentives for Parallel Imports
Valuations in the value of currencies
Intentional restriction of product supply
Import quota and tariff restrictions
Large price differentials.

6. Factors That Impact International Pricing Policy: Price Escalation
Taxes and tariffs
Administrative costs
Inflation
Exchange rate fluctuations
Channel costs.

7. Strategies for Lessening Price Escalation
Lower cost of goods
Lower tariffs
Lower distribution costs
Foreign trade zones.

8. Leasing in International Markets
Creates opportunities for many foreign firms
Helps to sell equipment innovations
Helps guarantee better maintenance & service
Helps to sell other companies in that country
Lease revenue tends to be more stable over time.

9. Factors That Impact International Pricing Policy: Countertrade
Global sales transactions
that encompass
the export and import
of goods or services
in addition to
or in place of
financial settlements.

10. Types of Countertrade Barter Compensation Deals
Counterpurchase (Offset Trade)
Buy Back Agreement.

11. International Transfer Pricing
The process of pricing the goods
transferred from a company’s operations
or sales units in one country
to its units in another country.

12. Benefits of International Transfer Pricing
Lowers duty costs
Reduces income taxes
Facilitates dividend repatriation