FTM 482 Exam 3 Questions With
Correct Answers
International Pricing - ANSWER - setting and changing prices are key marketing
decisions
- Of all the tasks facing the international marketer, determining what price to
charge is one of the most difficult
- An offering's price must reflect the quality and value the consumer perceives in
the product
Usually more localized than product or advertising decisions
- Maximizing profits depends on:
i.) Price sensitivity of local customers
ii.) Prices of competing products and services
- Companies tend to more closely align pricing policies across countries similar
in customer characteristics, economic conditions, and stage of the product
lifestyle.
Skimming Pricing: - ANSWER setting the highest initial price that customers
really desiring the product are willing to pay
- May occur at the introduction stage of the product life cycle
- When a company is the only seller of a new or innovative product
- May be used to maximize profits until competition forces a lower price
Ex: Tommy Hilfiger and Rebook in India
penetration pricing - ANSWER setting a low initial price on a new product to
appeal immediately to the mass market
cost-plus pricing - ANSWER Per-unit product costs are the sum of all past or
current direct and indirect manufacturing and overhead costs + additional costs
& expense when goods cross national borders.
total cost depends on - ANSWER Destination
Mode of Transport
Tariffs
Various fees
Handling charges
Documentation costs
Export Price Escalation - ANSWER the increase in the final selling price of goods
traded across borders
, Flexible cost-plus pricing - ANSWER ensures that prices are competitive in the
contest of the particular market environment
Factors in Price Escalation - ANSWER - cost of exporting
- taxes, tariffs, and administration costs
- Inflation
- deflation
- middleman and transport costs
- exchange rate fluctuations
Cost of exporting - ANSWER shipping costs, insurances, packing, tariffs, longer
channels of distribution, larger middlemen margins, special taxes,
administrative costs, and exchange rate fluctuations
Taxes, Tariffs, and Administrative Costs - ANSWER These costs results in higher
prices, which are generally passed on to the buyer of the product
Inflation - ANSWER Inflation causes consumer prices to escalate and the
consumer is faced with rising prices that eventually exclude many consumers
from the market
Deflation - ANSWER results in ever decreasing prices, creating a positive result
for consumers, but both put pressure to lower costs on everyone in the supply
chain
Middleman and Transportation Costs - ANSWER longer channel length,
performance of marketing functions and higher margins may make it necessary
to increase prices
Exchange Rate Fluctuations and Varying Currency Values - ANSWER currency
values swing vis-a-vis other countries on a daily basis, which may make it
necessary to increase prices
Approaches to Lessening Price Escalation - ANSWER -Lowering Cost of Goods
-Lowering tariffs
-Lowering Distribution costs
-Using Foreign Trade Zones
taxes on imported goods - ANSWER - import duties (A way of protecting
countries against cheaper products)
- VAT or sales tax
- Excise Duty & Consumption Tax
- In some cases, additional tax is levied on imported goods (For instance,
agricultural levies on agricultural products or anti-dumping duty on industrial
products)
Correct Answers
International Pricing - ANSWER - setting and changing prices are key marketing
decisions
- Of all the tasks facing the international marketer, determining what price to
charge is one of the most difficult
- An offering's price must reflect the quality and value the consumer perceives in
the product
Usually more localized than product or advertising decisions
- Maximizing profits depends on:
i.) Price sensitivity of local customers
ii.) Prices of competing products and services
- Companies tend to more closely align pricing policies across countries similar
in customer characteristics, economic conditions, and stage of the product
lifestyle.
Skimming Pricing: - ANSWER setting the highest initial price that customers
really desiring the product are willing to pay
- May occur at the introduction stage of the product life cycle
- When a company is the only seller of a new or innovative product
- May be used to maximize profits until competition forces a lower price
Ex: Tommy Hilfiger and Rebook in India
penetration pricing - ANSWER setting a low initial price on a new product to
appeal immediately to the mass market
cost-plus pricing - ANSWER Per-unit product costs are the sum of all past or
current direct and indirect manufacturing and overhead costs + additional costs
& expense when goods cross national borders.
total cost depends on - ANSWER Destination
Mode of Transport
Tariffs
Various fees
Handling charges
Documentation costs
Export Price Escalation - ANSWER the increase in the final selling price of goods
traded across borders
, Flexible cost-plus pricing - ANSWER ensures that prices are competitive in the
contest of the particular market environment
Factors in Price Escalation - ANSWER - cost of exporting
- taxes, tariffs, and administration costs
- Inflation
- deflation
- middleman and transport costs
- exchange rate fluctuations
Cost of exporting - ANSWER shipping costs, insurances, packing, tariffs, longer
channels of distribution, larger middlemen margins, special taxes,
administrative costs, and exchange rate fluctuations
Taxes, Tariffs, and Administrative Costs - ANSWER These costs results in higher
prices, which are generally passed on to the buyer of the product
Inflation - ANSWER Inflation causes consumer prices to escalate and the
consumer is faced with rising prices that eventually exclude many consumers
from the market
Deflation - ANSWER results in ever decreasing prices, creating a positive result
for consumers, but both put pressure to lower costs on everyone in the supply
chain
Middleman and Transportation Costs - ANSWER longer channel length,
performance of marketing functions and higher margins may make it necessary
to increase prices
Exchange Rate Fluctuations and Varying Currency Values - ANSWER currency
values swing vis-a-vis other countries on a daily basis, which may make it
necessary to increase prices
Approaches to Lessening Price Escalation - ANSWER -Lowering Cost of Goods
-Lowering tariffs
-Lowering Distribution costs
-Using Foreign Trade Zones
taxes on imported goods - ANSWER - import duties (A way of protecting
countries against cheaper products)
- VAT or sales tax
- Excise Duty & Consumption Tax
- In some cases, additional tax is levied on imported goods (For instance,
agricultural levies on agricultural products or anti-dumping duty on industrial
products)
