Reference no: EM133154548

Pricing Strategy

Competition is serious business and sometimes fierce. The stakes are high. Unless the firm has a monopoly, pricing is one area that may be intensely competitive, and not all competition is fair or legal.

When considering pricing strategy, the international business manager must be aware of the strategies of other firms when setting the firm's own strategy. Pricing is an important part of the marketing mix. Firms must look at charging different prices in different markets, pricing as a competitive weapon, and the regulatory factors including government control and antidumping regulations. As managers set prices under the strategy, they must be aware of many different dynamics. All will affect the design and implementation of pricing strategy.

Select the description and then enter the letter in the appropriate column. Is it a consideration of price discrimination, strategic pricing, or regulatory influence? (Not all cells will be filled.)

1. Multipoint Pricing - One of your competitors has aggressively entered your home market as a reaction to changes you made in the market where both of you were competing head-to-head.
2. Predatory Pricing - One of your competitors has driven the price very low to capture your market share with the objective of driving you out of the market.
3. Price Elasticity of Demand - The elasticity of demand in a given country is determined by a number of factors, of which income level and competitive conditions are the two most important.
4. Antidumping Regulations - One your competitors has asked the government to investigate your pricing, which is supposedly below fair market value.
5. Experience Curve Pricing - One of your competitors is lowering prices to capture market share in many places to increase the units sold. Initial sales are at a loss with the expectation of recovering later.
6. Competition Policy - Governments in developed countries often restrict monopolies and often promote competition.
7. National Markets Separate - The firm will find it easier to charge different prices in different markets if those markets can be kept entirely separate.

Exercise 5: Enter your answer in the cell below.

Discuss the differences between the physical product and the total product, with examples.