1 chapter xxix export pricing export cost factors export pricing strategy export pricing methods...
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CHAPTER XXIX CHAPTER XXIX EXPORT PRICINGEXPORT PRICING
Export Cost Factors Export Cost Factors Export Pricing Strategy Export Pricing Strategy Export Pricing Methods of Export Pricing Methods of
Manufacturers Manufacturers Pro Forma InvoicePro Forma Invoice
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Cost FactorsExport Cost Factors
1) Product modification cost
2) Promotion cost
3) Packaging cost
4) After-sales service cost
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Pricing StrategyExport Pricing Strategy
(1) High pricing strategy Unique or new products Brand name products: Gucci bags High profit margin Limits market to well-to-do customers Attracts competition Higher price at the beginning and lower
price later
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Pricing StrategyExport Pricing Strategy
(2) Low pricing strategy To penetrate foreign markets To increase market share To dispose of excess or obsolete
inventory To discourage new competition Cannot be a long-term strategy
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Pricing StrategyExport Pricing Strategy
(3) Moderate pricing strategy Adequate profit margin Can meet competition and maintain market
shares Should be long-term strategy
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Pricing Methods of Export Pricing Methods of ManufacturerManufacturer
(1) Marginal Cost Pricing Method Assumes that indirect fixed costs are fully
recovered from domestic sales Cost for manufacturing additional unit for
export and exporting cost Includes direct cost of material and labor
only General & Administrative (G & A) expenses
not included Floor price
Copyright(c) 2012 Dr. Chase C. Rhee
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Export Pricing Methods of Export Pricing Methods of ManufacturerManufacturer
(2) Cost-plus pricing method Adding exporting costs to domestic
production cost Include G & A expenses Too high to compete in international market U.S. manufacturers should convert cost-plus
pricing to marginal cost pricing method in determining an export price
Copyright(c) 2012 Dr. Chase C. Rhee
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Pro Forma InvoicePro Forma Invoice
When requested by an importer for an import license or an application for a letter of credit
Not an invoice but a quotation for an export product consisting of product name, quantity, unit price, and total price
Must have a validity, a period for quoted price to remain effective
Copyright(c) 2012 Dr. Chase C. Rhee