MAJOR 7

“PRICING STRATEGY”

Larra Mae B. Biron BSBA MM – III Pre-Finals

Questions for Discussion:

1. Propose scenarios in which export prices are higher/lower than domestic prices.
- There are four scenarios in which export prices are higher/lower than domestic prices
which written in the module. These are namely the following scenarios:
 First case: adding only the Cost, Insurance, Freight and Tariff charges.
 Second case: adding foreign importer and lengthens the foreign part of the
distribution channel.
 Third case: adding VAT (value-added tax)
 Fourth case: simulates a situation typically found in less-developed countries where
distribution channels are longer.

2. What are the implications of price escalation?

- The implications of price escalation is when both the clear-cut and costs results of an
export prices exceed the domestic prices.

3. Discuss the use of currency of quotation as a competitive tool.

- Currency of quotation can be a competitive tool especially in those countries where the
currency rate is high. Although it is disadvantage for those exporter in other country which has a
low currency rate because they will find it difficult to export their product outside or to other
country. Also, currency of quotation or currency rate/stability can be a competitive tool because
organization or the exporter of a product can set their prices according to how low or high the
currency of the country where the product is being exported. The higher the currency the higher its
price can be.

4. Argue for the use of more inclusive shipping terms from the marketing point of view.
- Inclusive shipping terms are important to the marketing point of view because those terms
are intended primarily to clearly communicate the tasks, costs, and risks associated with the
transportation and delivery of goods. Inclusive shipping terms is like an agreement of terms
between the one who will cargo or deliver the product and the marketer or business who owned
the product. Without these terms it could result in delivery and payment problems, and
unanticipated costs and disputes. It might also mean that customs declarations are incorrect, which
can have some serious legal ramifications.

5. Suggest different importer reactions to a price offer and how you, as an exporter, could
respond to them.
- During the price negotiations, there are different importer reactions especially to the price
offer. But as an exporter, I have a main objective to meet the importers requirements without
jeopardizing its goals. With proper negotiation with the importer in its reaction to my products
price offer we can eventually precede I the same settled price. As an exporter, I have to make the
importer be in a favourable reaction to a price offer.

6. Who is harmed and who is helped by dumping?

- The local marketers or businesses may be harmed because of low income. In the part of
local marketers, they may experience low income because consumers are most likely to patronage
those low cost products. For instance, we Filipinos are most likely want imported products as gifts
than local products. Dumping helps the exporters create a huge income because of the consumers’
patronage of its product. Although the products are at low prices, when there is a huge demand of
an item or product, the exporters can most likely balance and overcome the losses.