Question

In: Economics

Well-developed explaination: Indentify all of the key elements of pricing in export markets explain in detail....

Well-developed explaination:

Indentify all of the key elements of pricing in export markets explain in detail.

Cost-Based Pricing, The Marginal Approach to Pricing, Skimming versus Penetration Pricing, Demand-Based Pricing and Competitive Pricing.

Solutions

Expert Solution

Cost-Based Pricing: It involves calculating the cost of the product and then adding a percentage mark -up to determine price.A firm calculates the cost of producing the product and adds on a percentage to that price to gve the selling price. Cost-based pricing is a method used by companies to maximise their profits.

Price Skimming versus Penetration pricing: Price skimming is a price strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination. It allows the firm to recover its sunk cost quickly before competition steps in and lowers the markt price. Objective of price skimming is to capture the consumer surplus.

Penetration pricing: It is the pricing technique of setting a relativey low initial entry price, often lower than the market price, to attract new customers. The strategy works on the expectation that customers will switch to the new brand becaus of the lower price. Pentration pricing is most commonly associated with a marketing objective of increasing market share or sales volume.

Demand Based pricing: It uses consumer demand to set a price of a good or service. Methods of demand based pricing can include price skimming, price discrimination and yield management, penetration pricing, price lining, value based pricing.

Competitive pricing: It occurs when a company sets a price for its good based on what competitors are selling a similar product for.If competitors are pricing their products at a lower price, then it's up to the company to either price their goods at a higher or lower price, all dependng on what they want to achieve.


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