lesson 11: export pricing and the significance of costing

Question 1

Setting the price of a product is one of the critical decisions that you have to make in the export arena

Answer 1

true

Question 2

• from the businessperson’s point of view is the monetary figure for which he/she sells his/her product to his/her customers
• It provides for the recovery of costs of the elements of the marketing mix and It generates revenue for the firm
• from the customers is what he/she is willing to pay and not what the businessperson is willing to change

Answer 2

PRICE

Question 3

BASIC CONCEPT OF PRICE

Answer 3

1. profit maximization for the firm
2. satisfaction for the customers

Question 4

controllable factors affecting price

Answer 4

1. cost
2. volume
3. company objectives
4. profit margins

Question 5

uncontrollable factors affecting price

Answer 5

1. market demand
2. competition
3. others

Question 6

• Most companies make _____ the dominant factor
• Any management wants to charge a price that will, at least, cover the total cost of manufacturing the product

Answer 6

cost

Question 7

refers not just to production cost but also to selling and distribution costs, as well as marketing support cost earmarked for sales promotion, advertising, etc.

Answer 7

cost

Question 8

Refers to the customer’s reaction to your product and price
- It is an important factor to consider because it will help you set the ceiling or the maximum price of your product

Answer 8

demand

Question 9

The strength and the behavior of _______ particularly the price and quality offered by competitors, are key factors that must be taken into account when setting the export price

Answer 9

competition

Question 10

Pertains to how your product will reach the target consumer

Answer 10

channel of distribution

Question 11

These are the goods you want to achieve in pricing

Answer 11

company objectives

Question 12

according to the _______, two main pricing policies are open to a firm. These are _______

Answer 12

International Trade Center’s Handbook on Pricing and quoting (2002) / cost-oriented pricing and market-oriented pricing.

Question 13

• this is a simple approach to pricing
• To a given cost, you simply add a percentage in absolute margin or rate of profit to determine the selling price

Answer 13

cost-oriented pricing

Question 14

It treats the export price of the product in the context of the market and the demand for the item

Answer 14

market-oriented pricing

Question 15

Is the simplest pricing method using a base cost figure per unit to which a mark-up is added to cover unassigned cost and to provide a profit margin

Answer 15

COST-PLUS PRICING

Question 16

is reached when the income line (sales) crosses the total cost line, so that income and total costs are equal and neither a profit nor a loss is made, and thus, the enterprise breaks even

Answer 16

• Breakeven point

Question 17

A person/entity who/which performs portside cargo handling operations,

Answer 17

arrastre

Question 18

is the amount assessed against the cargo of a vessel engaged in the foreign trade, based on the quantity, weight or measure received and/or discharged by such vessel. The owner, consignee, or agent of either, of the merchandise is the person liable for such charge.

Answer 18

Wharfage charge