Suggested Answers to Discussion Questions
1. What are the three basic factors affecting price in any market? What
considerations enter into the pricing decision?
One factor is the price floor, which can be linked to product cost or some other
consideration. For example, in the fall of 1996, Florida tomato growers concerned
about cheap tomatoes from Mexico persuaded the U.S. Government to impose a price
floor of 21 cents per pound on Mexican tomatoes. A second basic factor is the price
ceiling, an upper limit created when comparable products are available. As industries
Whether or not a product’s quality is reflected in the price;
How to price to different segments;
2. Identify some of the environmental constraints on global pricing decisions.
Students should recall the discussion in an earlier chapter concerning currency
fluctuations as an important consideration in global marketing. Inflation is another
factor in the economic environment that may force a company to make frequent price
3. What is dumping? Is it an important trade issue or a red herring?
Dumping is the practice of selling goods in foreign markets at prices that are lower
than the cost of production or lower than the home-country price. During the GATT
4. What is a transfer price? What is the difference, if any, between a transfer price
and a “regular” price? What are three methods for determining transfer prices?
A transfer price is the price one unit of a company charges to another company unit
5. What are three alternative approaches to global pricing? Which one would you
recommend to a company that has global market aspirations?
An ethnocentric pricing policy calls for the price of a particular product to be the
same in every part of the world. When management uses this approach it foregoes
6. If you were responsible for marketing CAT scanners worldwide and your
sourcing country (location of manufacture) was experiencing a strong and
appreciating currency against almost all other currencies, what options are
available for adjusting prices to take into account the strong currency situation?
The real issue here is not just options for adjusting prices, but options that will allow
manufacturing in the strong currency country, focusing on cost -cutting efficiencies