Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

17. Pricing Objectives and
    Policies

Text © The McGraw−Hill

Companies, 2002

Pricing Objectives and Policies 497

Things turned out well for EControl even though the manager initially ignored

exchange rates. Note, however, that during the 1999–2001 period the exchange rate

for the British pound against the U.S. dollar increased.So in the 1999–2001 period

EControl’s situation might have been reversed!^16

Most price structures are built around a base price schedule or price list. Basic

list pricesare the prices final customers or users are normally asked to pay for prod-

ucts. In this book, unless noted otherwise, list price refers to basic list price.

In the next chapter, we discuss how firms set these list prices. For now, however,

we’ll consider variations from list price and why they are made.

Prices start with a

list price

Most Price Structures Are Built around List Prices

Discount Policies—Reductions from List Prices

Quantity discounts

encourage volume

buying

The idea behind Beenz.com was

to create a globally acceptable

currency—an alternative to

money from different countries—

that could be used by online

merchants to influence and

reward online consumer behavior.

However, there is an implied

exchange rate for beenz just as

there is with money.

Internet Exercise Xenon Laboratories has set up a website with a system

that uses current exchange rates to convert one country’s currency to

another. Go to the website (www.ausmall.com.au), scroll down and click on

International Currency Converter.How much is $100 U.S. worth now in Thai

bhats, British pounds, and German marks? How do those numbers compare

with April 2001 (see Exhibit 17-6)?

Internet

Discountsare reductions from list price given by a seller to buyers who either give

up some marketing function or provide the function themselves. Discounts can be

useful in marketing strategy planning. In the following discussion, think about what

function the buyers are giving up, or providing, when they get each of these discounts.

Quantity discountsare discounts offered to encourage customers to buy in larger

amounts. This lets a seller get more of a buyer’s business, or shifts some of the storing

function to the buyer, or reduces shipping and selling costs—or all of these. Such

discounts are of two kinds: cumulative and noncumulative.