Pricing
A new bubble tea shop opens in a mall where most other shops sell drinks for ₹180. To attract customers, the new shop sets its price at ₹170, advertising it as “better taste for less.”
Within a month, several nearby shops reduce their prices slightly to avoid losing customers.
What type of pricing strategy is being used?
Competetive pricing
Define market share
The percentage of one firm’s share of the total sales in a market.
What is sales forecasting?
The quantitative method predicting what a business’s future sales will be
Define international marketing
The process of getting the right product to the right customer at the right time, when the right place, is in another country - related to the sale of goods and services of one country in another
An international consulting firm notices differences between its offices. In one office, employees prefer to work independently, highlight their personal achievements in meetings, and expect individual bonuses based on their own performance. In another office, employees prefer group projects, avoid standing out, and believe rewards should be shared equally among the whole team.
Individualism vs Collectivism
Define dynamic pricing
When a business charges different prices based on demand. When demand is higher, prices go up, and vice versa. No fixed prices
Define market leadership
When a business has the largest market share in a given market
What are the three types of sales forecasting?
Seasonal
Cyclical
Random
List two advantages of entering international markets
Larger group of customers
Possible economies of scale
Lower operating costs than home markets
Spread the risk over different markets
forming new business relationships
Improved brand image
Benefiting from government incentives
Benefiting from different laws and regulations
A German manufacturing company expands into a new country. Local employees request detailed job descriptions, clear safety protocols, and structured daily schedules. They feel stressed when managers introduce sudden changes or unclear instructions, and productivity drops when expectations are not clearly defined.
Uncertainty avoidance
Define contribution pricing
When a business sets its prices above the variable costs per unit, so that each item contributes to paying off the fixed costs
What is one advantage of market leadership?
ADVANTAGE:
Able to advertise that you have “the most popular product in the market”
Market leaders can negotiate and bargain with suppliers and banks
Recruitment of high class employees
List two benefits of sales forecasting
Operations: can help with production schedule, capacity needs to expand
HR: increase staff, make redundancies, train workers for new areas
Marketing: new marketing campaigns, reductions in prices to increase slowing sales, introduction of new products
Finance: monitor cash flow, invest or wait on new projects, find sources of finance
List two disadvantages of entering international markets
Social and cultural differences
Technological challenges
Infrastructure issues
Economic disparity
Legal regulations
Political issues
A Japanese car company invests heavily in employee training programs that may not show profit for several years. The company also focuses on building long-term relationships with suppliers rather than switching to cheaper options for short-term gains.
Long-term vs short-term orientation
What is price elasticity of demand? And what do PED=0-1, PED=1, and PED=+1 mean?
Measures how the demand changes when the price changes
PED = 0-1: Considered inelastic. Means that a large change in price does not change demand significantly. These products are a necessity for consumers. No good substitutes.
PED = 1
Considered unit elastic. Change in price=change in demand
PED = +1
Considered elastic. A small change in price will result in a large change in quantity demanded. Many substitutes and brand loyalty is low.
What is one disadvantage of market leadership?
DISADVANTAGE:
Being a market leader puts pressure on a business to perform at the highest standard
The media often scrutinize the market leaders and seek out mistakes
Market share does not necessarily mean increases in profitability or sales- expensive to maintain
List one drawback of sales forecasting
Sales forecasting is time consuming especially if you have to take variations into account. And it can change rapidly and needs to be redone.
Sales forecasting ignores external factors, which makes it less accurate. This could include new competition, change in customer preferences, legal issues, political instability, economic issues, etc.
New businesses cannot use it because they do not have enough sales data.
Interpretation of the data can be biased by the person reading it. One person can see it as an opportunity while someone else sees bad news.
List two methods of entering international markets
Internet: Businesses sell internationally to online customers through their webpage and use shipping services to get their products to their customers
Exporting: Businesses market their products abroad and sell them in established stores already in the country
Franchising: Businesses allow locals to buy the rights to set up in their home country.
Joint venture: Businesses come together for a new project in a new country usually where one business has experience and the other company offers some other benefit
Direct investment: Businesses open a physical location in another country either through stores or production facilities
A Swedish company designs its workplace to include flexible hours, generous parental leave, and emphasizes employee wellbeing. Managers praise cooperation and teamwork rather than aggressive competition, and employees are not encouraged to work excessive overtime just to outperform colleagues.
Masculinity vs femininity