CPM Global Pricing & Cross-Border Strategy Flashcards

When entering a new international market with a low introductory price to build share, the firm is using:

Answer: Market penetration pricing

Penetration pricing sacrifices early margin to gain market share quickly, relying on scale and switching costs to restore profitability over time.

Local pricing adaptation requires firms to consider which factor that is unique to international markets?

Answer: Country-specific price elasticity, purchasing power, and competitive intensity

Each market has a distinct demand curve shaped by local incomes, competition, and consumer culture, requiring independent elasticity analysis.

A 'geocentric' global pricing approach attempts to:

Answer: Balance global pricing consistency with local market adaptation by coordinating across subsidiaries

Geocentric pricing seeks an optimized balance — not uniform (ethnocentric) nor fully local (polycentric) — using global frameworks with local input.

The primary goal of anti-dumping regulations from the perspective of the importing country is to:

Answer: Protect domestic industries from unfairly priced foreign competition

Anti-dumping duties offset below-cost foreign pricing that would otherwise destroy domestic producers unable to compete with artificially low import prices.

Currency risk in international pricing can be partially mitigated by:

Answer: Invoicing in the seller's home currency or using currency hedging instruments

Invoicing in a stable home currency or using forwards/options transfers or hedges currency risk, protecting the seller's realized margin.

Price standardization across global markets is most feasible when:

Answer: Product value is universal, switching costs are high, and gray market risk is low

Standardized global pricing works best when the product's value is equally recognized worldwide and when arbitrage barriers (like digital delivery or high transport cost) prevent gray markets.