Problem:
Deliverable Length: 4- paragraphs
Details: Mr. Romero wants to make sure that his investment in a foreign country will yield acceptable returns. He knows that the opportunity cost in the domestic market is high. His reasoning is that the U.S. market is still very attractive and the company's marketing efforts have not tapped emerging markets in the Midwest and Northeast. It is time to bring together some of the critical costs involved in selling the sauce in the foreign country. Considering one pound of sauce, research, estimate, and discuss the following:
-the average landing cost at the port of destination (Note: consider one pound of sauce in your calculations.)
-the average wholesale and retail markups for the channel members
-the typical trade promotions (e.g., discounts)
-the average retail price to the consumer in the foreign market
Reference and Citation needed, please.
COMMENTS: Host country - VENEZUELA -
It is important to understand that you are only giving estimates, not actual costs. So, for example, if you find the costs for similar packaged goods (e.g., coffee), you may use these as proxy estimates. The landed cost is the cost of transporting the product from origin--the warehouse of the exporting company-- to the port of destination in the host country. It involves the following costs: land freight, export tariffs (if any), maritime freight, insurance rates, merchandise handling charges, and port facilities charges. The trade markups vary from country to country and reflect the local cultural, economic and competitive conditions. The same is true for trade promotions and allowances. Finally, research the retail prices of competitive brands and estimate the average retail price for ¡Qué Rico! in the host country. Ideally, the estimated retail price will be higher than the estimated combination of the landed cost and trade markups. However, that's not always the case and companies must decide if they can afford to forgone profits and rely on non-pricing strategies to "penetrate" the market.