PRICING AND

CREDIT
STRATEGIES
IS 101 - Lesson 10
CONTENT
Pricing: A Creative Blend of Art Pricing Techniques for Service
01 and Science 05 Businesses

02 Pricing Strategies and Tactics 06 The Impact of Credit on Pricing

03 Three Powerful Pricing Forces

Pricing Techniques for
04 Retailers
 OBJECTIVES

01 02 03 04 05 06
Explain why Discuss the Describe Explain the Explain the Describe the
pricing is both relationships effective pricing pricing pricing impact of credit
an art and a among pricing, strategies for techniques used techniques used on pricing.
science. image, both new and by retailers. by service firms.
competition, and existing
value. products and
services.
PRICING: A CREATIVE BLEND OF ART AND SCIENCE

Pricing in business has been described as both an art and a science because it
requires both creative approaches based on facts and figures to understand
consumer behavior and profit margins, as well as a thorough understanding of market
dynamics, costs, and pricing objectives to develop an appropriate strategy.

Prices that are overly high tend to put off clients and hinder a small business'
revenue. Pricing products and services too low, which is common among first-time
entrepreneurs, deprives a company of its capacity to produce a profit, gives
customers the idea that the company's goods and services are of poor quality, and
undermines the business's viability in the long run.
PRICING: A CREATIVE BLEND OF ART AND SCIENCE

Entrepreneurs must analyze how the following aspects interact to provide indications
about the optimum price to charge when determining the most appropriate price for a
product or service:

The total cost associated with providing the product or service

Target customers’ characteristics, including their buying power and their
perceptions of the product or service
Customers’ sensitivity to price changes
Traditional and expected credit terms and discount policies
PRICING: A CREATIVE BLEND OF ART AND SCIENCE

Price is the monetary value of an item or service in economic

terms. It is a measure of what a customer has to give up in order to
receive a product or service. Price is important to shoppers for it is
a representation of worth. Customers frequently look to the price of
a product or service for indications regarding its quality/value.
PRICING: A CREATIVE BLEND OF ART AND SCIENCE

Understanding client attributes, purchasing behavior, product

benefits, and rival prices all contribute to a company's pricing
strategy. To understand their target clients and their sense of
value, entrepreneurs should perform market research and gather
customer feedback. The purpose is to set prices within an
acceptable range with a focus on projecting a desired image of
cheap, mid-range, or prestige pricing.
 PRICING STRATEGIES

Communicate with customers.

Let your customers know what’s happening

Rather than raise the price of the good or service, include a surcharge.
Price increases tend to be permanent, but if higher costs are the
result of a particular event a company can include a temporary
surcharge. If the pressure on its costs subsides, the company can
eliminate the surcharge.
 PRICING STRATEGIES

Offer products in smaller sizes or quantities

As food costs soared, many restaurants in t roduced “small plates,”
reduced portions that enabled them to keep their prices in check.

Focus on improving efficiency everywhere in the company

One way to cope with the effects of a rapid increase in costs is to
find ways to cut costs and to improve efficiency in other areas
 PRICING STRATEGIES

Emphasize the value your company provides to customers.

“If you provide great value to your customers, a little price
increase isn’t going to scare them away,”
 PRICING
TECHNIQUES FOR
BASIC
OBJECTIVES ESTABLISHED
STRATEGIES PRODUCTS AND
SERVICES

Mary Joy H. Belarma

PRICING always plays a critical role in a firm’s overall strategy;
pricing policies must be compatible with a company’s total
marketing plan
Price is too high = danger of failing because of low sales
volume.
Price is too low = sales revenue might not cover costs; more
dangerous.

Mary Joy H. Belarma

 Maintain
Get the
market share Earn a
product
as competition Profit
accepted
grows.

Mary Joy H. Belarma

 WHEN PRICING ANY NEW PRODUCT, AN
ENTREPRENEUR MUST SATISFY THREE OBJECTIVES:

1. Get the product accepted

Price must be acceptable to a company’s potential
customers.
Revolutionary products
can charge depends, in part, on the type of product
it introduces

Mary Joy H. Belarma

 Type of Products a Company Introduces
REVOLUTIONARY EVOLUTIONARY ME-TOO
PRODUCTS PRODUCTS PRODUCTS
new; they can making just to keep up
transform an enhancements to with competitors
industry products that are nothing new &
can charge prices already on the unique
that are close to market least amount of
the price ceiling do not have the pricing flexibility
they may have to ability to charge focusing on cost
educate customers premium prices control and
about the too low price can targeting the right
product’s benefits lead to a price war market segments

Mary Joy H. Belarma

 WHEN PRICING ANY NEW PRODUCT, AN
ENTREPRENEUR MUST SATISFY THREE OBJECTIVES:
2. Maintain market share 3. Earn a Profit
as competition grows. A small company must
Continuously reappraising establish a price for the
a product’s price in new product that is higher
conjunction with
Revolutionary special
products than its cost products
Revolutionary

advertising and promotion Pricing their products too

techniques helps the low is a common and often
company maintain market fatal mistake for new
share. businesses

Mary Joy H. Belarma

 Life Cycle
Penetration Skimming
Pricing

Mary Joy H. Belarma

PENETRATION
sets the price just above total unit cost to develop a
Revolutionary products
wedge in the market and quickly achieve a high volume
of sales

SKIMMING
sets a higher-than-normal price in an effort to quickly
Revolutionary products
recover the initial developmental and promotional costs
of the product

LIFE CYCLE PRICING

introduces a product at a high price; then, the company relies on
Revolutionary
technological advances, the learning products
curve effect, and economies of
scale to lower its cost and to reduce the product’s price faster than
its competitors can; Phases: Launch, Growth, Maturity, Declination
Mary Joy H. Belarma
 Odd-Pricing Leader Pricing Bundling

Price Lining Geographic P. SRP

Dynamic Pricing Discounts Follow-the-leader

Mary Joy H. Belarma
Odd-Pricing Price Lining Dynamic Pricing

sets prices in Each category set different prices

odd numbers (5, of merchandise on the same
7, 9) contains items products and
services for
believed that an that are similar
different
item selling for in appearance,
customers using
P1899 appears quality, cost, the information
to be much performance, or they have collected
cheaper than other features about their
P2000 customers

Mary Joy H. Belarma

 Geographic
Leader Pricing Discounts
Pricing
small retailer pricing decisions to move stale,
marks down the are greatly outdated,
customary price affected by the damaged, or slow-
of a popular costs of shipping moving
item in an merchandise to merchandise
attempt to customers across for seasonal
attract more a wide range of for special groups
customers geographic to close a
regions business

Mary Joy H. Belarma

 Suggested Follow-the-
Bundling
Retail Price leader
offers eliminates the a business
customers extra need to make matches the prices
value at a and services of the
a pricing
special price market leader; a
decision
rather than cut company will
into their follow the pricing
already thin of the largest
profit margins player in the
industry

Mary Joy H. Belarma

 IMAGE, COMPETITION, AND VALUE

Price Competition Focus on

Conveys and Prices Value
Image
PRICE CONVEYS IMAGE
A company’s pricing policy can be a powerful tool for establishing
a brand and for creating a desired image among its target
customers. Whether they are seeking an image of exclusivity or
one that reflects bargain basement deals, companies use price to
enhance their brands. Some companies emphasize low prices,
whereas others establish high prices to convey an image of
quality, exclusivity, and prestige, and all of which appeal to a
particular market segment.

Small companies underprice their products and services, believing

that low prices are the only way they can gain an advantage in the
marketplace.
PRICE CONVEYS IMAGE
These entrepreneurs forget that price is just one element of the
marketing mix and that for many customers it is not the most
important factor.

The secret to setting prices properly is understanding a

company’s target market, the customer groups at which it aims its
goods or services. Target market, business image, and price are
closely related.
COMPETITION AND PRICES
An important part of setting appropriate prices is tracking
competitors’ prices regularly; however, the prices that competitors
are charging is just one variable in the pricing mix. Companies
that successfully implement a differetiation strategy can charge
higher prices for their products and services.

Two factors are vital to determining the effects of competition on

a small firm’s pricing policies: the location of the competitors and
the nature of the competing goods.
COMPETITION AND PRICES
The nature of competitors’ goods also influences a samll company’s
pricing policies. Entrepreneurs must recognize those products that are
directed substitutes for those they sell and strive to keep prices in line
with them. Entrepreneurs should avoid head-to-head price competition
with other firms that can more easily offer lower prices because of their
lower cost structures.

Nonprice competition can be an effective strategy for a small business

in the face of larger, more powerful enterprises, because there are many
dangers in experimenting with prices.

One of the deadliest games a small business can get into with
competitors is a price war.
COMPETITION AND PRICES
What is Price Wars?
Price wars eradicate profit margins, force companies out of
business, and scar an entire industry for years. Price wars usually
begin when one competitor believes that it can achieve a higher
volume through lower price or that it can exert enough pressure
on competitors’ profits to drive them out business. In most cases,
entrepreneurs overestimate the power of price cuts to increase
sales sufficiently to improve net profitability.
FOCUS ON VALUE
Ultimately, the “right” price for a product or service depends on one
factor: the value that it provides customers.

There are two aspects of value:

1. Objective Value - which is the price customers would be willing to pay
if they understood perfectly the benefits that a product or service
delivers for them.
2. Perceived Value - which determines the price they are willing to pay.

Businesses that underprice their products and services or that run

constant sales and discount price promotions may be short-circuiting
the value proposition they are trying to communicate to their customers.
FOCUS ON VALUE
In some economic conditions, companies have little choice but to offer
lower-priced products. Techniques that companies can use to increase
customers’ perception of value, and essentially lower their prices with
less risk of diminishing their brands, include offering coupons and
rebates that are not as closely connected to the product as direct price
units.

Another strategy that some companies have used successfully is to

launch a fighter brand. It is less expensive, no-frills version of a
company’s flagship product that is designed to confront lower-priced
competitors head-on, satisfy the appetites of value-conscious
customers, and preserve the image of the company’s premium product.
FOCUS ON VALUE
For most shoppers, three reference points define a fair price:

The price they have paid for the product or service in the past.
The prices competitors charge for the same or similar product
or service.
The costs a company incurs to provide the product or service.
 SERVICE
RETAILERS MANUFACTURERS
BUSINESSES
 PRICING TECHNIQUES FOR RETAILERS

A retailer is a business or person that sells goods or

services directly to consumers.

Retailers typically purchase products from wholesalers

or manufacturers at a lower price and then sell them to
consumers at a higher price, making a profit in the
process.
 PRICING TECHNIQUES FOR RETAILERS

Markup

The basic premise of a successful business operation is

selling a good or service for more than it costs to produce it.
The difference between the cost of a product or service and
its selling price is called markup (or markon).
PRICING TECHNIQUES FOR RETAILERS
 PRICING TECHNIQUES FOR RETAILERS

The initial markup is the average markup required on

all merchandise to cover the cost of the items, all
incidental expenses, and a reasonable profit.
PRICING TECHNIQUES FOR RETAILERS
 PRICING TECHNIQUES FOR RETAILERS

Once an entrepreneur determines the initial markup

percentage, he or she can compute the
appropriate retail price to achieve that markup using the
following formula:
PRICING TECHNIQUES FOR RETAILERS
PRICING TECHNIQUES FOR SERVICE BUSINESSES
A service business provides a skilled service, personal labor, or
expertise instead of a physical product.

Most service firms base their prices on an hourly rate, usually

the actual number of hours required to perform the service.

To establish a reasonable and profitable price for service, the

small business owner must know the cost of materials, direct
labor, and overhead for each unit of service.
PRICING TECHNIQUES FOR SERVICE BUSINESSES
PRICING TECHNIQUES FOR MANUFACTURERS

A manufacturer is a person or company that produces

finished goods from raw materials by using various
tools, equipment, and processes, and then sells the
goods to consumers, wholesalers, distributors,
retailers, or to other manufacturers for the production
of more complex goods.
PRICING TECHNIQUES FOR MANUFACTURERS
The most commonly used pricing technique for manufacturers is
cost-plus pricing. Using this method, manufacturers establish a
price composed of direct materials, direct labor, factory
overhead, selling and administrative costs, plus the desired
profit margin.

Cost-plus pricing is also known as markup pricing. It's a pricing

method where a fixed percentage is added on top of the cost it
takes to produce one unit of a product ( unit cost). The resulting
number is the selling price of the product.
In today’s business environment, linking a company’s pricing
strategy with its credit strategy has become essential because
many customers expect to “pay with plastic” rather than with
cash. Consumers crave convenience when they shop, and one of
the most common convenences they demand is the ability to
purchase goods and services on credit. Small businesses
have three options for selling to customers on credit: credit
cards, installment credit, and trade
credit.
Most companies require the customer to make an
initial down payment for the merchandise and then
finance the balance for the life of the loan. The
customer repays the loan principal plus interest on
the loan. One advantage of installment loans for a
small business is that the owner retains a security
interest as collateral on the loan
Many small companies, especially those that sell to
other businesses, offer their customers trade
credit; that is, they create customer charge accounts.
The typical small business invoices its credit
customers monthly. To speed collections, some offer
cash discounts if customers pay their balances early;
others impose penalties on late payers.
A global marketing strategy is an overall marketing
strategy to expand a business into markets across
the world. It's the reference for localized marketing
plans to reach various regions and new markets.
Entrepreneurs who take the plunge into global business
can reap many benefits, including the ability to offset sales
declines in the domestic market, increase sales and
profits, improve the quality of their products to meet the
stringent demands of foreign customers, lower the
manufacturing cost of their
products by spreading fixed costs over a larger number of
units, and enhance their competitive position to become
stronger businesses.
Scarborough, Norman M. Effective Small Business
Management 10th Edition
 THANK
YOU FOR
LISTENING!
 Global
Marketing
Strategies
 Learning Outcomes
At the end of the learning experience, the learner will be able
to:
1. Explain why “going global” has become an integral part of
many small companies’ strategies.

2. Describe the nine principal strategies small businesses can

use to go global.

3. Explain how to build a successful export program.

4. Identify the major barriers to international trade and their

impact on the global economy.
 Topics:
A. Why go global?
B. Going Global: Strategies for
Small Businesses
C. Barriers to International Trade
 Why go global?
“In the global
economy, the Lester Thurow Maryann Stein
competitor six time
“Just being part of thedomestic
zonesaway is “There are an awful lot market and depending on that
potentially as serious of people in the rest of source of revenue isn’t cutting
it anymore,”
a threat as the the world who think “We haven’t really had to
competitor six blocks they are pretty good explore othermarkets because
U.S. companies have been OK
away,” says one at doing your
just selling domestically. That’s
expert. business,” not the caseanymore.”
Benefits
ability to offset sales declines in the
domestic market
increase sales and profits, improve the
quality of their products to meet the
stringent demands of foreign customers
lower the manufacturing cost of their
products by spreading fixed costs over a
larger number of units
enhance their competitive positions to
become stronger businesses
Success in the global
economy also requires
constant innovation
staying nimble enough to use speed as
a competitive weapon
maintaining a high level of quality and
constantly improving it
being sensitive to foreign customers’
unique requirements
adopting a more respectful attitude
toward foreign habits and customs
hiring motivated, multilingual
employees
retaining a desire to learn constantly
about global markets
Before venturing into the global marketplace,
an entrepreneur should consider six questions:
1. Is there a profitable market in which our company has
the potential to be successful over the long run?
2. Do we have and are we willing to commit adequate
resources of time, people, and capital to a global
campaign?
3. Are we considering going global for the right
reasons? Are domestic pressures forcing our company
to consider global opportunities?
4. Do we understand the cultural differences, history,
economics, values, opportunities, and risks of
conducting business in the countries we are
considering?
5. Do we have a viable exit strategy for our company if
conditions change or the new venture does not
succeed?
6. Can we afford not to go global?
Going Global: Strategies for
Small Businesses
 Creating a Presence on the Web

The Web gives small businesses

tremendous marketing potential all
across the globe without having to
incur the expense of opening
international locations. With a well-
designed website, a small company can
extend its reach to customers
anywhere in the world - without
breaking the budget.
 Replying on Trade Intermediaries

Another alternative for low-cost and

low-risk entry into international
markets is to use a trade intermediary.
Trade intermediaries are domestic
agencies that serve as distributors in
foreign countries for domestic
companies of all sizes.
 Although a broad array of trade intermediaries is available , the
following are ideally suited for small bussiness :

EXPORTING MANAGEMENT
EXPORT MERCHANTS
COMPANIES (EMCS)

RESIDENT BUYING OFFICES

EXPORT TRADING
COMPANIES

FOREIGN DISTRIBUTORS

MANUFACTURER’S EXPORT
AGENTS (MEAS) THE VALUE OF USING TRADE
INTERMEDIARIES
 Joint ventures
Joint ventures, both domestic and foreign, lower
the risk of entering global markets for small
businesses. They also give small companies more
clout in foreign lands.

Domestic Joint Venture

-two or more U.S small business form an alliance for
the purpose of exporting their goods and service
abroad.

Foreign Joint Venture

-a domestic small business forms an alliance with a
company in the target nation. The host partner
brings to the joint venture valuable knowledge of
the local market and the customs and the tastes of
local customers.
 Resources for Locating Trade
Intermediary

Trade intermediaries make doing business

around the world much easier for small
companies, but finding the right one can
be a challenge.
 Entrepreneurs looking for help in breaking into global markets, should contact
the International Trade Administration, the U.S. Commerce department and the
Small Business Administration first to take advantage of the following services:

Agent/ Distributor Service (ADS)

Commercial Service International Contacts (CSIC) List
Country Directories of International Contacts (CDIC) List
Industry Sector Analyses (ISAs)
International Market Insights (IMIs)
Trade Opportunity Program
International Company Profiles (ICPs)
Commercial News USA
Gold Key Service
Platinum Key Service
Matchmaker Trade Delegations Program
Multi-State/Catalog Exhibitions Program
Trade Fair Certification Program
Globus and National Trade Data Bank (NTDB)
International Trade Library
Economic Bulletin Board (EBB)
U.S Export Assistance Centers
Trade Information Center
Office of International Trade
Export-U.com
U.S Commercial Service
Export.gov.
Federation of International Trade Associations
(FITA)
 Foreign Licensing

Rather than sell their products or

services directly to customers
overseas, some small companies
enter foreign markets by licensing
business in other nations to use
their patents, trademarks,
copyrights, technology, processes,
or products.
International Franchising

Franchising has become a major

export industry for U.S. A survey
by the International Franchise
Association reports that 52% of
U.S - based franchisors have an
international presence and more
domestic franchisors are looking
to expand abroad.
 Growth potential is the primary attraction of international markets.
Franchisors that decide to expand internationally should take these
steps
1. Identify the country or countries that are best suited to the franchisor’s business concept
2. Generate leads for potential franchisees
3. Select quality candidates
4. Structure the franchise deal
Direct Franchising
which is common in domestic franchise deals, involves selling single-unit franchises to
individual operators in foreign countries.
Area Development
is similar to direct franchising except that the franchisor allows the franchisee to develop
multiple units in a particular territory, perhaps a province, a county, or even an entire nation.
Master franchising
is the most strategy for companies entering international markets.
Countertrading and Bartering
Countertrade is a transaction in which
a company selling goods and services
in a foreign company agrees to help
promote investment and trade in that
country.

Bartering, the exchange of goods and

services for other goods and services,
is another way of trading with
countries lacking convertible currency.
 Exporting

Growing number of small companies,

realizing the incredible profit potential
that exporting offers, making
globalization an ever-expanding part of
their marketing plans.

Small and medium-size companies that

export generate, on average, 12 percent
of their revenues are from exports.
What steps must entrepreneurs take to build
a successful export strategy?
1. Recognize that even the tiniest companies and less experienced
entrepreneurs have the potential to export; help is available.
- size and experience are not very receipts for a successful export
program.

2. Analyzed your product or service.

- qualities and quantities

3. Analyzed your commitment.

- are you willing to devote the time in the energy to develop export
markets?
- Patience is essential.

4. Research markets and speak your target.

- exporters can choose from a multitude of guides, manuals, books,
statistical, reports, newsletters, videos and other resources to help them
research potential markets.

5. Develop a distribution strategy.

- should you use an export intermediary or sell directly to the customers
What steps must entrepreneurs take to build
a successful export strategy?
6. Find your customer.
- one of the most efficient and least expensive ways for entrepreneurs to
locate potential customers for their company’s products and services is to
participate in a trade mission.

•TRADE MISSION – usually sponsored by either a federal or a state

economic development agency for an industry trade association for the
purpose of cultivating international trade by connecting companies with
potential trading partners overseas.
-Particular industry or makeover several industries but Target a particular
country.

7. Find financing.
- Capital

8. Ship your goods.

• Transport architects – to exporters what travel agents are to passengers
and normally charged for a valuable service.
-They move shipments of all sizes to destinations all over the world
efficiently, saving entrepreneurs many headaches.
What steps must entrepreneurs take to build
a successful export strategy?
9. Collect your money.
- collecting foreign accounts can be more complex than collecting domestic
ones.

• Cash in Advance of the sale – is the safest method of selling to foreign

customer.

• Export credit insurance – protects a company against and then payment of

its open accounts due to commercial and political problems.
-A tool that small exporters can use to minimize the risk of bad-debt losses
on foreign sales.

• Letter of credit – an agreement between exporters bank and the foreign

buyers bank that guarantees payment to the exporter for a specific
shipment in goods.

• Bank Draft - is a document the seller draws on the buyer requirement the
buyer to pay the face amount (the purchase price of the goods) either on
site (sight draft) or on a specific date (time draft) once the goods are
shipped.
 Establishing International Locations

establishing an office or a factory in a foreign land can require a substantial

investment that reaches beyond the budget of many small companies.
small companies usually have lean management steps and cannot afford to
send key people abroad without no running the risk of losing their focus.
small companies that established international locations can recap
significant benefits. Start up costs are lower in some foreign countries And
lower labor costs can produce significant savings as well.
 Importing and Outsourcing
Entrepreneurs who are considering importing goods and service or outsourcing
their service or manufacturing jobs to foreign countries should follow the steps:

1. Make sure that important or outsourcing is right for your business.

2. Establish a target cost for your product.
3. Do your research before you leave home.
4. Be sensitive to cultural differences.
5. Do your groundwork.
6. Protect your company’s intellectual property.
7. Select manufacturer.
8. Provide an exact model of the product you want manufactured.
9. Stay in constant contact with the manufacture and try to build a
long term relationship.
 Importing and Outsourcing
Going global by employing one or more of these nine strategies can put
tremendous strain on a small company but the benefits of cracking international
markets can be significant. Not only does going global offer attractive sales and
profit possibilities but it is also strengthens the company’s competitive skills and
enhances its overall reputation. Pleasing tough foreign customer also keeps
companies under competetive toes.
Barriers to International Trade
A. Domestic Barrier
B. International Barrier
C. Political Barrier
D. Business Barrier
E. Cultural Barrier
 Domestic Barrier
Three major domestic roadblocks are:
1. Attitude
2. Information
3. Financing

Attitude
this is the lack of confidence with it comes
to exporting goods
Information
the lack of information on what the
business should be and how to start the
business
Financing
the lack of finance in starting the export
business
 International
Barrier
Two types of international
barriers are:
1. Tariff
2. Nontariff
 Alexander
Tariff
Established the tariff system in the

Hamilton, United States

The tariff system generated
1790 majority of the federal revenue for
about 100 years

Tariff is a tax, or duty, that a

government imposes on goods and sets tariffs for products imported

services imported into that country Harmonized into the United States
Includes 37 000 categories of
Imposing tariffs raises the price of Tariff goods
Schedule The United States imposes tariffs
the imported goods making them on thousands of items, ranging
from brooms and fish fillets to
less attractive to consumers and costume jewelry and fence posts.
The average tariff is 1.3%
protects the makers of comparable
domestic products and services.
Nations across the globe rely on
tariffs to protect local
manufacturers of certain products.
 Nontariff

Quota is a limit on the amount of a

product imported into a country.
Dumping selling large quantities of them in
foreign countries below cost

the unauthorized duplication of

total ban on imports of certain copyrighted content that is then sold at
products or all products from a substantially lower prices in the 'grey'
particular nation. market
Embargoes The motivation for embargoes is
not always economic but can
involve political differences,
Piracy Pirates and counterfeiters ply their
illegal, unethical trade to almost every
kind of product, from designer
environmental disputes, terrorism, handbags and smartphones to birth
and other issues. control pills and industrial equipment.
Political Barrier
often astounded by the complex
web of governmental and legal
regulations and barriers they
encounter in foreign countries
 Business Barrier
quickly learn that business practices
and regulations in foreign lands can
be quite different from those in the
United States.
Simply duplicating the practices they
have adopted in the domestic market
and using them in foreign markets is
not always a good idea.
Cultural Barrier
Culture - includes the beliefs, values, views, and more
that is common in one nation.

Understanding and heeding these often subtle cultural

differences is one of the most important keys to
international business success.

A lack of understanding of cultures and business

practices can be as great a barrier to structuring and
implementing a business transaction as an error in the
basic assumptions of the deal.
 The North
World Trade American
Organization International Free Trade
Agreement
Trade
Agreements

The Dominican
Republic-
Central America
Free Trade
Agreement
World Trade Organization
January 1995
153 members
the only international organization
that establishes rules for trade
among nations.
involved in there solution of trade
disputes among members
Multilateral Trading System
rules and agreements of the WTO
result of negotiations among its
members.

General Agreement on Tariffs and Trade (GATT)

first global tariff agreement, which was created in
1947 and designed to reduce tariffs among member
nations.
The North American Free Trade
Agreement
world’s largest free trade zone among Canada,
Mexico, and the United States
these barriers were eliminated for trade among the
three countries, but each remained free to set its
own tariffs on imports from nonmember nations

Free Trade Zone

an association of countries that have

agreed to eliminate trade barriers
both tariff and nontariff among
partner nations.
The Dominican Republic-Central
America Free Trade Agreement
August 2, 2005
designed to promote free trade among the United
States and six Central American countries: Costa
Rica, El Salvador, Guatemala, Honduras, Dominican
Republic, and Nicaragua
Reference:
Scarborough, Norman M. Effective Small
Business Management 10th Edition
 Members

Kathleen Faye Lorrea Jheff Patricia Rizzen Key

Concha Dayupay Gaceta Zuyco
Thank you
very much!
 Studio
Shodwe

E-COMMERCE
ENTREPRENEURSHIP
Presented by:
Alliah Kissy Esperanza
Gereed Mathew Delima
Maria Ailene Valiente
Xyza Krizel Asenas
Kayla Espanto
Objectives:
AT THE END OF THE LEARNING EXPERIENCE,
THE LEARNER WILL BE ABLE TO:

Describe the benefits of selling

01 on the World Wide Web.

Understand the factors an

02 entrepreneur should consider before
launching into e-commerce.

Explain the 10 myths of e-

03 commerce and how to avoid
falling victim to them.
 Explain the basic strategies entrepreneurs
04 should follow to achieve success in their
e-commerce efforts.

Explain the basic strategies

Learn the techniques of designing a
05
04 entrepreneurs
achievekiller
should follow
Web
success site. e-
in their
to

commerce efforts.

Explain how companies track the

06 results from their Web sites.

Describe how e-businesses ensure the

07 privacy and security of the information
they collect and store from the Web.
 CONTENT
Benefits of Selling on the
01 Web

Factors to Consider Before

02 Launching into E-commerce
 CONTENT
03 Ten Myths of E-commerce

04 Strategies for E- Success

 CONTENT
05 Designing a Killer Web

06 Tracking Web Results

Ensuring Web Privacy and

07 Security
Opportunity to increase revenues
Ability to Expand into global
markets
Ability to remain open 24hours a
day, seven days a week
Capacity to use the Web’s
interactive nature to enchance
customer servive
Ability to lower the cost of doing
business
Ability to spot new business
opportunities and capitalize on
them
Faster buying process.
Several payment modes
Affordable advertising and
marketing
Flexibility for customers
1. Selection of Products/Services (what to sell)

2.Target Audience Research/Know Your Consumers

3. Credit Card Processing

4. How Much To Sell / How Much to Invest

5. Who Competitors Are? What Are They Doing?

6.Where to Stock – Inventory Management/Stock

Tracking

7. How to Take Order / Order Tracking

8. How to Ship –Shipping Management

9. How to Manage Returns

10. Monetization –What is Price/Profit/Budget

11. Selection of E-commerce Technologies

13.Selection of Development Team

14.Selection of Marketing Team and Strategies.

1. It’s easy
E-commerce business management involves numerous obstacles, including website
management, customer service, marketing, logistics, taxes, technical issues, and delivery
options, which not only attract buyers but also ensure smooth operations.

2. You should focus on selling globally from the first day

It might be tempting to target everybody all around the world, but it’s not the best approach
when you just started your business. Starting an e-commerce business requires focusing on
local markets initially, then expanding internationally.

3. It’s free
Starting an open platform store incurs costs, including monetary (marketing and advertising)
and non-monetary (time spent on tasks similar to a custom solution).

4. Product photographs are not important

If you want to differentiate yourself and make your website stand out, you should either take
the pictures yourself or hire a photographer to take them. Show your product from different
angles. Make sure your customers are offered as many details as possible.

5.The only way to sell more is to lower the prices

Pricing is not the only thing customers take into account in the decision-making process. They
take other things into account, such as website design and responsiveness, complete
information about ordering, shipping and delivery,and reviews.
6. Personalization is a waste of time
Customers have a set of personal criteria they use when making a purchase. This is why you
need to appeal directly to each one of them. This problem can be solved by offering a good
level of personalization for everyone that visits your website.

7. My products are excellent, so I don’t need to market them

Word of mouth is a powerful advertising tool, but a strong marketing strategy is essential for
businesses to succeed and keep customers informed about their products.

8. E-mail marketing is not important

Email marketing remains an effective, easy, and cost-effective way to convert customers,
especially with mobile phones allowing frequent email check-ins.

9. Revenue is everything that you should care about

Profit is the ultimate goal for businesses, but understanding metrics like conversions rate,
bounce rate, traffic, and session durations is crucial for optimizing marketing efforts.

10. Mobile users do not convert

The truth is that in recent years, online traffic from mobile devices has grown significantly.
Make sure that your website is optimized for mobile devices. Otherwise, you will lose
customers in favor of other competitors.
Consider focusing on a market niche
Develop a community
Attract visitors by giving away
“Freebies”
Make creative use of e-mail, but avoid
becoming a spammer
Promote your site online and offline
Make sure you Web Site says
“Credibility”
Consider forming alliances
Select a domain name that is consistent with the imag
you want to create for your company and register it
Short
Memorable
Indicative of a company’s business
Easy to spell
Be easy to find
Give customers what they want
Esbalish Hyperlinks with other businesses,
preferably those selling complementary products.
Include e-mail option and a telephone number in
your site
 Counter
Log-analysis software
Clustering
Collaborative filtering
Profiling systems
Artificial intellgence
Take an inventory of the
customer data collected
Develop a company policy for
the information you collect
Post your company’s privacy
policy prominently on your
web site and follow it
Virus Detection software
Intrusion detection sofware
Firwall
Studio
Shodwe
Building the Right Culture and Organizational Structure

Company culture

-is the distinctive, unwritten code of conduct that governs the behavior, attitudes, relationships, and
style of an organization.

• Respect for the quality of work and a balance between work life and home life.
• A sense of purpose.
• Diversity
• Integrity.
• Participative Management
• Learning environment
• A sense of fun
• Engagement

MANAGING GROWTH AND A CHANGING CULTURE

As companies grow, they often experience dramatic changes in their culture. Procedures become more
formal, operations grow more widespread, jobs take on more structure, communication becomes more
difficult, and the company’s personality often begins to change.

Team-Based Management

As a company grows, its success may lie in the founder’s willingness to shift from a top-down, single-
leader structure to one that is team-based.

self-directed work team

-is a group of workers from different functional areas of acompany who work together as a unit.

The following errors are common in team-oriented environments:

- Assigning a team an inappropriate task, one in which the team members may lack the necessary skills
to be successful (lack of training and support).

- Creating work teams but failing to provide the team with meaningful performance targets.

-Failing to deal with known underperformers and assuming that being part of a group will solve the
problem; it doesn’t.

- Failing to compensate the members of the team equitably.

To ensure the success of the teams approach, entrepreneurs must do the following:

- Make sure that teams are appropriate for the company and the nature of the work.

- Form teams around the natural work flow and give them specific tasks to accomplish.
- Provide adequate support and training for team members and leaders.

- Involve team members in determining how their performances will be measured, what will be
measured, and when it will be measured.

- Make at least part of team members’ pay dependent on team performance.

Communicating Effectively

Effective communication is the lifeblood of a successful company. It reinforces the organization’s vision,
connects employees to the business, fosters process improvement, facilitates change, and drives
business results by changing employee behavior. An important and highly visible part of the
entrepreneurs’ role is to communicate the values, beliefs, and principles for which their businesses
stand.