Pricing Decision in International Market

Gautam Dutta

Lecture Outline: To explain the concept of pricing decisions in international markets Role of non-price factors in international markets Pricing issues for developing countries

Source ; GD Research

The Meaning of Price

Price is the amount of money and/or other items with utility needed to acquire a product.
Price may involve more than money. Pricing is an active instrument of accomplishing marketing objectives? Or pricing as static element of business decision?

1990 UNI FROM P&G

Pricing is like a Tripod

1992 Cost Cost Kimberly clerk MONIKA
TIPPY BASIC at par with COMFORT SECA

UNI price cut

launched SUPER SECA ( 25% higher } COMFORT SECA 20 percent lower

Carrefour started importing crudely made PIPI diaper Demand Demand Competition Competition

Prices of diaper saw price drop by 60%

Methods of Export Pricing

Cost based pricing
Full cost pricing Marginal Cost Pricing

Market based pricing

Role of Non-price Factors in International Marketing

Prejudice against products manufactured in developing C. Product Differentiation Brand image Order Size Presumed relationship between quality & price. After sales services Before sales services Consistency/continuity of supplies. Prompt deliveries. Ability to supply complete range of products

Factor Distorting Price

Parallel imports
or

Country A Production centre

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Country B Lateral grey import

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Country C Price of C < B

Counter trade: Payments are made in kind rather cash. Dumping

Approaches

Transfer at Cost: price is equal to production cost. Subsidiary

makes all the profit.

Transfer at Arms length:

Checking the price in a similar transaction between two totally different parties; A B vs C D Checking the price in a similar transaction between one involved party and one unrelated party A B vs A C

Transfer at cost plus: price is equal to cost + overhead +

Margin