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Journal of International Marketing. Chicago: 2001. Vol. 9, Iss. 3; pg. 1, 18 pgs Abstract (Summary) In response to certain important gaps identified in the global marketing literature, a study investigates the pricing strategies followed by manufacturing subsidiaries of multinational corporations. Specifically, it attempts to identify the factors that play an important role in determining the degree of international pricing strategy standardization. The findings suggest that the extent to which multinationals standardize their international pricing strategies depends on the level of similarity between home and host countries in terms of customer characteristics, legal environment, economic conditions, and stage of the product life cycle. The study highlights implications of the findings for business practitioners and discuss future research directions along with the limitations. Jump to indexing (document details) Full Text (6445 words) Copyright American Marketing Association 2001
[Headnote] ABSTRACT [Headnote] In response to certain important gaps identified in the global marketing literature, the focus of this inquiry is an investigation of the pricing strategies followed by manufacturing subsidiaries of multinational corporations. Specifically, the authors attempt to identify the factors that play an important role in determining the degree of international pricing strategy standardization. The findings suggest that the extent to which multinationals standardize their international pricing strategies depends on the level of similarity between home and host countries in terms of customer characteristics, legal environment, economic conditions, and stage of the product life cycle. The authors highlight implications of the findings for business practitioners and discuss future research directions along with the limitations of the study. Increasing liberalization, interdependence, and competition in world economies have accelerated the need for multinational corporations (MNCs) to develop effective global strategies in their endeavor to achieve sustainable competitive advantage in international markets (Samiee and Roth 1992). Marketing has played a significant role in the advancement of the field of international business; marketing strategy constitutes a critical component of a firm's global strategy (Zou and Cavusgil 1996). The development of optimal programs for global markets is of vital interest to business managers who view international operations as a means of boosting corporate growth, improving competitive
Because the key consideration in international business operations is whether the marketing strategy should be standardized or adapted. a review of the pertinent literature illustrates that scant attention has been devoted to investigating drivers of international pricing strategy standardization (Samli and Jacobs 1994). The study begins with an overview of the standardization versus adaptation debate.position. and (3) it determines the areas that should be prioritized in global resource allocation decisions (Jain 1989). previous standardization studies have commonly been conducted at the headquarters level. However. we highlight managerial implications of the findings and limitations of the study.g. we consider international pricing strategy along the standardization-adaptation continuum (Cavusgil and Zou 1994). In view of these limiting empirical considerations. product (e. The vast majority of studies have focused on promotion (e.g. and to a lesser extent distribution (e. Notwithstanding the long-standing interest in and many articles published on the topic. the extent to which elements of the marketing program should be standardized across markets or adapted in order to accommodate different foreign market conditions. This is followed by an examination of the factors that are potentially associated with pricing standardization and the development of specific research hypotheses. and then present and discuss the results of the study. Specifically. In this context. Larsen. we specify the research method employed. and Mehta 1997) aspects of the international marketing program. and the perceptions and attitudes of subsidiary managers have largely been ignored.. Harvey 1993).. Harris 1994. and preferences has received focal research attention at both the conceptual and the empirical level. Hill and Still 1984. Nevertheless. subsidiaries play an important role in international marketing strategy formulation and implementation as a result of their closeness to the market and better understanding of local conditions.g. The degree to which international marketing programs must be standardized or customized has been a contentious issue for more than three decades now. Walters and Toyne 1989).. Furthermore. Finally. this empirical inquiry aims to investigate the factors that play an important role in influencing the degree of international pricing strategy standardization from the standpoint of subsidiary managers. and ensuring company survival and longterm viability in a highly globalized marketplace. (2) it affects its long-term direction with respect to international operations. the primary interests of this investigation focus on the pricing strategies MNCs follow. A review of the pertinent literature identifies three schools of thought: the two extreme opposites of . Rosenbloom. understanding the elements that influence the extent of standardization of international pricing strategy is vital. The approach an MNC adopts has important implications because (1) it influences the MNC's ability to match its offerings effectively with the overseas market environments in which it operates. because standardization can affect firms' revenue and profitability levels and determine a product's foreign market positioning (Czinkota and Ronkainen 1998). Next. strengthening financial performance. along with directions for further research. requirements.
Boddewyn. are considered driving forces behind the creation of a global village and thus a global marketplace (e. p. In a controversial article.. The first involves the drivers of standardization. defined as the developments in the international business environment that make standardization a feasible. First of all. According to these authors.g. Walters and Toyne 1989). The arguments in favor of marketing program standardization emphasize two main aspects. Levitt (1983. and better coordination and control of international operations (Douglas and Craig 1986). and Green 1992). the United States. Other drivers of standardization discussed in the literature include the need of international firms to serve their multinational customers (Buzzell 1968. The second aspect refers to the potential advantages that may result for a company that pursues a strategy of international marketing program standardization. Proponents of standardization also emphasize several important benefits associated with the pursuit of this strategy. international firms will be in a position to gain a significant advantage over their competitors by selling high quality products at lower prices (Levitt 1983). Douglas and Wind 1987). Verhage. These perspectives are examined next. 600 million consumers in all parts of the Triad have strikingly similar needs and preferences. North America and the European Union) (Walters and Toyne 1989). Technological developments in the areas of communication and transportation. many academics expressed their disagreement with Levitt's (1983) argument about a worldwide homogenization in needs and preferences.g. people around the world have the same needs and desires and that "almost everyone. The adaptation school of thought emerged essentially as a reaction to the arguments put forward in favor of standardization. as well as increasing international travel by tourists and businesspeople. and the growth of international market segments with similar needs and preferences (Yavas. no hard evidence can be produced in support of Levitt's thesis (Douglas . Quelch and Hoff 1986). seen or experienced through the new technologies.complete standardization versus complete adaptation and the "middle-of-the-road. and Picard 1986. Ohmae (1985) refers to the emergence of the Tridians: the residents of Japan. income levels. research and development. Douglas and Wind 1987). lifestyles. and the European Union. Elinder 1965). everywhere. These people have similar academic backgrounds. myopic. Keegan 1969). uses of leisure time." Similarly. or even inescapable strategy. wants the things they have heard about.. 95) claims that in this new commercial reality." or contingency perspective. and marketing (e. as a result. and aspirations. advantages that make standardization a desirable alternative.g. Other advantages of standardization proposed in the literature include the potential for rapid introduction of new products in international markets (Samiee and Roth 1992.g.. and contrary to the marketing concept (e. By fully exploiting the potential for economies of scale in all value-adding activities through marketing program standardization. Soehl. the presentation of a consistent image across markets (Harvey 1993). The most significant advantage of standardization is its contribution to the achievement of economies of scale and cost savings in production. regional economic integration (e.. viewing it as overly simplistic. the ability for worldwide exploitation of new and innovative ideas (Buzzell 1968.
according to critics of standardization. preferences. monitoring market developments overseas. and quickly responding to shifts in customer preferences (Craig and Douglas 1996). Quelch and Hoff 1986). because of either legislation and allied governmental regulations or inescapable and uncontrollable marketplace realities (Hill and Still 1984).. Soehl. Third. Moreover. Second. Onkvisit and Shaw 1990. the difference between standardization and adaptation is in degree rather than in kind.. and purchasing behavior among different countries (e. Therefore. critics of standardization have questioned the significance of economies of scale and the cost savings underlying this approach. the . cost of raw materials and labor) (Douglas and Craig 1986). Walters and Toyne 1989). Zou. Recent standardization literature has followed a more fruitful research avenue by supporting the contingency perspective of international marketing (e. Certain external (e.g.g.g. and augmentation of firms' capabilities in analyzing and understanding foreign markets. Cross-cultural empirical research has found significant differences in customer characteristics. On the other hand. enhanced motivation and morale of local managers (Douglas and Wind 1987. Wind 1986).. technological developments in flexible manufacturing systems and computer-aided design and manufacturing facilitate production of customized products without major cost implications and reduction in the minimum efficient scale of production (Douglas and Wind 1987. and Picard 1986).. the decision whether to standardize does not depend on managerial discretion alone. some authors have indicated several important benefits that are likely to result from adapting international marketing programs to local market conditions. market.and Craig 1986. it has been suggested that certain industries (e. packaged consumer goods) are less susceptible to manufacturing and research and development economies (Quelch and Hoff 1986). Wind 1986). Cavusgil. These include deeper penetration of foreign markets and thus increased market share and sales volume for the firm (Cavusgil.g. Schlegelmilch. Zou. Diamantopoulos.g. environmental. Fourth. Furthermore. Such factors are responsible for mandatory adaptations. defined as the adaptations a company is obliged to make.g. On the one hand. and Naidu 1993). their effect may not be significant if a large proportion of the total cost is determined by factors on which standardization has no impact (e. According to this perspective. several authors have claimed that even when cost savings can be made. organizational structure and processes) factors may limit the degree of standardization that a firm is able to apply (Boddewyn.. It has been argued that low price positioning is a vulnerable strategy that may not lead to the achievement of sustainable competitive advantage (Douglas and Wind 1987. industry) and internal (e. and the two perspectives are viewed as occurring along a continuum on a bipolar scale (Onkvisit and Shaw 1987). and Naidu 1993). and Du Preez 1995). there is no evidence to suggest that customers have become more price conscious or that they are willing to trade off specific product features for lower prices..
hypothetico-deductive research approach was a serious obstacle to this end. the firm's experience in international operations (Cavusgil. . we attempted to include the largest possible number of relevant contingency variables. from a methodological point of view. stage of product life cycle (PLC) (Baalbaki and Malhotra 1995. and Naidu 1993. and to what degree (Buzzell 1968. Bodur. physical. Although a large number of potentially important variables have been proposed by various authors at the conceptual level (as discussed in the previous section). The critical issue in designing international marketing strategies in the framework of contingency theory is to identify contextual factors that determine the appropriate degree of marketing program standardization and determine which individual marketing-mix elements are influenced by each factor and to what extent.challenge facing international marketing managers is to decide which marketing-mix elements they should standardize or adapt. conditions and patterns of product use (Hill and Still 1984). Jain 1989. Samiee and Roth 1992). the relationship between headquarters and local subsidiaries (Jain 1989). product familiarity of foreign customers (Cavusgil. Cavusgil. and industry technology orientation (Quelch and Hoff 1986. and competencies of marketing intermediaries (Harvey 1993. A review of the extant literature suggests that these factors can be organized into four broad categories: (1) macroenvironmental factors. In investigating the factors influencing the degree of international pricing strategy standardization. (3) firm-specific factors. including the degree of centralization in decision making (Quelch and Hoff 1986. and Naidu 1993). Zou. and Naidu 1993). and Cavusgil 1991). cost. such as the nature of product (Cavusgil. and demographic elements (Douglas and Wind 1987. cultural specificity of the product (Cavusgil and Zou 1994. under what conditions.. Ozsomer. cultural. and Naidu 1993. Zou. Jain 1989). Zou. and the subsidiary's ownership structure (Rau and Preble 1987). In response to this challenge. to limit our effort to the examination of contingency variables whose relevance had been established in previous standardization studies and that could be linked specifically to the degree of international pricing strategy standardization pursued by MNCs. However. and Cavusgil 1991). that the present study represents the first systematic endeavor to examine this issue using a descriptive. and several classificatory schemes have been proposed (e. Wind and Douglas 1986). Rau and Preble 1987). product uniqueness (Cavusgil. Ozsomer. and Naidu 1993). and (4) product and/or industry factors. corporate orientation (Perlmutter 1969). (2) microenvironmental factors.g. Johnson and Aruthanes 1995). Jain 1989). legal. Zou. Zou. including economic. We therefore deemed it appropriate. only a limited number of these have been empirically tested. such as customer characteristics. attitudes. Bodur. and the availability. and behavior (Jain 1989). Craig and Douglas 1996). academic researchers have examined the factors that play an important role in the determination of marketing program standardization. the structure and nature of competition (Cavusgil. Quelch and Hoff 1986). and Naidu 1993. Zou.
. the economic environment of the host country determines the cost of raw materials. environmental protection acts. which requires firms to sell certain products at specified prices. Empirical research has shown that differences in government laws and regulations across markets are among the major obstacles to standardization (Baalbaki and Malhotra 1995. The relevance of each factor is considered next. health and safety standards. The purpose of such laws is either to protect customers from unfair exploitation or to ensure that certain sensitive products (e. Moreover. Douglas and Wind 1987). customer characteristics and behavior. Furthermore. pharmaceuticals) are easily accessible to almost everybody in the population. the higher is the degree of pricing standardization. weight. demand for a product at different price levels is a function of the purchasing power of targeted customers. a review of the limited empirical evidence. and the like that may prevail in foreign markets (Buzzell 1968. the overall level of economic and industrial development of a country determines customers' priorities in terms of the products they consider essential. Governments may also impose price controls on certain products to protect local producers from international competition that is deemed unfair. a product considered essential in a developed country may be viewed as less necessary or even as a luxury item in a less developed country (Hill and Still 1984). because they determine demand potential for a particular product and have a significant impact on a firm's cost structure. the pricing policy pursued by an international firm in a particular foreign market should reflect these factors. which is determined by the level of economic development of the country (Jain 1989). electric. energy. in addition to the prices they are able and willing to pay for certain products (Jain 1989). For example. A common law found in many countries that directly influences pricing is retail price maintenance. revealed five factors that are potentially important in influencing the extent to which MNCs standardize their international pricing strategy: economic environment.. Samli and Jacobs 1994). firms incur extra costs. and measurement systems. To make the required modifications.g. labor. The level of such costs has a direct impact on the overall cost structure of local subsidiaries. Cavusgil. Cavusgil. Zou. We therefore advance the following: H1: The greater the similarity in the economic environment between an MNC's home and host countries. legal environment. which forces them either to charge higher prices or to compress their profit margins. and Naidu 1993. and stage of PLC. We therefore expect the following: H2: The greater the similarity in government laws and regulations between an MNC's home and host countries. On the cost side. and other resources a firm needs to purchase or hire in order to carry out its everyday operations (Douglas and Wind 1987. The economic conditions prevailing in a host country can influence pricing decisions in several ways. pricing is influenced indirectly by laws and regulations that necessitate product modifications in compliance with different technical specifications. the higher is the degree of pricing standardization. On the demand side. Zou.Accordingly. Thus. distribution infrastructure. and Naidu 1993). combined with relevant conceptual work.
product quality and performance) may be equally or even more important to certain customers (Douglas and Wind 1987).g. Therefore. and purchasing behaviors with respect to various price levels.. and decline--and marketing strategy programs differentiate across the various stages. some products may be at different stages of their life cycles in different countries (Buzzell 1968). Because of possible differences in economic and market development levels among countries. including sales and credit terms and discounts offered. Price level is among the most important criteria used by customers in evaluating competing products (Levitt 1983). competencies. The significance of such an approach diminishes in circumstances in which there is no difference in a product's life . This is more likely to happen when a company is targeting similar customer segments in domestic and foreign markets (Jain 1989). we suggest the following: H4: The greater the similarity in customer characteristics and purchasing behavior between an MNC's home and host countries. A standardized pricing policy is more appropriate if domestic and foreign customers place an equal emphasis on and have similar perceptions of price. Several empirical studies demonstrate the important role PLC plays in determining the degree of international marketing strategy standardization (Baalbaki and Malhotra 1995. As a result. Under such circumstances. may influence price levels. not all customers are price sensitive. an MNC must be aware of foreign customers' preferences. perceptions. For example. MNCs may need to modify their pricing programs to take account of particular local market conditions (Rau and Preble 1987). in developing its pricing policy. Therefore. in turn. a significantly higher cost will be added to the product by the time it reaches the end user. growth. the higher is the degree of pricing standardization. the higher is the degree of pricing standardization. type. However. a firm may also decide to modify other elements of its international pricing policy. and allied international pricing policy elements (Buzzell 1968).International firms often must rely on existing distribution channels to distribute their products in foreign markets. and margins of the intermediaries involved in the process of transferring the product from the point of production to the end user have a significant effect on a firm's cost structureparticularly if the distribution cost constitutes a significant proportion of the total cost. Therefore. maturity. It is therefore possible to hypothesize the following: H3: The greater the similarity in the distribution infrastructure between an MNC's home and host countries. costs. The additional cost incurred is likely to result in higher final selling prices and/or reduced profit margins for the firm. the number. The life cycle of a product consists of four major stages-introduction. The extent to which an MNC will achieve its objectives in a particular foreign market will depend largely on its ability to satisfy the needs and preferences of target customers. a careful examination of overseas customer characteristics and purchasing behavior is essential in selecting an appropriate pricing strategy for a specific foreign market. Johnson and Aruthanes 1995). other criteria (e. The stage of PLC is a fundamental variable affecting business strategy (Anderson and Zeithaml 1984). if the distribution channel used in a particular foreign market involves a greater number of intermediaries or channel members are less competent and efficient than those in the domestic market. Therefore. This. profit margins.
cycle stage between the domestic and international markets (Sorenson and Wiechmann 1975). we extensively pretested and refined the revised questionnaire in personal interviews with managers in subsidiaries of MNCs. We gathered data for this study from a mail survey of manufacturing subsidiaries of MNCs operating in the United Kingdom.. we excluded 201 firms for a variety of reasons. We identified 706 manufacturing subsidiaries of MNCs. We initially reviewed the relevant literature and simultaneously conducted exploratory interviews with executives in subsidiaries of MNCs to identify items for operationalizing the constructs under investigation. they served as expert judges to appraise the face validity of the items selected. and Japan. we ask respondents to answer the questions of the research instrument with reference to a particular product or product line their company (i.e. we identified individuals who met the knowledgeability criterion for key informants and were willing to participate and whose companies had a product or product line that the parent firm also manufactured and marketed in its own domestic market.K. the key informant). Finally. We therefore hypothesize the following: H5: The greater the degree of similarity in the stage of PLC between an MNC's home and host countries. including an absence of common products in the portfolios of the parent firm and its U. discover whether there was a product or product line that both the parent firm and its U. a company policy of not taking part in external research studies. subsidiary produced and marketed in their home markets. . which originated mostly from the United States. Specifically.K. manufacturing subsidiary. in addressing this problem in the study of pricing strategy standardization of MNCs. We developed the sampling frame for this study using the Financial Analysis Made Easy electronic database of U. Therefore. or the unavailability of correct contact details. We designed a preliminary questionnaire. Cavusgil and Zou (1994) argue that any study on international marketing strategy standardization conducted at the overall company level is likely to result in confounded and thus unreliable findings. we adopt the product or product line as the unit of analysis. which we then asked several academic researchers in the field of international marketing to evaluate. the subsidiary) is manufacturing and marketing in the United Kingdom but that is also manufactured and marketed by the parent firm in its home market.K. We developed the questionnaire used in this research in several steps. identify the person in each company who was the most qualified to provide the required information (i. and encourage respondent participation in the survey.. This is because international firms often employ different marketing strategies across countries and product-markets. which thus assured content validity. We then contacted each of these firms by telephone to ensure that the correct address of each company was available. In 505 of the 706 (72%) firms. Upon completion of the telephone contacts. firms.e. Germany. All these firms were targeted in this research. the higher is the degree of pricing standardization. a change in the firm's status as a result of a merger or acquisition.
Again. and distribution infrastructure between the U. Scatter diagrams and bivariate correlation analyses pertaining to (1) the international pricing strategy standardization indicators and (2) the external elements that potentially influence the degree of pricing standardization indicated that certain items were highly correlated. Respondents were asked to compare the pricing policy followed by the subsidiary with that pursued by the parent company in its home market. Following Kotabe and Omura (1989) and Johnson and Aruthanes (1995). we followed Armstrong and Overton's (1977) formal extrapolation procedure.K. was used to capture individual responses. Table 2. Regarding the factors that potentially influence pricing strategy standardization. anchored by "very different" (1) and "very similar" (7). postage-paid envelope and a cover letter. A copy of the questionnaire. customer characteristics and behavior. A sevenpoint rating scale. The guidelines of the total design method (Dillman 1978) were followed to enhance respondent participation in this mail survey. Reminder/thank-you postcards to all managers and two additional follow-up mailings. anchored by "strongly disagree" (1) and "strongly agree" (7). was used to measure participant responses. a satisfactory response rate of 26% was achieved. We therefore conclude that nonresponse bias is not likely to be a problem in this research. Therefore. late respondents are more likely to be similar to nonrespondents. followed by two further reminders. Principal components analysis was thus employed in each set of items to explore the presence of an underlying structure in the data. Table 1. Using a t-test under the assumptions of both equal and unequal group variances. market and that in which the parent firm was based (see Table 2). Table 1 exhibits the results of principal components analysis for the international pricing strategy standardization items. together with a self-addressed. was personally mailed to the key informant in each target firm who had been identified during the telephone contacts.The extent of international pricing strategy standardization was measured on the basis of five items (see Table 1). A seven-point scale. responses were captured on a seven-point scale ranging from "very different" (1) to "very similar" (7). a single item was employed to assess the extent to which the focal product or product line is in the same life cycle stage in both the United Kingdom and the parent firm's home market. a set of items was used to measure the degree of similarity in economic and legal environments. we found no significant between-group mean differences between the early and late respondent groups with regard to any of the variables examined in the study. produced 129 usable responses. When we used an eigenvalue of one or greater as the . as contrasted with early respondents. which is based on the contention that. To assess possible nonresponse bias.
Ozsomer. little empirical work has been undertaken examining the issue of standardization within the context of MNCs' pricing strategy. legal environment. both the goodness-of-fit and explanatory power of the estimated regression model were acceptable. H4. H2. customer characteristics. the focus of the present study is the nature of pricing strategies followed by MNC manufacturing subsidiaries and the identification of the factors that drive the extent of international pricing strategy standardization.g. positive relationships in the equation. economic conditions. Therefore. Germany. However. and PLC stage. The analysis revealed four significant. pertaining to customer characteristics. Multiple regression analysis was used to estimate the relationships of economic conditions. and this similarity is conducive to the pursuit of international pricing standardization. distribution infrastructure. These countries have considerable resemblance to the United Kingdom in their levels of economic. This is signified by the mean scores. The solution featured strong individual loadings on each factor. Bodur. This evidence may be attributed to the fact that the vast majority of the sample firms originate in the United States. legal environment. it can be concluded that H1. Japan. A four-factor solution emerged that accounted for approximately 67% of the total variance. economic conditions. customer characteristics. our findings appear to suggest that the opposite is true for MNCs domiciled in a developed country and operating in another developed country. No relationship was established between similarity in distribution infrastructure and pricing standardization.factor selection criterion along with the screen test. To contribute toward filling this void in the global marketing literature. previous research shows that a high level of pricing standardization is uncommon among MNCs that operate in less developed host market contexts compared with their home market bases (e. and one-sample t-test results for the items used to measure the pricing standardization construct (see the Appendix). economic conditions. industrial. and Cavusgil 1991). Factor scores were then computed for all five factors that emerged for use in subsequent analysis. standard deviations. and PLC stage. a single-factor solution emerged that explained nearly 70% of the total variance. The four factors have been labeled legal environment. and distribution infrastructure. and market development. Notably. The study found that the majority of the participant MNC subsidiaries adopt a relatively high degree of pricing strategy standardization. legal environment.. enabling straightforward interpretation. or another developed nation. As shown in Table 3. . thus testing H1-H5. Despite the substantial amount of research attention devoted to the subject of marketing program standardization in international markets. Table 2 shows the principal components analysis results with respect to the environmental elements that potentially influence the degree of pricing standardization. and stage of PLC (independent variables) with subsidiary performance (dependent variable). These results suggest that the degree of international pricing strategy standardization of MNCs is influenced by the level of similarity between home and host countries in terms of customer characteristics. and H5 are validated and H3 is rejected.
. firms may be forced to adopt uniform pricing across markets as a defensive measure against the graymarket imports of unauthorized intermediaries that are completely out of their control (Cavusgil 1996). This objective can be achieved through either premium pricing when market conditions are favorable (i. in turn. economic and legal conditions. Samiee and Roth 1992. Then. Samli and Jacobs 1994).Regarding the determinants of pricing standardization. however. One possible explanation for this result is that distribution costs represent a minor component of the product's total cost and. because the standardization versus adaptation decision is situation specific. However. contrary to expectations. this is an issue that warrants further empirical investigation. .e. It should be remembered that because pricing affects the revenue side of the profitability equation. the ultimate long-term objective of managers in setting international pricing policy centers on revenue maximization. legal environment. The results of the present study substantiate the conclusion drawn in previous empirical research (Cavusgil and Zou 1994) that success in international markets is within the reach of management. These findings are consistent with earlier research efforts that have examined determinants of standardization. Despite the existence of a large and complex set of factors that influence international business activities. Managerial decision making regarding standardization or customization of pricing strategies in international markets should be based on a thorough analysis and assessment of the degree of similarity (or difference) between the firm's home and host markets.. the results indicate that the extent to which MNCs standardize their international pricing strategies depends on certain environmental and market conditions-the degree of similarity between a firm's home and host markets in terms of economic conditions. have no significant effect on the international pricing strategies of the participant MNCs. appropriate pricing strategies must be developed with respect to each market. special attention should be paid to the coordination of business operations across different foreign markets and the exploitation of potential scale economies and synergies with the ultimate objective of enhancing the overall company efficiency and effectiveness. our study suggests that these elements are significant correlates of standardized pricing programs. Nevertheless. the level of similarity in the distribution infrastructure between home and host countries was found. but within the framework of an overall marketing strategy (e. however. customer characteristics. a separate analysis and assessment of the environmental and market conditions that prevail in each targeted foreign market should be performed. and stage of PLC. Douglas and Wind 1987. Johnson and Aruthanes 1995. Furthermore. and stage of PLC-must be taken into account. four factors-customer characteristics and behavior. demand is strong and competition is weak) or competitive pricing when they are hostile (i.g.. In this regard. Jain 1989.e. At the same time. managers may be able to enhance the performance of their firms by formulating and implementing marketing programs that match the environmental and market conditions of each foreign market targeted (see Venkatraman and Prescott 1990). demand is weak and competition is intense). not to play an important role in the determination of the degree of international pricing standardization. Sometimes.
ACKNOWLEDGMENTS .. Therefore. more emphasis should be placed on investigating the influence of various firm characteristics and product.e. Certain limitations evident in the explication of this study should be taken into account. Another relevant aspect could be process standardization. and control of marketing programs in overseas markets (Jain 1989). First. though costly and time consuming. which involves the use of uniform structures and processes for the design. Fourth. Third. the present study looked only into the content aspect of standardization with reference to pricing. Second. because of the descriptive nature of the present study. the United Kingdom). the empirical inquiry focused on a specific international market framework (i. which suggests that the results may suffer from limited external validity. especially if making inferences to other significantly different economic settings such as former Eastern Bloc or newly industrialized regions.Table 3. Finally. Conceptual and empirical studies focusing on the drivers and performance consequences of international marketing pricing standardization would have important implications for both theory development and the advancement of management practice in the field. combined with the limited amount of available empirical evidence.and/or industry-specific factors on the degree of international pricing strategy standardization. implementation. Future research efforts may consider the use of a longitudinal methodology that. Future research efforts could add to the body of existing knowledge by exploring the extent of standardization of the process MNCs follow in formulating their pricing strategies across different foreign markets. For example. readers should exercise caution in attempting to generalize from this investigation. the study employed a cross-sectional research design that prevents us from making cause/effect inferences. Testing the external validity of the present evidence requires an examination of the issues addressed in this study within other international business contexts. The pursuit of a particular international pricing strategy makes sense from a managerial perspective only to the extent to which it has a positive effect on the performance of the firm. there is a need for more exploratory research to gain insights into the interrelationships among these variables and how they affect international pricing programs. can help track dynamic phenomena such as the relationships of extent of international pricing strategy standardization with its determinants. a natural extension of the present study would be to consider performance outcomes of international pricing standardization. Given the absence of pertinent empirical evidence. a relatively limited number of potential independent variables have been examined. Further research should investigate the significance and relative importance of other contingency factors.
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[Author Affiliation] THE AUTHORS [Author Affiliation] Marios Theodosiou is Lecturer in Marketing. School of Economics Fy Management. [Author Affiliation] Constantine S. University of Cyprus. Cardiff Business School. . Katsikeas is Sir Julian Hodge Chair in Marketing Fr International Business. Cardiff University.
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