‘CHAPTER 11. PRICING FOR INTERNATIONAL MARKETS 381 This difference is not perceived to be so great in other countries, however, where consumers feel that the general quality is not significantly different to justify a substantially higher price. Mustration 11.1 suggests other factors that influence prices. ‘three to four timas bigger than the average hard owned by a UK daly farmer have recently benetita from fan- tastic weather. The yields from their cows has grown to ‘such alhigh level that the price at which mikis sold has reduced. This is bad news for the UK daly farmer as mk prices ae cictated global. Therefore, a reduction in mik. prices in one country affects dairy farmers worldwide. Recently, poltics has impacted on UK (and Euro- pean) dairy farms. The mik suppled to manufacturers ‘to make choose, yoghurt and butter was lat standing in factories and ports. Russia's recent (2015) import ban on products from Europe meant cheese from the UK could not be sold in Russia. Russia had previously imported a lot of cheese from Europe. This created a ILLUSTRATION 11.1 Milk: global pricing and politics shake the UK dairy farmers’ profits ‘cheese mountain’ whichn tun reduced cheese pices. sand European dairy farmers saw thor prof reduce again for issues outside their conto, Most businesses axein conto ofthe key elements of the marketing mix. Since the lste 1980s, delry farms in the UK have emover *s snot the caso for ho UK daly frmor reduced in number. Of those that are left, 50 per cant of milk is sok ‘mainly to wholesalers or retall- rs, while the other 50 per cent is sent to manufactur- fers to make into cheese, yoghurt and butter. However, a high percentage of these products are also made from mik imported ftom overseas, UK farmers are affected by international pricing, “which sometimes can make their profs go down. Huge farms in the USA and New Zealand (with average herds Questions 1 What ave the main factors that affect the price of nik? 2. What factors can farmers control and which can they rot control? Reterence: The Guardian (2015) EovalThe Guarcian view ‘on ik prone: dary farmars ae beng hiven cut of business. ‘The groceries regulator should find out why. 12 January. Price plays an important role in product differentiation by enhancing the perceived value of the product and helping consumers to distinguish between offers from different competitors in order that their needs ‘can be met. Watch prices, for example, range from very little for a child's watch, to a high premium price for a Rolex. Within this range, individual manufacturers normally confine specific brands within particular pricing bands. These are linked to the positioning of the brand and the profile of the watches within the range, and to the characteristics of the target segment, The key role of price in differentiating products within a category and within a particular market can be used as an offensive strategy. This is demonstrated by the South Korean car manufacturer, Kia. It entered the US car market knowing that its brand name had litte credibility there and that the market was already saturated with broadly equivalent products. It targeted its Japanese equivalents, the Honda Civic and Toyota Corolla, by offering a similar car at a 25 per cent lower price. The influence of cost structures on pricing ‘There is a close relationship between prices, costs and sales volume of a product, because the price charged affects sales volume by increasing or decreasing the overall demand. As a result of producing or marketing Larger volumes the unit cost of an individual product reduces. Therefore, ofall the factors, this often becomes the initial stimulus for firms taking the decision to export. ncn inp nom tpynaenramdamee