1 / 19

International pricing strategies

International pricing strategies. Learning Objectives. Identify and evaluate the factors affecting international pricing Appreciate the significance of costs Develop pricing strategies for different products/markets

alma
Télécharger la présentation

International pricing strategies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. International pricing strategies

  2. Learning Objectives • Identify and evaluate the factors affecting international pricing • Appreciate the significance of costs • Develop pricing strategies for different products/markets • Appreciate the problems associated with implementing international pricing strategies

  3. Pricing is………. • The only element of the marketing mix which creates revenue (and profit?) • The most neglected element of the marketing mix in terms of academic research • Increasingly important in the wake of • market de-regulation • price harmonisation policies

  4. What influences international pricing? • Corporate objectives/strategy • Costs

  5. What influences international pricing? 1. Company objectives/strategy pricing* • Take margins now (premium pricing strategy) • USE: • following high investment in R&D, A&P, brand development etc. • Reflect premium brand/product • Take margins later (discount pricing strategy) • USE: • entry strategy e.g. Nissan, Toyota, Honda in 1970s • e.g. a strategy to buy market share • Never take margins (loss leader strategy/cross-subsidisation) • USE: • to promote engagement with the brand *Lancioni and Gattorna, 1992

  6. What influences international pricing? 2. Company costs – usually the price floor • Fixed/indirect – unrelated to the level of output • High for services • Variable/direct - related to the quantity produced • Low for services • Specific international costs (price escalation): • Carriage, insurance and freight (c.i.f.):transport, agents’ fees, port charges, documentation costs etc. • Plus: • Import duty • Distributor mark-ups • Host country tax

  7. Impact of price escalation - 3 cases

  8. What influences international pricing? • What costs can we avoid? • e.g. do we set up sales offices or build a factory? • Can we franchise or license our operations • What costs must we absorb? • Exchange rate movements • Taking lower profits abroad?

  9. What influences international pricing? 3. Consumers • No two countries are exactly the same • Purchasing power (disposable income) • Stage in the PLC • First time buyers? (e.g. McDonald’s in Russia) • Brand loyalty • Attitude to quality

  10. What influences international pricing? 4. Competition • Competitive rivalry: • How many? • Size? • Host country companies? • Multinational companies? • Threat of new entrants/barriers to entry • Threat of substitutes

  11. What influences international pricing? 5. Country/regional factors: • Trade bloc factors • e.g.price harmonisation in Europe • Little evidence in reality yet! • Pressure groups • E.g. Organisation of Petroleum Producing Countries (OPEC)

  12. What influences international pricing? • Variations in % Value Added Tax (VAT) • Variations in tax structure • e.g. luxury car tax • e.g. lower tax on parts for local assembly • Export credits for local purchasing

  13. What influences international pricing? 6. Currency/monetary factors • Differential inflation rates between producing country and host countries • Changing exchange rates • E.g. appreciation of the Yen in 1990s • Both can seriously undermine positioning strategies

  14. Exchange rate fluctuations raise two issues • How much of the price change can be passed through to customers? • To what extent do we price to market ? • E.g. Export price to US=£100 • Xrate is $2:£, US price =$200 • Xrate rises to $2.5:£, US price =$250 • Do we: • pass tho’ and loose market share or • price to market and take a cut in profit ($50=£20) • Evidence that German companies pass thro’ and Japanese companies price to market

  15. What influences international pricing? 7. Channels • Variations in distributor power • e.g. retailers in UK, France and Germany • Variations in margins between countries • Alternative: • distribute direct/cut out the middle man • e.g. Mercedes in Europe

  16. What influences international pricing? 8. Large differences in price between countries lead to Parallel importing • Undertaken by unofficial distributors • Taking advantage of differential prices • e.g. pharmaceuticals in Europe: - Glaxo’s Zantac sold to Greece, bought by UK distributors, re-imported and sold to the NHS! • Undercuts official prices, reduces profits and undermines brand propositions

  17. Transfer pricing • Intra-company trading to maximise global profit • Relates to movement of raw materials, components as well as finished goods/services • To reduce the impact of duty and tax • Set low prices in high duty/tax countries • Set high prices in low duty/tax countries • Ethical concerns

  18. Dumping • Selling at lower prices in foreign markets • At less than ‘cost’ • Illegal in many countries e.g. US • Examples: • Boeing v Airbus Industrie • Recent steel duty increases in U.S. • Difficult to prove

  19. Counter-trade • Non-currency related payment • e.g., goods or partial J.V.s • Used by countries with limited reserves of convertible currency • c5% of UK exports, c8% of world trade (GATT), could be much higher • Distinct from barter (goods only payment) - less risky

More Related