Pricing Decisions 1 1 .pptx - International/Global Pricing...

International/Global Pricing
Decisions

Lecture Outline
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Price – definitions and pricing strategies
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Pricing in International Market
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Pricing & culture
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Seminar task

Global Marketing Mix

What Is a Price?

What Is a Price?

Factors Affecting Price Decisions
Other internal and
external considerations
Marketing strategy,
objectives and mix
Nature of the market and
demand
Competitors’ strategies and
prices
Customer
perception
s of value
Product
costs
Price Ceiling
No demand
above this price
Price Floor
No profits
below this
price

Main pricing strategies

Value-based pricing
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Uses buyer’s perception of value as the key to pricing
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Price is considered along with the other marketing mix variables
before the marketing programme is set

Cost-based pricing
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Cost-based pricing involves setting prices based on the costs
for producing, distributing, and selling the product plus a fair rate
of return for its effort and risk
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Cost-based pricing adds a standard mark-up to the cost of the
product

Pricing Objectives:
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As an active means of attaining marketing objectives
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Companies use this when trying to achieve certain
objectives, profit margins or targeted market share.
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As a static element in a business decision
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Companies use this when they are foreign marketing is
not a priority
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Usually associated with trying to get rid of
excess inventories
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The more control a company has over the final selling price of a
product, the better it is able to achieve its marketing goals
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The more control a company has over the final selling price of a
product, the better it is able to achieve its marketing goals
•
It is not always possible to control end prices
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It is not always possible to control end prices
Pricing Policy

B. Parallel Imports
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Where a manufacturing company sells its products to
a specific country; and those products are further sold
to another unintended country
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“Gray Market” situation can occur
C. Exclusive Distribution
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Where manufacturers select preferred distributors to
sell its products at premium prices in order to:
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Maintain high profit margins; stock large assortments; and
to maintain the exclusive quality image.
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This also contributes to parallel imports
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Exhibit 18.1 pg. 534 “How Gray-Market Goods End Up in
the U.S.”
Pricing Policy

Approaches to International Pricing
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Full Cost vs Variable Cost
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Full Cost is determined by combining the total cost plus a
profit margin to every unit
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Every unit must bear the total cost (including
international units sold)
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Variable cost is determined thru the incremental cost
associated with producing goods for selling them in
international markets
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Can appear to be “dumping”