Remember our management orientations? In addition to being key to HOW a company expands internationally, those management orientations also have a lot to do with how products are priced in different countries.
1. Ethnocentric pricing, essentially the same price is charged no matter where in the world the buyer is located.
2. Polycentric pricing, permits subsidiary or affiliate managers to establish whatever price they feel is most appropriate in their market environment.
3. Geocentric pricing, more dynamic and proactive than the other two, the price is neither fixed worldwide nor are subsidiaries or local disributors allowed to make independent pricing decisions. Generally, the price is controlled from headquarters but is based on local market factors.
Let's talk about the pros and cons of each pricing strategy. For example, the simplicity of ethnocentric pricing, especially for low end products sounds appealing. In addition, one price worldwide would eliminate the gray market for that good