Download Pricing Decision in International Market The

Pricing Decision in
International Market
Gautam Dutta
The Meaning of Price
• Price is the amount of money and/or other items
with utility needed to acquire a product.
– Price may involve more than money.
– Pricing is an active instrument of accomplishing
marketing objectives?
– Or pricing as static element of business decision?
Methods of Export Pricing
• Cost based pricing
– Full cost pricing
– Marginal Cost Pricing
• Market based pricing
Role of Non-price Factors in International Marketing
•
Prejudice against products manufactured in developing C.
•
Product Differentiation
•
Brand image
•
Order Size
•
Presumed relationship between quality & price.
•
After sales services
•
Before sales services
•
Consistency/continuity of supplies.
•
Prompt deliveries.
•
Ability to supply
•
complete range of products
Approaches
• Transfer at Cost: price is equal to production cost. Subsidiary
makes all the profit.
• Transfer at Arm’s length:
• Checking the price in a similar transaction between two
totally different parties; A
B vs C
D
• Checking the price in a similar transaction between one involved
party and one unrelated party
A
B vs A
C
• Transfer at cost plus: price is equal to cost + overhead +
Margin