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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