Page 151 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

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that is relevant to that market, Martin Taylor, general manager of platform strategy at
Microsoft, said in a conference call with financial analysts on Friday.
“From a pricing perspective, I think one of the most difficult challenges that we work on
is to really understand, let’s call it this ‘Big Mac’ index, in terms of how much does a Big
Mac cost in India versus in New York versus in Taipei, and how do you map a similar Big
Mac index to software? It’s a very difficult problem,” Taylor said, according to a transcript
of the call.
The Big Mac index is an annual listing of prices for Big Mac hamburgers in several countries
compiled by The Economist magazine.
One problem for Microsoft is that, unlike hamburgers, software doesn’t spoil, which
makes it easier for buyers to shop around for a better deal and buy their software from
another country. To address this, Taylor suggested that Microsoft could offer different
prices for the different language editions of its products.
“English speaking is an area that we have to really think about,” he said. “When you have
markets where you have specific languages then it’s a little bit easier to do.”
Microsoft is working with several unspecified governments to tailor its offerings, Taylor
said. “We’ve got quite a few different initiatives that we’re beginning to work on that
we’ll be announcing in the coming months,” he said. Taylor didn’t provide specifics.

The problem Taylor and his company are facing is a tough one, said Laura DiDio, a senior
analyst at Boston-based The Yankee Group.
“I can absolutely see and sympathize with what he is grappling with. What can you do?
You want to make your products affordable, particularly to companies in the Pacific Rim,
because they just don’t have the money, and then what do you say to your customers in
established markets such as North America and Western Europe?” DiDio said.
DiDio expects Microsoft to come up with a solution for its woes. Not only will it negotiate
on pricing or offer tailored version of its software for various countries, it will also talk to
governments about jobs the company has created in their region, bring in Chairman and
Chief Software Architect Bill Gates for some star power, and the Bill and Melinda Gates
Foundation may even contribute to a local cause, she said.
“I don’t want to suggest that Bill Gates is using his charity as leverage to get Windows in
anywhere, but it certainly does help,” she said.
Paul DeGroot, an analyst at Directions on Microsoft Inc. in Kirkland, Washington, doesn’t
expect Microsoft to change its global pricing strategy overnight, but does see some changes
happening at the local level.
Source: www.infoworld.com/t/applications/microsoft-rethinks-unified-pricingstrategy-921

Task Price is an important element of marketing mix. Explain with the help of examples.

8.4 Pricing Issues in International Marketing

Price can best be defined in ratio terms, giving the equation

Resources given up
Price =
goods received

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