Page 158 - DMGT547_INTERNATIONAL_MARKETING

Unit 8: Pricing Decisions for International Markets

Notes
Niyogi: If I may add, the real objective of the VIT was not just to transfer as many techniques
as a 10-week programme would allow. We actually want to set-off a continuous
improvement process. But we are not really sure how much momentum is being sustained
after those 10 weeks. We have no monitoring of that. For all I know, there’ll be no long-
term impact.…
Kshirsagar: And then there’s another fear I have although I must add, Gautam doesn’t
share my views here. I feel that the VIT may be stretching our people, whose time would
be used better in focusing on our core vendor development work.

Niyogi: Who knows, Rajeev? May be you’re right. I’m not sure any more. So, can you help
us, Arnab?
Questions

1. Is an initiative like the VIT the right approach in helping vendors improve their
processes and their output? Should it be linked to the vendor’s strategy? Or to the
original equipment manufacturer’s strategy?
2. Should something like the VIT be pursued continuously, or as a one-off programme?
Should its coverage be extended to include non-manufacturing activities? Should it
now be improved, or discarded? Or should it be integrated into Indo-Nichita’s
regular vendor-development strategy?

Source: P K Vasudeva, International Marketing, Excel Books.
8.5 Summary

This unit attempts to give an overview of the functions in as simple manner as possible.
Pricing is like a tripod, the three factors being costs, demand and competition. The price
cannot be fixed below cost for long.
Cost determines the floor price below which an exporter may not agree to sell the goods.
Whatever be the price determined by the firm for its product it must consider the price and
non-price factors before taking a final decision.
An offer may also be in the form of printed price list where the goods have a standard
export price.

The export price structure like the domestic price structure begins on the factory floor. The
export price structure is the basis of all exports price quotations, discount and commissions.

There are various methods of calculating the price in the foreign market. The methods
may be grouped into two – cost oriented export-pricing method and market oriented
export pricing method.

Pricing strategy is an important part of fixing the international price. Elasticity of demand
is another factor, which influences the price.

Price can best be defined in ratio terms, giving the equation
Resources given up
Price =
goods received
Different pricing strategies are used in different markets. These strategies can be Market
Penetration Strategy, Probe Pricing Strategy, Follow the Leader Pricing Strategy, Skimming
Pricing Strategy, Differential Trade Margins, Standard Export Pricing Strategy, Cheaper
Price for Original Equipment and Higher Price for Spare Parts.

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