International pricing strategy

Pricing strategy for international market

1. Pricing Strategy For International Market Presented By: Anshu Nath - 02 Pranjali Sinha - 14 Kavya Vajjhala - 30 Subrata Kr. Dey - 45

2. I nternational Pricing

3. Export Pricing Decision For Developing Countries Lower production & technology base – higher cost of production. Little bargaining power to negotiate – compelled to sell products at below cost of production. Less/ marginal value addition of the products – limited scope for realizing optimal prices. Appropriate pricing strategies with innovation – success in international market.

4. Pricing Methods

5. Cost Based Pricing Based on the cost of the product. Certain percentage of profit and other expenses may be added to the cost. No optimum method for following reasons :  May be too low vis-à-vis competitors, and importers may earn a huge margin.  May be too high, making goods non competitive and rejection of offers

6. Full Cost Pricing Used during the initial stages of internationalization. Adding a mark-up on the total cost determine price. Benefits: Ensures fast recovery of investments. Useful for firms dependent on international markets than domestic markets. Eases operation and implementation of marketing strategies. Disadvantage: Overlooks prevailing international market price- either uncompetitive due to high price or low price .

7. Marginal Cost Pricing

8. Market Based Pricing Exporters in developing countries generally are: This makes them assess the prevailing price in the international markets and top down calculation to arrive at the cost of the product. Beneficial as it allows to meet the competitor price in the market

9. Cost

10. Competition

11. Product Differentiation

12. Exchange Rates

13. Economic Conditions of the Importing Country Exports should take into consideration: Demand means:

14. Government Factors

15. Pricing Strategies

16. Standard Approach Some firms use a standard worldwide price approach where the exporter does not adjust the product price, regardless of any outside factors. This method often limits sales potential, because flexibility is often required to successfully enter a market . However, this approach may work with certain products that are in high demand. An alternative to a standard price might be average pricing, when a certain profit margin is maintained on a worldwide basis, including the domestic market .

17. Competitive Pricing Competitive Pricing is based on evaluating the price of competitive products in the target market Domestic Pricing Begin with the “Ex-Works" or the “FOB Factory” price of product that includes possible sales agents’ commissions or distributor discounts

18. Marginal Pricing By far, this method is the most logical since it considers all of the direct costs relative to international trade, and does not burden export sales with domestic overhead costs. Begin with the actual cost of manufacture. Add the costs of: Product modification for international sale Distributor discounts or sales commissions Allowances for promotion or financing Special packaging for international shipping Administrative cost relative to international trade

19. Pricing Strategy: If Tata Nano is Launched in European Market  if Nano is expensive or even if price is at par, more over due to increase in fuel prices, economic conditions customers buying power is also affected. So they would prefer to buy a small car with low price that would meet their basic travelling needs.  European customers are more safety conscious, and if Nano is priced low then their perception about quality of product will lead to a assumption that product on high of safety standards and this car might be dangerous to travel in

20. International Commercial Terms of Sale: INCOTERMS INCOTERMS are divided into four main components and are built around the main carriage of the shipment.

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