international promotion mix & pricing decision

PROMOTION
Promotion plays a vital role in providing information of the product to the foreign
customers. It also creates the desirability of the product among foreign potential buyers.
Foreign companies desire to communicate with their mareting intermediaries and
potential buyers to ensure favourable sentiment toward themselves and their products.
Promotion is more culture bound than other Ps.
!ence" the foreign companies must tae special care in promoting the product in the host
country.
The promotion mi# include$
%. &dvertising
'. (ales Promotion" and
). Personal (elling
*. Public Relations
%. &+,-RTI(IN.
Though advertising is not given due importance in developing countries" it plays crucial
role in international mareting and particularly for consumer goods and consumer
durables. The international firm while formulating advertising strategy should consider /
0a1 Message
0b1 Medium
2 -#tent of global advertising efforts.
(&3-( PROMOTION
(ales promotion includes specialised mareting efforts lie coupons" in/store promotions"
sampling" direct mail campaigns" co/operative advertising and trade fair attendance.
International companies attend trade shows lie Paris &ir (how" Toyo &uto Mart etc.
Most of the &irlines companies use sales promotion to lure customers.
P453I6 R-3&TION(
Public relations include efforts aimed at enhancing a firm7s reputation and image with the
general public. The conse8uence of public relations is that the firm is a 7good corporate
citi9en.7 This image in its turn enhances company sales.
Pricing +ecision
PRI6IN. +-6I(ION(
Though the pricing is significant among the * Ps" it receives the least attention in the
international mareting. Pricing decisions can be studied from the following approaches$
:: (upply and +emand
:: 6ost
:: -lasticity or 6ross -lasticity of +emand
:: -#change Rates
:: Maret (hare
:: Tariffs and +istribution 6osts
:: 6ulture
:: Purchasing Power
PRI6IN. PO3I6I-(
The pricing policies of international companies include$
:: (tandard price policy
:: Two/tiered pricing
:: Maret pricing.
(tandard price policy$ 4nder the standard price policy" the international company sells
the product at the same price for the customers of any country or nationality. 6rude oil
producers lie ;uwait Oil" &ramco and Peme# sell their products to all customers at price
determined by supply of and demand for crude oil in the world crude oil maret. .
Two/tiered pricing policy$ International company under this policy sells its product at two
prices" vi9." one price for domestic sales and another price for the foreign sales. This
policy is adopted due to the involvment of shipping costs" tariffs and foreign distribution
costs.
Mareting pricing policy$ International companies following this policy customise their
pricing on a maret/by/maret basis in order to ma#imise their profits in each maret.
<apanese automobiles follow this policy in pricing their cars.
&lternative pricing strategies$ There are a number of alternative pricing strategies in
addition to the above/mentioned strategies. These include$
+iscounts 0cash" 8uantity" functional etc.1
Financing or credit terms
5undle or unbundle.
Factors affecting international pricing
Pricing factors of international business vary from those domestic business. & number of
factors affect the international pricing. The important among them are$
0a1 6ost
0b1 6ompetition
0c1 Product +ifferentiation
0d1 -#change Rate
0e1 -conomic 6onditions of the Importing 6ountry$
0f1 .overnment Factors$
0g1 Other incentives lie supply of finance" inputs etc. at lower prices in order to
encourage the domestic e#ports.
The normal e#/price structure is as follows$
0i1 6ost of production
0ii1 Producer7s profit
0i1 = 0ii1 > -#/factory gate price
0iii1 Pacing and Maring
0iv1 3oading charges at the factory
0v1 Transportation charges to docs" railway station or airport
0vi1 !andling charges and fee at port" railway station" airport
0vii1 6ost of documents 0lie cost of lading and airway bill1
0viii1 6onsular invoice" certificate of origin
0i#1 -#port duty 0if any1
0#1 0i1 to 0i#1 > 6 and F Price
0#i1 6ost of insurance
0#ii1 (ea or air freight charges
0i1 to 0#ii1 > 6IF Price
0#iii1 4nloading charges at destination
0#iv? Import duties and ta#es
0#v1 Fee paid to the 6learing &gent
0i1 to 0#v1 > 3anded Price
0#vi1 Transportation charges to Importer7s @arehouse
0#vii1 Importer7s MarginAMar/up
0#viii1 Mar/upAMargin of all other maret intermediaries in the importing country
0i1 to 0#viii1 > Price to the consumer
+4MPIN.
+umping is a form of price discrimination. 4nder dumping the international company
charges different prices for the same product in different marets. +umping means selling
the products at below the cost of production or at below the on going price in the maret.
6onse8uently" the imported goods are sold at prices so low as to be detrimental to local
producers of the same ind of merchandise. I I For e#ample" 6hina dumped its steel"
4(& and Malaysia dumped cooing oil in India. 6onse8uently" Indian .overnment
imposed
antidumping measures to protect domestic industry.
Types of +umping
0%1 (poradic dumping $ (poradic dumping occurs when an international company sells its
unsold inventories in a foreign country to get rid of them.
0)1 Predatory dumping$ Predatory dumping is selling the product in a foreign maret at a
loss as a strategy of entering the maret. Benith uses this strategy for selling televisions
and computers.
0'1 Persistent dumping$ Persistent dumping involves consistently selling the product at
lower prices in one maret than in other marets. <apan sells its electronic products at
high prices in <apan and sells the same products consistently at lower prices in 4(& and
India.
0*1 Reverse +umping$ 4nder reverse dumping the product is sold at high price in
international marets and at a low price in the domestic maret.
&ntidumping Terms
+umping adversely affects the domestic manufacturers" suppliers of raw materials"
components" labour and other staeholders of the domestic companies. Further" it affects
the economic activity in the domestic country and also the government revenue. !ence"
the domestic governments 7importing7 impose antidumping termsAmeasures.