Managing A Global

Business Through
Suitable Pricing
Policies
Introduction

 Among the four marketing mix,

product, distributing channels,
promotion and price, only price creates
income and the other three generate
costs. Price, besides creating income,
plays a major role as a strategic factor
in developing competitive advantage in
the market.
 Pricing means to set price or prices
for the markets, aim at gaining profit
for the company. There are many
kinds of pricing including pricing
objectives, pricing strategies, pricing
policies available to global marketers.

 An overall goal must be to contribute

to company sales and profit objective
worldwide.
 The amount of income and promotion
of a company regarding the positioning
and finding a suitable position in the
mind of customers are related to
suitable pricing.
Pricing Objectives
 Pricing objectives vary depending on
products’ life cycle stage and the
country-specific competitive
situation.

 Any pricing system should address

price floor, price ceiling and optimum
prices in each of national market in
which the company operates.
 The pricing consideration for marketing
outside the home countries are the
reflection of quality in price,
competitiveness, price penetration,
skimming or holding, the type of
discount, market segmentation, the
pricing option in case of costs increase
or decrease, logicalness of price by
the host- country, and its laws and the
probable dumping.
Pricing Strategies
 Market skimming
 Penetration pricing
 Market holding
 Cost-plus pricing
Pricing Process
Environmental factors
affecting pricing

 Currency fluctuation
 Inflation
 Government control and subsidies
 Competitive action
 Market demand
Pricing Strategy Matrix
Transfer Pricing

 Transfer pricing refers the pricing of

goods and services bought and sold by
operating units or divisions of a single
company. In other word, transfer
pricing concerns intra corporate
exchanges- transactions between
buyers and sellers that have the same
corporate parent.
Approaches Of Transfer
Pricing

 Cost based pricing

 Market based transfer pricing
 Negotiated pricing
Pricing Policies
 Extension/ Ethnocentric
 Adaptation/ Polycentric
 Invention/ Geocentric
Other approaches to pricing
 Psychological pricing
 Product line pricing
 Optional product pricing
 Captive product pricing
 Product bundle pricing
 Geographical pricing
Particular factors of an
export price

The factors for developing price

are:
 Costs
 Market
 Customer behavior conditions
 Competition
 Company policies
Developing export pricing
model

According to Kotler, export pricing model

is dependent on two factors:

 amount of management authority,

which is depended to delegation
granted for pricing

 the internal market conditions

Model of export pricing based on
amount of authority granted and
internal market conditions
Conclusion
 Pricing is one of the components of
marketing mix and reflects costs and
competitive factors.

 There is no maximum absolute price

of a product yet for each market, the
price should be fixed concerning the
customer attitude. The goal of most
marketing strategies is to determine
a price which could be accountable
for customer perception.
 A company usually fixes prices
regarding the value that a customer
concerns for the product, and covers
costs and provide a profit margin.

 Each company should determine

competitive market, its costs for
each market, the availability of
them, and other environmental
dimensions.
 Export managers, from their
advantage point of familiarities to
markets should have enough
authority to determine strategic
prices for each market regarding
the life cycle of the product in
each market an their stability
and profitability for that market.
 Pricing theories can be classified based on
point of delivery and introducing a
conceptual model indicating different
pricing strategies based on the internal
market condition and the amount of
authority granted to export or global
marketing manager for pricing decisions
with the emphasis on delegating high
authority to expert and informed global
marketing managers.
 Export managers should program
pricing strategies to respond the
customer's needs and to take the
company profits in to account for
the long term.
Thank You