International Marketing Strategies

Pricing and Distribution strategies

for International Markets
Module IV
 Pricing strategies

• As part of its marketing plan, every business must decide what amount to

charge and how to get goods and services to customers. Factors such as

export costs, values of foreign currencies, and the availability of

transportation systems influence pricing and distribution for international

marketing.
Types of pricing strategies
 Pricing strategies

• Pricing is one of the most relevant elements of the marketing mix. Price is

defined as the amount of money required for a product or service.

Generally, this should reflect the cost of producing the product, the cost of

providing any necessary or ancillary services, a return for the firm, as well

as the quality of the product.

 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Competition pricing: When a company tries to

differentiate itself from its competition, it can change

the price, making it higher or lower, to achieve the

planned result.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Skimming pricing: This is a strategy where the price is

set high from the start. It is very popular in electronic
and tech companies, where the initial price slowly
decreases over time, after the release date. It gives a
possibility of introducing the product in steps to
different layers of the market.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Penetration pricing: This is something opposite to a

skimming strategy. It starts with a low price to
penetrate the market, usually with a product that
already exists in the market. It helps to gain sales and
market share. In the future, the price may be raised.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Product Line pricing: This strategy is linked to the kind

of features of the product. E.g., a phone might have a
different price whether it has a 4k camera build in or
not.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Psychological pricing: We can see this strategy applied

every day in shops and supermarkets. It is a method of
changing the price to simulate it is smaller than it is.
For example, when the product should cost Rs.100, it
will be changed to Rs. 99 to simulate it is cheaper.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Cost Plus pricing: This strategy is applied when, in

order to determine the final price, a percentage is
added to the costs as a profit margin.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Optional pricing: This technique works when a product

is being sold with an additional item, with the aim to
boost up the product’s attractiveness. It may be a
phone with extra internet, a washing machine with a
10-year guarantee etc.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Premium pricing: This means setting up a price at a

higher level to establish the exclusiveness of a high-
quality product. Premium brand stores or luxury cars
are a great example.
 Different pricing strategies
According to a firm’s objective,
the following pricing strategies can be considered:

• Bundle pricing: It is a pricing strategy in which multiple

products are sold at one price, instead of charging
each one of them separately.
 Different pricing strategies

• While looking into factors influencing the price

strategies, we can establish two main categories,
namely internal and external factors:
 Pricing strategies

• Among the factors that are internal to the firm, three stand out:

 Production and operating Costs,

 The Knowledge Of The Market And Sales Channel

 Firm's Business Strategies.

 Pricing strategies

• While the company can, to some extent, exert control

over these elements, sometimes it may not be so easy

to do so. Indeed, some changes require significant

cost and time efforts and thus are not always

profitable for the organization.

 Pricing strategies

• External factors have a great influence on pricing

decisions, but cannot be completely controlled by the
firm. They include the macroeconomic conditions in
the countries to which you want to export, the behavior
of target customers, the competitive structure and
l e g i s l a t i v e c o n s t r a i n t s o f t h e d i ff e r e n t m a r k e t s .
International Pricing strategies
7C’s of International Pricing strategies

• Dr. Chris D’Souza developed the 7Cs of international

pricing These are primary and secondary factors which

you’ll need to account for before setting your international

pricing strategy.
7C’s of International Pricing strategies

1. Costs – Firstly, it’s critical to get a handle on all your costs

related to your product / service offering. This includes

development, manufacturing / production, packaging,

distribution, storage, marketing, freight, tax, custom duty.

7C’s of International Pricing strategies

2. Competitors – Understanding the competitive landscape is

another key element. From a brand positioning perspective,

understand where you sit within the positioning map in relation to

your competitors.

E.g., premium vs economy, as this will influence prices.

7C’s of International Pricing strategies

3. Customers – At this stage in formulating your GTM strategy,

you should have a firm understanding of your target

customers and how much they are willing to pay for your

product/service. If you don’t know, you need to find out. .

7C’s of International Pricing strategies

4. Cultural differences – This comes back to understanding the local culture

and your target customer’s perception of your brand versus your competitors.

For example, Starbucks deploy huge price variations due to market positioning:

in Russia, they position themselves as a luxury high-end coffee house, whereas

in the US, their target market is “Regular Joes”; therefore, their US prices are

relatively lower than in Russia.

7C’s of International Pricing strategies

5. Channels of distribution – How many organizations are

involved in your global supply chain? For example, agents,

importers, wholesalers, retailers. The more companies which

are involved, the higher your costs.

7C’s of International Pricing strategies

6. Currency rates Handling multiple currencies means that you

are vulnerable to exchange rate fluctuations. This should be

factored into your pricing strategy.

7C’s of International Pricing strategies

7. Control by government: Government regulations could

potentially add to the complexity. For example, in the UK, there is

a national minimum wage enshrined in law, so regardless of the

size of your business, you would need to factor this in for UK

workers.
International Distribution strategies

Definitions: According to Philip Kotler, “Every producer seeks

to link together the set of marketing intermediaries that best

fulfil the firm’s objectives. This set of marketing intermediaries

is called the marketing channel.”

International Distribution strategies

Definitions: According to Richard Buskirk, “Distribution

channels are the systems of economic institutions through

which a producer of goods delivers them into the hands of

their users.”
International Distribution strategies

Definitions: According to William J. Stanton, “A channel of

distribution for a product is the route taken by the title to the

goods as they move from the producer to the ultimate

consumers or industrial user.”

International Distribution strategies

Definitions: According to McCarthy, “Any sequence of

institutions from the producer to the consumer, including none

or any number of middlemen is called a channel of

distribution.”
Distribution Channel

Distribution channel is that path which includes all individuals

and institutions which work to make goods reach the consumers

from producers without interruption.” Thus distribution channel

helps in the transfer of goods in original form from producers to

consumers.