This strategy is very simple and guarantees a fixed return. With standard formula pricing , the company standardises by using the same formula to calculate prices for the product in all country markets.
There are different ways to establish such a formula. For example, full-cost pricing consists of taking all cost elements e.
A direct cost plus contribution margin formula implies that additional costs due to the non-domestic marketing process and a desired profit margin are added to the basic production cost. The most useful approach in standard formula pricing is the differential formula. While these strategies accentuate elements of international standardisation in pricing, in price adaptation strategies prices are typically set in a decentralised way e.
Prices can be established to match local conditions. While this ability to comply with local requirements constitutes a clear advantage, there can be difficulties in developing a global strategic position. Additionally, the potential for price adaptation is limited by interconnections between the diverse international markets. Therefore it is necessary to coordinate the pricing strategy across different countries because otherwise reimports , parallel market or grey market situations can emerge.
In these situations, products are sold outside of their authorised channels of distribution. As a specific form of arbitrage, grey markets develop when there are price differences between the different markets in which products are sold. If these differences emerge, products are shipped from low-price to high-price markets with the price differences between these markets allowing the goods to be resold in the high-price market with a profit.
Parallel markets , while legal, are unofficial and unauthorised and can result in the cannibalisation of sales in countries with relatively high prices, damaging relationships with authorised distributors. Share This Paper. Background Citations. Results Citations. Citation Type. Has PDF. Publication Type. More Filters. This paper is based on the premise that it is important to understand what niche marketing is; what its elements are, and also to know about the characteristics of niche marketing strategy.
View 2 excerpts, cites background. The purpose of the paper is to study the product positioning concept and to understand its relevance in the marketing strategy of Industrial Products.
To know more on the subject existing literature … Expand. Unless a company is state-owned, the relationship an organization nurtures towards its consumers is nowadays a significant factor of success and competitiveness.
The aim of this paper is to point out … Expand. View 1 excerpt, cites background. Advertising messages in countries may have to be adapted because of language, political climate, cultural attitudes and religious practices. For example a promotional strategy in one country could cause offence in another.
Every aspect of promotional detail will require research and planning one example is the use of colour; red is lucky in China and worm by brides in India, whilst white is worn by mourners in India and China and brides in the United Kingdom. Many organisation adapt promotion strategies to suit local markets as cultural backgrounds and practices affect what appeals to consumers.
The level of media development and availability will also need to be taken into account. Is commercial television well established in your host country? What is the level of television penetration? How much control does the government have over advertising on TV, radio and Internet? Is print media more popular than TV? Before designing promotional activity for a foreign market it would be expedient to complete a PEST analysis so that you have a complete understanding of the factors operating in the foreign market you would like to enter.
Pricing on an international scale is a complex task. As well as taking into account traditional price considerations such as fixed and variable costs, competition and target groups click here for further information about marketing mix pricing an organisation needs to consider additional factor such as. The internet has created further challenges as customers can view global prices and purchase items from around the world.
This has increased the level of competition and with it pricing pressures, as global competitors may have lower operating costs.
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