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    Drivers of Foreign Market Pricing: Company Goals Company Costs Customer Demand

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    Suman Pandey Tiwari
    This document discusses various factors that affect pricing strategies in international markets. It addresses drivers of foreign market pricing including company goals, costs, customer demand, competition, distribution channels, and government policies. It then covers managing price escalation, pricing in inflationary environments, currency fluctuations, transfer pricing between countries and businesses, global pricing regulations, coordinating prices across international markets, and countertrade agreements.

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    Drivers of Foreign Market Pricing: Company Goals Company Costs Customer Demand

    Uploaded by

    Suman Pandey Tiwari
    40 views16 pages
    This document discusses various factors that affect pricing strategies in international markets. It addresses drivers of foreign market pricing including company goals, costs, customer demand, competition, distribution channels, and government policies. It then covers managing price escalation, pricing in inflationary environments, currency fluctuations, transfer pricing between countries and businesses, global pricing regulations, coordinating prices across international markets, and countertrade agreements.

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    Global pricing

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    Sumy-IIMT-04

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    This document discusses various factors that affect pricing strategies in international markets. It addresses drivers of foreign market pricing including company goals, costs, customer demand, competition, distribution channels, and government policies. It then covers managing price escalation, pricing in inflationary environments, currency fluctuations, transfer pricing between countries and businesses, global pricing regulations, coordinating prices across international markets, and countertrade agreements.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    40 views16 pages

    Drivers of Foreign Market Pricing: Company Goals Company Costs Customer Demand

    Uploaded by

    Suman Pandey Tiwari
    This document discusses various factors that affect pricing strategies in international markets. It addresses drivers of foreign market pricing including company goals, costs, customer demand, competition, distribution channels, and government policies. It then covers managing price escalation, pricing in inflationary environments, currency fluctuations, transfer pricing between countries and businesses, global pricing regulations, coordinating prices across international markets, and countertrade agreements.

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    You are on page 1of 16

    1.

    Drivers of Foreign Market Pricing


    Exhibit 13-1 Highest and Lowest Prices in ECU of Products in EC Cities

    Company Goals

    Company Costs
    Customer Demand Exhibit 13-2 An Example of Downsizing with Price Adjustment
    1

    1. Drivers of Foreign Market Pricing (cont)


    Competition Exhibit 13-3 The Cost of a Pack of Marlboro Cigarettes vs The Highest- and Lowest- Price Brands in Each Market
    Distribution Channels Government Policies

    2. Managing Price Escalation


    1. Rearrange the distribution channel 2. Eliminate costly features (or make them optional) 3.Downsize the product 4. Assemble or manufacture the product in foreign markets 5. Adapt the product to escape tariffs and tax levies
    3

    3. Pricing in Inflationary Environments


    Ways to safeguard against inflation 1. Modify components, ingredients, parts, and/or packaging materials. 2. Source materials from low-cost suppliers 3. Shorten credit terms 4. Include escalator clauses in long-term contracts

    3. Pricing in Inflationary Environments (cont)


    5. Quote prices in a stable currency 6. Pursue rapid inventory turnovers 7. Draw lessons from other countries

    3. Pricing in Inflationary Environments (cont)


    Courses of action with price controls 1. Adapt the product line 2. Shift target segments or markets 3. Launch new products or variants of existing products 4. Negotiate with the government 5. Predict incidence of price controls
    6

    4. Currency Fluctuations
    Exhibit 13-4 Exporter Strategies under Varying Currency Conditions

    Currency Gain/Loss Pass Through Exhibit 13-5 A Numerical Illustration of PassThrough and Local Currency Stability Exhibit 13-6 Retail Price Changes During Dollar Appreciations: Japanese and German Exports to the U.S. Market Currency Quotation
    7

    5. Transfer Pricing
    Determinants of Transfer Prices Tax regimes Local market conditions Market imperfections Joint partner venture Morale of local country managers

    5. Transfer Pricing (cont)


    Setting Transfer Prices
    Minimizing the Risk of Transfer Pricing

    Tax Audits
    Exhibit 13-7 Decision Model Making for Assessing Risk of TP Strategy

    6. Global Pricing and Antidumping Regulation


    Trading-up
    Service Enhancement Distribution and Communication

    10

    7. Coordinating Prices
    1. Nature of customers
    2. Nature of channels 3. Nature of competition 4. Market integration 5. Internal organization

    6. Government regulation
    11

    7. Coordinating Prices (cont)


    Aligning Pan-Regional Prices Exhibit 13-8 Frame 1 Development of Prices in Europe Step 1: Determine Optimal price for Each Country Step 2: Find out whether parallel imports (gray markets) are likely to occur at these prices Step 3: Set a pricing corridor
    12

    7. Coordinating Prices (cont)


    Implementing Price Coordination 1. Economic Measures 2. Centralization 3. Formalization 4. Informal Coordination

    13

    8. Countertrade
    Forms of Countertrade Exhibit 13-9 Classifications of Forms of Countertrade Non cash payments
    Simple Barter, Clearing Agreement, Switch Trading

    Cash payment flows


    Buy-back (Compensation), Counterpurchase, Offset

    14

    8. Countertrade (cont)
    Motives Behind Countertrade Gain access to new or difficult markets Overcome exchange rate controls or lack of hard currency Overcome low country credit worthiness Increase sales volume Generate long-term customer goodwill
    15

    8. Countertrade (cont)
    Shortcomings of Countertrade No in-house use for goods offered by customers Timely and costly negotiations Uncertainty and lack of information on future prices Transaction costs

    16

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