Title: Global Pricing PoliciesCreator: Babu John MariadossSpeaker: Douglas Albertson

online.wsu.edu

SECTION 2

Development of Global Marketing Strategies

Module 9: Global Pricing

Lecture: Global Pricing Policies

Key Features of Pricing Strategy

Feature Standardization Adaptation Corridor/Invention

Pricing Decision Central Local Central and Local

Addition to basic price

Transport and import duties etc. paid by the customer, hence price variations in country.

Final price depends on local transport and other marketing costs.Transfer pricing is a corporate decision.

Local prices set within the constraints of the long-term objectives of the corporation.

Drivers Decreasing marketing costsSize of marketReduction of trade barriersIncreased brand globalisationGlobal sourcing

Customer preferencesCost structuresTerms of access, duties, and tariffsCompetition

Compromise between unprofitable, low, standardised and adaptive prices.Market opportunitiesChanging patterns of demand.Long-term considerations

Advantages Low risk Responds to local conditions and competition.Encourages sales volumes

Responds to local conditions.If demand takes off, encourages local investment.Encourages long-term profit.Discourages grey and parallel markets.

Disadvantages

No local conditions are taken into accountDoes not maximise profits of volumeEncourages parallel and grey market trading

No central controlEncourages grey markets

Short-term losses

Example Commodities Cars Holidays

Pricing Policy Options

Pricing Objectives

Rate of return on investment Cost-oriented e.g. oil and gas

Competition matching or prevention Competition based pricing e.g. commodities or lower than competition

to prevent competitive entry

Market share/penetration Demand-led pricing or geographical pricing: low when product is in

plentiful supply, ‘least cost sourced’ or to get product established e.g. Chinese made umbrellas

Market skimming Demand-led pricing: high when product is in short supply or ‘new to

market’ e.g. Nintendo Wii