International Pricing
International Pricing
Companies that market their products internationally must deeide what prices to charge in the different countries in which they operate. In some cases, a company can set
a uniform worldwide price. For example, Airbus sells its jetliners at about the same price everywhere, whether in the United States, Europe or a Third World country. However, most companies adjust their prices to reflect local market conditions and cost considerations.
The price that a company should charge in a .specific country depends on many factors, including economic conditions, competitive situations, laws and regulations, and development of the wholesaling and retailing system. Consumer perceptions and preferences may also vary from country to country, calling for
International price escalation: a pair ofLevi's selling/or S30 in the United States goes for over £60 in a
Levi's boutique in Korea and other Pacific Rim countries.
734 • Chapter 17 Pricing Strategies
different prices. Or the company may have different marketing objectives iii various world markets, which require changes in pricing strategy. For example, Sony might introduce a new product into mature markets in highly developed countries with the goal of quickly gaining massmarket share — this would call for
a penetration pricing strategy. In contrast, it might enter a less developed market by targeting smaller, less pricesensitive segments in this case, marketskimming pricing makes sense.
Costs play an important role in setting international prices. Travellers abroad are often surprised to find that goods which are relatively inexpensive at home may carry outrageously higher price tags in other countries. A pair of Levi's selling for 830 in the United States goes for about $M in Tokyo and 888 in Paris. A McDonald's Big Mac selling for a modest S2.25 in the United States costs $5.75 in Moscow. Pink Floyd's 'Dark Side of the Moon' CD sells for $14.99 in the United
States, but costs about 822 in the EU. Conversely, a (hied handbag going for only $60 in Milan, Italy, fetches 0240 in the United States. In some cases, such price
escalation may result from differences in selling strategies or market conditions. In most instances, however, it is simply a result of the higher costs of selling in foreign markets the additional costs of modifying the product, higher shipping and insurance costs, import tariffs and taxes, costs associated with exchangerate fluctuations and higher channel and physical distribution costs.
For example, Campbell found that its distribution costs in the United Kingdom were 30 per cent higher than in the United States. US retailers typically purchase soup in large quantities 48can cases of a single soup by the dozens, hundred or carloads. In contrast. English grocers purchase; soup iu small quan tities typically in 24can cases of assorted soups. Each case must be hand packed for shipment. To handle these small orders, Campbell had to add a costly extra wholesale level to its European channel. The smaller orders also mean that English retailers order two or three times as often as their US counterparts, bumping up billing and order costs. These and other factors caused Campbell to
charge much higher prices for its soups in the UK. 1 1
Thus international pricing presents some special problems and complexities. We discussed international pricing issues in more detail in Chapter 5.
Parts
» Book Principles Of Marketin Pleased
» I'hrce considerations underlying the
» The Information Technology Boom
» • False Wants and Too Much Materialism
» There is good reason to search a 2.4
» Levi's Strategic Marketing and Planning
» Analysing the Current Easiness Portfolio
» Conflict Between Departments
» Marketing Strategies for Competitive Advantage
» Principal actors in the company's
» • Persistence of Cultural Values
» McDonald's; Breaking into the South African Market
» Analysis of International Market Opportunity Deciding Whether or Not to Go Abroad
» Understanding the Global Environment
» Procter & Gamble: Going Global in Cosmetics
» Sheba: The Pet's St Valentines Day Pedro Quclhas Brito, Universidade do Porto, Portugal
» Individual Differences in Innovativcncss
» Influence of Product Characteristics on Rate of Adoption
» Selling Business Jets: The Ultimate Executive Toy
» • Systems Buying and Selling
» • Strong Influences on Government Buyers
» TABI.EI GOVERNMENT CODES OF PRACTICE IN VARIOUS COUNTRIES
» Qantas: Taking Off in Tomorrow's Market
» • Defining the Problem and Research Objectives
» CLOSEDEND QUESTIONS NAME DESCRIPTION
» Estimating Total Market Demand
» Estimating Actual Sales and Market Shares
» TimeSeries Analysis technology.
» Segmenting International Markets
» • Selecting Market, Segments
» 2 VOLUME BRAND SHARES (%) BRAND SHARE CoffeeMate total: 55.5
» 7 CONSUMPTION BY HOUSEHOLD SIZE (PER PERSON/WEEK)
» Preview Case Gastrol: Liquid Engineering
» Determine the Competitors'Positions One way of defining competitors is to look at
» Communicating and Delivering the Chosen Position
» The Need for Customer Retention
» The Ultimate Test: Customer Profitability
» 1 POTENTIAL PRODUCT FIELDS FOR AN EXPANSION OP THE UNCLE BEN'S BRAND
» 2 VARIETIES OF UNCLE BEN'S FEINSCHMECKER SAUCE
» Federal Express: Losing a Packet in Europe
» Close or Distant Competitors
» • Expanding the Total Market
» • The Customer Service Department
» What Governs NewProduct Success?
» Lufthansa: Listening lo Customers
» Managing Productivity CU _ C7 ^ •
» Mattel: Getting it Right is No Child's Play
» Internal Factors Affecting Pricing Decisions
» • BreakEven Analysis and Target Profit Pricing
» 1 CAR OWNERSHIP ACROSS THE EUROPEAN UNION
» Mobile Phones: Even More Mobile Customers
» Stena Sealink versus Le Shuttle, Eurostar and the Rest
» Preview Case British Home Stores
» • Selecting the Message Source
» Setting the Total Promotion Budget
» Factors in Setting the Promotion Mix
» Integrated Marketing Communications
» Setting the Advertising Budget
» • Selecting Advertising Media
» Standardization or Differentiation
» Media Planning, Buying and Costs
» IBM Restructures the Sales Force
» • Other Sales Force Strategy and Structure Issues
» 5 per cent sales elite apart from the rest is 'an astounding 60 per cent [are] just there for the
» Britcraft Jetprop: Whose Sale is it Anyhow? 1
» 1 COMMERCIAL SUCCESS OF THE JETPROP AIRCRAFT, 1992 NUMBER OF CONTINENT
» 1 PANEUROPEAN CONSUMER GROUPS
» Analyzing Customer Service Needs
» Defining the Channel Objectives and Constraints
» Identifying Major Alternatives
» Designing International Distribution Channels
» Evaluating and Controlling Channel Members
» • Building Channel Partnerships
» The Growth of Direct Marketing
» Customer Databases arid Direct Marketing
» DirectResponse Television Marketing
» Online Marketing and Electronic Commerce
» Germany, the UK and other countries in Europe 1997 to SI.64 billion or 7.5 per cent of global
» • Creating an Electronic Storefront
» • Participating in Forums, Newsgroups and IVcb Communities
» • The Promise and Challenges of Online Marketing
» Roberto Alvarez del Blanco and Jeff Rapaport*
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