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Tuesday, 11 September 2018

Pricing Strategies

      The international marketplace poses a lot of pricing challenges to the marketer . for instance when a distribution cost differential such as transportation, price, tariffs channel members margin are added to the factory price, the resultant price will be different for each country. This leads to price escalation problems. More so a transfer price, dumping charges and gray markets add to the international pricing changes. International firms are exposed to 3 choices as the grapple with this strategic issue as suggested.

    Setting a uniform price everywhere:   Nestile may decide to change $1 dollar  for a particular product everywhere in the world. This strategy will translate to Nestle making or earning different profits rate in different countries due to varying escalation cost. Poor countries of the world will end up paying higher price than rich countries.

Setting a market based price in each country: this is a situation where Nestle charges a price based on what each country can afford. One remarkable characteristics of this strategy is that it ignores the difference in the actual cost from  country. This could warrant subsidiaries in low price countries to reship their Nestle products high price countries.

Setting a cost based price in each country:  Here Nestle decides a standard markup of its costs to arrive at a product price in every foreign market where it operates. The question here is what happens in country where the cost are quite high? In this case the strategy might price Nestle products out of such markets.

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