International Pricing is management of prices and price policies in international marketing is somewhat more complex than in domestic marketing. Due to increasing complexity of markets, price decisions are becoming more critical than ever. All markets are becoming more segmented, which results in firms having to broaden their product-lines with different products aimed at different types of customer.
Price may be defined as the exchange of goods or services in terms of money. Without price there is no marketing, in the society. To a manufacturer, price represents quantity of money received by the firm or seller. To a customer, it represents sacrifice and hence his perception of the value of the product. Conceptually, it is:
Price = Quantity of money received by the seller/Quantity of goods and services rendered received by the buyer
The term ‘price’ needs not be confused with the term ‘pricing’. Pricing is the art of translating into quantitative terms (rupees and paise) the value of the product or a unit of a service to customers at a point in time.
According to Prof. K.C. Kite___ “ Pricing is a managerial task that involves establishing pricing objectives, identifying the factors governing the price, ascertaining their relevance and significance, determining the product value in monetary terms and formulation of price policies and the strategies, implementing them and controlling them for the best results”.
International Pricing Objectives
- Market Penetration: it is a very important objective, particularly for new exporter a firm may attempt to penetrate the market with a low price.
- Market Shares: The price may be manipulated to increase the market share. In many cases it is a corollary to market penetration.
- Market Skimming: This is often the case with innovative products. The product is introduced with a high initial price to skim the cream of the market. The price may be subsequently reduced to achieve greater market penetration.
- Fighting Competition: Sometimes price is a tool to fight competition. A price reduction by the competitor may have to be countered by price cuts.
- Preventing New Entry: A firm may charge a low price even when there is scope for high price so that the industry does not look very attractive to new entrants.
- Meeting Export Obligation.
- Optimum Capacity Utilization.
- Return on Investment.
- Profit Maximization.