Submitted by: Submitted by sunnyash15
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Words: 618
Pages: 3
Category: Business and Industry
Date Submitted: 03/08/2013 02:26 AM
Pricing Decision
for
International Markets
Learning Objectives:
● To explain the concept of pricing decisions in
international markets
● To discuss various methods of export pricing
● Role of non-price factors in international
markets
● Pricing issues for developing countries
● To explain the concept of counter trade
The Meaning of Price
● Price is the sum of values received from the
customer for the product or service.
● Besides money, it may also include other
tangible and intangible items of utility.
Pricing is like a Tripod
Cost
Demand
Competition
Significance of Pricing for Developing and Least
Developing Countries
● Lower production and technology base
● Relatively low share in international markets
makes them marginal suppliers in most
product categories with little bargaining power
● Majority of products sold as commodities with
marginal value addition
Price Realization by Developing
Countries
● Traditional Products
Price Realisation by Developing
● Non-Traditional Products
Countries
○ Intermediate Products
Price Realization by Developing
Countries
● Non-Traditional Products
- Consumer Products
Rs 100
onwards
Good Brands Rs 450
onwards
Pricing Approaches for International Markets
● Cost based pricing
○ Full cost pricing
○ Marginal Cost Pricing
● Market based pricing
Top Down Calculation for
International Pricing
Consumer Price: 1,160
VAT* 160 + 16%**
Market Price minus VAT 1,000
* Figures based on assumptions.
Top Down Calculation for International
Pricing
Margin retailer: 250 = 25%**
Price to retailer: 750
Margin wholesaler: 90 + 12%**
Price to wholesaler 660
Margin to importer 33 + 5%
** Figures based on assumptions.
Top Down Calculation for International
Pricing
Landed-cost price: 627
Import duties: 110 + 20%**
Other costs (storage, banking) 17**
CIF (port of destination): 500
** Figures based on assumptions.
Top Down Calculation...