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International Pricing Decisions<br />Contact Details:<br />Email:chandan.vichoray@gmail.com <br />Chandan Vichoray<br />B....
What the Presentation Covers<br />A brief of how to strategize International Pricing<br />Factors affecting Pricing Decisi...
Pricing<br />A Psychological element valuing product or service<br />Essential that products & services be competitively p...
Elements of International Pricing<br />Pricing decisions<br />Pricing policies<br />Factors affecting international pricin...
Pricing Decisions<br />Supply & Demand<br />Elasticity or Cross Elasticity of Demand<br />Exchange Rates<br />Market Share...
Supply & Demand<br />Marginal Utility & Money<br />Marginal Utility & Price<br />Indifference Theory Pricing<br />Laws of ...
Elasticity or Cross Elasticity of Demand<br />No proportional demand – supply<br />Elasticity can be used to justify and r...
Exchange rates<br />Pattern of money payment whether installment or one time<br />If money to be recovered is over a perio...
Market Share<br />Generally follows law of demand<br />International Pricing normally based on PPI and CPI<br />Pricing ba...
Tariffs & Distribution costs<br />Tariffs are in the form of Duties and taxes<br />Tariffs can also be in the form of trad...
Culture<br />Based more on promotional activities<br />Localization of products, a necessity which might effect a major ch...
Purchasing Power<br />An economic concept<br />Depends on <br />The strength of the currency<br />Employment <br />GDP gro...
Factors Affecting International Pricing<br />Cost<br />Competition<br />Product Differentiation<br />Exchange Rate<br />Ec...
Cost<br />Should keep low in the short run for a long term gain<br />May operate at No-Profit-No-Loss Level initially<br /...
Competition<br />Import Substitution<br />Local as well as Foreign<br />Competition pricing will depend on trade agreement...
Product Differentiation<br />Can accelerate market share growth<br />Spurs buying if a strong USP exists<br />Can create a...
Exchange Rate<br />Exchange rate fluctuation can be offseted in a probabilistic market condition<br />Higher price can be ...
Economic Conditions of the Importing Country<br />Exports should take into consideration:<br />Per Capita Income<br />Spen...
Government Factors<br />Margin Regulations (Profit Rates)<br />Price floors & Price ceilings indicating lowest and highest...
Pricing Strategies<br />Transfer Pricing<br />Parity Pricing<br />Cost plus Pricing<br />Low Price Strategy<br />Complimen...
References<br /><ul><li>Kumar Aseem, Export Import Management, EB
Henry Anthony, Understanding Strategic Management, Oxford University Press
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International Pricing Decisions

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International Pricing Decisions

  1. 1. International Pricing Decisions<br />Contact Details:<br />Email:chandan.vichoray@gmail.com <br />Chandan Vichoray<br />B.E. MBA Doctoral Thesis Submitted<br />
  2. 2. What the Presentation Covers<br />A brief of how to strategize International Pricing<br />Factors affecting Pricing Decision<br />
  3. 3. Pricing<br />A Psychological element valuing product or service<br />Essential that products & services be competitively priced<br /> Fair price reflects the perceived value of the product in question<br />
  4. 4. Elements of International Pricing<br />Pricing decisions<br />Pricing policies<br />Factors affecting international pricing<br />Price quotations<br />Dumping<br />Counter trade<br />
  5. 5. Pricing Decisions<br />Supply & Demand<br />Elasticity or Cross Elasticity of Demand<br />Exchange Rates<br />Market Share<br />Tariffs and Distribution Costs<br />Culture<br />Purchasing Power<br />
  6. 6. Supply & Demand<br />Marginal Utility & Money<br />Marginal Utility & Price<br />Indifference Theory Pricing<br />Laws of Supply<br />
  7. 7. Elasticity or Cross Elasticity of Demand<br />No proportional demand – supply<br />Elasticity can be used to justify and reason the behaviour of demand<br />In some cases demand for one product affects the demand of other products<br />The concept of Supplementary & Complementary Goods<br />
  8. 8. Exchange rates<br />Pattern of money payment whether installment or one time<br />If money to be recovered is over a period of time, it is necessary to hedge the pricing to avoid excessive losses or profits<br />Spur in arbitrages can cause exchange rate fluctuations<br />Effect of Exchange rates is on both the importer and exporter<br />
  9. 9. Market Share<br />Generally follows law of demand<br />International Pricing normally based on PPI and CPI<br />Pricing basis can be done on Wholesale Price Index of the manufacturers<br />Guarding against Monopolistic and Restrictive trade practices although ideally every exporter would like to have 100% market share<br />
  10. 10. Tariffs & Distribution costs<br />Tariffs are in the form of Duties and taxes<br />Tariffs can also be in the form of trade barriers in the form of subsidies<br />Costs take into account the taxes and duties<br />Distribution costs include the cost of supply chain<br />This includes, Commissions, Shipping costs, Cost of setting up the supply chain for products<br />Regular Vs Rush orders<br />
  11. 11. Culture<br />Based more on promotional activities<br />Localization of products, a necessity which might effect a major change in the product signature<br />Pricing should go in line with the consumer behaviour of the targeted market<br />What is right in one country may not apply to other countries<br />
  12. 12. Purchasing Power<br />An economic concept<br />Depends on <br />The strength of the currency<br />Employment <br />GDP growth<br />Exchange Rate<br />
  13. 13. Factors Affecting International Pricing<br />Cost<br />Competition<br />Product Differentiation<br />Exchange Rate<br />Economic conditions of the importing country<br />Government factors<br />
  14. 14. Cost<br />Should keep low in the short run for a long term gain<br />May operate at No-Profit-No-Loss Level initially<br />Cost of promotion<br />Cost of Distribution<br />
  15. 15. Competition<br />Import Substitution<br />Local as well as Foreign<br />Competition pricing will depend on trade agreements<br />Initial low cost products can be offered to gain market share<br />
  16. 16. Product Differentiation<br />Can accelerate market share growth<br />Spurs buying if a strong USP exists<br />Can create a niche product if put in IPR<br />Can be used to fix varying prices<br />
  17. 17. Exchange Rate<br />Exchange rate fluctuation can be offseted in a probabilistic market condition<br />Higher price can be fixed for a favoured currency payment<br />Hedging should be done if payments are to be received over a period of time<br />Uncovered Interest rate parity can also be used to neutralize the effects of Exchange rate fluctuations<br />
  18. 18. Economic Conditions of the Importing Country<br />Exports should take into consideration:<br />Per Capita Income<br />Spending pattern<br />Demand means<br />Desire to acquire something<br />Willingness to pay for it<br />Ability to pay for it<br />
  19. 19. Government Factors<br />Margin Regulations (Profit Rates)<br />Price floors & Price ceilings indicating lowest and highest price levels<br />Subsidies provided by the government<br />Tax concessions as in SEZs<br />Encouragement to local exporters through finance, inputs at lower indexes<br />
  20. 20. Pricing Strategies<br />Transfer Pricing<br />Parity Pricing<br />Cost plus Pricing<br />Low Price Strategy<br />Complimentary Product Pricing<br />
  21. 21. References<br /><ul><li>Kumar Aseem, Export Import Management, EB
  22. 22. Henry Anthony, Understanding Strategic Management, Oxford University Press
  23. 23. P. SubbaRao, International Business, Himalaya Publications
  24. 24. Ball, McCulloch, Frantz, Geringer, Minor, International Business – The Challenge of Global Competition, Mc-Graw Hill </li></ul>Atkeson Andrew and Burstein Ariel, “Pricing-to-Market, Trade Costs, and International Relative Prices”, through http://www.econ.ucla.edu/arielb/ABPricingtoMarket.pdf<br />
  25. 25. Thank You<br />

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