This document discusses factors to consider when making international pricing decisions. It covers pricing psychology, elements like pricing decisions and policies. Key factors discussed are supply and demand, elasticity, exchange rates, market share, tariffs, distribution costs, culture and purchasing power. Other topics covered are pricing strategies, competition, product differentiation, economic conditions in importing countries and government factors. The goal is to strategize international pricing by understanding these various influencing elements.

1. International Pricing DecisionsContact Details:Email:chandan.vichoray@gmail.com Dr. Chandan VichorayBE, MBA, Ph.D

2. What the Presentation CoversA brief of how to strategize International PricingFactors affecting Pricing Decision

3. PricingA Psychological element valuing product or serviceEssential that products & services be competitively priced Fair price reflects the perceived value of the product in question

4. Elements of International PricingPricing decisionsPricing policiesFactors affecting international pricingPrice quotationsDumpingCounter trade

5. Pricing DecisionsSupply & DemandElasticity or Cross Elasticity of DemandExchange RatesMarket ShareTariffs and Distribution CostsCulturePurchasing Power

6. Supply & DemandMarginal Utility & MoneyMarginal Utility & PriceIndifference Theory PricingLaws of Supply

7. Elasticity or Cross Elasticity of DemandNo proportional demand – supplyElasticity can be used to justify and reason the behaviour of demandIn some cases demand for one product affects the demand of other productsThe concept of Supplementary & Complementary Goods

8. Exchange ratesPattern of money payment whether installment or one timeIf money to be recovered is over a period of time, it is necessary to hedge the pricing to avoid excessive losses or profitsSpur in arbitrages can cause exchange rate fluctuationsEffect of Exchange rates is on both the importer and exporter

9. Market ShareGenerally follows law of demandInternational Pricing normally based on PPI and CPIPricing basis can be done on Wholesale Price Index of the manufacturersGuarding against Monopolistic and Restrictive trade practices although ideally every exporter would like to have 100% market share

10. Tariffs & Distribution costsTariffs are in the form of Duties and taxesTariffs can also be in the form of trade barriers in the form of subsidiesCosts take into account the taxes and dutiesDistribution costs include the cost of supply chainThis includes, Commissions, Shipping costs, Cost of setting up the supply chain for productsRegular Vs Rush orders

11. CultureBased more on promotional activitiesLocalization of products, a necessity which might effect a major change in the product signaturePricing should go in line with the consumer behaviour of the targeted marketWhat is right in one country may not apply to other countries

12. Purchasing PowerAn economic conceptDepends on The strength of the currencyEmployment GDP growthExchange Rate

13. Factors Affecting International PricingCostCompetitionProduct DifferentiationExchange RateEconomic conditions of the importing countryGovernment factors

14. CostShould keep low in the short run for a long term gainMay operate at No-Profit-No-Loss Level initiallyCost of promotionCost of Distribution

15. CompetitionImport SubstitutionLocal as well as ForeignCompetition pricing will depend on trade agreementsInitial low cost products can be offered to gain market share

16. Product DifferentiationCan accelerate market share growthSpurs buying if a strong USP existsCan create a niche product if put in IPRCan be used to fix varying prices

17. Exchange RateExchange rate fluctuation can be offseted in a probabilistic market conditionHigher price can be fixed for a favoured currency paymentHedging should be done if payments are to be received over a period of timeUncovered Interest rate parity can also be used to neutralize the effects of Exchange rate fluctuations

18. Economic Conditions of the Importing CountryExports should take into consideration:Per Capita IncomeSpending patternDemand meansDesire to acquire somethingWillingness to pay for itAbility to pay for it

19. Government FactorsMargin Regulations (Profit Rates)Price floors & Price ceilings indicating lowest and highest price levelsSubsidies provided by the governmentTax concessions as in SEZsEncouragement to local exporters through finance, inputs at lower indexes

20. Pricing StrategiesTransfer PricingParity PricingCost plus PricingLow Price StrategyComplimentary Product Pricing

21. ReferencesKumar Aseem, Export Import Management, EB

22. Henry Anthony, Understanding Strategic Management, Oxford University Press

23. P. SubbaRao, International Business, Himalaya Publications

24. Ball, McCulloch, Frantz, Geringer, Minor, International Business – The Challenge of Global Competition, Mc-Graw Hill Atkeson Andrew and Burstein Ariel, “Pricing-to-Market, Trade Costs, and International Relative Prices”, through http://www.econ.ucla.edu/arielb/ABPricingtoMarket.pdf

25. Thank You