Overseas market research pricing

Pricing can be the most challenging due to different market forces and pricing structures around the world.

The pricing is based on estimation, evaluation, size and standard. The price in the market is the exchange value of goods and services expressed in terms of currency. Accordingly, pricing simply means determining the price for a good or service. It is an activity that needs to be repeated and is a continuous process. This continuity is due to environmental changes and the lack of stability in market conditions, which justifies the need to repeat this process.

Although price competition is one of the major issues that companies face it in international markets, but many companies cannot solve this problem efficiently. Price is one of the most important and effective factors that helps companies to attract customers and keep up their loyalty and satisfaction because the quality of the goods and services from different companies is booming, and the competition among different companies are intensifying.

Pricing on global markets is more difficult than pricing in domestic markets. In the domestic market, the manager knows the effects of the cultural and economic environment on pricing policies. But in the international markets, due to the lack of familiarity with foreign markets and the variety of those markets, it is not easy to decide on pricing policy.

In international markets there are fierce problems in pricing: the difference in customer response to pricing strategies by commodity in different markets, the limits imposed by governments on the level of profits and prices, the competition that determines price changes in the market, and the existence of different rules. But despite these problems, a company that wants to compete effectively and reach its goals in terms of sales and profits should consider pricing, local conditions and coordination with other elements of marketing mix. In international pricing, in addition to factors affecting domestic pricing, other factors should be considered, such as exchange rate fluctuations, currency with which prices are announced, government control over tariffs, and a group of economic and cultural factors that are found in different markets and differ with each other.

Pricing Considerations 

• What type of market positioning (i.e., customer perception) does your company want to convey from its pricing structure?
• Does the export price reflect your product’s quality?
• Is the price competitive?
• What type of discount (e.g., trade, cash, quantity) and allowances (e.g., advertising, trade-offs) should your company offer its foreign customers?
• Should prices differ by market segment?
• What should your company do about product-line pricing?
• What pricing options are available if your company’s costs increase or decrease?
• Is the demand in the foreign market elastic or inelastic?
• Is the foreign government going to view your prices as reasonable or exploitative?
• Do the foreign country’s antidumping laws pose a problem?

7 C’s of International Pricing Strategy

Pricing strategy brand depends on three primary factors: your cost to offer the product to consumers, competitors’ products and pricing, and the perceived value that consumers place on your brand and product vis-a-vis the cost. These three factors can be referred to as the 3 C’s of Pricing Strategy and are relevant both domestically and internationally.:

Competitors: Comprehensive and up-to-date analysis of your competitors’ in the international marketplace competing products, brand, and prices as well as where your brand is positioned relative to those competitors.

Costs: Comprehensive understanding of all costs related to offering the product, including development, creative, production, distribution, storage, advertising, manpower, and so on. International transportation and related costs like freight, insurance & handling lead to increase in costs. And then there is TAX.  There could be custom duty and turnover tax like the local GST or VAT which could result in an escalating price.

Customers: Customers overseas will have a different perception of the value of the product as compared to domestic markets due to many differential cultural and other factors. It should also be noted that customers today are able to instantly compare their prices with domestic prices on the internet.

Besides the primary factors (3 c’s) that determine international pricing there are a range of secondary factors which are unique to each international market. These make the pricing decision much more complex in international marketing.  When a firm crosses its domestic borders and enters a foreign country it encounters many unique international dimensions. These factors affect the pricing decision and consequently in case of international pricing we have expanded the 3 C’s of pricing to 7 C’s of International Pricing by adding the following additional 4 C’s:

Channels of Distribution: Lengthening channels of distribution means that more people are going to be handling your product including importers and wholesalers which causes not just cost escalation but increases distribution complexities.

Cultural Differences: The international pricing decision requires a comprehensive understanding of the overseas markets culture as well as the wants and needs of its inhabitants, including their perceptions of the value of your brand and products and your competitors’ brands and products.

Currency Rates: The complexities of multiple currencies which are subject to exchange rate fluctuations plus conversion costs.

Control by Government: Governmental and bureaucratic controls and regulations can be onerous and complex, like in China and even some European countries. Some countries have price control over some products like pharmaceuticals, fuel and food.