Discuss the difficulty or desirability of having a standardized price for a company's product across all the countries

Thèmes abordés

Standardized price - Price - The Distribution system - Exchange rate and Taxes

Résumé du document

Price is fundamentally about value, customers place prices within the context of perceived value. (West, Ford and Ibrahim 2006). It is also the 4th P in the marketing Mix and the only element that produces revenue. With the current economy and decrease of the purchasing power, the price impacts directly the consumer's choice. Internationally, the pricing decisions are directly impacted by factors such as the company's level, the environment, the market and the product. Taking into account these factors, the management of a company can set up its pricing strategy.

In this essay, we are going to focus on the pricing strategy that companies can implement when going international. First, we will have a look at the factors influencing the pricing strategy across countries. In a second time, we will present the concepts of standardization and of differentiation, and present the case of two companies: Apple and Zara, which choose to different approachThe Distribution system es.

Extraits

[...] Apple's effort for price standardization across Europe Apple Inc. the American multinational corporation has announced that in the next six months they will lower the prices that are charges in the UK iTunes Stores, in order to standardize and equalize them to the prices it charges in most of the European countries. This reason is why Apple charges more in the UK because it has to pay a higher amount of money to UK record labels, than in the rest of the European countries to have their music distributed. [...]

[...] Indeed, the company might face a lack of control among the headquarters out of the prices set by subsidiary operations or external partners. Besides, without an overall pricing policy, it is possible to see significantly different prices on adjacent markets. It can result in a bad image for the company. Finally, this strategy can encourages the creation of parallel importing/grey markets, whereby products can be purchased on one market and sold in another. Zara seemed to be a good example of pricing differentiation. [...]

[...] To conclude, this schema shows the different aspects that can affect a company's pricing strategy. We can see that a differentiation strategy is impacted by market related drivers and external drivers. For example, this strategy can be used in a situation where a company wants to adapt their price to a specific target. This strategy also takes into account the different financial factors that can impact a business, have we have seen with iTunes and the price of an album in the US and in Europe, directly impacted by the exchange rate. [...]

[...] Strategic Global Marketing.[ Online] Available from: http://books.google.ie/books?id=brsHFsnfEEQC&pg=PA103&lpg=PA103&dq=price+sta ndardization&source=web&ots=mr0LjvdMmY&sig=IyDkHuLSAY6- n1OUgNpP9wSrnN0&hl=en&sa=X&oi=book_result&resnum=5&ct=result#PPA99,M1 [Accessed 10 December 2008] Onkvisit, S. and Shaw, J International Marketing: Analysis and Strategy. [Online]Available from: http://books.google.ie/books?id=jvdpDo5Xr7EC&printsec=frontcover&hl=es [Accessed 10 December 2008] De Burca S., Fletcher R., Brown L International Marketing, An SME Perspective, Harlow: Pearson Education Limited. Hollensen S Global Marketing, A decision-oriented approach, Fourth Edition, Harlow: Pearson Education Limited. [...]

[...] This represents a danger in case of political or economical argument if the country concerned decided a trade embargo. This would increase the price in the other countries. If the demand is high enough it does really worth to manufacture abroad to keep the price stable. The Distribution system A company that distribute its products via its own subsidiaries have a better control over the final prices. By working with distributors the company will have to adapt its price to their margins, which can easily change. [...]