Why is pricing so difficult in global marketing

The Relationship Between Product and Promotion Product and promotion in global marketing can work together effectively with proper market research and communication techniques.

Learning Objectives Illustrate the relationship between product and promotion from a global marketing perspective. Promotion is one crucial component of the global marketing mix that enables a global company to send the same message worldwide using relevant, engaging, and cost-effective techniques.

Changes in Promotion Local languages, colors, and religious beliefs all impact how global marketers promote their products and services in different countries. Learning Objectives Analyze the rationale used to promote products within a global marketing mix.

Key Takeaways Key Points To successfully implement global marketing strategies, brands must ensure their promotional campaigns take into account how consumer behavior is shaped by internal conditions and external influences. Global companies must be nimble enough to adapt changing local market trends, tastes, and needs to their promotional mix. When launching global advertising, public relations or sales campaigns, global companies test promotion ideas to provide results that are comparable across countries.

Using measures can be particularly helpful for marketers since they are based on visual, not verbal, elements of the promotion. Key Terms demographics : The observable characteristics of a population, such as physical traits, economic traits, occupational traits, and more. Learning Objectives Examine the rationale behind product placement from a global marketing perspective.

In addition to where products are placed, global marketers must consider how these products will be distributed across the different shopping venues and communication channels unique to that particular country or market. Often synonymous with the four Ps: price, product, promotion, and place. Changes in Pricing Price in global marketing strategies can be influenced by distribution channels, promotional tactics, and the quality of the product.

Learning Objectives Summarize how proper pricing from a global marketing perspective impacts a company. Key Takeaways Key Points In the global marketing mix, pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Price will always vary from market to market, and global brands must be prepared to deal with external influences such as trade tariffs, and political and economic shifts in the target country.

Key Terms jurisdiction : the limits or territory within which authority may be exercised tariff : A system of government-imposed duties levied on imported or exported goods; a list of such duties, or the duties themselves. Global Marketing and the Internet The internet has allowed marketers to benefit from reduced geographic and time constraints, and reach consumers in various new ways. Learning Objectives Translate the use of the Internet to marketing on a global level.

Key Takeaways Key Points One of the great benefits of global marketing via the Internet is the elimination of geographic and time constraints. The Internet provides scope and immediacy for marketers looking to reach large swaths of consumers across different demographics. Technological tools such as behavioral targeting, as well as online groups and communities, allow companies to effectively target consumers in different markets with different needs.

Key Terms lead : Potential opportunity for a sale or transaction, a potential customer. Licenses and Attributions. CC licensed content, Shared previously. Customers will not pay literally a penny more than the true value of the product. Penney [New York Time, ]. Customers in one overseas market are dissimilar to customers in other markets and so are many other market dimensions that are unique to each market.

So, determining what the value of your product is to the foreign customer and consequently determining what the customer will pay in each market makes the international pricing decision much more complex. Costs: Comprehensive understanding of all costs related to offering the product, including development, creative, production, distribution, storage, advertising, manpower, and so on.

And then there is TAX. 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. 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.

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. 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. No one will value you. Set a fair price for you, your book, your services, whatever it is that you have to offer.

Most of us set way too low a price. Put it a little higher than you would normally be inclined to do. The worst that can happen is someone will come along and steal it. When formulating international pricing strategies, firms are also faced with the question — is our price too high to compete or is it unnecessarily low at the cost of profitability?

The answer to this already complex question is further complicated by dimensions of international business which are unique to each country. In order to arrive at the optimum price a firm is required to undertake a full strategic analysis of the competitor and consumer environment e.

The international pricing strategy for firms will differ based on the elasticity of demand for the product which is linked with its competitive advantage. For example, the international pricing policy for Sensodyne repair and protect which is a specialist dental product with a differential advantage will differ from your run of the mill toothpaste without any differentiation. Skimming as we know is the setting of the highest possible initial price for a new product and then lowering it progressively over time.

This strategy is best for short term profit maximisation and is only possible for differentiated products for which there is no credible competition in the short run. In the International market the success of this strategy depends on factors like the demand in the local market, customer preferences, purchasing power etc. Not specifying countries. Executives tend to think about overseas markets in vague regional terms e.

Customers identify at the national level, and marketers need to remember that every country has its own local laws, cultural norms, forms of currency and payment, and unique business practices. Being more specific from the beginning helps tremendously with prioritizing one market over another, creating a staffing plan, and budget allocation—all of which are necessary for helping a company achieve its desired global goals.

Research into local markets has to be aimed at understanding the market size, the challenges customers face, the solutions they currently have, and where your product can fit in. Many companies fail to think about these basics of product positioning at the country level and overlook things like strong local competitors.

Not paying enough attention to internal data. Developing a global market entry strategy requires more complex and specialized market research. Many companies rely heavily on external data sources to guide this decision-making.

However, analyzing your own data will help you answer the latter two questions and determine whether you have a strong product-market fit.

Are you seeing a surge in leads from a particular market, in spite of not investing heavily there? Marketers always watch not only the present economic prosperity of a country, but also its future development in terms of population and density, inflation and economic growth, age and distribution of income, level of urbanization as well as other economic activities that will affect markets and pricing.

The economic environment of the foreign or host country influences pricing decisions. For example, some products that are considered essential in western countries, are viewed as luxury items in my country India , and most of the Asian countries. People from different cultures have different tastes, buy different products and respond in different ways to the same service or product. Therefore, the demographic structure of a foreign market should be considered.

The aging of population in major western markets, and the increase in population in several countries such as India and China, is another continuing development that will affect international marketing. As teens around the world are becoming a global market segment today, pricing strategies will have to adapt to social factors, that is, when pricing for international markets, one has to take into consideration of local material culture, language, aesthetics, education and religion, as well as attitudes and values.

Price level is an important criterion used by consumers in evaluating competing products. Other criteria such as product quality and performance are important to customers.

This may have significant impact on costs, and in turn may influence price, as well as profits. Technological change is another dynamic but ongoing phenomenon.

A perfect example is the internet. Therefore, technology provides both opportunities and challenges. Pricing is a strategic choice, and it will be partially influenced by environmental factors. Price is the amount of money charged for a product or service. Price includes the cost of producing product, providing any needed services that may accompany the product, the amount of profit in order to stay in business.

Therefore, price can be a direct reflection of quality or even perceived quality. There are several basic pricing strategies:. Premium pricing is adopted when there is a substantial competitive advantage, and the product or service is unique Concord flights , and economy pricing strategy is adopted when the cost of marketing and manufacture is kept at a minimum.

Low profit margin will penetrate the market. It is designed to grab market share quickly. Penetrating the market with an exceptionally low-priced item creates a broad customer base.