Page 179 - International Marketing

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BRILLIANT'S Overseas Market 181

compels them to sell their products in international markets often
below the total cost of production.
(c) Since, the majority of products from developing and least
developed countries are sold in international markets as
commodities with marginal value addition, there is limited scope
for realizing optimal prices.
(d) In view of competitive markets and complex pricing strategies
adopted by multinational marketers, formulation of appropriate
pricing strategies with innovation becomes a pre-condition for
success in international markets.
Factors Affecting Pricing Decisions

The important factors affecting the pricing decisions are as follows:
1. International marketing objectives: The objective of marketing
is one of the important factor in determining
the price. If the firm's objective is market Factors Affecting
penetration, the price charged must be low. Pricing Decisions
If the firm's objective is maximizing profit in 1. International mark-
the short run, then the price must be high. eting objectives
2. Costs: The pricing decision is
influenced by the costs. It may include fixed, 2. Costs
variable, production, transportation and 3. Competition
marketing costs. In short run, the export price 4. Market characteristics
may be lower than the full cost, but in the long- 5. Image
run a firm is expected to cover the full costs. 6. Exchanges rate
3. Competition: The level of competition 7. Government factors
determines the price. For example, in case
of monopoly, the price will be higher, but in case of the perfect competition
price is comparatively lower.
4. Market characteristics: There are certain characteristics of market
apart from competition, which also affects the pricing decisions. These
are as follows.
 Demand trend.
 Level of consumer income.
 Importance of product to consumers.
 Trade characteristics like trade margins.
5. Image: The price is also determined on the basis of the image of
the firm and the country. A well- reputed firm charges higher price than
others. Besides, the price may be determined on the quality of the product
of any country. For example, India has a poor quality image among the
world, thus its products are priced low in the international market.