Page 182 - International Marketing

184 International Marketing BRILLIANT'S

3. Market pricing: Methods of Pricing
Note : Please refer further questions for
details of this topic. 1. Cost plus pricing
4. Market skimming: The market 2. Competitive pricing
skimming pricing is a deliberate attempt to 3. Market pricing
reach a market segment that is willing to 4. Market skimming
pay a premium price for a product. In such 5. Penetration pric-ing
instances, the product must create high 6. Market holding
value for buyers. It is often used in the 7. Price escalation
introductory phase of the product life cycle 8. Export price quotation
when both production capacity and 9. Dumping
competition are limited. Setting high prices,
limits the demand to early adopters; those 10.Leasing
who are willing to pay the price. The goal of
this pricing is to maximize revenue on limited volume and to match demand
to available supply thereby reinforcing customer's perceptions of high
product value. NPP
5. Penetration pricing: Penetration pricing uses price as a
competitive weapon to gain market position. An exporter is unlikely to use
penetration pricing at the first time. The product may be sold even at a
loss for a certain period of time. Companies that are new to exporting,
cannot absorb such losses. However, a company whose product is not
patentable may wish to use penetration pricing to achieve market saturation
before the product is copied by competitors.
6. Market holding: Market holding method is frequently adopted by
companies that want to maintain their share of market. In single country
marketing, this strategy often involves reacting to price adjustments by
competitors. For example, when one airline announces special bargain
fares, most competing carriers must match the offer or risk losing
passengers. In global marketing, currency fluctuations often trigger price
adjustments. Many American companies used this approach when the
dollar appreciated against most other currencies in the early to mid-1980's.
7. Price escalation: Price escalation is the increase in a product's
price as transportation, duty and distributor margins which are added to
the factory price. The retail price of the exports is usually much higher
than the domestic retail price for the same product due to cost of
transportation, custom duty and distributor's margin. The geographic
distance that goods must travel results in additional transportation cost.
The imported goods must also bear the import taxes in the form of
customs duty imposed. The completion of the export transactions also