Page 208 - GLOBAL STRATEGIC MARKETING

Pricing for International Markets
9

Learning outcome

At the end of this unit you should be able to:

• Understand how pricing can be used strategically and tactically within
the marketing mix.

9.1 Introduction

International pricing is a more complex activity than domestic pricing

because of the large number of variables involved and the greater degree
of uncertainty (Burca et al., 2004; Doole and Lowe, 2008). These authors
also point out that pricing is the only element of the marketing mix that

generates revenue and has a great influence on demand. It is an integral
part of the product when marketed in international markets, as it is difficult

to think of a product without considering its price. Price is the only element
of the marketing mix that generates profit, so many companies believe that
pricing is the most flexible, independent and controllable element of the

marketing mix, and that it plays a major role in international marketing
management (Doole and Lowe, 2008). This comes down to the fact that

pricing changes promote an immediate response from the market. The
combination of internal and external factors that together affect the price
that can be charged for products in different markets gives rise to the

problem of establishing prices in each individual market. At this point,
companies need to find a competitive price, which is the point between

lowest price (that is, break-even or minimum return on investment) and the
highest price - what the market will bear (Woods, 2001). Pricing strategy
is an influential tool in gaining market share because it affects demand.

Therefore, when you think about competitive advantage towards gaining
market share and how it determines pricing, you will find that competitive

position and market share differ from country to country, and so do the
prices (Terpstra and Sarathy, 2000).

9.2 The development and implementation of pricing strategies