Pricing In International Markets
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All organizations and companies set prices for the goods and services they offer. The price of goods and services in marketing is the amount of money or cost the buyer is willing to pay in exchange for receiving them. This price may be in the form of various concepts such as tuition, subscriptions, rights, rentals, etc. Among the components of the marketing mix, the price is the only factor that generates revenue and the other three are part are costly for the company. This makes it even more important factor in the marketing mix. Also, the price is the most flexible component of marketing mix because it can be changed quickly. Although price competition is one of the major issues faced by companies, many companies cannot solve this issue in an excellent way. By aligning the quality of the goods of different companies and intensifying competition, the price element has become one of the most important factors in maintaining, attracting customers, their loyalty, and satisfaction. This is the case nowadays due to the growth of the Internet and social media networks.
Definition of pricing
The pricing is based on estimation, evaluation, size and standard. The price in the market is the exchange value of goods and services expressed in terms of currency. Accordingly, pricing simply means determining the price for a good or service. It is an activity that needs to be repeated and is a continuous process. This continuity is due to environmental changes and the lack of stability in market conditions, which justifies the need to repeat this process.
Importance of Pricing
Providing better products than other competitors and taking the right steps in choosing a strategy to achieve a favorable position against competitors is an important part of achieving profitability in the business model. Therefore, a firm must be able to price its products and services in such a way that it can generate revenues proportional to the value provided to the customer and thus maintain its position vis-à-vis customers, complementary goods, competitors, and potential newcomers. Pricing is the most important part of the business model and decisions about it, have a huge impact on the profitability of the firm.
Successful pricing will be accomplished by answering some important questions:
How should the price be adjusted to cover the benefits that the firm offers to its customers and the cost of these benefits?
How long should the firm cut or raise its prices?
What will be the reaction of competitors and customers when the firm is raising or lowering its prices?
When the firm should sell its products with very low price?
Pricing in the international market
Although price competition is one of the major issues that companies face it in international markets, but many companies cannot solve this problem efficiently. Price is one of the most important and effective factors that helps companies to attract customers and keep up their loyalty and satisfaction because the quality of the goods and services from different companies is booming, and the competition among different companies are intensifying.
Pricing on global markets is more difficult than pricing in domestic markets. In the domestic market, the manager knows the effects of the cultural and economic environment on pricing policies. But in the international markets, due to the lack of familiarity with foreign markets and the variety of those markets, it is not easy to decide on pricing policy.
In international markets there are fierce problems in pricing: the difference in customer response to pricing strategies by commodity in different markets, the limits imposed by governments on the level of profits and prices, the competition that determines price changes in the market, and the existence of different rules. But despite these problems, a company that wants to compete effectively and reach its goals in terms of sales and profits should consider pricing, local conditions and coordination with other elements of marketing mix. In international pricing, in addition to factors affecting domestic pricing, other factors should be considered, such as exchange rate fluctuations, currency with which prices are announced, government control over tariffs, and a group of economic and cultural factors that are found in different markets and differ with each other.
A company must have a clear understanding of the international marketing environment before deciding to expand its activities abroad. In an international pricing strategy, managers generally face a wide range of external and internal factors, and the main concern is how the managers come to terms with these factors and determine their final effect. Additionally, they should consider the political, cultural, linguistic, economic and legal differences in each market in global environment.