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Question
Principles of Marketing
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Business |
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2 |
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APA |
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Answer
Businesses that desire to venture into the international market have to set reasonable prices for their goods and services. This poses a challenge because customers across different markets react differently to changes in prices. In addition, they have different financial abilities. international markets exist under different conditions. (Kotler &Armstrong 2016). As a result, companies have to come up with a different pricing strategy for each market. This paper discusses factors that influence international pricing.
- Economic Conditions
Gross Domestic Product (GDP), which is the measure of value of the market of all the goods and services produced over a given period, normally one year, is a major determinant of disposable income available to customers. It is used as a measure of the economic condition’s attractiveness of a foreign market. (Kotler &Armstrong 2016). As a result, businesses have to consider these factors when pricing their products for different markets.
- Laws and Regulations
A company should have a detailed understanding of the legal and regulatory framework of a country. For instance, protectionism regulations will likely translate into increased prices of imported products in order to make them less competitive (Kotler &Armstrong 2016). As a result, the goods will be expensive for the customers.
- Competitive Conditions
In free market economies, supply and demand forces determine the price of commodities. Markets with monopolies will tend to have higher prices compared to those with oligopolies or many competitors (Kotler &Armstrong 2016). This statement affirms that the behavior of competing firms is integral in international pricing of commodities.
- Company Market Objectives
Export pricing is majorly influenced by the goals and objectives as well as the strategy adopted by an organization. In most cases, organizations adopt prices with a given intention in mind. This statement is backed by Porters generic strategies where cost leaders tend to charge the lowest possible prices while firms using differentiation charge premium prices (Kotler &Armstrong 2016). Collectively, these factors influence pricing strategy.
In conclusion, there are numerous factors that have to be considered before setting a price for international market. These factors include; economic conditions, laws and regulations, competitive conditions and company market objectives.
References
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Kotler, P., & Armstrong, G. (2016). Principles of marketing. London: Pearson Education Limited.
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