Changes in Pricing
Price in global marketing strategies can be influenced by distribution channels, promotional tactics, and the quality of the product.
Summarize how proper pricing from a global marketing perspective impacts a company
- In the global marketing mix, pricing factors are manufacturing cost, market place, competition, market condition, and quality of product.
- As one of the four “Ps” in the marketing mix, pricing is the only revenue generating element.
- Price will always vary from market to market, and global brands must be prepared to deal with external influences such as trade tariffs, and political and economic shifts in the target country.
- jurisdiction: the limits or territory within which authority may be exercised
- tariff: A system of government-imposed duties levied on imported or exported goods; a list of such duties, or the duties themselves.
- marketing mix: A business tool used in marketing products; often crucial when determining a product or brand’s unique selling point. Often synonymous with the four Ps: price, product, promotion, and place.
Changes in Pricing
Pricing is the process of determining what a company will receive in exchange for its products. In the global marketing mix, pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. As one of the four “Ps” in the marketing mix, pricing is the only revenue generating element.
The goal of pricing in global marketing strategies falls under three criteria:
- Achieving the financial goals of the company and generating profits
- Matching the realities of the marketplace and consumer buying trends
- Support a product’s positioning so that it is consistent with product, promotion and placement
General Factors Affecting Price
Like national marketing, pricing in global marketing is affected by the other variables of the marketing mix. Price in global marketing strategies can be influenced by distribution channels, promotional tactics, and the quality of the product. For instance, if distribution is exclusive, then prices are likely to be higher. High prices will also be needed to cover high costs of manufacturing, or extensive advertising and promotional campaigns. If manufacturing costs go up due to the rise in price of some raw material, then prices will need to rise as well.
The Role of Price in Global Marketing
Price will always vary from market to market. However, global marketers must be prepared to deal with not only cultural expectations of pricing, but also external variables including trade tariffs, political and economic fluctuations, and the administrative or legal criteria of specific jurisdictions. Pricing can also be affected by the cost of production (locally or internationally), natural resources (product ingredients or components), and the cost of delivery (e.g., the availability of fuel). For instance, if a country imposes a minimum wage law that forces the company to pay more to its workers, the price of the product is likely to raise to cover some of that cost. Natural resources, such as oil, may also fluctuate in price, changing the price of the final good.
Additionally, the product’s positioning in relation to the local competition influences the brand’s ultimate profit margin. Global marketers must carefully consider how to position their product in global markets, and whether their products are considered high-end, economical or something in-between according to cultural norms and customs.