International Marketing

Camila Cortés
Alejandra Hernández
Nicolas Mora
Vanessa Vargas

An Examination of
Factors that Affect
Pricing Decisions for
Export Markets
NEOCLASICAL PRICE THEORY
The "Neoclassical Theory" elaborated by Alfred
Marshall states that the consumer makes decisions
according to the price of the product or service to be
purchased.
It is like a "Barter" where the consumer has to give up a
certain amount of capital in order to satisfy a need. It is
also deduced that when buying a product with a
considerable price, the utility that it will have on the
consumer is reflected, that is, a PRICE - QUALITY
correlation
REASONS FOR SELLING
ABROAD OR EXPORTING
To enter an international market, not only the desire but also a
solid structure is needed to enter such a difficult market, since
in the export market there are brands that have been
consolidated for years. That is why a strategy must be made
based on what can be contributed to the market and how it
could affect the competition and the company itself.

When defining the entire strategy, the opportunities that would

be generated in the national market should also be seen
because despite observing new horizons, the national market
would open more doors and make the product evolve greatly,
thus taking it to a state of maturity national.

That is why the greatest achievement of a company is to find

the best way to export products.
PITFALLS OF EXPORTING
 The difficulties that export has is mainly in the
economic sector, since to have a greater impact on
the international market investment is needed, that
is why many companies have established budgets
only for export movements, this investment is based
more in carrying out a marketing strategy that
helps to enter the market, matching the competition
and understanding the behavior of local consumers,
and thus presenting itself as a foreign company but
willing to fight positions in the market. All this
without neglecting the national market and
managing the two hemispheres of sales without
losing anywhere.
EXPORTING VS DOMESTIC
SELLING

EXPORTING
When exporting, different factors that can affect
this activity are measured since in most countries
they handle different tariffs which for obvious
reasons are discounted to the company that
wants to enter the international market. There
are also times when things don't go as planned
and more and more expenses arise. That is why
companies try to have everything in order so as
not to go through a budget cut during the export
process.
Which means that exporting can be the most
risky move that a company can make.
DOMESTIC
SELLING
When a company is planted and
positioned in the local market, it knows
that it has to maintain itself and carry
out strategies to avoid a decline. When
the company is comfortable in the
market, it does not make as many
expenses for the distribution of its
product.
That is why a company must first secure
the national mark before going
international.
 UNDERSTANDING
FOREIGN MARKETS
All markets are based on the consumer, they do everything based on this, not only the
manufacture of products, but also the distribution is carried out through the most appropriate
channels for them, and the price is set depending on the market environment that is being
operated.

The PEST means: Political, Economic, Social, Technological;

the opportunities and what makes different foreign markets,
are analyze with these factors.

Policy Environment
Due to multilateral trade agreements and other economic and policy integrations, it’s
important that a company knows the conditions that have the countries in which they want to
start operating, or are already operating. This includes the policies and laws of production,
because affect the different processes of a company.
Companies must make the best decisions based on legal and regulatory conditions in foreign
countries, but follow their objectives, since sometimes guidelines can be reached that go
against the legal and ethical aspects of the country.
Political Factors
Laws and regulations directly affect the price of products
and services, in addition they must be set according to
health and safety standards, environmental regulations,
measurement systems, which are set in response to the
policies and economic frameworks of the foreign country.

Economic Factors
Marketers are interested in both the present and the economic
future of a country, including the concepts of population and
density, inflation and economic growth, age and distribution of
income, level of urbanization as well as other economic activities.
It has a quite relevant and important impact on the costs and prices
of the products. The demand for products or services can occur as a
consequence of the economic development of the consumer's
country, and companies must consider the different price levels to
offer their products in the foreign market.
Social Factors Differences between cultures, tastes, product preferences, and responses to stimuli
from products, and what is related to their commercialization. Companies must understand the global
market, implement the marketing strategies mix, fixed in the new social factors that are understood in
the foreign countries. Also set the price for international markets, determine local elements, such as
culture, language, aesthetics, education and religion, as well as
attitudes and values. Local consumers will examine the quality
and performance of the products, depending on these they can
determine their preferences, perceptions, and purchasing
behaviors, companies must choose the best price strategy that
suits their consumer.

Technological Factors Being present in the international

market can ensure that companies have developed communication
infrastructure at their disposal. Businesses must adapt and adjust to
the local distribution infrastructure. Technological factors also affect
costs and therefore the price of products in foreign markets. Internet is
a tool that varies depending on the country you are in, mainly allowing
online contact with the firm's customers, suppliers, partners and
subsidiaries. Technology can provide both opportunities for existing
competitors and openings for new competitors, as well as challenges.
 Pricing strategies
Price strategies are the guideline that companies follow when setting the price of their products or
services. This includes what is the cost of production and the profit desired by the company. Therefore,
this is extremely important for the customer because depending on this price, their perception of the
product and the brand may vary.

It should be noted that all these strategies depend on the product, the brand, the sector and even the
target group. That said, these are the basic strategies for setting these prices:

1. Economy premium
2. Penetration or Low Price
3. Competitor’s Pricing
4. Rigid Cost-Plus Strategy
5. Flexible Cost-plus Strategy
6. Dynamic Incremental Strategy

Economy premium
It’s used when the product is
unique in the market or when the
cost of marketing and
manufacturing is very low.
Rigid Cost-Plus Strategy
This is accomplished by adding
international customer costs and a
gross margin to domestic
manufacturing costs.
Pricing strategies
Penetration or Low Price
This is generally used when you
want to position yourself or
increase market share.
Flexible Cost-plus Strategy
This allows price variations
according to circumstances.
Ej: discounts based on customer,
order or competitive factors.
Competitor’s Pricing
This is generally used when you
want to attract the largest
number of customers and
generate a constant turnover.
Dynamic Incremental Strategy
This helps companies to enter,
penetrate and compete in
international markets. Some
internal costs such as internal
promotion and marketing costs
are ignored.
 Export pricing
and conclusion
“Exporting is essential in a country, since due to
this the growth of the country can be observed
internationally, apart from the great monetary
reward that this brings”
 Enter the market
To start having a market share, it must be taken
into account that it should start with a low
profile, since being a brand without recognition
it will not be so preferred by the public, as it
already manages to have a place in the market
and the mind of the consumer, the price can be
gradually raised, it should always be carefully
considered:

• Provide an excellent product to the consumer

• Know how to sell the product in a timely
manner
• Give prices lower than the competition, but
reasonable; since it could give the idea that
being of low price is of poor quality
 Skimming strategy
On the other hand we find the skimming strategy,
which is totally contradictory to the one previously
exposed, since it tells us that there are some
products that enter the market with high prices,
since these have high demand, this can only be done
with the existing brands because their products
gave added value and for this reason they are worth
more compared to their competition, the customer
is aware that they probably paid a very high price,
but their quality is worth it.
Data to define the price versus the
competition
• When setting a price it should not be high or low
enough, it should be in the right balance between
the customer being able to pay it and being a
profit for the company
• There is no one strategy that works forever, these
must change as the market advances.
• They must be prepared to adapt to any
opportunity or danger that arises in the constantly
changing market.
• Optional product pricing, captive pricing, and
product bundle pricing, promotional, geographic,
value pricing, sticky and flexible cost-plus
strategy, dynamic increase, marginal cost, and
loss-leading pricing strategies.
• Penetration prices, economic prices and price
reduction are the main prices marketing mix
strategies
 Flexible cost-plus strategy
The flexible strategy allows price
variations according to circumstances.
For example, there may be some
discounts. depending on the customer,
the order or competitive factors. This
strategy is often used to find exchange
rate pressures or fluctuations.
Incremental dynamic strategy
The incremental strategy also
assumes that there will always be
unused capacity or excess supply
and, therefore, products will not be
exported that cannot be sold at full
price. This helps companies enter,
penetrate, and compete in
international markets.
The right optimal price
The seller sets his price to maximize
profit, considering the bigger picture of
a business model (i.e. high price / low
volume or low price / high volume). The
company must pay the cost of
production, marketing, and overhead,
and still make a profit.
 Conclusion
Defining the price of a product is one of the
most difficult tasks, since within this, enough
items must be included at the internal level of
the company so that you can have a
considerable profit, in the article we named
several strategies, through Of which you can
define this price, but you have to take into
account that the market is changing and these
strategies also, you must always keep your
competitors in mind and study very well the
places to which a product will be exported.