1. Pricing Decisions Keegan’s four steps to global pricing strategy
General pricing strategies
Problems with pricing for multinational markets
Problems with foreign currency and economic conditions
Grey markets

2. Global Pricing Strategies - Four Steps
1 Determine the price elasticity of demand
(Inflexible demand will allow for a higher price)
2 Estimate fixed and variable manufacturing costs
(product adaptation costs must be calculated)
3 Identify all costs associated with the marketing programme
4 Select the price that offers the highest contribution margin
Warren J. Keegan (1995)

3. Market skimming Market penetration Market holding Cost-plus pricing
Pricing Strategies
Market skimming
Market penetration
Market holding
Cost-plus pricing

4. Market Skimming - Sony Betamax Harvey Schein, President - $1,295 at launch!

5. Market Penetration - Daewoo ‘blitz’ the market

6. Market Holding Maintain their share of the market
Currency fluctuations often trigger price adjustments
Price adjustments can mean lower, or no profit margin
strong home currency could mean manufacturing/licensing abroad

7. Cost-plus Adds-up all cost of production (and shipping)
Easy to make quotes
Ignores demand and competitive pricing in target market
Consumer and competitor value issues must always considered in a rational pricing strategy

8. Problems of multinational pricing
Co-ordination across various markets?
Do we maintain a ‘uniform’ pricing policy across markets?
How to transfer price between and across markets? E.g. Sandvik (Sweden)
Parallel imports or ‘Grey’ markets?

9. Problems with foreign currency and economic conditions
Which currency for pricing in international markets?
How to deal with fluctuating exchange rates?
Strategies for high inflation rates?

10. Grey Markets
Products must be available internationally (as products are standardised in global markets)
Low trade barriers (tariffs, legal restrictions, transport costs)
Price differentials must be great enough (so that grey marketers can make a profit)
Duhan and Sheffet (1988)