1. Welcome to class of International Pricing by Dr
Welcome to class of International Pricing by Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg Canada

2. Factors Affecting International Pricing…
Inflation
Exchange Rate Fluctuations
Parallel Imports
Price Escalation
Government Influences

3. Factors Affecting International Pricing…
Inflation
Eliminates consumer’s purchasing power
Inflation 
Adjust price 
Delayed payment will erode profit
Problem with consignment basis shipment I.e paid when sold
Strategy
Careful price quotations and supply contracts
Increase brand value
Retain and win trust of customers

4. Factors Affecting International Pricing…
Exchange Rate Fluctuations
It fluctuates
Govt. may intervene if too much fluctuations
Weak currency  export and vice-versa
Monitor other currencies movement also
Strategy
Review entire operation system
Adjust cost structure
Increase brand value
Check mode of operation in foreign markets
Exports vs. licensing vs. investment

5. Strategies Under Varying Currency Conditions
Source: S. Tamer Cavusgil, “Unraveling the mystique of export pricing,” Chapter 71 in Sidney J. levy, George R. Frerichs and Howard l. Gordon (eds), The Dartnell Marketing Manager’s Handbook (Chicago: Dartell Corporation, 1994), Figure 2, p

6. Factors Affecting International Pricing…
Parallel Imports
Distributors in one country sell in another country
Not illegal
Overstocking
Distributor bankrupt
Exclusive distributors, luxury products, upscale retailers, margin 
Internet I.e. inexpensive music CDs Italy…
Drugs/medicine Canada USA
Strategy
Self-certify the product!
Language, packaging
For sale in specific country only
Product is not suitable for another country e.g. too sweet/color
Warranty/repair not transferable between countries
Close relationship with distributors

7. Factors Affecting International Pricing…
Price Escalation
A direct result of products moving across borders
Manufacturers Importers Distributor  Jobber  Consumer
Import duty (Fixed/unit, Valorem/values of goods x%, both $1 per unit + x% of its value), VAT, PST/GST
Operating costs 
Additional transportation costs
Two distributors: high lot and low lot
Insurance, packaging, country of origin, other admin. costs
Strategy
Move to low cost manufacturing countries
Lower distribution costs
Lower features and lower quality
Re-classification of the product to save on duty (art vs. jewellery)
Adjust dimension (shoes less thick, larger containers)

8. Causes and Effects of Price Escalation
Source: CIF Cost, Insurance, Freight, The exhibit assumes that all domestic transportation costs are absorbed
by the exporter. Just for illustration purposes.

9. Factors Affecting International Pricing…
Government Influences
Reduces the impact of price competition or eliminate it
Keeps retail margins below exorbitant level
Correlation between car-owners and superstores visits
Maximum/suggested retail price
Limited period of discount  EU Feb & Aug.
Wal-mart Everyday Low Price (EDLP) i.e., No discount
Displaced sales
Strategy
North American Approach
Govt creates environment conducive to conducting business
Adjusting interest rate
Monitoring the market to prevent abuses
Canada Competition Bureau
Cocoa, coffee, sugar, wheat  Board