Export Pricing Strategies

1742 WordsApr 4, 20157 Pages
Firm contemplating to enter into a new foreign market and/or expanding its existing operations, pricing of its products and services plays a key role in its success or failure. Businesses engaged in international operations need to adhere to effective pricing strategies, as it is one of the critical factors in determining the competitive position of the companies in the foreign market. Therefore, it is not a surprise that an international marketer, even when it is devised with the right products, the appropriate promotion, and distribution channels, can lose to competitors if a sufficiently large section of the markets is not willing to pay the price the MNC is charging. A thorough literature review in the area of export pricing…show more content…
In order to effectively implement the export pricing strategies, these factors should be accurately identified. The conceptual framework proposed by them addresses the relationship between export pricing strategy and the internal and external forces as discussed by Tellis (1986) and Cavusgil and Zou (1994). The authors further mention that adoption of a specific export pricing strategy depends on selected internal and external variables. These variables are crucial to the export pricing strategies of a firm. The variables are related to – firm and management, Product, and export markets. The framework for this literature review is primarily based on Cavusgil (1988), because it provides an exhaustive classification the variables influencing export pricing, though this review considers only five elements (except the element - U.S. government regulation). After reviewing the literatures, I categorized the determinants of each article into this framework. The interaction of these internal and external determinants provides distinctive feature to the pricing strategies to different environments. To be precise, these determinants are the background forces limiting managers’ choice of adopting various export pricing strategies. The following section discusses five of the six categories proposed by Cavusgil (1988). Nature of Product/Industry - The classification
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