One of the most technical parts of doing business is the price aspect. And
if you think itÆs complicated in the domestic market, wait till you see what
all the factors are that need to be considered in the international arena!
Without making this little write up technical in any way, there are some
things to be emphasized, because they are important, whether you are an
international marketer or not.
First of all: when you are about to determine a price for your product or
service, there are at least 4 factors to keep in mind:
1. The nature and standing of your product: How is it perceived by potential
buyers? Is it unique or not?
2. The market itself: Who are the buyers? Rich folks? Middle class people?
The lower class? And what exactly are they looking for? In other words: how
should you market this product? What channels should you use? Where and how
should you display your product?
3. The level of adaptation needed for the product: Will you have to simplify
the product in order to make it accessible to the target market? Will you
have to diversify and decide upon a standard versus a deluxe version for
this market? Will you have to purchase cheaper materials to produce the
product for this market or will you have to move your production facilities
to a place where itÆs just cheaper to produce it? And is it worth the
effort?
4. The costs: Will you deliver in your own country, so that you donÆt have
any risk of exporting to carry? Will you deliver up till the truck, the
ship, or up till the foreign country? Or maybe up till the customerÆs
warehouse in the foreign country?
All of these issues are decisive factors in determining a price for your
product. But thereÆs more. Financing plays an important role as well: will
you be able to find a bank or other institution to finance your export? And
further: How much risk will you carry? How fast will you be able to get your
money? How stable is the currency in the foreign market? In what currency
will the deal take place?
Yes: pricing is a complicated and much-encompassing issue. In yet another
international marketing session my students came up with the following 3
tips to remember, whether you are an international marketer or not:
1. Know your competitors well in every market you operate in. Do your best
in positioning your product as well as you can, but realize that sometimes
the only way to shift from the third or second place to the first will be
when number one does something to his or her own self-destruction. Alertness
for when this happens is mandatory! And so is a fast action-plan!
2. Never over- or under price your product in any market, for it may ruin
your marketing position for good. You can only overprice a product if it is
unique, if customers really want it, if there are no government regulations
regarding a maximum price, and as long as there are no alternatives
available. But as soon as the competition kicks in and customers realize
that you have been squeezing them out, they may turn against you. And under
pricing? First of all, that may be considered intentional dumping if you do
it just to penetrate a market and break the competition. There may be duties
you will run into if you do that, and it may harm your reputation.
Therefore: be smart in your pricing change strategies: they can make or
break you.
3. Make sure you know the terms of trade in your negotiations! This is
especially crucial for every new star on the international firmament. A
price may seem interesting until you realize the terms under which it will
be delivered. Remember: the more risk in your shoes if you are the exporter:
the higher the price will end up being.
The world is becoming a global village, they say. And in some regards they
are right. But there is still a ways to go. And while weÆre on that journey,
we may as well position ourselves and whatever it is that we sell as
positive and beneficial as possible. The points above, together with a
positive approach and an empathic attitude toward business partners, may
guide you through the most difficult timesàwith a smile.
Joan Marques, Burbank, October 8, 2003
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About the Author:
Joan Marques, holds an MBA, is a doctoral candidate in Organizational
Leadership, and a university instructor in Business and Management in
Burbank, California. You may visit her web site at www.joanmarques.com
Joan's manual "Feel Good About Yourself," a six part series to get you over
the bumps in life and onto success, can be purchased and downloaded at:
http://www.non-books.com/FeelGoodSeries.html
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