Factors influencing pricing decisions in marketing Rating:
The BCG (Boston Consulting Group) matrix is a tool used by companies to evaluate their business units or product lines based on two dimensions: relative market share and market growth. The matrix divides the business units or product lines into four categories: stars, cash cows, dogs, and question marks.
Stars are business units or product lines that have a high market share in a growing market. These units or lines generate a lot of cash and are considered the main growth drivers of the company.
Cash cows are business units or product lines that have a high market share in a mature market. These units or lines generate a lot of cash, but they do not contribute to the growth of the company.
Dogs are business units or product lines that have a low market share in a mature market. These units or lines do not generate much cash and do not contribute to the growth of the company.
Question marks are business units or product lines that have a low market share in a growing market. These units or lines may have potential for growth, but they require a lot of investment to catch up with the competition.
Now, let's apply the BCG matrix to Reliance, a diversified conglomerate company in India.
Reliance has several business units and product lines, including telecommunications, retail, petrochemicals, and energy.
The telecommunications unit, Jio, can be considered a star. Jio has a high market share in the growing telecommunications market in India and has been a major growth driver for Reliance.
The retail unit, Reliance Retail, can be considered a cash cow. Reliance Retail has a high market share in the mature retail market in India and generates a lot of cash, but it does not contribute much to the overall growth of the company.
It is difficult to classify the petrochemicals and energy units as either dogs or question marks because these industries are subject to fluctuations in demand and prices. However, the petrochemicals unit may be considered a cash cow due to its high market share and cash generation, while the energy unit may be considered a question mark due to its low market share and potential for growth.
Overall, the BCG matrix can help Reliance identify its growth drivers and allocate resources accordingly. It can also help the company make strategic decisions about which business units or product lines to invest in and which ones to divest.
Place: Prices for different places are discriminated upon. Equally important is how much buyers are willing to pay for the offering. The retaliation of the third level is difficult to comprehend as the business premises and cost structures are very different from the telephone company in question. Discount, credit sales, and price allowances are important issues related to seasonal factor. In particular it covers legislative and fiscal developments. Price cannot be determined without considering the strategy of competitors.
Internal and External Factors Affect Pricing Decision
When the seller pays the rest to the factoring firm, the firm gives the rest to the company, less the factoring fees. When the economy is weak and many people are out of work, companies often lower their prices. There's a good chance you can. By following this strategy, the organization can increase sales volumes in the short run but cannot survive in the long run. Differential Trade Margins Strategy: Variations in trade margins may be adopted by the exporter as the pricing strategy in the foreign market. Yet it is critical to get your Pricing Decision process right because a wrong pricing decision can not only hurt your business and it can take a very long time to recover from it.
Pricing of a Product in International Market: Factors, Methods and Pricing Process
The pricing decisions of the firm have to be consistent with this philosophy. Two, three, four units combined to get a price off. Which are the factors that influence the pricing Assignment Solutions, Case study Answer sheets Project Report and Thesis contact aravind. This is most likely to happen with new products where the organizational objectives permit a new product to simply meet its expenditures while efforts are made to establish the product in the market. The longer the chain of distribution, the higher is the margin added to cost in fixing the price.
Factors Influencing Pricing Strategy in International Marketing
But this principle does not always hold good. Largely, these factors are controlled by the company and, if needed, can be altered by them. This has an advantage of maintaining the image and profit margins of existing brands. This method based on marginal cost only sets the lower limit up to which a firm can sell its product without affecting its overall profitability. If prices are kept high, turning a blind eye to these, will make us lose business. In the country like India, the state exercises a lot of influence on price decisions in respect of a large variety of products. Organizations must understand buyers, competitors, the economic conditions, and political regulations in other markets before they can compete successfully.
Figuring Out Pricing in International Marketing Strategy
If a company introduces very low prices customers suspect its quality, and do not buy the product inspite of the low price. For example, if the price of cotton goes up, the increase is passed on by suppliers to manufacturers. Published price list does not help customers to make a decision. Advantages: There are a number of advantages by the use of this method: i Export sales are additional sales hence these should not be burdened with overhead costs which are ordinarily met from the domestic trade. The base price can be determined by following the three basic steps: i First, relevant demand schedules quantities to be bought at various prices should be estimated over the planning period; ii Then, relevant costs total and incremental of production and marketing should be estimated to achieve the target sales volume as per demand schedules prepared; and iii Lastly, the price that offers the highest profit contribution, i. Products can be exported at lower prices in such cases.
The firm may have a variety of objectives including — sales revenue maximisation, profit maximisation, market share maximisation, maximisation of customer value, maintaining image and position, maintaining stable prices etc. Under these circumstances the sales manager has little or no control over the prices and he has to fall in line with the public policy. Explain Forms of Direct Marketing. Market Penetration Price Strategy: The basic objective of penetration pricing is to help the product penetrate into markets to hold a position. Relative market share can be calculated with reference to close competitors. International marketing pricing strategies 3. Steady Demand- When the demand is steady, prices are maintained at the same level as competition.
Information of Foreign Market: For price determination, information about foreign market, competition, nature of demand and proportion in total market is considered vital. The price of the product does not affect its demand. Pricing is one of the most important factors in the field of Trade. Normally, such a policy may be applied for national development, industries position, stock of goods, and protection of industries. Environmental factors relate to tariff barriers, exchange rates, currency fluctuations, governmental influences, inflation etc.
Demand creation or demand management is the prime task of marketing management. The Distribution Network : For consumer and industrial goods the importance of considering distribution channels stems from the fact that many organisations will be involved, not simply in setting a price to their final consumer, but also in setting a price for their goods as they enter a particular distribution channel. Also note that while your input costs will impact your pricing, your pricing can also impact your costs. Whatever be the cost of production, there is a price at which the consumer is willing to buy. The following methods are common: a. Exporter may follow any method to calculate price.