The paper "Price as an International Market Issue" is a perfect example of marketing coursework. Global companies mainly perform international marketing, and Allsmile is one of the companies that need international marketing for their products (Gillespie & Hennessey, 2011). The marketing mix is otherwise known as the four P's of international marketing namely, price, product, promotion, and place. The product range offered by the company is wide, and most of them are top-selling in the markets penetrated. Place entails the location of the company's stores around the globe. Promotion involves advertising and finding locations for stores in new markets (Mooij, 2013).
Finally, the main area of focus, which is the price, is designed by the company to bring as much competition to its competitors around the world (Hoffmann, 2008). The company aims at formulating low prices and keep the promotion levels high, and that is the main reason our company provides a negative contribution. Products pricing in international markets is complex and requires careful planning and evaluation. Pricing of goods by international marketing managers is dependent on the costs, customers, and completion and these factors vary from one country to another (Richter, 2012).
Pricing is aimed at providing more revenue through fewer costs through placing a range of prices that fall within what customers are willing to spend and ensuring that the prices fall in line with what the competitors are offering. Pricing is important for all international managers. Because the customers, costs, and competitors vary from country to country, Standardization of prices in Latin America compared to those in developing countries for the same product is dependent on various factors. In this case, we can assume that in a given country market that is very strategically critical for the company, there exists a high level of competition.
To enter such markets, a company needs to offer prices that are lower than its competitors are offering and in the process receive lower profit margins. In another country, that we assume is a neighbor the prices will have to be set higher because the number of competitors is less and thus a lower level of competition. However, companies may sometimes wish that the differences in prices between stores in different countries were not extreme.
This scenario arises because ill will might be created especially in the markets that are highly-priced. Additionally, extreme differentials might force companies to focus resources and opportunities on the higher-priced markets and sometimes even outsource resources from lower-priced markets to the higher-priced markets, a situation known as grey trade or parallel importing. A good example is an SKU (Stock Keeping Unit), which is lower priced in Brazil, can find a way to Argentina where the same SKU is highly-priced because a retailer or wholesaler in Argentina can find out that it is cheaper to acquire the product from Brazil than from the manufacturer directly.
Such issues are eliminated through standardization of prices especially those within neighboring states. The fluctuation of foreign currencies is another major aspect that determines the price of products in global markets (Hollensen, 2016). Many investors have the aim of holding dollars, and this leads to the rise in dollar value and therefore foreign units needed to buy the dollar rises. It is clear that the rise or fall in dollar value affects the importers and exporters or in general international marketing (Mathur, 2008).
Unlike the domestic businesses where the domestic currency determines all the production costs and sales, global businesses entail a minimum of two currencies. For example, All smile products are manufactured in the United States and need to be exported to Latin countries like Brazil. The United States currency (USD) and Brazilian currency (REAL) will be involved in the transaction, and therefore the currencies will, in the end, be a determinant in the products’ price. In some other cases, the price to the target customers do not change, and the scenario is referred to as pricing to marketing.
Pricing to marketing is based on the logic that the exchange rates should not affect the pricing of goods for customers in the target market. This approach of pricing is a disadvantage to the company when the USD rises at levels about the local currency. Moreover, the only way the company can deal with this is by lowering the cost of production, which can be tough sometimes. Altering with local prices is the only way that the firm can address the issue and this, therefore, proves that the price of goods in international marketing depends heavily on foreign currency exchange rates.
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