There is no single fixed price, but local subsidiaries are not given total freedom over setting prices. It is the surplus earning of a seller who faces The buyers are free to choose the quantity at a fixed price. The most useful approach in standard formula pricing is the differential formula. If these differences emerge, products are shipped from low-price to high-price markets with the price differences between these markets allowing the goods to be resold in the high-price market with a profit. Monopoly rent = Total revenue - Total cost, CS = Total  use value - total expenditure, Unifrom pricing 2, 1 December 2016 | Journal of Marketing Research, Vol. For instance, a company could price a $25 shirt at $40, allowing it to still sell for $26 after a 35 percent discount. by the local subsidiary or local partner). Dynamic pricing means the price on a product or service can change over time. The price will equal the marginal use ■ The terms of payment are contractual statements fixing, for example, the point in time and the circumstances of payment for the products to be delivered. Academic library - free online college e textbooks - info{at} - © 2014 - 2020. Discount Pricing. This strategy is very simple and guarantees a fixed return. In these situations, products are sold outside of their authorised channels of distribution. cost of production, marketing or distribution); it is important to take many other factors into consideration that may differ internationally (Doole/Lowe 2012, pp. 66, No. Therefore it is necessary to coordinate the pricing strategy across different countries because otherwise reimports, parallel market or grey market situations can emerge. 8, International Journal of Hospitality Management, Vol. 8, 28 April 2019 | Sustainability, Vol. Interestingly, we find that uniform pricing induced by consumers' concerns of fairness can actually help mitigate price competition and hence increase firms' profits if the demand of the product category is expandable. 64, No. 1, 2 August 2013 | Management Science, Vol. Global industries are dominated by a few, large competitors that dominate the world markets (Solberg/Stöttinger/Yaprak 2006). Here the seller includes the transportation charges and keeps the price same for all the locations in that zone. The most important factors that influence international pricing strategy are summarised in Table 21.2. a downward sloping demand curve. (Simple monopoly pricing), Conditions 4, 20 May 2017 | Economic Theory, Vol. The extensive adoption of uniform pricing for branded variants is a puzzling phenomenon, considering that firms may improve profitability through price discrimination. 368-369). Which international pricing strategy is appropriate depends on the firm's ability to respond to the diverse external, market-related complexities of international markets (see Figure 21.2). International pricing is often considered the most critical and complex issue in international marketing. 9, 12 October 2015 | Marketing Science, Vol. Enter your email address below and we will send you your username, If the address matches an existing account you will receive an email with instructions to retrieve your username. 11, 1 August 2018 | Journal of Marketing Research, Vol. If you have an individual subscription to this content, or if you have purchased this content through Pay Per Article within the past 24 hours, you can gain access by logging in with your username and password here: The Benefit of Uniform Price for Branded Variants, Sign Up for INFORMS Publications Updates and News, Copyright 2020 INFORMS. Furthermore, an individual firm may not have an incentive to unilaterally mitigate consumers' concerns of price fairness to its own branded variants, which suggests the long-run sustainability of the uniform pricing strategy. A direct cost plus contribution margin formula implies that additional costs due to the non-domestic marketing process and a desired profit margin are added to the basic production cost. Agent Selling, An Empirical Study of Uniform and Differential Pricing in the Movie Theatrical Market, Cognitive Hierarchy in Capacity Allocation Games, Quality and Pricing Decisions in a Two-Echelon Supply Chain with Nash Bargaining Fairness Concerns, All's Not Well on the Marketing Frontlines: Grasping the Challenges of Adverse TechnologyyConsumer Interactions, Anticipated Regret and Product Innovation, Why offer lower prices to past customers? ☆, New Product Preannouncement: Phantom Products and the Osborne Effect, An Exploration of Initial Purchase Price Dispersion and Service-Subscription Duration, The strategic effect of retailers' in‐store advertising services under product variety competition, Incorporating Behavioral Factors into Operations Theory, When Showrooming Increases Retailer Profit, Loss aversion and the uniform pricing puzzle for media and entertainment products, Entry deterrence/accommodation with imperfect strategic thinking capability, The Impact of Consumer Fairness Seeking on Distribution Channel Selection: Direct Selling vs.