Pricing Strategies

Introduction    

            Global pricing is complicated compared to domestic pricing because of currency fluctuations in different countries. To analyze an organization’s performance, global pricing has to be considered first i.e. ethnocentric, polycentric and geocentric pricing strategies.

            Ethnocentric pricing strategy is also referred to extension pricing policy whereby a product’s home-country price extends to all country markets. Polycentric pricing strategy also referred to as adaptation pricing policy (Schindler 2012). This strategy sets different pricing levels for a given product in different countries markets. The pricing is high as each country implements its own local market price. Geocentric pricing strategy involves both use of ethnocentric pricing and polycentric pricing. The pricing uses a standard price worldwide.

            Introduction of new products to the market requires total commitment so as to win the customer’s interest. Getting to the business world is more complex, therefore going for a product that is unique gives high chances to be successive. Introducing the product, the best pricing strategy to go for is Geocentric pricing strategy because of the standard pricing all over the world. A product like a computer will have lasting distinctiveness from a competitor's product. Though local manufacturers may tend to lower the prices of the same product leading to competition, discount is necessary i.e. sell a product at a high price, sacrifice high sales to gain a high profit. Companies such as HP (Hewlett-Packard), IBM (International Business Machines Corporation) and Wal-Mart use geocentric pricing strategy.

The special problems of pricing in highly inflationary environments

            In highly inflationary environments pricing problems come in as there’s increased general level of prices for products and services. Due to inflation prices go up, this leads to workers demanding pay rise resulting to less company profit. Protecting the firm's profits when operating in such environments, the firm needs to invest for long-term capital gains and manage wisely recurring monthly bills for the firm e.g. phone bills.

Distribution channel

Consumers in less developed countriesprefer more basic products and therefore exclusivedistribution channel is suitable as it’s hard for outsiders to access the products. Marketers still be successful in such countries because exclusive distribution occurs more frequently in the wholesale level resulting in high demand of products from consumers.