8. Market Holding Strategy
Adopted by companies that want to
maintain their share of the market.
For E.g : in single country marketing ,
strategy involves reacting to price
adjustments by competitors.
Telecom Sector in India
9. Market Holding Strategy
In global marketing , currency fluctuations often
trigger price adjustments.
E.g : Appreciation of source country currency will not be
automatically passed in form of higher prices.
If the competitive situation in market countries is price
sensitive.
Manufacturers must absorb the cost of currency
appreciation by accepting lower margins in order to
maintain competitive prices in country market.
10. Market Holding Strategy
A strong home currency and rising costs in the
home country may
force a company to shift its sourcing to in-country or
third country manufacturing or licensing agreements
instead of exporting from the home county in order to maintain
the market share.
E.g. IKEA sourced 50% of its products in the USA in 1992
compared to only 10 % in 1989.
11. Market Holding Strategy
If the currency of a country weakens it becomes
more difficult to compete in price with imported
product.
A weak currency country can be a windfall for a global
company with production operations in a weak currency
country.
E.g During Asian Flu of 1990’s the Indonesian rupiah
fell from 2400 to 18,000 and then recovered to below
8000 to the US Dollar.
Global companies made windfall profits.
Their costs in rupiah increased 100 % but the value of
their production in dollars or any hard currency increased
by 300 to 700 %.
12. Cost Plus Pricing
It requires adding up all costs required to
get the product to where it must go plus
shipping and ancillary charges and a profit
percentage.
13. Drivers of Foreign Market Pricing
4 C’s : Company (cost, goals) , Customers (price
sensitivity, preferences), Competition (Market
structure ) and Channels
14. Company Costs: Export Pricing policy
Rigid Cost plus pricing
Export pricing set by adding all costs accrued in
selling product in international market and a gross
margin.
Flexible cost plus pricing
Adjustments of prices to market conditions in host
market. The domestic fixed costs are not considered
as theses are sunk costs.
Dynamic incremental pricing
Export related incremental costs include
manufacturing costs, shipping expense, insurance ,
overseas promotional cost.
16. Customer demand
Countries with low per capita income
Brand Dilution
Cannibalization
E.g. P & G
Ariel in Egypt
Packaging changed from 200 gms to 150 gms
Crest Toothpaste in China
Cavity protection (generic)
Whitening (Premium )
17. Customer Demand
Niche Strategy
Starbucks
Haagen Dazs
Extended Product Portfolio
HUL
Selling Older version at lower price
18. Competition
Number of competitors
Nature of competition
E.g: Indian Rural Market
Global vs local
Private vs State owned
Presence of counterfeit products
E.g Microsoft in China
- Piracy rate for PC software in china is more than 80 %
- Prices slashed by over 70 %