Question

Pricing can also come down to how you choose to position your brand — should the cost of your product reflect luxury status? Or will low prices help you to penetrate a new market? Swedish furniture giant Ikea, known in Europe for its low-cost value, struggled initially in China due to local competitor costs of labor and production being much cheaper. By relocating production for the Chinese market and using more locally sourced materials, the company was able to successfully cut prices to better reflect its brand and boost sales among target consumers. Wherever you’re looking to launch your product or service, what do you think are strategies to help you find the right price?

Answer 1

Pricing strategy is one of the key ingredients required for successful entry in foreign markets. An investigation into the consumer preferences for the product which the company is going to sell becomes pivotal. The presence of local competitors necessitates importance of a competitive pricing strategy. The availability of raw materials in the local market as well as cheap labour and machines should be considered. For automated production company may need to set up manufacturing unit in the foreign region to oust the local competition. There can be retaliation from local competitors regarding undercutting and using other barriers. Therefore an appropriate investigation in the business laws of the foreign nation is also important.