Question

When my newly established FMCG brand launches its brand in a foreign country, how should geocentric pricing policy apply to my FMCG brand? What is this pricing approaches advantages and disadvantages to the FMCG firm? (international marketing perspective)

Answer 1

answer-

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Geocentric pricing policy will apply to your FMCG brand in which FMCG brand will take the intermediate course of setting the price. In this pricing approach, Your subsidiary or brand that entered into a foreign country will look at local market condition and other factors like local cost, income level of target market, competitors etc then this information will be send to corporation's HQ in home country to set the price accordingly.

In short, This approach of pricing is about not setting a standard global price or not let subsidiaries to set thier own pricing but use local information to use and set pricing with collaboration and coordination with HQ and foreign subsidiary.

for example- your FMCG brand sells multi grain breads famous in US at price of $2 and you enter into foreign country say India where income level of customer is average, people consume more brown bread or white bread so after analyzing local condition then you consult with HQ in US and decide to set price of bread to sell it at $1.5 or 114 INR.

The advantages of this geocentric pricing approach to the FMCG firm are it helps FMCG brand to take account of local market conditions which leads to better meet need of local customers in foreign country. This will lead to increase in sales and capture more market share in less period of time. This pricing approach is proactive and flexible in nature depend on market conditions and allow company to make decisions on outsourcing and develope marketing strategies.

The disadvantage of this pricing approach to the FMCG is that it is time consuming and takes up extra cost. This is because you have to do market analysis and research for local market conditions. Then cost of coordination between HQ and susbsidiary is also increases.

Note- i hope these ideas and views will help you in your assignment or home work question.Please please give this an UPVOTE if it helped you. it helps me too. i appreciate it. THANKYOU..