International pricing
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The document discusses international pricing strategies and provides information about India's economy. It covers pricing objectives like market penetration and preventing new entry. Factors affecting pricing include costs, competition, and exchange rates. Pricing types include cost-based, market-oriented, and transfer pricing. The document also includes a case study on McDonald's entry into India and their pricing strategy of reducing combo meal prices by 25% to attract customers.
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International pricing
- 1. International Pricing Price may be defined as the exchange of goods or services in terms of money. Without price there is no marketing, in the society. To a manufacturer, price represents quantity of money (or goods and services in a barter trade) received by the firm or seller. To a customer, it represents sacrifice and hence his perception of the value of the product.
- 2. Pricing Objectives Market penetration Market share Fighting competition Preventing new entry
- 3. Factors Affecting Pricing Costs Competition Product differentiation Exchange rate Market characteristics Image
- 4. Steps In Pricing Defining pricing objectives Analyzing market characteristics Calculating costs Determining export price
- 5. Types Of Pricing Cost Based Pricing Market Oriented Pricing Break Even Price Transfer Pricing
- 6. GDP OF INDIA GDP $2.439 trillion (nominal; 2017) $9.446 trillion (PPP; 2017) GDP rank 6th (nominal) 3rd (PPP) GDP growth 7.2% (MOSPI, 2017-18) GDP per capita $1,852 (nominal est.; 2017) $7,173 (PPP est; 2017)
- 7. GDP per capita rank 141st (nominal) / 123rd GDP by sector Agriculture: 17.32% Industry: 29.02% Services: 53.66% (2016 est.)
- 8. Inflation(CPI) 1.54% (June 2017) Base borrowing rate 6.25% (as on 26 Jan. 2018) Population below poverty line 21.2% live less than $1.90/day 58% live less than $3.10/day[ (2011; World bank estimate) Human Development Index 0.624 (2015) medium (131st)
- 9. Labour force 520.4 million (2017) Labour force by occupation Agriculture: 47% Industry: 22% Services : 31%(FY 2014 est.) Unemployment 4.9% Urban 5.1% Rural 5.0% National (2016, Labour Bureau) Average net salary 82,269 / $1,284 annually (2016-17)
- 10. Main industries Textiles chemicals food processing steel cement mining petroleum machinery Software pharmaceuticals transportation equipment
- 11. Export Data Main export partners European Union 17.6% United States 16.1% United Arab Emirates 11.5% Hong Kong 5.1% China 3.4% Other 46.3%
- 12. Exports $275.8 billion (2017) Export goods Agricultural products 13.2% Fuels and mining products 15.7% Manufacturers 68.4% Others 2.7%
- 13. IMPORT DATA Main import partners China 17% European Union 11.3% United States 5.7% United Arab Emirates 5.4% Saudi Arabia 5.2% Other 55.5%
- 14. Imports $384.3 billion (2017) Import goods Agricultural products 7.1% Fuels and mining products 33.1% Manufacturers 47.8% Other 12%
- 15. FDI stock Inward: $318.50 billion Outward: $144.13 billion (2016) Net international investment position $404.8 billion (Sept. 2017) Public debt 67.7% of GDP (2017) Revenues 35.41 trillion (US$540 billion Expenses 46.25 trillion (US$710 billion) Foreign reserves $421.914 billion ( 02 February 2018)
- 16. Modes Of Entry in India Direct Exporting Licensing Franchising Management Contracts Joint Venture Turnkey Projects FDI
- 17. Case Study
- 18. McDonalds in India McDonalds began operations in India in 1996. The fast-food chain started making profits after it broke even in 2008. Reports suggest that McDonalds two subsidiaries in India, Connought Plaza Restaurants based in New Delhi and Hard Castle Restaurants in based in Mumbai posted accumulated losses of Rs 189.19 crore and Rs 119 crore in fiscal 2008. India and China continue to be high-growth markets for McDonalds. The top management felt that McDonalds had achieved tremendous brand success in India and there was nothing extraordinary about accumulating losses and that McDonalds India was not a unique case as the company was making losses similarly in many other markets.
- 19. McDonalds Pricing Strategy in India In September 2009, McDonalds announced reduction in prices by almost 25% for its lunch and dinner menus. Prices for its extra-value meals like McVeggie and McChicken were reduced to Rs. 85 and 95 respectively from Rs. 110 and 120 respectively. Typically a meal consists of burger, French fries and soft drinks. This strategy was surprising as it came at a time when food prices were increasing by the day. Cutting prices in such times did not make sense. But the management in India was convinced that tweaking the prices of it combo meal offering would help customers prefer McDonalds as a lunch and dining destination as well.