Developing an effective pricing strategy today is becoming a difficult task for industrial marketing managers. The failure of firms to totally understand the implications of their pricing decisions often leads to missed opportunities and eventually lowers profits. Price setting and implementation are multidimensional processes affecting customers, products, cost recovery efforts, produce margin levels, customer retention, market share, and domestic and international sales.
Five dynamic pricing issues retailers should consider
1. Customer perception
Most of customer not aware with the price setup by retailers. If the retailers always change the price on a regular basis, it will cause the reduction of trust among customer.
2. Data accuracy
The changes of pricing depends on the data whereby the data driving pricing decisions is accurate. There are some of techniques which data is collected and filtered.
3. Algorithm mishaps
As retailers must know how mishaps can be minimized and what policies will govern when a mishap results in a big mistake (eg. customers being able to purchase a product at a ridiculously low price).
4. Altered customer behavior
As the existence of dynamic pricing becomes more evident to consumers, retailers will need to grapple with the possibility that it could impact customer behavior.
5. Overall experience
Customer service, selection, shipping, return policies and loyalty schemes can also help drive sales, even when a retailer can't offer the lowest price. These things are often crucial to fostering the brand positioning and customer loyalty retailers covet, so embracing dynamic pricing without addressing overall customer experience is short-sighted.
Issues Related To Pricing in International Market
1) Governmental Intervention:
Government price controls prohibits certain competitive pricing practices. The WTO permits a government to establish restrictions against any imports that enter the country at a price below the price charged to customers in the exporting country (dumping).
2) Greater Market Diversity:
Creates natural segments and a company sets different prices for different countries on the basis of competitive situation and stage of product in the product life cycle.
3) Price Escalation in Exporting:
4) Currency Value and Price Changes:
There are two more pricing problems occur because of inflationary conditions which are as follows:
i) The receipt of fund in a foreign currency that, when converted, buy less of the company’s own currency than had been expected.
ii) The frequent readjustment of prices necessary to compensate for continual cost increases.
5) Fixed versus Variable Pricing:
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