Differential Pricing For Different Markets Strategy : In this case, different prices are charged to different markets depending upon a number of factors. The exporter can have differential pricing strategy for home markets and for overseas markets. Again, there can be differential pricing between two or more overseas markets.
The differential pricing is justified because :
(a) differences in expenses such as documentation, freight, insurance, packing, etc.
(b) differences in costs to be charged – total costs for domestic markets and only variable costs for export markets, especially when major sales are in the home market,
(c) differences in the level of competition – where there is no or less competition, prices can be high, and vice-versa,
(d) differences in demand in international markets – where there is a need to modify product and incur additional costs, then prices can be high for such markets, and low where little or no product modification is required,
(e) attitude of buyers – if the buyers attitude towards exporting country’s goods is negative, then the exporter may fix low prices to gain entry in such markets, whereas, in other markets, he may charge higher prices.