International Business: The New Realities, 5th Edition

International Pricing

1. 16.4 Explain international pricing.

Pricing is complex. It is particularly challenging in international business, with multiple currencies, trade barriers, added costs, diverse regulations, and typically longer distribution channels. Given lower incomes in much of the world, firms often feel pressure to lower prices. Conversely, prices tend to escalate because of tariffs, taxes, and higher markups by foreign intermediaries. Price variations among different countries can lead to gray market activity—legal importation of genuine products into a country by intermediaries other than authorized distributors (also known as ‘parallel imports’). We discuss gray markets later in this chapter.23

Prices influence customers’ perception ...