624 The Marketing Book
segment across national frontiers, i.e. a buying
public with very similar profiles, as in the case
of the major credit cards such as Visa Gold or
the travel and entertainment cards of Diners
Club and American Express. Essentially, this is
an international segment who share many
commonalities, including travel.
It may also be possible to sell the same
products to different segments in foreign mar-
kets. However, to do this successfully may
require product or communication strategy
modifications. Small companies with a niche
product may be able to do this as successfully
as their multinational counterpart.
Now, back to the operational
4Ps...
Price
This always has a strategic role in terms of
positioning the brand. However, it is better to
take pricing out of this narrow box and empha-
size instead how marketing can create price
inelasticity. Pricing is strategically important
from export contract pricing to final sale to the
ultimate consumer. Garda (1995) discusses how
tactical pricing can protect the company’s pric-
ing structure by tracking competitive bids
made by rivals; timing price increases rather
than following competitors can shift customer
perceptions. Further confusion can be caused
amongst competitors by making price informa-
tion confidential to each customer, thereby
making it difficult for competitors to follow.
Customer price sensitivity and switching costs
are further keys to tactical pricing.
The Euro currency introduced by the
European Union in 1999 for paper transaction
and on 1 January 2002 as a complete
replacement for 12 national currencies will
usher in a new era where there will be the
most transparent situation we have ever
experienced to date as regards global pricing
amongst 12 of the 15 EU states. Pricing will
become more transparent and more easily
comparable across the 12 states of the EU.
The strategic implications are far-reaching.
Marginal pricing is tantamount to ‘dumping’,
which can take three forms: sporadic,
predatory or persistent. Each implies a
different competitive threat from an aggressive
foreign supplier.
Countertrade (CT) is the precise generic term
for barter, which today has many possible
variants. It means that an overseas buyer pays
partly in cash and partly in goods. The
merchantability of the countertrade goods
determines whether or not a countertrade
specialist is required to offload those goods
and realize a cash value for them. The costs of
countertrade transactions can escalate
dramatically depending upon the goods offered
and, even where specialist equipment of high
quality is offered, it can have serious supplier
displacement effects at home. However, while
the total trade in countertrade has declined
from 1989 estimates of around 30 per cent of
world trade, in the aerospace and computer
industries particularly, it would be virtually
impossible to conduct business without
recourse to such contract alternatives.
Paliwoda and Thomas (1998) discuss the
countertrade variants at length with examples.
Transfer pricing, which is intra-corporate
pricing, is another important aspect, often
because it has political overtones, since it has
the potential at least to move money with
goods. As a company has the power to decide
for itself the price it will charge for transfers
within its own organization, transfer pricing
has therefore been seen as an insidious threat
to governments who stand to lose tax revenue
as the corporation moves its highest value
added to the countries with the lowest tax
regime. To workforces everywhere there is the
risk of them being demoralized through unfair
pricing of their output, which in turn may
provide a reason for closure.
Price harmonization between country markets
is impossible to achieve except within fixed
bands, but when this gap widens, it opens up.