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Team09

How to Price Technology?

Companies that have succeeded in marketing believe that the final stage of the transformation in the marketing mix, which can change the conditions for you, is product pricing. The reason for this is very clear. The supply price is equivalent to all costs, including production and product development, management, distribution, and advertising. Of course, the strategy of a company requires that a particular product be offered in a particular market for a certain amount of time at a price below the price that it would certainly not end up with. The price plays a key role not only in profitability but also in sales volumes and market share.

Sometimes one percent of the price increase can be up to 50 percent for a company to profitably. Especially for companies with a low profit margin, such as computer companies, smart pricing is a secret of survival and success. At the same time, price changes after the pricing are difficult, dangerous, and almost all customers have no realistic understanding of price fluctuations. After pricing, customers consider the price increase to be unaffordable and, on the other hand, the price drop has a negative impact on the value of the product and may reduce the share, market share, and profitability.

Therefore, it can be said that price is an important part of the marketing strategy. In addition, the price is an essential element of the transaction between the company and the customers, and sometimes it is the only factor for decision making to buy a product. Correct pricing in technology products is usually not easy. The physical part of products has high prices. For example, the average cost per kilogram of materials in making the satellites is 20,000 times the value of one kilogram of material in the construction of the building and 2000 times the value of one kilogram of material in the making the car, which is why the prices are barely set by market agents. The statistics show that in pricing these products typically in each case 50% of executives, 40% of sales executives, 30% of pricing committees and 20% of marketing directors are involved. In a world where products and the competitive position of companies are changing rapidly, managers need to know how to adapt themselves to different circumstances. They first determine the price based on commonly used pricing models based on all the necessary parameters and then improving it by using policy frameworks, company and market constraints. After choosing and fixing the right price, all behaviors of competitors, customers, and market agents are anticipated.

This policy can vary depending on the source of income. For example, a hardware device, a computer or a satellite can be sold directly, on the other hand, it can be rented. But in the case of software or some technologies, the story is a bit different. For a group of these products, licenses are issued and sold. This subscription is a password that has an expiration date and usage that is subject to that as well as the amount of access priced. In these cases, all sources of money will be affected and priced. Supply and demand are one of the major drivers of dynamic prices, and companies are careful to keep things in check. The price of a product always fluctuates between the two upper and lower points. Price ceiling and floor price. The price ceiling is the price that your customers will not be willing to pay more for your product. You may produce a product that the market does not stretch, and it is precisely for this reason that many ideas will never be commercialized. The price of the ceiling is determined by the market and determined by the price elasticity of the demand in the target market. However, this number may also affect production processes and create changes in production. The floor price is primarily determined by the manufacturer and is specifically calculated on the basis of costs.

Finally, only after the product is sold, we can have the right comment about its pricing. Companies often change prices after sales. As prices go up, customers are forced and in spite of their intrinsic desires, and as the price rises, the number of customers drops rapidly. Price reduction also has its own consequences. Reducing the price avoids the company from its slogans. But often the price reduction with the policy of increasing the volume of sales is synchronized, and companies, prefer greater volumes to unit profits for different reasons. Do not forget, it’s not always a low price or discounts policies that the manufacturer has as his main weapon. Instead, sometimes by raising the price, you show the higher level of quality and performance than your rivals. It’s just the example of Apple’s approach, and because of that, it displays the quality and innovation of its products against its The physical. This method was proposed by Steve Jobs, who extracted it from a successful model of B.M.W products. 

Categories
Global Marketing

Amazon: Technology Making International Marketing Easy

 

According to a Reuters article from earlier this year, more than one-quarter of all Amazon sales for third-party sellers on the platform were cross-border transactions. Leveraging its supply chain infrastructure, brand recognition, and international customer service operations, Amazon is able to provide sellers with a level of support that makes selling internationally nearly as easy as selling domestically.  Amazon offers both international Fulfillment By Amazon (FBA) in an expanding number of countries and FBA Export to sellers of all sizes.

Through its FBA program, Amazon is offering small and medium-sized businesses a means of quickly and effectively expanding internationally.  Amazon is able to distribute these sellers products to countries throughout the world with minimal shipping time, handle taxes and tariffs as required, and provide customer service in the local language on behalf of a business. Additionally, Amazon is able to provide sellers with connections to services that will assist with customizing product detail pages and messaging to adapt to local cultures on country-specific Amazon platforms.  Smaller companies are also able to capitalize upon the trust that consumers have for Amazon, reducing the need for individual sellers to build trust beyond that of Amazon reviews and rating.

This offers a significant opportunity for smaller businesses that may not have considered international sales an option.  An increasing number of these companies are opting to sell in Amazon’s expanding international channels, which has led to cross-border sales growth for Amazon increasing at a rate that is outpacing its 31% overall net sales increase.  This trend also means an increase in competition in all international markets that Amazon is able to serve as a growing number of sellers begin taking advantage of Amazon’s programs. For marketers, it may be difficult to continue with differentiation or low-cost strategies as more and more markets become saturated.  This may eventually lead to a large number of companies developing a more focused differentiation approach in order to target a niche market that may value a very specific product offering.

With the successes that Amazon is seeing from employing robotics, information tracking, and internet technologies to allow companies of all sizes to sell, market, and distribute products throughout the world, it is likely that other large global e-commerce players like Alibaba, jet, FlipKart, and Rakuten will work towards copying this strategy. There is a high likelihood that marketing globally will become more cost-efficient and simple for businesses of all sizes to incorporate into their businesses.  In domestic markets, companies will need to consider the potential threat that this ease of market entry by international competitors will generate. Additionally, companies, especially those that are early adopters, will have the potential to greatly increase their revenues and global reach.

References

https://www.pymnts.com/amazon-commerce/2018/amazon-vendors-international-payments/

https://www.reuters.com/article/us-amazon-com-trade-exclusive/exclusive-on-amazon-a-quarter-of-merchants-sales-are-cross-border-idUSKBN1GW1AE

Think You’re Too Small to Export? Amazon Can Help

http://www.supplychainquarterly.com/news/20180501-study-amazons-fba-onsite-program-poses-a-threat-to-3pls/

Categories
Global Marketing

E-commerce Regulations: International Opportunity or Threat

The US, Japan, and Singapore are among nearly a dozen World Trade Organization (WTO) members that are pushing for international e-commerce regulations.  The US has specified that the agreement should cover the free flow of information, digital security, fair treatment of digital products, trade facilitation, protection of proprietary information, and facilitation of internet services. At the WTO Ministerial Conference in Buenos Aires last December, 71 members of the 164 WTO members were in support of beginning talks on e-commerce with a join statement formalizing this stand.

India, which has yet to establish a national policy on e-commerce, is concerned that many countries do not yet understand the full implications of binding rules in this space due to asymmetric development of e-commerce globally. Several countries in Africa have are also opposed to e-commerce negotiations at this point.  However, with the US, EU, Japan, and China backing negotiation proposals, it is unlikely that India will be able to prevent negotiations from going forward.

This comes at an interesting time for India as India’s e-commerce is experiencing a period of rapid growth and its largest e-commerce player, Flipkart.com, is close to closing a deal with Walmart and Alphabet, Google’s parent holding company.  According to Forrester Research, India’s online commerce is expected to grow from $19.6 billion in 2017 to $27 billion this year, nearly a 38% growth. Additionally, the deal to acquire a more than 70% stake in Flipkart.com for $20 billion by Walmart and Alphabet is close to closing.  As a nation with a quickly growing e-commerce market and no national policy for e-commerce, an agreement by the WTO is of great concern to the country. It is for this reason that India is now rapidly working to develop a detailed national policy, which Commerce Secretary Rita Teaotia has stated would assist “India in articulating its stand on e-commerce at the World Trade Organization.”

What is FlipKart?

There is also speculation that the US is attempting to utilize an agreement on digital trade to counter China’s digital trade barriers. As Stephen Claeys noted in an article in The Hill, the US paper on negotiations states that the agreement should cover all trade-related aspects of commerce through electronic means.  This would expand the negotiation agreement beyond the WTO’s narrow definition of e-commerce, which “only covers activities related to the electronic provision of goods and services, such as distribution, marketing and sales (Claeys).”   Although it is unlikely that all objectives in this paper would be accepted into a WTO on e-commerce, if they were, it would eliminate the top barriers to technology and information companies and would make a significant move towards the liberalization of digital trade.  

For companies currently in the global e-commerce market or considering entering this market, a WTO agreement regarding e-commerce could pose a large opportunity or threat.  One topic of concern is that of information freedom and security which may alter the gathering and storage of data for companies either in a more restrictive way or more open.  Additionally, the negotiations are likely to cover taxation, tariffs, and other potential costs for companies, which may increase or eliminate these costs for international e-commerce.  If eliminated or reduced, large international companies would be able to compete more aggressively with domestic companies in many countries. Companies looking to enter international markets through e-commerce will need to continually monitor progress on this front as regulations may offer a significant opportunity or threaten the profitability of their business in the near future.

 

References

Clays, Stephen. The Hill. http://thehill.com/opinion/finance/384120-digital-trade-paper-shows-us-using-wto-as-part-of-approach-to-china

https://thewire.in/trade/as-push-for-global-e-commerce-rules-gain-pace-india-starts-taking-a-stand

https://timesofindia.indiatimes.com/companies/walmart-alphabet-together-may-buy-over-70-in-flipkart/articleshow/64036426.cms

https://www.businesstoday.in/current/corporate/google-alphabet-walmart-flipkart-deal-amazon-stake/story/275751.html

https://www.thehindubusinessline.com/info-tech/govt-to-frame-policy-on-e-commerce/article23660302.ece