6 Ways to Improve International Market Launches through Pricing
Since the boom of the Internet, difficulties in international expansion have been reduced considerably easier for brands aiming establish their business globally through various channels. Loyal consumers in international markets can research product offerings, price points, and discounts of what their favorite product is valued at in the U.S. market, which makes it challenging for brands to hide distribution fees and tariffs in their pricing model. Because of the distribution of transparent information, consumers are now more aware of the price-to-value ratio which, in fact, changes the value of a product in the marketplace. However, the main strategy for understanding the buyer’s behavior is their willingness-to-pay threshold versus the product’s value in each market. For example, Asian markets will value Product X over Product Z but Canadian markets will value Z and X, even though X is not available to them. And more so, what the South African customer is willing to pay for a White Claw may not be the same as German customers, who historically favor beer. In this post, I will discuss the 6 Ways that White Claw can improve their International Market Launch through Pricing.
- Understand willingness-to-pay in each market
- The willingness-to-pay is the knowledge and information regarding what the customer will pay for the product, based on what they value it. White Claw can plan their pricing strategy along with marketing communications, which could vary throughout one specific market. If the WtP is high White Claw holds the power to price competitively to gain opportunities but if by mistake the WtP is low, then they will lose out on a considerable amount of sales revenue.
- Continuously monitor prices across countries
- Price differentiation reflects the pendulum of willingness-to-pay at the international level. It is important for White Claw to track price movement with revenue growth to implement a pricing strategy that compliments further growth (i.e.: new product launches). Since White Claws international market launch will be a substitute to existing product, their pricing should reflect the improvement of existing goods.
- Establish a language for price discussions across markets
- White Claw must explore a formal and permanent pricing meeting to discuss their international launches and prices discrepancies. A clear understanding of the Target Price across all markets globally will ensure that new launches, and base prices generate the minimum profitability. This language must be hidden from the customer and market to avoid distrust and resentment.
- Global to Local communication
- Global brands seek consistency in their market communication. However, value communication and value pricing are conducted at the local level, where urban customers in one country put different values on products in comparison to their neighboring suburban counterparts. Circling back to the first strategy: if you have different willingness-to-pay in different countries, the business must reflect those differences in your communication when launching products internationally.
- Don’t focus on price harmony
- By theory and practice, Willingness-to-pay differs between countries. Therefore, prices should also differ. Although it’s easier to manage, the problem with international companies falling into the temptation of harmonized prices, is that customers will quickly understand that fluctuation in currency and demand has no effect on the product. In fact, it’s actually more expensive to establish harmonious prices because you will end up with the lowest possible price. White Claw should seek unique opportunities in their market launches to appreciate the value of the fixed price by distracting customers with a location specific marketing plan.
- Value is local
- Despite the continued internationalization of brands and communication, the perception of value is largely localized. Young adults in the U.S. value hard seltzers like White Claw differently than their German beer loving counterparts. But more specifically, the alcoholic beverage market shows that hard seltzer is the least favorited beverage among adults in the U.S., behind beer, wine, and liquor. Although this depends on the industry itself, companies should deliver tactics to incite value when launching new products and differentiate the communication of its features to adjust the local willingness-to-pay.
Follow along for White Claw’s Global Attack Strategy with a recent interview discussing their future growth!https://www.thedrum.com/news/2021/04/08/get-ready-uk-white-claw-s-cmo-reveals-the-hard-seltzer-s-global-attack-strategy