Export price: how to make it more competitive

Gabriele Snieskiene, Akvile Cibinskiene

Abstract


20th International Scientific Conference; Economics and Management 2015, ICEM 2015, 06-08 May 2015, Kaunas, Lithuania

Export price: how to make it more competitive

Gabriele Snieskiene, Akvile Cibinskiene

a Kaunas University of Technology, K. Donelaičio g. 20, Kaunas LT-44239, Lithuania

b Kaunas University of Technology, K. Donelaičio g. 20, Kaunas LT-44239, Lithuania

 

Purpose. The main purpose of the paper is to identify the key factors that enhance price competitiveness in export markets.

Methodology. Scientific studies on export pricing practices are collected and reviewed. The research methods used in the article are systemic and comparative scientific literature analysis.

Results. Export price setting is a crucial managerial decision determining the ability to compete in foreign markets. Creation of a flexible and responsive to market conditions export pricing strategy is vital because of its direct influence on the exporter‘s profitability, market share, financial stability, its products competitiveness, and etc. Many researchers agree that export price can be the easiest and fastest way to increase competitiveness. However, pricing decisions can be complicated because of the uncertainties associated with today’s dynamic environments, plenty of influencing factors. This is especially true for export pricing that is confronted with additional environmental factors. It is not enough to have a principal knowledge of pricing, previous experience, and intuition. Exporters must take a more proactive approach to price setting in foreign markets. Only an in-depth analysis of influencing factors and competent interpretation of their impact allow to increase the efficiency of export pricing decisions, i.e. to set a more competitive export price.

Based on the reviewed and examined scientific research findings, the article establishes the most important environmental factors that have an impact on price competitiveness in export markets. Their probable effect on export pricing decisions has been discussed in the article.

Findings:

  1. Appropriate export pricing strategies are critical managerial decisions for success in foreign markets. Export price competitiveness depends on comprehensive identification of environmental factors and the congruence of pricing decisions and actions by the firm. Competitive export price should be flexible and change over time due to environmental or organizational conditions.
  2. The environment of export pricing strategy is a uniform completeness of forces affecting the decisions on price, where the effect of factors producing direct and indirect influence intertwines.
  3. The analysis of scientific literature has demonstrated that export price competitiveness by the most part depends on competitive intensity, firm’s market share, its size, exchange fluctuations, inflation, stage of product life cycle, customer sophistication, firm’s size, export experience, and international distribution system.
  4. The changing environment requires new solutions, and export pricing decisions should be regularly reviewed, monitored and adjusted if appropriate.

The theoretical contribution. The article complements and expands scientific studies on export pricing practices. Theoretical and practical issues of pricing have been analyzed by Obadia and Stöttinger (2014), Sousa and Bradley (2009), Dovleac (2014), Indounas and Avlonitis (2009), Rusetski (2014), Myers et al. (2002), Dolgui and Proth (2010), Tan and Sousa (2011).

The findings of the article offers important guidelines for better understanding about the impact of environmental factors on export pricing decisions.

Keywords: export pricing, external factors, internal factors, export experience, competitive intensity

Paper type: Theoretical paper.


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