Pricing Decision

Top management and marketing managers always need to do decision for setting the
initial price of the product and also changing the price of product from time to time. An
acceptable price can provide a satisfying marketing-mix to target market members.
(Saxena, 2009). To decide the price of Basmati Rice it is depends on lots of factors which
are cost, competition, advertising and sales promotion. (Barron's Educational Series,
2016). Export marketing managers are concerning the price of the product either is export
price or domestic price for the product. The imported products price will influence the
pricing of domestically produced and sold product. Besides, the price of products which
sold is different market will also have differential on pricing.

Determinants of an export price

Cost

To determine the price of Basmati rice in Dubai for exporting it depends on the cost to
produce the rice. The cost of Basmati Rice in Indian is 15038 Rupee per 100 kilograms. A
price floor is useful in setting a price. Labor, raw materials, packaging and shipping is the
basic categories of cost incurred for determine the price of Basmati Rice. After
calculating the minimum wages for labor Golden Rice Company can set the Basmati Rice
at a price of 180 Rupee for one kilogram packaging, 350 Rupee for two kilogram
packaging and 1520 Rupee for 10 kilogram packaging. We set the price at 180 Rupee for
one-kilogram package because after calculating the cost for the rice is around 150 Rupee
and including labor cost, Golden Rice Company will set the price at 180 Rupee.

Market condition and consumer behavior

Price ceiling is for the Dubai government to decide the price which is upper limit for
prices. A demand schedule is established for the product in an export market. For a
demand schedule it might include the quantity of customers who will purchase at several
levels of pricing. Thus, the markets can be fulfilled. When the price of the rice keeps
increasing and thus it will make the consumers to asking for price ceiling. For example,
the Dubai government has set the price ceiling on maximum of 170 Rupee per kilogram,
therefore Golden Rice Company can only set the price below than 170 Rupee but not
more than 170 Rupee. (Taylor, 2006)

Competition

In a competitive condition, it can help Golden Rice Company to decide the actual price
should be set when the demand and cost condition encircle the price ceiling and price
floor. The price tends to set in a market price which is just above the cost and also can
obtain marginal product in a pure competitive condition. In the other hand, in
monopolistic or imperfect competition in order to adapt the price of the product the seller
has the title discretion to variety of the product quality and promotional efforts. Oligopoly
competition is the price is set depend upon the assessment of others oligopolies reaction.
For Basmati Rice, it is a pure competition where there are a very large number of
companies operating in the same commodities and consumers have knowledge about the
cost and price of the product. Therefore, the price of products is not much different
between each companies. For example, Company A set their price at 185 Rupee per
kilogram, Company B set their Basmati Rices price at 175 Rupee, therefore Golden Rice
Company can decide to set their Basmati Rice in between 175 Rupee to 185 Rupee per
kilogram.

Legal and Political Issues

Government will restrict the freedom of a company to set the price of the product so that
the price is not set too high or too low. This is because the government take action to
protect the local industries. Dumping is the product sell at foreign market at low price
which lower than domestic price. Antidumping legislation is a legislation where any
complain about antidumping, World Trade Organization will punish the company. For
example, Dubai government decide the price of Basmati Rice at 170 Rupee, Golden Rice
Company cannot set their price too low like 70 Rupee per kilogram. If Dubai government
discovered Golden Rice Company do so, they can take action complain to World Trade
Organization(WTO). Thus WTO will take action to punish Golden Rice Company.
Import tariff is an incentive for exporter to differentiate the prices from each country.
General company policies and marketing mix

Export pricing is affected by the past and current corporate rationality, association, and
administrative policies. Pricing cannot be separated from product consideration. Golden
Rice Company administrative must take the consumers view point and assess a product
regarding of its quality and other characteristics respect to its costs. Price is also affected
by the channel distribution utilized. Some of the channel also require high operating
margin which is the price is sold in a very high price.

In conclusion, Golden Rice Company will set the price of Basmathi rice at 180
Rupee which is 9.70 Dirham in Dubai currency. This price has included the advertising
price, labor costs, cost for logistics which is export from India to Dubai, and last but not
least the price of 180 Rupee has also included the business expenses. The price of 9.70
Dirham per kilogram of rice is fair after including all the expenses that will cost while
exporting rice from India to Dubai.
Fundamental export pricing strategy

There have five pricing strategy which is skimming the market, sliding down the demand
curve, penetration pricing, preemptive pricing and extinction pricing

For Golden Rice Company, we are using penetration pricing. It is a technique which
fundamentally utilized by organizations with innovative products. The pace is slow
enough to get benefit and fast enough to debilitate competitors. This technique includes
building up a price adequately low to quickly make a mass market. We are targeting a
large market and a high volume of sales. These are needed so that we can meet our
company profit goals. Accentuation is put on esteem rather than cost when setting cost.
An extraordinary for of penetration pricing is expansionistic evaluating. This is the same
as penetration pricing aside from that is goes much lower in order to get a bigger rate of
the consumers who are potential purchasers at low costs. This technique includes high
degree of price elasticity of demand and costs extremely susceptible to reduction with
volume output. Indeed, using penetration pricing strategy is for Golden Rice Company
prevent others competitor to compete with them because they set at lower price and bring
a low profit margin. Therefore, it would not attract others to come in the market and
compete with Golden Rice Company. (Queensland Government, 2016)
References
Barron's Educational Series. (2016). Pricing Decision. Retrieved from All Business:
https://www.allbusiness.com/barrons_dictionary/dictionary-pricing-decisions-
4945494-1.html

Queensland Government. (2016, June 8). Retrieved from Pricing strategy:

https://www.business.qld.gov.au/business/running/marketing/pricing-products-
services/pricing-strategies

Saxena. (2009). Pricing Decision. Retrieved from KnowledgeBrief:

https://www.kbmanage.com/concept/pricing-decisions

Taylor, B. (2006). Price Ceilings. Retrieved from

http://economics.fundamentalfinance.com/price-ceiling.php