Price differentiation

Price strategy for international markets that allows each local subsidiary or partner (agent, distributor. etc.) to set a price that is considered to be the most appropriate for local conditions, and no attempt is made to coordinate prices from country to country. The weakness of the price differentiation strategy is the lack of control that headquarters has over the prices set by the subsidiary operations or external partner. Significantly different prices may set in adjacent markets and this can reflect badly on the image of multinational firms. It also encourages the creation of parallel importing and grey markets, whereby products can be purchased in one market and sold in another, undercutting the established market prices in the process. See price standardization.

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