Pricing and Ethical Issues for Global Markets

Multinationals operating in global markets require analyzing several pricing considerations. They require setting appropriate prices of their products for each of the markets they operate in. Price of a product is an important criterion which decides whether a product will get sold or not. Companies contend with a number of issues in pricing like geographical pricing, price escalation, transfer prices, dumping charges, pricing for emerging markets, and pricing for individuals at the bottom of the pyramid. There are several legal and ethical aspects in pricing. These include deceptive or illegal prices – deceptive reference pricing, loss leader pricing, and bait and switch approach towards pricing; predatory pricing; price discrimination; and price fixing. The contribution of the study is that it conducts a conceptual analysis of the literature on pricing strategies and ethical issues. The analysis is validated by collecting and analyzing information from literature. It discusses how multinationals facing such situations should handle them, establish their businesses in global markets, and generate substantial revenues and profits.

Why Are Inferior Seats “Underpriced”? Evidence from the English Premier League

This paper studies the practice of loss-leader pricing strategy in the English Premier League (EPL). While the TV broadcasting revenue for EPL clubs has increased over the past 20 years, the importance of revenue from ticket sales has declined. The theory of multi-product pricing suggests that a change in the relative importance of revenue sources can induce profit-maximizing firms to underprice one product in order to raise the demand for a complementary one. Using other leagues in England and Scotland that do not have as much TV broadcasting revenue as a control group, we find that inferior seats are underpriced among the EPL clubs. Consistent with the growing importance of TV broadcast revenue, we also find that such “loss-leader pricing” is stronger in later years of the sample. Furthermore, we provide evidence that the underpricing of inferior seats is more pronounced in (i) EPL clubs compared to clubs in other European leagues; (ii) elite clubs in EPL compared to non-elite clubs in EPL that have less TV broadcasting revenue; and (iii) clubs promoted to EPL as compared to clubs that are either promoted or relegated to different leagues in England and Scotland. These findings corroborate with the hypothesis that clubs that rely more on TV broadcasting underprice their inferior seats as loss leader to attract more passionate fans.

Pricing Strategies of Multinationals for Global Markets – Considerations and Initiatives

Multinationals require analyzing a number of pricing considerations while competing in globally. Firms require setting different and appropriate prices of their products for each of the markets they operate in. The price of a product is an important criterion while formulating strategies for global markets as it determines to a large extent whether a product will get sold or not. Companies contend with a number of issues in pricing for global markets like geographical pricing, price escalation, transfer prices, dumping charges, pricing for emerging markets, and pricing for individuals at the bottom of the pyramid. There are several legal and ethical aspects in pricing for global markets. These include deceptive or illegal prices – deceptive reference pricing, loss leader pricing, and the bait and switch approach towards pricing; predatory pricing; price discrimination; and price fixing. Each of the issues is discussed in detail. The article focuses on how multinationals should handle and overcome them, establish their businesses in global markets, and generate substantial revenues and profits.

Are Multinational Retailers Really Selling at Lower Prices Than Domestic Chains? Evidence from Three Sectors

Currently, there is no systematic evidence showing that, 15 years or more after entry, all multinational retailers provide lower prices than domestic buying groups. In the short term, some multinational retailers may lower prices to deter local competitors and attract consumers in a ‘loss leader’ strategy. However, domestic competitors can integrate buying groups to share the benefit of economies of scale with multinational retailers, while holding lower profitability requirements and overhead costs than multinational retailers. We compared multinational retailers to domestic buying groups in a jurisdiction that had one of the highest proportions of Walgreens and Walmart stores in the world. Despite their market power, in our representative samples of goods, there is no evidence that the prices of multinational retailers in the sectors of pharmacies, supermarkets and hardware stores are lower than domestic chains. JEL Codes: M3, R1, L8, F2

Platform as a Strategy

Mobile payments are a new way to pay in the digital age. The emerging mobile payments enable viable businesses through real-time and context-specific transactions between consumers and collaborating actors. Mobile payment services realize in a multi-actor digital chain. Business interactions between actors take place in a coopetitive way: simultaneous competition and collaboration. However, little knowledge exists about mobile payment innovation strategy in coopetitive markets. This paper introduces the DISCO model (dynamics of innovation strategy in a coopetitive environment). It contributes to the exploration of strategic moves by mobile payment innovators through platform ecosystems. Our results from a case study indicate that firms have the potential to be successful through collective innovation in a coopetitive environment along with the movement of their superior competencies. Moreover, the firms should pursue ways in managing the paradoxical relationships between competition and cooperation, resource allocation and combination, as well as leadership and loss-leader strategy.

Internet Pornography without Intellectual Property

A notoriously innovative industry, adult entertainment has survived and thrived through every technological disruption. Kate Darling researches how the copying and sharing of digital files over the Internet has posed new challenges for content producers, effectively eliminating their copyright protection. But rather than destroy all incentive for production, this change has driven companies to reinvent their business models. Amidst some struggles, the U.S. industry has quickly shifted toward selling services and interactive experience goods, while continuing to create traditional content as a loss leader.