I (Meaning and importance of Exports) Unit Structure

9) Transfer pricing strategy
Transfer pricing refers to the pricing of goods or services 
among subsidiaries within a corporation. This strategy s adopted by 
a MNC (Multinational Corporation). The subsidiaries of a MNC 
trade among themselves or with the parent firm. It seems that any 
price charged by a subsidiary to another subsidiary or to the parent 
firm is acceptable as the sales are undertaken within the 
corporation. 
10) Trial Pricing 
 
 
In this case, a firm may launch a new product with low 
pricing, for a limited period of time. The purpose is to win customer 
acceptance first and make profits later. Often, trial pricing is seen 
as an alternative to giving away samples of a product in order to 
make people to have a trial of the product. 
11. Flexible- Price Strategy 
 
In this case, a firm offers the same product and quantities to 
different customers at different prices. For example, when a new 
product is introduced, a firm may sell it at a special price to its loyal 
customers. A retailer may offer special price to frequent shopper as 
compared to other customers, who do not buy frequently from that 
store. The special price is a reward for customer‟s loyalty. 

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CHECK YOUR PROGRESS: 
 
1. Fill in the blanks: 
a. Price means the expression of value of utility of a 
commodity in terms of -----------------------. 
b. High prices are charged and limited promotional effort 
are done to promote the product it is called as -------------- 
c. When different prices are charged in different markets it 
is called as -----------------------------------. 
d. When low prices are charged, and the product is 
promoted with heavy promotional expenditure it is called 
as ---------------------------. 
e. In Marginal costing only --------------- should be recovered 
from export market. 
2. Define the following terms: 
a. Trial pricing 
b. Transfer pricing
c. Follow the leader pricing 
d. Flexible pricing
e. Penetration pricing 
3. Enlist the Internal factors determining the price.