TAMPERE UNIVERSITY OF TECHNOLOGY Tampere School of Business and Technology
ONUR TAMUR PRICING WHEN ENTERING A NEW MARKET IN B2B ENVIROMENT: Understanding the B2B Dynamics Seminar Report
With the rise of globalization and saturated local markets, many companies started chasing international opportunities that would help them expand to new countries and increase their brand recognition around the globe. One of the challenges that companies face while entering a new market is defining the right price and pricing of their offering to be competitive and successful in the market. In B2B area, there are not any wide research on pricing issues that companies face in the ...view middle of the document...
I am very thankful to my supervisor Dr. Jouni Lyly-Yrjänäinen who helped me to pick the right topic for analysis and supported me through the process. I am thankful to my seminar group members who helped me with their inputs during discussions. Also, I am very thankful to Ali Kutlay and Mert Murat Mertadam for their support and feedback through the preparation of the paper.
Tampere, January 2011
TABLE OF CONTENTS
ABSTRACT ______________________________________________________ ii PREFACE _______________________________________________________ iii 1 INTRODUCTION ____________________________________________ 1
1.1 1.2 Background __________________________________________________ 1 Objective of the Paper __________________________________________ 1
ENTERING NEW MARKETS IN B2B ___________________________ 3
2.1 2.2 2.3 2.4 The Challenges of B2B Markets __________________________________ 3 Market Entry Barriers in B2B ___________________________________ 4 Market Entry Strategies ________________________________________ 5 Market Entry Modes ___________________________________________ 6
PRICING IN B2B _____________________________________________ 8
3.1 3.2 3.3 Differences of B2B and B2C Pricing ______________________________ 8 Pricing Techniques ____________________________________________ 9 Pricing Framework in a New Market ____________________________ 10
PRICING IN A NEW MARKET IN B2B ENVIRONMENT ________ 12
4.1 4.2 4.3 Market Entry Modes in Terms of Profitability _____________________ 12 Value Creation in B2B _________________________________________ 13 Pricing Behaviour in a New Market______________________________ 14
CONCLUSION ______________________________________________ 18
REFERENCES __________________________________________________ 19
According to Lee and Carter (2005), globalization is an inevitable and irreversible process fundamental to the future of world economic development. The growing integration of national economies around the world will lead to rapid economic growth and poverty reduction in developed and developing countries. However, there are also some arguments supporting that globalization exacerbates poverty and inequality between rich and poor, cultural convergence and spread of deadly diseases (Lee and Carter 2005). Even though there are many debates on globalization, it is accepted as an industrial reality and an increasing trend in current business environment. As the developing technology is reducing the transportation costs, the interests of organizations working in international markets will keep on spreading around the globe. This presents organizations with unlimited opportunities to grow and transform to become not only larger but also more competitive and efficient (Lee and Carter 2005). On the other hand, it covers some risks as well. Companies need to follow the right strategies in...