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Qinhui (Eliza) Shen Kristen Foster CO 150.401 28. October 2013 Is the price on tag reasonable for the consumer?

Exploratory essay In the US market, each iphone 5s selling price is $649 and 5cs is $549, which can be transferred into RMB 3972 and RMB 3360, while in China market the price for 5s and 5c are RMB 5288 and RMB 4488 respectively (Apple), the price is definitely higher than those in the foreign markets. Not only for Apple products, many other well-known universal brands have been set at a higher price in some countries, especially for the new listing. Although it is quite a normal phenomenon in the markets, I still want to reveal the real reason why this phenomenon existing and the effects of that. For these research project, I decided to pursue the questions why China market charge such a higher price for the same product than the US and what kind of consequence does the huge commodity markets lead to. Therefor, there is no doubt that it is a considerable issue and deserved to be examined because there are more people in the world prefer to buying Apples and many luxury products, while they have been charged by various or even higher prices in the different locations which makes them feel unsatisfied and unhappy. And Apple company continues to expand their market shares over the world. The more difference for the price tags among various countries, more problems will be resulted on the global markets unfairness.

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Before I search for the reasons why there is prices difference among the countries, I firstly wonder what kinds of products are sold with extremely different prices, the i.t. and software products, the daily assumption items, or the new energy? So I start my research by typing items in China are selling higher prices compered with other places into Google, and found an op-ed article China to Become the Worlds Largest Market. I learned from the article that due to the fact that the duties on the luxury products in mainland China are 45% higher than in Hong Kong and even over 50% higher than that in the United States. Chinese consumers would like to purchase luxury products abroad to avoid Mainlands high taxation, which leads to that 80% of Chinese luxury goods are purchased overseas (China to Become the Worlds Largest Market). I think this article helps me illustrate the question the reason why there is price difference among different locations.

Since the consumer is the mainly served by products and services and this topic has straight relationship with personal benefits. I decided to study on the aspects of customers. I wonder to know the target customers attitudes towards the unfair taxation treatment. Then I typing consumers attitudes towards unfair marketing treatment, and found the source China Said Mulling Luxe Tax Move. From WWD: Womens Wear Daily (Farrar, Lara). I learned from the article that Chinese consumers support to eliminate the taxes on luxury products because the lower taxes could make the lower prices of the products, therefore, they can save money on purchasing luxury items or gain more goods with the same amount of money.

Besides, I really wonder know the motivations for those brands pursuers; I typed the

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reason why customers pursue well-known brands into Google Search. Then, I found out an op-ed article called Luxury Experiences in China from KPMG.com. A research shows that to demonstrate the good social statuses which could give some opportunities in businesses or other situations, those consumers would purchase on luxury products; and the motivations for luxury consumption of the consumers are mostly self-reward, instead of seeking the practical use of products and the really favorite or connoisseurship to these luxury brands. So that they care more about the prices, and the changes of the goods prices really crucial effect to their decisions on purchasing. Therefore, keeping the prices relatively fair would make products cheaper, which would be big deals for them; in addition, cheaper products would stimulate those consumers purchase more goods which will lead to an inflating consumptions (Luxury Experiences in China).

After search for information in customers aspects, I started search the companies aspect. By plugging Consumer response to price discrimination into Google, I located a study titled, Consumer Responses to Price Discrimination: Discriminating Bases, Inequality Status, and Information Disclosure Timing Influences by Wu, Chicheng, Liu ,Yifen, Chen ,Yingju and Wang ,Chihjen(Wu, Chicheng, Liu ,Yifen, Chen3). According this article, that authors conducted two experimental studies to explore the emotions and reflections to unfairness. The authors analyzes the response and attitudes of consumers facing with various price discriminations and expresses that price discrimination may produce unfavorable consumer responses that will dramatically diminish the sellers profits from their products and services. Previously, I think the sellers always can keep the benefits from price discrimination with dramatically increasing their profits and net income. And I have never thought about the

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disadvantages from that strategy which can conversely damage sellers benefits and profits.

As I consider the topic from the retailers view, I hope to take a deep investigative how selling retailers take price strategy to absorb consumers and the influence by that. By typing Exploring effects in the price strategies into Google, and found the source Exploring Asymmetric Effects In the Formation of Retail Price Satisfaction. By Zielke,Stephan. In this article, the author points out that customers loyalty and satisfaction towards retailer stores are influenced by price perception and customer segments(Zielke, Stephan). In addition, according to the evidence from survey, the author considers that except the pricing and promotion policy, an important factor to investigate is the relevance of price level, value of money and special offers among customer group. This article answers both of my inquiry questions: How can the retailers attract new customers and increase customer loyalty to the brand and satisfaction to the price tag. What factors can influence ones price satisfactory. The article presents the stakeholders of customers and sales retailers. However this article does not present the opinions and views from the local governments.

Although I have taken the customer and selling retailer in to consideration, the sources are not enough to help me to deeply explore my topic.

As a result I continue to explore some non-human control factors can influence the pricing strategy. I typed the Factors influence pricing, and an academic journal absorbed my eyes, which title was Immigration and International Prices by Zachariadis, Marios (Zachariadis, Marios). In the article, the author states that immigration, a crucial element to judge one places pricing strategy, plays a negative impact on price pressure. By showing some official

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data and statistics of average immigration numbers and labor costs, the author presents a general scope of price pressure difference by comparing conditions of currency and decades years before. In addition, the author mentions that in the term of immigration, goods consumption weighs heavier than production. This source can help me to answer inquiry question: What elements can influence the price on tags and how does the price on tag influence the global business. And it presents the stakeholders both the local country and relative other countries. However, there are limitations of the article that it does not provide enough effects on local government.

At the same time, the other journal article provided my answer: What non- human element can affect the pricing. Can Cultural Affect Prices? A Cross-Cultural Study of Shopping and Retail Prices by Ackerman, David and Tellis Gerard. The authors conducted a survey and revealed that price of the same brand and size items in Chinese Supermarkets are lower than those at American supermarkets because of different shopping behavior and product prices in grocery stores(Ackerman, David2).

So far, by doing the research, I learned that the tag price tag is not influenced by the pricing itself but also affected by the taxation roles and the strategies played by sellers. The pricing strategy can bring the sellers great pros, at sometimes, cons are followed. Besides, the research helps to answers to my inquiry questions: what kinds of products are sold with extremely different prices; the motivations people pursue the branded items; what elements can influence the price on tags. Meanwhile, I got two stakeholders from consumers and selling retailers; two non-human control elements for pricing strategies. What I need to do is finding more

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stakeholders from other aspects, for example, what is the local governments attitude towards the price discrimination.

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Work Cited Apple. Store Apple.com.Apple,n.d. Web. 17.Oct.2013. Ackerman, David and Tellis Gerard. Can Cultural Affect Prices? A Cross-Cultural Study of Shopping and Retail Prices. Journal of Retailing, 2001, 77:57-82, Web.17 Oct. 2013

China to Become the Worlds Largest Market for Luxury Goods over The Next Decade. CLSA AsiaPacific Market, 12 Oct. 2011. Web, 20 Oct. 2013.

Farrar, Lara. China Said Mulling Luxe Tax Move. WWD: Womens Wear Daily. 3 Mar 2012, Vol. 203 Issue 52, p4-1, 1p. Web. 10 Oct. 2013.

Luxury Experiences in China. KPMG.com/cn. KPMG, Apr. 2011. Web, 20 Oct. 2013

WuChicheng , Liu Yifen, Chen Yingju and Wang Chihjen. Consumer Responses to Price Discrimination: Discriminating Bases, Inequality Status, and Information Disclosure Timing Influences. Journal of Business Research, 2012,65: 106-116,Web. 11 Oct. 2013. Zielke,Stephan. Exploring Asymmetric Effects In the Formation of Retail Price Satisfaction. Journal of Retailing and Consumer Services, 2008, 15: 335-347, Web. 11 Oct.2013. Zachariadis, Marios. Immigration and International Prices. Journal of International Economics, 2012, 87: 298-311,Web. 18 Oct.2013.

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