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Explain the influence of globalisation on the interaction of price and quality. - HSC - SSCE Business Studies - Question 27 - 2018 - Paper 1
Question 27
Explain the influence of globalisation on the interaction of price and quality.
Worked Solution & Example Answer:Explain the influence of globalisation on the interaction of price and quality. - HSC - SSCE Business Studies - Question 27 - 2018 - Paper 1
Step 1
Global Marketing
Answer
Globalisation has significantly influenced the strategies businesses use in global marketing. Companies now have to consider how price and quality interact in a global context. For instance, firms may adjust their pricing strategies based on the perceived quality of their products in different markets, often leading to the adoption of global branding practices. A strong brand can demand a higher price, reflecting quality, which is shaped by global standards.
Step 2
Global Branding
Answer
The concept of global branding allows companies to introduce a uniform product quality across various markets. This can create a perception of higher quality, justifying a premium price. Brands like Coca-Cola and Apple exemplify this, where a consistent brand image and quality across countries enhance customer trust, allowing firms to maintain higher price points.
Step 3
Standardisation vs. Customisation
Answer
Globalisation forces a choice between standardisation and customisation. Standardisation can lead to economies of scale, reducing costs and prices, while customisation can increase perceived quality, justifying higher prices. Companies must find a balance based on market dynamics and consumer expectations.
Step 4
Global Pricing Strategies
Answer
Pricing strategies are influenced by global factors such as competition, market demand, and production costs. Companies often employ cost-plus pricing in global markets, where they ensure prices reflect quality and can cover international manufacturing expenses.
Step 5
Global Factors
Answer
Finally, global factors such as sourcing, economies of scale, and international trade agreements can heavily influence the perceived interaction of price and quality. Businesses must navigate these factors to ensure their products remain competitively priced without compromising on quality.