Question

Why might a company sell its products for different prices in different markets even if the income levels of its target consumers were the same in all cases?

Answer 1

Even if a company is targeting cusomers of same income level its price can be different in different markets. The various reasons for it can be following:

Cost Difference: There can be difference in costs in different markets. Costs can be variable costs like labor cost, raw material costs etc. or it can be fixed costs as well like land acquisition cost, transportation costs etc. So the company will charge different prices to maintain its profitability

Taxes: Different markets can have different tax structures that they levy on sale of products ( that ultimately will be borne by consumer) so in different markets the company has to charge different prices, even to same income level of target consumers.

Competition: Competition also plays a role in pricing. A market which has a lot of competitors will be more price sensitive as compare to market where there is less option for consumers. So company will have to keep the prices accordingly.

Customer Loyalty: Some markets are price sensitive markets where customer loyalty is less and customers sways with the price. In these kind of markets company's has to price their product cheaper in compare to marketas where customer loyalty is more even when the company is targeting customer groups belonging to same income level.