Question

What kind of international pricing strategy would be used for CVS Health when it enters Turkey? Why?

Answer 1

Any market entry strategy for Turkey should begin with a thorough understanding of the costs and benefits of doing business in the country. In most cases, it is essential to visit the market to establish relationships.   Investing in these relationships early and routinely will increase the likelihood of a more successful venture.

A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.

There are several pricing strategies:

Premium pricing: high price is used as a defining criterion. Such pricing strategies work in segments and industries where a strong competitive advantage exists for the company. Example: Porche in cars and Gillette in blades.

Penetration pricing: price is set artificially low to gain market share quickly. This is done when a new product is being launched. It is understood that prices will be raised once the promotion period is over and market share objectives are achieved. Example: Mobile phone rates in India; housing loans etc.

Economy pricing: no-frills price. Margins are wafer thin; overheads like marketing and advertising costs are very low. Targets the mass market and high market share. Example: Friendly wash detergents;Tide surf ; local tea producers.

Skimming strategy: high price is charged for a product till such time as competitors allow after which prices can be dropped. The idea is to recover maximum money before the product or segment attracts more competitors who will lower profits for all concerned. Example: the earliest prices for mobile phones, VCRs and other electronic items where a few players ruled attracted lower cost Asian players.

Types of market a) Perfect competition. b) Monopoly. c) Monopolistic Competition d) Oligopoly.

So everything depends on the company risk appetite and its relation and the market in which it is entering in another country if CVS Health is US company and it wants to invest in Turkish market then there is lot of opportunities there according to present statistical data Turkish pharmaceutical market grew by 16.5% in 2016 and sales reached 20.7 billion TL , with 7.6 % CAGR during 2011-2016. • The real growth in the industry has been 5.5% CAGR in the past six years, reaching 2.23 billion of boxes by the end of 2016 so that there is robust growth in industry.

opportunities with turkey are:

• Turkey wants to reduce import dependency and increase local production

• Turkey is emerging as an ideal location for clinical trials with potential treatment-naive patients and a favorable regulatory environment aligned with international standards.

• Turkey has a benign R&D ecosystem with its developed education institutions and incentives

• Biopharmecuticals have been rapidly increasing with double-digit growth rates

• Strategic location with increasing export opportunities

so i hope you understand what i am trying to say.

Thanks

yours sincerely.