price corridor

The price corridor is a strategy for price differentiation in an international context in order to counteract undesirable grey markets and reimports and to realize profit potential.

Standardized prices across all countries seem not feasible for many companies, as customer preferences, competitive conditions or cost structures vary from country to country. The price corridor represents a compromise between a standardization of prices across all markets and country-specific price differentiation. The price corridor determines the price differences between the individual countries in such a way that reimports, and grey markets appear as unprofitable as possible.

When determining country-specific prices, aspects such as price elasticity, market size, cost structure, but also competitive conditions must be taken into account. The definition of a price corridor requires centralized pricing in order to avoid decentralized sales organizations with individual pricing.

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