Advice Given On Pricing Exports

Press, Volume CX, Issue 32360, 28 July 1970, Page 14

Advice Given On Pricing Exports

Too much emphasis had, in recent years, been placed on marginal costing for export, the marketing director of N.Z. Forest Products, Ltd (Mr D. 0. Walker), told about 150 Christchurch company executives and officers at a seminar in Christchurch yesterday.

Mr Walker presented a paper to an export marketing seminar organised by the Department of Industries and Commerce. Similar seminars will be held soon in Dunedin, Auckland and Wellington. References to the importance of “being competitive” on overseas markets had prob-, ably led to the undue empha- i sis on marginal costing, Mri Walker said. But if export: pricing was dictated by the accountant at home, the salesman would be limited in. his ability to secure the best return for his company and for New Zealand.

Generally, New Zealanders needed to make no apology for the quality of New Zea-land-manufactured products, Mr Walker said.

“We should not be complai cent about this, but we should use this acceptability to place our nroducts on the highest possible shelf for prices in ithe overseas market “I have yet to »*>«» mket in which quality does not command some special consideration from buyers,” Mr Walker said.

He had heard members of trade missions express pleasure at being able to “undersell” competing products overseas, but this was a naive approach. “Who wants to undersell?” He had also been concerned by claims of immediate success in selling in an overseas market visited for the first time, Mr Walker said. He believed “instant sales” occurred when prices were too low. He had also seen New Zealand sellers enter a market at a very low initial price in the hope of developing future business at higher and more economic prices. But this was not sound. Some trial orders might be supplied on special terms but it must be clear at the outset that the object of both parties was continuing trade development at acceptable prices. It was important for an exporter to know the minimum return he could accept for his overseas sales, Mr Walker said. But it was also important to recognise that marginal costing for export constituted discriminatory pricing and was generally the first leg of dumping.

Of course,' it was necessary to be competitive, but this meant matching quality and service as well as price. “We must avoid underselling on price through trying to be too competitive, or assuming that our lowest marginal cost is the denominator of price.”