Competitive Pricing Across Borders

I Did a Little Research and Found Something Fascinating in FMCG Pricing Across Borders (IND VS PAK) Recently, I came across an insightful comment on my post regarding SKU pricing strategies in FMCG. It led me to do a quick comparison between India and Pakistan, and the findings were quite interesting. Let’s break it down using two trusted brands: LUX (Unilever) and Colgate (Colgate-Palmolive) • In India – Smaller SKUs = More Value Per Gram In India, brands often price smaller SKUs more aggressively, making them more economical per gram especially for low-income consumers or frequent buyers. Lux International Creamy Soap • 75g = ₹30 → ₹0.40/g • 125g = ₹83 → ₹0.66/g Colgate Toothpaste • 23g = ₹10 → ₹0.43/g • 36g = ₹20 → ₹0.56/g • 100g = ₹78 → ₹0.78/g (Source: URBAN GROCERY MART) Key Insight: Intense market competition, especially in rural and tier 2/3 cities, forces brands to use small SKUs as value-led entry points to win market share. • In Pakistan – Larger SKUs = More Value Per Gram In contrast, Pakistan’s pricing strategy often favors larger SKUs, encouraging consumers to buy more and save more. Lux Nourished Glow Soap • 98g = Rs. 120 → Rs. 1.22/g • 128g = Rs. 150 → Rs. 1.17/g Colgate Toothpaste • 45g = Rs. 66 → Rs. 1.47/g • 75g = Rs. 90 → Rs. 1.20/g (Source: Naheed) Key Insight: With less retail competition and a culture of bulk/monthly shopping, brands position larger SKUs as offering better long-term value. Why This Difference Exists? • Shopping Patterns & Channels India has high kiryana density, daily purchases Pakistan has monthly or bulk purchases via utility stores or supermarkets • Inflation & Price Locking Pakistani consumers prefer larger SKUs to hedge against rising prices • Market Competition India’s FMCG sector is hyper-competitive, especially in personal care and oral hygiene Pakistan sees fewer competitors per category, so pricing strategies are less aggressive • Consumer Segments & Affordability Indian brands use small SKUs to penetrate deep into price-sensitive markets In Pakistan, value messaging is centered on family-size efficiency • Operational Strategy In India, volume-driven pricing works due to scale In Pakistan, logistics and inflation management often favor larger packs Same brand, same product but entirely different pricing logic. This shows how deeply local insights influence SKU strategy in FMCG. Understanding regional behavior, competition, and consumer psychology is essential for success. Would love to hear your thoughts, have you observed similar pricing shifts in other markets or sectors? #FMCG #PricingStrategy #SKUManagement #India #Pakistan #ConsumerInsights #BrandStrategy #RetailMarketing #Colgate #Lux #MarketResearch

The large price difference between the Suzuki Cultus in Pakistan and its equivalent in India (known as the Maruti Suzuki Celerio) can be attributed to several key factors: 1. Import Taxes and Duties: Pakistan has higher import duties and taxes on vehicles and auto parts, which significantly raise manufacturing and retail costs. India has a larger, more localized automotive supply chain, reducing dependence on imported components. 2. Localization of Parts: In India, a significant percentage of vehicle components are manufactured domestically, thanks to the extensive automotive ecosystem. Pakistan relies more on imported parts for assembly, which is more expensive due to exchange rate fluctuations and import taxes. 3. Economies of Scale: India has a much larger market for automobiles, allowing companies to benefit from economies of scale. Higher production volumes in India drive down per-unit costs, which are then passed on to consumers as lower prices. Pakistan’s market is comparatively smaller, leading to higher per-unit production costs. 4. Currency Exchange Rates: The difference in currency value between the Pakistani Rupee and the Indian Rupee also plays a role. A weaker PKR means that imported components and raw materials cost more in Pakistan than in India. 5. Government Policies: India’s government has promoted local manufacturing through initiatives like "Make in India," which has attracted significant investment in the automotive sector. Conversely, Pakistan's automotive policy framework has traditionally been less robust, with higher protectionist tariffs that affect local production costs. 6. Labor and Operational Costs: While Pakistan has relatively low labor costs, India's efficient production models, larger workforce, and modern facilities offset the labor cost advantage Pakistan might have, leading to more competitive pricing in India. The result of these combined factors is a significantly higher price for the Cultus in Pakistan than for the Celerio in India.

How to adapt pricing across borders in 3 steps Cultural differences can make or break your pricing strategy. Here's how to adapt: 👉 Understand Local Values Consumer behavior is shaped by cultural values. In collectivist cultures, fairness matters, making people more sensitive to price changes. Do your homework on what drives purchasing decisions locally. 👉 Localize Your Prices Adjust for local economic factors like taxes, demand, and currency. A one-size-fits-all pricing strategy rarely works across markets. Think global, price local. 👉 Use Psychological Pricing Wisely High-context cultures might prefer rounded prices (e.g., $50) over pricing on the 9 (e.g., $49.99), which they may see as manipulative. Test and learn what resonates. This approach doesn’t require massive overhauls—just cultural insight and thoughtful adjustments. Follow these steps and watch your global pricing strategy thrive. PS: Price sensitivity isn’t universal. Learn the market, respect the culture, and win the customer.