Impact of Foreign Currency Change in Setting Price with Example of Bestway Cement

Price Setting Mechanism

Market information is gathered by marketers on a daily basis from ongoing projects, retail shops, cement plants, and other sales representatives. After having a detailed assessment, knowing the competitors, brand position, local home market, and future prospects a proposal is made and sent to line managers. The line managers compare it with the current price and after checking fluctuations the proposal is sent to higher management. The higher management includes GM, DGM, and Director Sales. After further assessment of them, the price is set.

Impact of foreign currency change in setting price

It varies from company to company. We have three sets of businesses as a group which includes Cement, pharmacy, and banking, which is operating in UK and Pakistan. We have three running cement plants as Hatter, Farooqia, and Chakwal. Many products are imported to Pakistan as raw material by which we are doing processes. Prices that we set are fixed by Bestway higher management which we call standard price if some department or management feels that they must raise the price they concern headquarters. Those companies which import the raw material got a big hit or loss big. An example is our company; we have many raw metrical which fluctuate with US dollar like the price of coal we import from South Africa has a close relationship with US dollar. The main raw material like calcium carbonate, silica, alumina, and iron ore from which the Cement is made, if US dollar rises, the cost price rise and we get loss of millions. To overcome the loss the options are that we use our reserves and try to stable it internally, as a group we are strong to lean on each other, or we can call off discounts scheme for time being. The second is to raise the price but for that, we must closely compare what our competitor is doing. We look for the price our competitors set and should be around it and always better less. What we have done is we didn’t pass the cost to the consumer directly we decided internally first to overcome the loss by reducing some other things. Foreign currency changes mostly make us raise the price so if the loss is more the company must plan what to do, they overcome the loss internally or just put it on consumer depending on the hit.

Pricing mechanism at Bestway Cement

The company I chose is the Bestway Cement Company. I met Zeeshan Zaman, the procurement officer for information regarding my assignment. He told me that there is no pricing department in Islamabad. According to him, the cement associates of the company set the pricing with the use of a value pricing strategy in which the prices are set according to the perception of the customer about the value of their products.

“To produce high-quality cement at the lowest cost”

As the vision of Bestway Company shows that the company does not seek to compete with its competitors. The cement associates set the pricing according to the demand in the market, there are different categories of cement quality A, B, and C.
Prices of Bestway cement fall in different price slots, depending on the quality, and demand of the customer by using a value pricing strategy.

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