For most multinational companies, managing price in different geographies can be a sizeable and complex challenge. ACNielsen Analytic Consulting's Global Normative Database, piloted in 2005 [covering 10 countries, three categories and a selection of brands and packs] offers a consistent assessment of a brand's pricing sensitivity, and provides global brand owners with benchmarks across different geographies and categories.

In 2006, ACNielsen Analytic Consulting has been building on this Normative Database, adding countries, categories and brands.

ACNielsen's Global Normative Database highlights that consumers are not the same. Their response differs for brands within a category, between categories and between countries. For instance, a comparison between an oral care brand and a soft drink brand (Figure 1) indicates that the same brand can have very different price sensitivity between countries depending on how a country's consumer base reacts. These sensitivities range from low medium to high.

In today's global economy, local price strategies cannot be managed independently. Globalisation of retailers means that most brand owners operate trade price corridors, to minimise the risk of arbitrage. This sets a 'floor' for the consumer pricing strategy: brand owners need to use their understanding of consumer price sensitivities to set a global retail price corridor within which local price strategies should operate.

When creating a global pricing strategy, brand owners need to consider the following factors, that vary in their degree of importance.

Consumer price sensitivity? critical importance
Local consumers' ability and willingness to pay a specific price in a specific geography.

Considerations: disposable income; price sensitivity; level and type of competition.

Retailer pricing strategy - important
Maturing CPG industry leading to aggressive pricing strategies by many retailers.

Considerations: private label; hard discounter threat; range.

Retailer potential for arbitrage? increasing importance
International retailers buying at the most favourable trade price, selling at the local retail price.

Considerations: buying power; import tariffs; logistic expense.

Consumer potential for arbitrage? category specific (e.g. tobacco)
Consumers' ability and willingness to travel for a better deal.

Considerations: border-crossing;'duty free'.