May 2, 2011

Chapter 10 : Pricing Decision ( Part 2 )


Consumer normally equate price with quality. Discuss the relationship between price and perceived quality. Illustrate your answer with relevent example.


- Higher price can lead to higher demand, when price is used as a signals that the product is high quality.
- 1st reason : For exclusive and prestige product
- Higher pricer means fewer customer afford to buy.
- E.g : Rolex watch ( few people afford to buy and give the feeling of prestige to the owner )
- 2nd reason: Product quality is either difficult to access before purchasing
- Need to be try first
- E.g : Life insurance, perfume
- Price must be consistent with the marketing strategies ( e.g. advertising )

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