Question

Given that higher-priced products are often perceived as being higher in quality, what implications does a low price have for marketers using promotional pricing strategies? A minimum of 250-word

Answer 1

With so many differentiated products , consumers may not be aware of the quality and features of the product they buy . They are often unable to make a quality comparison among brands . A popular brief is " you get what you pay for ." Therefore consumers believe that high price is indicator of better quality . However ,this is not always true . There are other factors that determine the quality of the product except the price ( which maybe taste ,appearance ,advertisement etc .) . Price determines quality upto a little extent .

Low price is being used as a promotional pricing strategy by marketers . Customers perceptions about the company and brand image are shaped by pricing a considerable degree . A company may choose to charge a lower price because it wants more people to own and enjoy its product , The several pricing strategies used for promoting the product are :

1 Penetration pricing : Price is set low to gain market share quickly . This is done when a new product is launched . The prices are raised once the promotion period is over and market share objectives are achieved .

2 . Price leadership : It is another low cost strategy . The goal is to undercut all your competitors by offering the lowest possible price on the products Examples : mobile phone rates in India .

A company should not treat the price of the product a just another element of marketing mix which bring in revenues and profits . When deciding upon its pricing policies , company should ponder about how it wants to be perceived by customers and then determine which pricing policy will help creating that perception in customer minds .