Question

**Note from Student: Please be very descriptive, examples, etc.

1. How does Brand Equity effect on pricing strategy? (10 points)

2. What is the difference between and the use of Reference Pricing and Anchor Pricing? (10 points)

Answer 1

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Here we will get into the topic of two cases which include, the effect of brand equity on pricing strategy under the case is, the difference between the use of reference pricing and Anchor pricing.

Brand equity is the form of goodwill that a company earns when a product or service listed or globally recognized by the consumers. It can be said that brand equity has a great impact on the pricing strategy of the company because when the product is being loved and recognized globally by the consumers, the company can charge these according to its will. So, brand equity leads to the many direct and indirect effects on the pricing strategy of an organization.

REFERENCE PRICING can be described as, the strategy in which the prices are fixed keeping in mind the behavior of the consumer towards the products and services. In this, the price is also being compared with the competitor's price, and the behavior of the customers is noted on behalf of that. The reference price is basically used to make a profit or revenue taking consumer behavior under consideration. On the other hand, ANCHOR PRICING refers to the pricing which is set to make sure that the customer makes decisions according to his choice rationally. We will get into this with the help of an example - let's take the example of a store which has discount facility, there are two types of discount, the discount on set A of cloths is flat 200 rupees off and discount on other set B of cloth is flat 100 rupees off. in this case, the ankle price would be flat 200 rupees off against a flat 100 rupees off.