Which pricing method is demonstrated by the following statement? "Alternative Pioneering Systems concluded that consumers would...

Which pricing method is demonstrated by the following statement?
"Alternative Pioneering Systems concluded that consumers would be willing to pay approximately $100 for a food dehydrator. Based on this price, the firm determined margins that would have to be allowed for wholesalers and retailers."
a. Prestige pricing
b. Price lining
c. Skimming pricing
d. Target pricing
e. Above-, at-, or below market pricing

The answer for this problem is Option d. Please explain to me why other options are incorrect.

Expert Solution

Correct Option-d. Target pricing

Reason-

(a) Prestige Pricing-

It is a psychological pricing. This pricing is generally done by addressing a superior and high class of customer group who is associated with high price and superior quality. The mind set of these category of Customer is that higher price measn higher quality. For Example Apple i phone and Nike. They set a high price , because generally it is the mind set of the customer that low price means low quality.

(b) Price Lining-

Its is pricing strategy where the seller fix the price of the same catogory of goods according to its Charecter, attribute and quality.

Fo example - Cocacola company sells beverage product like Fanta, sprite, Coke its at different price accordig to the Quality and attribute.

(c)Skimming Pricing-

It is a strategy where the seller initially sets higher price of the product and then reduce the price by giving discount to attract the customer.

For example in Amazon and Flipkart we can see that many seller gives 50%-60% ect. discount after increasing the price.

(d)Target Pricing-

In this pricing strategy, first the seller finds the competative price in the market for the product. We can say that first the seller will find that how much a buyer will be willing to pay for their product. Based upon th final price then the seller decides its margin and cost.(CORRECT OPTION)

(f)Above-, at-, or below market pricing

It refers to setting the price of the product purely based on the expected competitor's price or other benchmark price.

jeff jeffy answered 1 year ago

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