Question

Give an example of how Target uses psychological pricing and product line pricing. Does Target's pricing strategy impact where you decide to shop?

Answer 1

Psychological pricing is carried out by the retailers by gauging a target customer’s emotional responses. Discounting and selling free on top of bought products is are strategies applied to Target Corporation. Often we will find that the in-store offers such as with 2 packets of oats, get 1 free. This makes the customers attracted towards the product and buys them even more than the consumed monthly amount. This type of pricing strategies are prevalent is grocery section of Target.

Product line pricing strategy refers to the process that retailers use to classify goods into different cost categories in order to create perceptions of different quality levels in the minds of the customers. Target Corporation, like any other big retailer, uses this principle in many places of its shop. Target uses one particular category of product line pricing which is known as the leader pricing. It gets the customers to come to the store for purchasing their groceries at a discounted price. While a customer sees a grocery item she needs but at a full retail price, she is more likely to buy Walmart gets customers to come into their store to purchase their groceries at discounted prices. When a customer finds a grocery item they need but at a full retail price, she is more likely to buy it simply because of convenience even if it could be found elsewhere in-store for less expensive.