Question

1.) Discuss how company’s use price to communicate perceived value and as consumers how we view brands that carry a higher price.

2.) Discuss the advantages of using product placement instead of advertising to promote specific product and brands.

Answer 1

1)

Companies use pricing strategy at various stages of their product. For example, during introduction, the companies may use their pricing strategies to establish one or more generic strategies for their product. However, once the company gains a certain level of awareness, it uses various means to indicate their brand value. This is, in most cases, is the process of establishing a perceived value of the brand. For example, consider the comparison between two brands of smartphones such as OnePlus and Apple. Even though the overall functionality, features, and attributes of OnePlus phones is equally comparable, if not better than Apple smartphones, the pricing of Apple product is nearly 2 or three times the price of OnePlus. This is mainly due to the perceived benefit of using Apple products. Much of this is established through feeling of exclusivity and premium pricing.

2)

Product placement is displaying and showing products in popular media such as movies, TV shows, etc. during the course of the storytelling. This means when audiences watch a movie or a show, they see the characters using the products and services which are placed in there. For example, James Bond movies tend to use Aston Martin vehicle is a clear sign of product placement by Aston Martin.

There are several advantages of product placement over advertisement. Product placement usually comes with a onetime cost rather than ongoing cost that is incurred in case of advertisement. Next, in case the movie/show audiences are a close match to the product potential target audiences then it can provide very good ROI. Finally the product placement strategies usually create a long term brand association rather than advertisement.