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What perceptions might consumers have of a brand selling two SKUs, a medium-sized economy toothpaste (6...

What perceptions might consumers have of a brand selling two SKUs, a medium-sized economy toothpaste (6 ounces) priced at $4.00 and a large healthy product (8 ounces) priced at $4.25? What perceptions might consumers have of the differences between the two SKUs?

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Answer #1

The consumer might have two perceptions one is quality of two SKUs because it is supplied by same brand. Since quantity of a medium sized economy toothpaste (6 ounces) is $4.00 so if we compute price of the medium sized economy toothpaste of quantity 8 ounces then it will be = 4/6*8 = $5.33 which is higher than the price of the large healthy product(8 ounces) of $4.25. This means the quality of mediium sized economy toothpaste is superior than the large healthy product.

Another perception of the consumers is input cost of production off medium sized economy toothpaste is higher than the large healthy product but the quality of both SKUs is more or less the same.

The third case will be if the brand is a monopolist firm then it can unilaterely determine the prices of two SKUs and do not take adequate care of the product quality.

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