Question

Many consumers associate high prices with high quality. In view of this assumption, some of the...

Many consumers associate high prices with high quality. In view of this assumption, some of the cosmetics companies use the _____ strategy to price their products.

a. penetration pricing

b. discounting

c. price dipping

d. symbolic/prestige pricing

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Answer #1

Solution :

The Correct option is (d). Symbolic / Prestige Pricing.

Symbolic/ Prestige pricing : It is a pricing strategy wherein a company prices its products at a price higher than the market prices of similar products.

Since most customers associate higher prices with higher quality products, most cosmetic companies use this form of pricing for their products.

It is a strategy to garner a customer base that associates quality products with high price. This strategy is used in pricing niche products within definitive and unique product features.

A company would mostly use such a pricing strategy when it is trying to establish itself in the market i.e., at its initial stages after inception.

This pricing strategy cannot be used for pricing products that are of common usage. It is viable to use it only for premium, luxury and high end products.

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