Price is defined as the quantity of payment for something. It shows price as an exchange ratio between goods that pay for each other. Price also related to the market the company’s planned value positioning of its product or brand. As well as their overall assessment of the retailer, price has gradually become a central point in consumers’ decisions of offer value. Price suggestively influences consumer choice and occurrence of purchase. For example, discount pricing makes consumers switch brands and buy products earlier than necessary.
Smart brands apply strategies to make and sustain a difference that assistances consumers rationalize spending more. By recognizing audience, understanding competition, and knowing brand's meaningful difference,
Price premium definition is sum consumers are willing to pay for a brand, compared to other related brands, and can be either negative or positive. The price premium does not essentially fully relate with actual consumer prices. It is also used to increase revenues in where consumers are happy to pay higher when there are no closed substitutes for the product. The term also symbolizes a high-status business that could produce far more revenue in the short term by reducing prices. Sales volumes remain low by keeping prices high. The quality, reputation and brand value carefully
The price also deals with a readiness to pay, which does not essentially reflect real prices. In addition, price premium is a relative measure, which means that it is relevant for all brands even for low-cost brands, for which customers can be willing to pay more for one brand than for another.
For anyone attracted in comparing brands from totally different product classes, the price premium apparently becomes an illogical measure. Price premium was the measure that best could describe choice of brand at individual level.
Most consumers save up to buy good products. A brand can only rationalize a price premium if it is view by its consumers to be profoundly different from the related products. Lack of value is what makes a market full of goods where people have no emotional connect with their buying. It is significant for the brand to recognize its consumers and their anticipations before it can provide the price premium and foster brand loyalty. A premium customer is the one who paid for higher price and then is justified in expecting top-notch product quality. To sustain that feeling of being meaningfully different from others is the challenge for premium
Due to the various options of distribution channels their prices vary. Consumers take that into consideration when purchasing their products.
This psychology of brand tribes explains why consumers choose the more expensive name brand compared to the off-brand that could very well be the same product with the same experience. Coca-Cola sold the youth lifestyle of peace and acceptance in the 60s. Disney understood that they were selling the American dream and a place for families that was a real-life utopia. Ikea’s brand idea is democracy in that consumers can put together their own furniture. Starbucks has branded themselves as a community center. Most young consumers go to Starbucks to meet up with a friend or relative, do homework, and simply hang out and use the free, reliable wifi; the coffee is just a byproduct. Companies have furthered their success by paying celebrities to model their clothes until they are such a household name where they no longer need to advertise to achieve success. Companies like Coca-Cola don’t need to tell consumers about their refreshing soft drink for most people already know, instead, they market the experience and life-changing moment of drinking their
Consumers have on several occasions questioned the price of products in relation to their value. Quality, use and importance, are influential aspects that determine the way consumers respond to a particular product. On the other hand, manufacturers and retailers are more oriented towards increasing customer satisfaction by producing quality goods at affordable prices. However, affordability is not supposed to affect the company’s expected profits. Companies may therefore fail to meet the consumer expectation on price because of the costs incurred during the production of their products. Since consumers are the most important assets to a company, the price of goods should reflect the value that consumers are willing to pay. It should therefore be the responsibility of every company to ensure that pricing reflects value without compromising on the expected profits.
Price Based Theories - This first theory focuses on the classification and study of the quality price relationship. And this led to the initial conceptualization of value as a cognitive tradeoff between perceptions of quality and sacrifice. As per this view the external ques influence product quality and value. Various instances so offered by Agarwal and Teas (2001, 2002, 2004); Dodds and Monroe (1985); Dodds et al. (1991); Grewal et al. (1998a); Li et al. (1994); Monroe (1979, 1990); Monroe and Chapman (1987); Monroe and Krishnan (1985); Oh (2003); Teas and Agarwal (2000); Wood and Scheer (1996) state the importance of price which does a bearing on the marketability of a
Fast food chains use value pricing. This type of pricing is how much the customer thinks an item on the menu is worth. Basically what this means is customers see price as a primary indicator of a product’s value. Value pricing happens when a company increases a product’s benefits while either maintaining or decreasing the price. A great example of value pricing in McDonald’s is the ability to “super-size” drinks and fries. The value of the drink or fries is increased because a customer can get substantially more of the item for a fraction more of the
Tanner and Raymond (2014) describe branding activity as “strategies that are designed to create an image and position in the consumers’ minds” (c.6). When branding messages coincide with its offerings’ characteristics, it establishes consumer trust, and brand strength. For example, when first introducing Dove brand in 1957, by labeling its product as a “beauty cleansing bar . . . [with] ¼ moisturizing cream, that rinses cleaner than soap” (Unilever, 2016), we can see that marketers associated the brand to moisturizing and beauty, and disassociated the brand from common soap. Over the years, this consistent message coinciding with product performance has strengthened the Dove brand. Strong brand equity is derived from consistent, strategic branding that establishes perceived quality and emotional attachment (Entrepreneur, 2016); therefore, consumers are more likely to pay higher prices, as well as purchase new offerings connected to the
Price Elasticity is the measure in responsiveness of consumers to changes in the price of a product or service. The evaluation and consideration of this measure is a useful tool in firms making decisions about pricing and production, and in governments making decisions about revenue and regulation. “Price Elasticity is impacted by measurable factors that allow managers to understand demand and pricing for their product or service; including the availability of substitutes, the consumer budgets for the product or service, and the time period for demand adjustments.” The proper consideration of Price Elasticity allows managers to set pricing such that the effect on Total Revenue is predictable and adjustments to production are timely. The concept of Price Elasticity is employed in the management of commercial firms and government.
According to the customer value triad theory by Earl Naumann, “value is a combination of quality, service and price” (Naumann, 1995). In this case quality could be defined as performance quality, the objective quality of a product (Kotler & Keller, 2012). A product with high performance quality, increases the value of a product. The value of a product is furthermore positively influenced by the service that is delivered (Kotler & Keller, 2012). The price however, can both positively and negatively influence the value of a product. A high price will in most cases decrease the value, but for some exclusive and luxury goods, a high price increases the value. The exclusivity, which is of intangible nature, is than one of the most important determinants of the value of the product. For most normal goods however, the objective quality is the prime determinant of the value. Although intangible benefits can be important in determining the value of a product, in most cases it is still the tangible benefits and costs, the objective quality and the price.
The source of the brand features is in a connection between customers and companies that sell services or products. Consumers who choose a specific company fundamentally acknowledge to prefer that brand more than other brands rooted from the recognition of the brand’s worth.
“Linked to a brand, its name is the symbol that adds to or subtract from the value provided by a product or service.” (Aeler, 1991) Like country of origin, brand equity is also one of the reasons why some people want to have a well-known brands in the whole world. Sometimes it is not all about the price anymore because in today’s generation brand is more important than
The shifting of the consumer’s taste of simple products to high quality branded products is not sudden. It grew out in the middle of the 20th century and the companies selling various products needed a new way to differentiate their products from the others giving it a unique identity.
...e enough because the company has chosen the best possible way to increase the company performance. The pricing strategy is the company’s best strategy from all because it affected the sales revenue a lot. Although fluctuating the price is quite risky for a business since the customers might order from other companies if the company doesn’t do it properly, but XXX Company manage to done it well so far. The effectiveness might also be seen by the average of sales revenue between January to August from 2011 to 2013.
From the study it is clear that people often purchase branded products since they are aware of the brand performance or perhaps they have a good past experience about the brands. This makes customer’s become loyal with the specific brand.
Every consumer has a unique way of measuring benefits versus costs and will sometimes pay for higher quality items and other times buy the low costs items, depending on which has the highest value to them.
Price is what a buyer must give up to obtain a product. It is often the most flexible of the four marketing mix element that the price is the quickest element to change. A marketer can raise or lower prices more frequently and easily than they can change other marketing mix