Prestigious price strategy
| Prestigious price strategy |
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In this strategy during product life cycle it is constantly perceived by customers as a product of high quality and luxury. The high price is an important stimulus to buy.
Buyers of luxury car brands, cameras, perfume or clothing, attain a high satisfaction with the prestige, which gives them the use and possession of these articles. Often cutting the prices of prestigious products of caused the drop in their sales. In such cases, the increase in sales as a result of lower prices do not usually balances loss of sales in client groups with higher income and social status.
Lower price for such customers have the same effect as to deprive the prestigious product image, which acts as an instrument for the purchase of specific brands. In the case of these products lower price perhaps inhibit the sale rather than increase it.
Role of prestige in motivation to buy
In recent times the quality and prestige have become two major motivating factors, which is reflected in most ads and promotion. Prestige is and will be seen in the future through the prism of purchases, but prestigious price strategy can provide qualitatively new way of price formation. This concept allows customer binding by satisfaction with the product and accompanying price structure. It focuses on how the product can satisfy his needs and expectations.
References
- Utaka, A. (2015). High Price Strategy and Quality Signalling. Japanese Economic Review, 66(3), 408-420.
