Give two examples of brands wh
Give two examples of brands where manufacturing costs are wellbelow the selling price. With that in mind provide answers to thebelow questions;
1. How have the companies been successful in charging highprices to the brand’s consumers, despite the low costs ofmanufacturing?
2. How is customer information used as a part of the pricingstrategy?
Be prepared to discuss and defend your choices with yourclassmates.
Your Discussion should be a minimum of 250 words in length andnot more than 750 words. Please include a word count. Use APAcitations and references for the textbook and any other sourcesused.
Answer:
1)Companies use a premium pricing strategy when they want tocharge higher prices from their consumers for their products thantheir competitors.They want to create a perception that theirproduct is superior and has a higher value than the products of thecompetitors and hence prices are higher.Marketing managers want tomake the consumers believe that the brand name itself assures thatthe product is superior than their competitors.Premium pricingstrategy increases the profit margin of the company.It createsbarriers to entry for the competitors and thus increases the brandvalue for the products of the company.
2)Customer information is used by small firms in order to getengaged in more aggressive pricing policy in comparison to dominantfirms . Symmetric information on preferences for brand, results inhigher prices for old customers but for new customers lower pricesare offered. There is increase in price discrimination withasymmetric information on type of customer.Again ,the manager’sage,education , experience influence pricing behaviour. Morecustomers are being served in markets with asymmetric brandpreferences as a result of information on verticaldifferentiation.However customer welfare is served more if customerprivacy is maintained in symmetric markets and giving encouragementto small firms to access customer information.
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