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Price setting in the Business World

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Define prestige pricing and describe when it would be an appropriate strategy.

Could a retailer charge a prestige price for a convenience product?

Does a decision to use prestige pricing affect how a product is distributed?

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Solution Summary

By addressing the questions, this solution discusses aspects of price setting in the business world. References are provided.

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Let's take a closer look at these interesting questions. I also provided links for further reading.

1. Define prestige pricing and describe when it would be an appropriate strategy.

Prestige pricing "a pricing method whereby prices are set at an artificially high level to provide prestige or a quality image" (see full article at http://www.knowthis.com/principles-of-marketing-tutorials/setting-price-part-1/market-pricing-psychological-method/).

It is considered a psychological strategy as it has a psyhcological effect on the customer's and affect her or his buying behavior. Prestige pricing points to a strong correlation between perceived product quality and price.
( see full article at http://www.knowthis.com/principles-of-marketing-tutorials/setting-price-part-1/market-pricing-psychological-method/).

It is appropriate for many instances. For example, the less a customer knows about a product the more likely they are to judge the product as being of higher quality based on ...

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