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Pricing decisions can be among the most challenging tasks for a marketer. Setting price seems to be part art, part science. A fundamental pricing idea is that value is in the eye of the beholder (or more specifically, the mind of the buyer).
One way that consumers evaluate price is to compare a product’s price. Marketing expert Sean D’Souza says evaluation of product price without anything else to compare to does not communicate value. Price judgments are not made in a vacuum but rather in reference to other prices.
In the article “Do Lower Prices Lead to More Sales?,” Sean D’Souza answers his headline with an emphatic “no.” His solution is for a business to develop a product line that has offerings at different price points, creating comparisons across your products rather than comparing with competing products or there being no comparison at all (pricing in a vaccum).
- Take a stance either for or against D’Souza’s call for developing a product line with different price points. Is this the most effective way to communicate product value via the price element of the marketing mix?
Answer:
Having a product line with different price points can be an effective way to communicate product value through pricing, as it allows consumers to make comparisons and evaluate the products in relation to each other. This approach can help to build a sense of perceived value in the minds of consumers and can support differentiation between different offerings in the product line. Additionally, offering products at different price points can also make it easier to target different segments of the market, based on their individual needs and preferences.
However, it’s worth noting that developing a product line with different price points is not a universal solution, and other factors such as product quality, brand image, and marketing communications can also play a role in shaping consumer perceptions of value. It’s also important for businesses to be aware of the potential risks of this approach, such as confusing customers or damaging brand image if the quality of the products varies significantly between price points.
In conclusion, having a product line with different price points can be an effective way to communicate product value, but it’s important to consider other factors and the potential risks involved.
