ITPEC FE Morning October 2021 Question 67
ITPEC FE Morning October 2021 — Question 67 of 80
Prestige pricing sets a deliberately high price to exploit the consumer perception that "high price = high quality." Luxury brands commonly use this approach.
Why not others:
- (a) Cost plus pricing — price is calculated as production cost + fixed markup percentage. No psychology involved, purely cost-based.
- (b) Differential pricing — charging different prices to different customer segments for the same product (e.g., student discounts, regional pricing).
- (c) Market price following pricing — setting prices based on competitors' prices (following the market rate), not on psychological perception.
Key rule: If the question mentions "consumer psychology" + "high price = high quality," the answer is prestige pricing.
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