La Belle introduces a cut glass perfume bottle priced at $299 each, despite its primary competitor offering a similar scent at $99 per item. La Belle believes that customers seeking luxury goods will prefer its product due to the perception that a higher price implies superior quality. Which pricing adjustment strategy is reflected in this rationale?

Question

BlackTom AI · Accepted Answer

The scenario describes a firm pricing a perfume bottle at a notably high price to create an impression of luxury and superior quality. This leverages consumer psychology that higher prices can signal higher quality or exclusivity, influencing purchasing decisions.
Option 1: Seasonal pricing. This strategy adjusts prices in response to seasonal demand or supply changes (e.g., holidays, peak seasons). The example does not reference seasonality, so this is not the correct rationale.
Option 2: Captive product pricing. This involves pricing a main product attractively while charging higher prices for inevitable ancillary items or consumables (e.g., printers cheap but ink expensive). The perfume bottle scenario doesn’t involve ancillary products or lock-in items, so this is not applicable.
Option 3: Time-based pricing. This approach changes prices over time (e.g., dynamic pricing, discounts for limited windows). The described jump to a high price to signal luxury does not hinge on time-related adjustments, so this is incorrect.
Option 4: Location-based pricing. This strategy varies prices by geographic location, often due to differences in market conditions or taxes. The scenario does not discuss geographic variation, making this option unsuitable.
Option 5: Psychological pricing. This category includes tactics that influence perceptions and behavior, such as premium or prestige signaling through a high price to imply superior quality. The reasoning aligns with the notion that customers interpret higher prices as higher quality, which matches the intended effect described.

MKTG1199 LF04 - In-Class Test 2

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