Page 9 - PCM - Pricing strategies Revista

PRICE SIGNALING REAL LIFE EXAMPLE

P Mango and Zara constitute great examples. We all
rice signaling occurs when there are two
know that some of the big clothes brands have
types of quality production levels: low
production in low development countries.
quality and high quality. Here firms can
choose one of the three approaches:
However, their stores charge high prices to
(1) sell low quality at a lower cost
clothes that sometimes do not have enough
(2) sell high quality at a high price
quality.
(3) sell low quality at a high price

Price signaling is most common for new or
amateur consumers. Therefore, companies play

with the customer’s perception of the relation
between price and quality.

For this strategy be executed with success, there
are some conditions:

(1) Information about price should be more

available than the quality
(2) Customers must want to buy high quality at
high prices even though the quality is uncertainty

(3) It should be sufficient customers that

understand the quality about the product and
even so they pay high price for high quality

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PRODUCT AND CLIENTS MANAGEMENT