A price discrimination strategy can be executed in different ways. Here are some examples that will help E-commerce projects make their pricing more flexible and effective.
Prestige pricing is regarded as a psychological pricing approach because it doesn't solely rely on competitor prices or the cost/value ratio. Since this method is more intricate and heavily depends on customer behavior, it might be compared to a marketing ploy because it is reliant on your branding and marketing efforts. If you charge more, it will help to build a prestigious environment around that product, but you will have to employ other marketing strategies to emphasize it.
There is a clear correlation between the price you charge for a product and the image you create for it. You wouldn't want to damage your company's reputation by charging a low price if you have already invested in marketing that would persuade clients that you offer a premium good or service.
The first crucial point is that buyers frequently fail to distinguish between worth and price. Therefore, a product's value increases with price. How often have you heard someone claim that a Lacoste shirt is roughly equivalent in quality to one from H&M? We all can occasionally think, "These watches cost much more than the others – there must be something remarkable about their features and performance,"
however this isn’t always true.
If you do in-depth research, you may reveal that premium-priced products aren’t superior in quality to their counterparts from less well-known brands. Despite this discovery, you may occasionally choose a costlier alternative. Why does that happen? Because premium pricing is based on the following consumption patterns:
- People buy a brand name when everybody around prefers it. Have you ever wondered why Apple, Nike and other giants put their logos right on their goods?
- People buy just because they are financially capable of purchasing a prestigious product.
- People buy something unique or very limited to enjoy the fact of owning a unique product that no one else can possess.