Principles of Marketing

Identify an example of each of the following terms: premium pricing, penetration pricing, economy pricing, psychological pricing, and promotional pricing. Discuss a time when you decided against purchasing something that was priced the lowest. What factors went into your decision to pay the higher price? For what product would these factors not influence your purchase decision?

Please include the name of the person or question to which you are replying in the subject line. For example, “Tom’s response to Susan’s comment.”




An example of premium pricing would be a luxury brand such as Louis Vuitton. Since they are known for their high status, they can dramatically increase sales volumes by having sales and discounting certain items. Louis Vuitton has been around for many years and has already been known for its high brand value. An example of penetration pricing would be utility companies. Comcast for example offers a low price for newcomers such as discounted channels and services, but after the end of the promotion period, the price increases dramatically. An example of economy pricing would be genetic food brands such as Great Value. “Why are they priced so low?” one may ask. This is because they don’t really use much marketing or promotion expenses. An example of psychological pricing would be reducing the left digit of a price such as $10.99 instead of $11. This is because customers perceive the price to be smaller. An example of promotional pricing would be “buy one, get one free” products. Customers would be more likely to purchase the products because they believe that they are getting a great deal by the “get one free” part. I have decided against to purchase things that was priced lowest because I felt that I didn’t need it or it wasn’t up to my expectation of quality. Some factors that went into my decision to pay the higher price would be better quality, brand name, design, and how it looked/felt. Of course, not all the time would I purchase things based on these listed factors. Sometimes I would see if I am getting a better deal for the exact same quality or if a friend gave me a great recommendation of a product I never even thought about.

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