Strategic Considerations
The use of premium pricing as either a marketing strategy or a competitive practice depends on certain factors that influence its profitability and sustainability. Such factors include:
- Information asymmetry (e.g., when buyers have no independent basis to test claims of "exceptional quality" for a particular product or service -- assuming the concept is well-defined to begin with);
- Market status as a Luxury good or a Superior good; and
- Market dynamics such as the level of competition and entry barriers.
The disadvantages of this pricing strategy includes:
- not possible with commodity goods
Read more about this topic: Premium Pricing
Famous quotes containing the word strategic:
“If the technology cannot shoulder the entire burden of strategic change, it nevertheless can set into motion a series of dynamics that present an important challenge to imperative control and the industrial division of labor. The more blurred the distinction between what workers know and what managers know, the more fragile and pointless any traditional relationships of domination and subordination between them will become.”
—Shoshana Zuboff (b. 1951)