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
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Famous quotes containing the word strategic:
“The practice of S/M is the creation of pleasure.... And that’s why S/M is really a subculture. It’s a process of invention. S/M is the use of a strategic relationship as a source of pleasure.”
—Michel Foucault (1926–1984)