Marketing Research Essay Example | Topics and Well Written Essays - 500 words - 2

Marketing Research - Essay Example Consumer psychology being used as a factor to charge a high price is a strategy known as premium pricing. It might be assumed that this kind of strategy would be used to skim the market and take as much profits as possible and finally will have to be abandoned. This hypothesis is, however, incorrect to assume. As Smith (1997) alludes, premium pricing strategy might not simply aim to skim the market rather to maintain a high priced brand value without straining the consumer to an extent leveled with the skimming strategy. If the company prices its wines at a price much higher than the actual cost, but keeps it within affordable limits of the targeted market segment, the product is likely to establish a significant brand value. Brand value, however, is dependant on the kind of advertisement that has been done and the branding cost to establish the product while pricing itself is an independent variable as the actual costs of the product are not a deciding factor. Brand value in the example research were measured by mere exhibition of cost to the sampling participants. The assumption of a better reputation and taste based on the cost confirms the premium pricing method for the product to be an effective technique that utilized the expectation of the participants from a high priced wine to be better in taste as per Emmerich’s (2005) research. Other variables, as Emmerich (2005) states, that could affect the results of such a strategy include competitive forces; competitors will have the advantage to sell their products at lower prices and continuously challenge the price of the product. Researches could have measured comparison with competitive brands as an additional variable. An experiment to test this will require each participant to test and sample the wine qualitatively only knowing the tagged prices and not the actual prices. The given example employed a simple random sample of 20 participants, in a