DECA Sports and Entertainment Marketing Practice Exam

What is a common tactic used in prestige pricing?

1. Offering frequent discounts

2. Setting higher prices to reinforce quality perception

3. Using a cost-plus pricing strategy

4. Conducting loss leader pricing

The correct answer is: Setting higher prices to reinforce quality perception

The correct choice highlights the strategy of setting higher prices to reinforce the perception of quality among consumers. Prestige pricing is a pricing strategy used primarily by luxury goods and services, where higher prices are established to create an impression of superior quality, exclusivity, and status. This approach is based on the idea that consumers often associate high prices with high quality; therefore, when a product is priced higher, it can enhance its perceived value in the eyes of consumers. This tactic is commonly employed in industries like fashion, automobiles, and high-end electronics, where the brand image and consumer perceptions play a critical role in purchasing decisions. By maintaining higher price points, companies can position their products as premium offerings, attracting customers who are willing to pay more for perceived value and exclusivity. Other strategies, such as offering frequent discounts, using cost-plus pricing, or conducting loss leader pricing, do not align with the principles of prestige pricing, as they either aim to drive volume through lower prices or focus on covering costs rather than creating a premium image.