When a company produces an inferior product and sells it at the same price as the better quality product of another firm, in the belief that consumers will equate the inferior product with high quality, then the company follows a _________ pricing strategy.

Question

Quizplus · Accepted Answer

The described pricing strategy is known as price signaling, where a company intentionally prices their inferior product at the same level as a competitor's better quality product to signal to consumers that their product is of comparable quality.

When a Company Produces an Inferior Product and Sells It