Maria and Kiana are shopping for ball gowns for a charity ball to be held at The Peninsula Hotel in Beverly Hills,California,a five-star,$825 per night hotel.Maria suggests that they look for dresses at Sax Fifth Avenue,Nieman Marcus,or Versace so they will blend with the wealthy people at the hotel.She also asserts that clothing purchased at these stores will be of higher quality and value than clothing purchased at Macy's,J.C.Penney's,or Ross even though they could find dresses by some of the same designers at those stores.Kiana asserts that dresses bought at Macy's,J.C.Penney's,or Ross by the same designers are the same as those from the high-end stores and will cost far less.Kiana tells Maria that paying more for a dress by the same designer does not make it a better dress.When buyers equate the status,quality,and value of a luxury item with its cost,what part of the pricing strategy is involved with setting prices of these luxury items?

Question

Quizplus · Accepted Answer

Pricing perceptions are involved with setting prices of luxury items. This is when the price of a product is related to the perceived quality and exclusivity of the product, rather than just the cost of producing it. Luxury brands often set high prices to create an image of exclusivity and quality, which appeals to consumers who are willing to pay more for perceived status and prestige.

Maria and Kiana Are Shopping for Ball Gowns for a Charity