Scenario 20.1 Use the following to answer the questions.Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands.
-Refer to Scenario 20.1. Ray-Ban has decided to promote the new sunglass line as an "affordable luxury" and plans significant promotional expenditures. With these objectives, which of the following should Ray-Ban use to price its product line?
A)competition-based pricing
B)cost-plus pricing
C)markup pricing
D)demand-based pricing
E)differential pricing

Question

Quizplus · Accepted Answer

Demand-based pricing would be the best choice in this scenario as Ray-Ban wants to position their new line as an "affordable luxury" and wants to gather information about customers' perceptions of other brands sold in department stores. By using demand-based pricing, Ray-Ban can determine how much customers are willing to pay for their new sunglasses and set the price accordingly. This approach will also allow Ray-Ban to differentiate their product from competitors and justify a higher price point.