loss leader”. This is the product, for which the seller sets the price below the operating margin. This causes some loss to the company, but the expenses are covered by the attraction of customers to the other products as well (Boone & Kurtz, 1992). This category overlaps with the category of promotional pricing, which views pricing is the main element of the marketing mix (Boone & Kurtz, 1992). Marketing managers are also well aware of the existence of the price/quality relationship, which implies that the majority of consumers are persuaded that there is a direct dependence between the price of the product and its quality, meaning that high price indicates good quality and vice versa. One of the most prominent evidence of this is the case of the snack cake Twinkies, which was considered to be of low quality solely on the basis of its lowered price (Semenik & Damossy, 1995). Prestige or Premium pricing is applied by the marketing managers in cases when they apply the price, which is at the top of the possible price range. In spite of the seeming groundlessness of this step, it still proves beneficial for the company, due to the case that the customers expect the high price to be the sign of good quality. The other explanation is the persuasion of some customers that high price is the indicator of the high status of its buyers. . Types of Pricing and Effective Pricing Framework.
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