BY:

RAHUL C-66
SAUDAMINI C-67
ABHISHEK C-68
ANUJ C-69
SWAPNIL C-70
 Sensitivity to price change varies from
consumer to consumer. Some important
characteristics are as follows:
 Prices are quantitative and unambiguous
whereas product’s quality, product’s image
etc are qualitative and ambiguous. Hence it is
easier to speculate about consumer behaviour
if prices rise than to speculate if there is
quality improvement.
 PRICE-QUALITY RELATIONSHIP-
-As testing the quality of products needs knowledge
and equipment, customers tend to look price as
reliable indicator of quality. So it is commonly
thought that what is costly is of a high quality.
In such cases, sales of certain goods could be
stimulated even with higher prices because-
a)It increases goods's appeal
b)It increases confidence of customer that he is
getting good quality
-If price is too low consumers tend to think that
the product is of inferior quality.
Hence, manufactures do not lower their prices
drastically even if there are innovations in
productions and raw materials would allow it.

With improvement in incomes, the average

consumer becomes quality and brand conscious.
Thus improvement leads to increase in demand.

Consumer can be persuaded even to buy high

priced products by heavy advertising
 Producers resort to marketing tactics
which actually exploit the consumers
psychologically. Some of them are as follows-

 DOUBLE PRICING-In this on the price tag are

printed and the higher price is crossed. The
consumer gets a feeling that the prices are
lowered by the company and in turn the
sales get boosted.
 PRESTIGE PRICING-A high price is maintained
and it is associated with prestige, so that
buyers attach prestige consideration to the
product.

 CUSTOMARY PRICES-Prices of goods maintained

more or less fixed.
 Thus a producer has a considerable
flexibility in pricing his products provided he
can create a positive psychological image of
his product in the minds of the consumers.