Scenario 12.3 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 12.3. 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

Ray-Ban wants to position the new sunglass line as a more distinctive brand and priced higher than other brands in the store. Therefore, demand-based pricing is the most appropriate method for pricing this new product line as it considers customers' perceptions and willingness to pay for the product, which aligns with Ray-Ban's objective to promote the new sunglass line as an "affordable luxury". Competition-based pricing, cost-plus pricing, and markup pricing are less relevant in this case as they do not take into account customers' perceived value of the product. Differential pricing is also less relevant as Ray-Ban wants to price the new product line as an "affordable luxury", indicating a single price point rather than different prices for different market segments.