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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

Ray-Ban's objective of promoting the new line as an "affordable luxury" and plans for significant promotional expenditures suggest that demand-based pricing would be the most appropriate pricing strategy. This involves setting the price based on the customers' perceived value of the product rather than simply the cost of production or markup over the cost. Ray-Ban wants to gather information about customer perceptions of other brands sold through department stores, which would help in determining the demand for their new product and setting the price accordingly.

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