Price quality relationship refers to the price is exactly match with the quality of the product or service. In the market place, the price is viewed as the payment for quality of a product. A market place offers a bundle of features of value products or services. This bundle may include physical or performance features. These features are the reliability of the product, convenience of use, the flexibility of use and the aesthetics of appearance.
- Price= Quality/ Value
There are a wide variety of products and services. Among them, it is hard to choose a better one. that’s why marketers offer different types of pricing with different types of quality. They make it available for all types of buyers at once.
So, comparing the price and quality, customers can take their purchasing decision.
Price is the most visible thing. It directly impacts on a firm’s performance in the market. Based on the nature of the business, success is always measured by the extent revenues from sales. Ideally, a set of price will ensure the highest margin consistent with the volume consideration. Besides, it considers customer evaluations of products, response to competitive threats and predicts all competitive inroads.
Price views as marketing stimulus. Price along with other elements influence consumer response in terms of sales growth. A lower price or reduction in pricing can increase sales. In many industries, a major competitive tool is promotional pricing. It involves short term price cuts. The price discount is a stimulative effect of products or services. However, It is most obvious on shopping goods.
Moreover, promotional pricing serves a dual purpose. The retailer offers it for a limited time. On the other hand, manufacturers discount for capturing more market share. In those situations, products are purchased frequently. As a result, who switch to branded products never buy the local products. Because there exists a “Price-quality relationship”. These types of customer never think of pricing. They only bother for quality. So, they are ready to pay for quality products.
The price cut is a strategy of marketers. It is marketing stimuli which influence the customers. However, it identifies the target markets and segments the markets. Moreover, Defining the markets, it identifies the price-sensitive customers for measuring profit. Profit maximization is possible through allocating resources based on the responses to the marketing stimulus.