Friday, February 19, 2010
Value Added Pricing
Value-added pricing is attracting value-added features and services to differentiate a market offering and support higher prices, rather than cutting prices to match competitors (Kotler 260). Some companies do not have to enter into price wars yet still be profitable. We see this in high fashion market. A good example is Armani.
Some product can be very expensive, yet is very popular. An example is Armani clothing. Although the product of Armani is often very expensive, Armani has a solid brand and many people buy Armani products. For example, Armani suit here has a price tag of $1895.00 and Nordstrom offers to sell in its store. Rather than offering a low quality suit with a less price tag, Armani offers high quality designers suit with a high price tag. It uses high quality wool that makes the jacket comfortable. The contemporary design designed under the name of Armani lets the customer have the latest trend, justifying the high price tag. The fact that Nordstrom offers this suit and actually making sales illustrate how some customers are seeking values in the products they buy and they are willing to pay for it.
Nordstrom Armani page