Thursday, March 4, 2010
Kotler defines psychological pricing as a pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product (Kotler, 276). Below is an example discussing the shoe brand Manolo Blahnik, which has incorporated this pricing strategy into their marketing plan.
Those who know a little about fashion know that Manolo Blahniks are high-end, designer heels. However, few can actually afford these exceptionally high-priced shoes that range from $500-14,000). While Manolo Blahniks may be higher in quality than your average high heel, the pricing of these luxury items seems to be an example of psychological pricing. I find it hard to believe that their prices truly reflect their quality, and instead reflect the customer-perceived value. Much of this customer-perceived value can be credited to its rise in popularity with the rich and the famous (thanks to its frequent features in the show Sex and the City). As a result, many fashionable women today see Manolo Blahniks as a must-have accessory to flaunt their status and style. This perceived value also comes from their pricing. The Manolo Blahnik brand has positioned itself high up on the pricing spectrum, convincing their buyers that these shoes are high-priced for a reason. Manolo Blahnik prides itself in its exclusivity based on their high prices and limited availability of each design. Manolo Blahnik has done quite well with their pricing strategy considering their fame and success.