Pricing and quality
The various elements of the marketing mix need to be consistent with each other. It is important, therefore, when choosing a price that it fits with the other elements of the marketing mix. If a product is priced towards the top end of the market, the promotion must develop a high quality image.
In the same way there will be a close correlation between price and product. A product that is perceived by consumers as high quality may command a premium price, but the reverse is true as well. In his book Marketing Management, Philip Kotler proposes a price quality strategy matrix. This is shown below.
|High price||Medium price||Low price|
|High quality||Premium price||Penetration pricing||Superbargain|
|Medium quality||Overpricing||Average price, average quality||Bargain|
|Low quality||Hit and run pricing||Shoddy goods||Cheap goods|
Place examples of products in each of these segments.