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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

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Place examples of products in each of these segments.