Question

Consumers are more likely to perceive the value of a product to be less than its price tag indicates if the product's _______. a. demand and supply attain the state of price equilibrium b. price is set too high in their minds c. demand is inelastic d. manufacturer gains very little profit from the product

Answer 1

Consumers are more likely to perceive the value of a product to be less than its price tag indicates if the product's (B) price is set too high in their minds.

• Consumers assume that a higher price denotes a higher quality, but they also assume that they will have to make a bigger financial investment to buy the product.
• As a result, perceived value is the result of the trade-off between perceived quality (i.e., gain) and perceived sacrifice (i.e., loss).
• Lower costs may help you win the sale if the customer feels like they are receiving a good deal.
• On the other side, cheap prices could imply that the item is of subpar quality.

What is consumer perception of price?

• Price perception is influenced by how well people comprehend and interpret price information.
• One of the customer evaluations used to compare the level of sacrifice required to receive items and services is price perception (Zeithaml,1988).

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