Question

Because consumers associate a drug's price with potency, some pharmaceutical companies use the _____ strategy to price their over-the-counter drugs.

Answer 1

Some pharmaceutical companies use the symbolic or prestige pricing strategy to price their OTC drugs. They do this because many consumers see a price and assume the potency of the drug on the dollar amount--something more expensive is assumed to be more potent. Symbolic/prestige pricing assumes high prices equal high quality in the minds of consumers.