Question

If a manager designs the shoe department in a manner that one of its private-label pairs of shoes, priced at $39.99, is positioned next to a well-known national brand of shoes priced at $69.99, what strategy is the manager attempting to accomplish?

Answer 1

This is reference pricing. The store-brand of the shoes is placed close enough to the national, name-brand that the customer can see the difference in the two prices. This gives the customer a reference point to see how much they might actually be saving by going with a private-label product.