When the Swiss Watchmaker TAG Heuer Quadruped the Average Price

question 119

Multiple Choice

When the Swiss watchmaker TAG Heuer quadruped the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is that

• A) the watch market is highly conservative.
• B) economies of scale in production would be substantial.
• C) retailers are not willing to carry new brands of watches in this category.
• D) once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
• E) the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

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Definitions:

Price-quality

The perceived relationship between the price of a product and its quality, where higher prices are often associated with higher quality.

Prestige-value

The perceived value of a product or service based on its prestige, status, or luxury appeal, rather than its functional attributes.

Price-prestige

The phenomenon where consumers perceive higher-priced goods to be of superior quality, leading to a positive correlation between price and the amount of prestige or status believed to be conferred by a good.

Promotional Mix

The combination of marketing tools used by a business to execute its promotional strategy, including advertising, sales promotion, public relations, and direct marketing.