Price is an under-rated element of the marketing mix. Pricing strategies can be employed to achieve a host of outcomes, relative to the objectives set.
As far as performance predictors are concerned, price indicates quality. Let's look at cars as an example.
If BMW and Hyundai were to reverse their car prices, how would your perception of the quality of their vehicles change? BMW has been positioned as a luxury car provider and its prices MUST reflect this position or sales will NOT be maximised.
When there is a mismatch between quality and price, prospective customers will hesitate as a result of the confusion created (at the subconscious level). This hesitation is likely to either stop the sale in its tracks or cause the prospective customer to begin the decision making process again (with the aim of looking for more or less value).
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