What marketing strategy entails placing a product at a higher price to enhance its perceived value?

The correct answer is prestige pricing, which entails setting a product's price higher to create an aura of exclusivity and enhance its perceived value among consumers. This strategy is based on the understanding that certain consumers associate higher prices with higher quality. When a brand uses prestige pricing, it aims to attract a discerning market segment that values luxury and status, positioning the product as a premium offering in comparison to competitors.

Prestige pricing is commonly used in industries such as fashion, automobiles, and luxury goods, where branding and perceived value play crucial roles in consumer decision-making. By pricing products higher, companies can signal quality, exclusivity, and desirability, ultimately influencing consumers to view these products as more valuable.

In contrast, cost-plus pricing involves determining a price by adding a markup to the production cost, which does not necessarily convey any enhanced perceived value. Value-based pricing focuses on setting prices based on customer perceptions of value rather than production costs, which may not always lead to higher prices. Penetration pricing aims for market entry with lower prices to attract customers, which is the opposite of the prestige approach.