Asked by Haddon Barrett on Jun 09, 2024
Verified
Some luxury product manufacturers will purposefully raise prices on their goods in order to reduce sales volume. This strategy may successfully increase sales revenue if the luxury goods are subject to the ________ effect and have relatively ________ demand.
A) bandwagon; elastic
B) bandwagon; inelastic
C) snob; elastic
D) snob; inelastic
Snob Effect
A phenomenon where the demand for a certain good increases as the price increases because the good is perceived as being more desirable, exclusive, or prestigious.
Luxury Goods
High-quality, expensive items that are not essential but are desired for their status symbol and prestige.
Inelastic Demand
A situation where the demand for a product or service does not significantly change in response to a price change, indicating consumers’ willingness to buy regardless of price adjustments.
- Comprehend the idea and influence of the snob effect on the marketing and price-setting strategies of high-end products.
- Examine the importance of elasticity within demand and its impact on the development of pricing approaches and market strategy formulation.
Verified Answer
EJ
Elizabeth JohnsonJun 13, 2024
Final Answer :
D
Explanation :
This is known as the snob effect, where customers are willing to pay a higher price for a luxury product that is exclusive and not easily accessible to others. If the demand for the product is inelastic, a price increase will not drastically affect the quantity demanded, leading to an increase in revenue.
Learning Objectives
- Comprehend the idea and influence of the snob effect on the marketing and price-setting strategies of high-end products.
- Examine the importance of elasticity within demand and its impact on the development of pricing approaches and market strategy formulation.