The price variable relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices. Setting price objectives is critical because they form a foundation on which the decisions of subsequent stages are based. Objectives for Red bull include organisational and marketing objectives such as profit, return on investment, growth and status quo.
Assessing the target market’s evaluation of price tells the marketer how much emphasis to place on price and may help determine how far above the competition the company can set its prices. In Red bull’s case the price of $2.65 more than 0.35c than the other leading competitors V and Mother tells us what they think about their target market. The price tells us that the target market has characterised the product that signifies prominence and status i.e. the market has characterised the product to their degree of prestige sensitivity. This means that the product has high quality in the minds of the buyer.
By marking the price 0.35c above the leading competitors marketers at Red Bull use their price to distinguish from the other competing brands. This is an example of non-price competition. A major advantage of non-price competition is that Red bull builds customer loyalty, again catering the needs of their target market that will purchase the product again for the benefits. This method ensures that the product has a superior quality compared to its competitors and hence will act on the consumer’s thought process as they use the price quality association.
On external factor that has been taken into consideration is the customer’s interpretation and response. Customer’s interpretation of and response to a price are to some degree determined by their assessment of what they receive compare with what they give up to make the purchase. Red Bull focuses on delivering a high quality product and thus reflects with their price. Hence...
Please join StudyMode to read the full document