A pricing strategy that sets the price at a premium under the assumption that people will pay more for the product because of the product's brand name, media attention, or some other reason that has piqued the interest of the public is known as .

Prestige pricing

Explanation:

Prestige pricing is a concept in which a company set the price of it's product higher than that of its competitor to make the product seem as it has higher quality.

In today's world, consumer tend to compare prices of similar products and sometimes chooses the one with higher price. One might think that this is absurd but the way human mind work differs. Higher price does not guarantee quality while lower price does not guarantee inferior.

People would buy products with higher price because they think that the higher the price, the higher the quantity of the product and vice versa. They think that if a company could set the price of its product at a price higher compare to its competitor, it must be that the product is of high quality.

One of the reasons why company engage in prestige pricing is because of their brand. Once a company has built it's brand, they sometimes tend to get away with setting higher prices for their product because they know that customers would still buy them.

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