Marketing and Consumer Behavior
Why can companies mark up their prices and stay in business?
Research Question:
In our world today a stigma exists between brand name products and the upper class and a common association between high prices and brand name items exists. Everyday marketers price products based off of researched consumer behavior, they price products at an excessive price compared to the cost to produce it, yet still sell their products and stay in business. Typically, the consumer is aware that brand names cost more money and consumer behavior has shown that the consumers are willing to pay high prices for these specific products and certain brands. Why is it that marketer’s mark up their products and that consumers are willing to purchase products and brands regardless of the price? Do marketers know the consumers will purchase their products regardless of price and take advantage by pricing them high? Is an underlying ethical issue present in the way companies are marketing their products? An interesting relationship occurs between consumers and brand name products and studies have shown consumers will spend any amount for a product they have justified they need or want. Furthermore, studies have shown that consumers purchase regular and brand name products based off of psychological driven needs. As a result of consumer’s physiological buying habits, marketers have based their pricing tactics off of it, resulting in excessively high mark ups. Although companies need to price their product in order to make a profit, in today’s world marketers are unethically pricing their products based off of the psychological drives that fuel consumers to buy; marketers have taken high mark ups too far and are taking advantage of unaware consumers; consumers need to become aware of this growing issue and shop better with their money.
Mark Up’s Economics