Low and High End Products

Paper Summary:

This paper examines the determinants for organizations to offer both low and high price products. The author defines and discusses the four determinants: competition, technology, consumer heterogeneity and markets. The paper also gives examples of organizations adopting this approach and lists the possible reasons for them doing so.

From the Paper:

"Thus, a company famous for its luxurious products is not likely to start producing/selling cheap products under the same brand as the expensive one. Aston Martin is a good example for this case. The car brand has stood as a symbol for luxury lifestyle for a long time and between 1994 and 2007 it was a division of the Ford Motor company. In this interval Ford Motor never tried to manufacture a cheap vehicle under the same brand, which could have jeopardized the brand's image and indirectly its value."

Sample of Sources Used:

• Baye, M. R, Morgan J. & Scholten P. (2003). Temporal Price Dispersion: Evidence from an Online Consumer Electronics Market. Journal of Interactive Marketing, Vol. 18(4): pp. 101-115.
• Hirsh, L. 2006. How Big is Ecommerce? Ecommerce Times, February 27, www.ecommercetimes.com
• Knorr, A. & Zigova, S. Competitive Advantage Through Innovative Pricing Strategy: The Case of the Airline Industry, Berichte aus dem Weltwirtschaftlichen Colloquium der Universitat Bremen, nr. 93, ISSN 0948-3829.
• Mulpuru, S. 2006. US eCommerce: Five-Year Forecast and Data Overview - North American Consumer Technology Adoption Study. Forrester Research, www.forrester.com
• Thorlacius, B. 2006. Price Differentiation - The Law of One Price in Retail e-Commerce. Kobenhavns Universitet - Okonomisk Institut.

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