Developing a pricing and packaging model is one of the essential steps of creating a successful business. The pricing strategy has a direct impact on the revenue stream, and it is the ultimate reflection of the value the company offers through its varied products. The product, Beat by Dr. Dre headphones, will use value-based pricing, augmented with the perceived value. The perceived value is the extra value that the product offers regardless of its intrinsic value (Prasad, Venkatesh, & Mahajan, 2015). It plays a role in informing customer choices and preferences; for instance, given an option between Beats by Dre. Headphones and generic Samsung or Sony headphones, most users will often pay substantially for Beats headphone despite the products serving the same purpose. From the preceding, customers pay extra for the familiarity and confidence instilled by the brand name in them. The process of creating a perceived value defends the product against commoditization, and prevents price erosion of the headphones by maintaining the brand value.
Sony and Samsung, some of the largest manufacturers of headphones, use the fixed pricing model. In this type of model, a client is charged a set price for the product. The importance of this strategy is that the time and resources committed to making the product are factored into its production. Without a clear understanding of the costs, a business can often lose money in the value-based pricing model. Moreover, the packaging of Sony and Samsung’s headphones users an elaborate strategy that incorporates brand requirements. The packaging contains brand aesthetics such as colors and fonts. However, for Beats headphones, the iconic logo is one of the essential determinants of its packaging strategy (Einstein, 2017). The logo, which many relates to, is one of the most potent forms that differentiates it from peer products and packaging.
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"Branding, Pricing, and Packing".
- Einstein, B. (2017). We Took Apart Some Beats Headphones and Here’s What We Found. The Huffington Post. Retrieved https://www.huffingtonpost.com
- Prasad, A., Venkatesh, R., & Mahajan, V. (2015). Product bundling or reserved product pricing? Price discrimination with myopic and strategic consumers. International Journal of Research in Marketing, 32(1), 1-8.
