Psychological Pricing

Recently while reviewing for the test, I came across the Gibson example, and how when they lowered the price of their guitars, they found that less people were purchasing them because they thought they were lower quality.  This was kind of interesting to me because I actually for the first time realized that I do this with guitars all the time.  I never really took notice of the effect that pricing has on how I determine the quality of the product.

I go into Guitar Center often and play all different brands of guitars just because I can't afford most of the ones I want.  However, I noticed that I immediately grab the most expensive ones, even when there is an identical model made by the same brand hanging right next to it.  For some reason, I just presume the one with the higher price tag is the better guitar.  It really is crazy to think about.  To be honest, I doubt I could tell the difference in the sound of a guitar that lets say is $500 and one that is $1800.  For the most part they sound almost exactly the same and feel pretty similar when I play them.  Yes, maybe there are certain aspects such as the type of wood that may be of higher quality in the more expensive model, but this doesn't necessarily change the sound.

I guess what I am trying to say is that sometimes the actual quality of the product does not determine the purchase or even the consumers perceived value of the product.  A lot of times it comes down to the price that signals quality to the consumer.  Therefore, I do believe it makes sense to price a product such as a guitar at a higher price because the consumer who is not experienced enough to really determine the difference in quality of a product, will automatically proclaim that the more expensive one is the better product.  Ultimately this leads to more sales for the company and allows them to compete with other models in their product category.