A price signal is a price that is designed to convey a marketing message. The following are illustrative examples.
Luxury SignalsA luxury fashion brand prices a bag at $50,000. They don't mind if few customers purchase the bag because it is meant to serve as a symbol of the brand. Customers who purchase the brand's $700 bags get the status of a brand with a $50,000 bag.
Social SignalsHistorically, many bars and nightclubs offered a "ladies night" with discounted prices for women. This served as a signal to men that women would likely attend. It should be noted that prices based on gender may no longer be considered socially acceptable or legal depending on culture and jurisdiction. However, similar signals are still common. For example, a "happy hour" with discounted prices for all may be used to signal a lively environment.
Welcoming SignalsPricing the seeks to welcome a target market. For example, a restaurant where kids eat free is sending a message that the restaurant welcomes families.
GoodwillSignals that seek to build goodwill with a community. For example, a convenience store that offers meals for $1 that have a value of $10 to a region that experienced a recent disaster and economic setback such as an earthquake. This is the opposite of price gouging whereby a firm tries to take advantage of a disaster by increasing prices.
EngagementSignaling involvement in a community, culture, cause or event. For example, a restaurant that sponsors a local sports team that offers discounted prices when they make the playoffs.
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