Final answer:
Value-based pricing is the technique where prices are set based on the perceived value of the product to the consumer, not just the cost of production or historical pricing. This method considers factors like product features and brand reputation to determine how much a customer is willing to pay.
Step-by-step explanation:
The technique in positioning strategies that emphasizes how much will be paid for the quality given, as well as how the consumers see the value of the product, is Value-Based Pricing. This strategy involves setting the price point based on the perceived or estimated value of a product or service to the customer rather than on historical prices or direct costs. The perceived value can come from product features, brand name, customer experience, and some other factors.
For example, if a monopolistic competitor like Authentic Chinese Pizza considers its unique offering in the market, it might use value-based pricing to determine that for the quality and uniqueness of its pizza, customers are willing to pay $16 per pizza. The decision is made after analyzing its profit-maximizing quantity of output and the perceived demand curve. If consumers perceive the pizza's value as high due to factors like taste, authenticity, or brand reputation, value-based pricing allows the pizza company to charge a premium price.