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Disadvantages Of Price Premium

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In current competitive environment where everything is changing rapidly and making all the advancements volatile there needs to be an urge of expanding the clientele and the profitability at the same time. Price premium is a phenomenon where any firm or brand charges more than routine charges for the products. Price premium is taken as the best and most useful estimate of brand equity (Aaker, 1996; Sethuraman, 2000). Price premium is the additional price which consumers are paying for the products, these are high charged products compared to the competitors (Aaker, 1996). According to Aaker price premium can have negative and positive effects. There has to be something special about the brand which makes it distinctive amongst the rest in order to attract the customers. There are few determinants which makes a product or brand different from others. It has to be made clear that there is a difference between price premium and premium prices. Previous researches have proved that it is more expensive to produce high quality products and low quality products will cost less. These high quality products will be charged high and these are premium prices and products are called premium products (Rao, 1993). On the other hand same quality of product which is charged higher if compared with the competing products then it will be called price premium.

Quality is a conceptual determinant and it is on the consumers how they perceive the quality. If food industry is considered then there
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