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Examines the phenomenon of “price signalling”, wherebyconsumer goods manufacturers attempt to signal higher quality via ahigher price when objective product quality is, in fact, notdemonstrably superior. A study of two similar facial moisturizers showedthat higher price alone did not succeed in signalling higher quality, butthat higher price accompanied by premium‐quality signals in the otherelements of the marketing mix (advertising, packaging, in‐storelocation) does succeed. To put it more generally, a “premiumpricing strategy” cannot be successful if price is the onlymarketing variable emphasized. Brand managers should therefore think interms of a “premium quality positioning” that requires theapplication of quality cues across the marketing mix.