Identify and describe the three types of product-line pricing.

Question

What will be an ideal response?

Answer 1

Product-line pricing means establishing and adjusting the prices of multiple products within a product line. Product-line pricing can provide marketers with flexibility in setting prices. When marketers employ product-line pricing, they have several strategies from which to choose. These include captive pricing, premium pricing, and price lining. When marketers use captive pricing, the basic product in a product line is priced low, but the price on the items required to operate or enhance it are higher. This pricing strategy is effective because consumers must purchase more of the operating items than the basic product, over their lifetimes. Premium pricing occurs when the highest-quality product or the most-versatile and most desirable version of a product in a product line is assigned the highest price. Other products in the line are priced to appeal to price-sensitive shoppers or to those who seek product-specific features. Marketers that use premium pricing often realize a significant portion of their profits from premium-priced products. Price lining is the strategy of selling goods only at certain predetermined prices that reflect explicit price breaks. It eliminates minor price differences from the buying decision-both for customers and for managers who buy merchandise to sell in these stores.