What is captive product pricing?
For instance, captive product pricing is a pricing strategy devised to attract a large volume of customers to a one-time purchase of a lower-priced core (or main) product that requires accessory (or captive) products for the main product to function. Consequently, companies might initially lose core product sales.
What is captive product pricing with example?
Captive pricing happens when an accessory product is necessary to purchase in order to use a core product. Classic examples of this include products like razor blades for razors and toner cartridges for printers. This is also called by-product pricing.
What is captive product pricing and by product pricing?
Captive product pricing is the pricing of products that have both a “core product” and a number of “accessory products.” It’s a pricing strategy that takes advantage of a product that will be used primarily to attract a large volume of customers.
What is a captive product?
A captive product is any accessory product that must be sold in addition to a base product. As a result, captive product pricing is how you price those core products and accessory products.
In what way pricing of captive products can increase sales?
Captive product pricing increases sales of several products by offering core and accessory items that require each other for full use. Within the captive pricing strategy, core products usually require a one-time purchase of relatively low value.
What is the purpose of a pricing strategy?
A pricing strategy is a model or method used to establish the best price for a product or service. It helps you choose prices to maximize profits and shareholder value while considering consumer and market demand.
What is captive pricing and how to use it?
Captive pricing must be done carefully, for the pricing of a core product could affective the value of a captive product, and vice versa. Captive pricing is often used by companies that have perishable product attachments, like ink for printers.
Why do firms use captive marketing strategy?
This strategy is adopted by the firms to attract the customers for the low priced core products and make revenues from the markup added to the captive products. Attract more customers for the low priced core product. With the increased customer base, the sale of a captive product also increases.
Does the pricing of a core product impact the captive product?
Make note—captive product pricing must be done carefully because the pricing of a core product could impact the perceived value of the captive product and vice versa. You’ve definitely seen captive product pricing before, without even realizing it.
What are the captive products?
The Captive Products are the products that are specifically designed to be used with the core products, or these products are necessary for the functioning of the core product. This strategy is adopted by the firms to attract the customers for the low priced core products and make revenues from the markup added to the captive products.