A company that produces men's electric shavers reasons that people who highly value being clean-shaven will buy a lot of replacement blades; on the other hand, people who place a low value on being clean-shaven will rarely buy replacement blades. What type of pricing strategy will maximize profits for this company?

Question

Quizplus · Accepted Answer

By charging a relatively low price for the electric shaver, the company can attract customers who place a low value on being clean-shaven. However, by charging a relatively high price for replacement blades, the company can maximize profits from those customers who highly value being clean-shaven and are willing to pay more for replacement blades. This pricing strategy allows the company to capture as much value as possible from each group of customers.

A Company That Produces Men's Electric Shavers Reasons That People