HP sells an inexpensive printer for an entry-level user, but the printer cartridges that need continual replacement are fairly expensive. This demonstrates the concept of ________.
A) product line pricing
B) captive pricing
C) price bundling
D) reference pricing
E) prestige pricing

Question

Quizplus · Accepted Answer

Captive pricing is a strategy in which a company offers a product at a low cost but makes a profit by selling a complementary product that must be replaced frequently and at a higher cost. In this case, HP is selling an inexpensive printer (the low-cost product) and making a profit by selling expensive replacement cartridges (the complementary product) to entry-level users. This encourages customer loyalty, as customers are more likely to continue buying the expensive cartridges rather than switch to a different brand of printer that uses less expensive cartridges.

HP Sells an Inexpensive Printer for an Entry-Level User, but the Printer