In the printer and cartridge market,key challengers are unable to undercut the very low prices offered by the market leader,Hewlett Packard (HP).However,HP charges relatively high prices for replacement cartridges ($50-$80 each).In an effort to gain ground in this highly competitive market,Canon,using the insight that customers resented the high prices of printer cartridges,saw an opportunity to compete on prices for ink-jet cartridges and came up with a very fair offer of $12 per cartridge.Both Hewlett Packard and Canon face which type of pricing situation?
A)captive-product pricing
B)optional market pricing
C)penetration pricing
D)by-product pricing
E)price bundling

Question

Quizplus · Accepted Answer

Captive-product pricing is the correct answer because HP and Canon are selling printers (the main products) at low prices but are charging high prices for the necessary replacement cartridges (the captive products). Canon's strategy to offer lower-priced cartridges directly targets this pricing model.

In the Printer and Cartridge Market,key Challengers Are Unable to Undercut