A 16-ounce bottle of Prairie Herb vinegar sells for $4.95, and a 16-ounce bottle of Heinz vinegar costs $1.05. Prairie Herb vinegar is new to the market, is perceived to be of higher quality, and provides a unique flavour to foods even though it is used in the same way as Heinz vinegar. Which type of policy is Prairie Herb vinegar most likely using?

Question

Quizplus · Accepted Answer

The pricing strategy used by Prairie Herb vinegar is price skimming. This is because it is a new product in the market and is perceived to be of higher quality, and thus it is priced higher than the existing Heinz vinegar. Price skimming is a strategy used by companies to set high prices for new products with unique features or benefits in order to maximize profits from early adopters.

A 16-Ounce Bottle of Prairie Herb Vinegar Sells for $4