Pharmacies are a relatively new addition to Costco. Costco has a stated philosophy of marking up merchandise a maximum of 14 percent. When that philosophy is applied to prescription drugs, warehouse club prices can be dramatically lower than those of conventional drugstores. Which type of strategy is Costco using to convince consumers to use its pharmacies rather than its competitors?
A)penetration pricing
B)price-insensitive demand
C)price skimming
D)cost bundling

Question

Quizplus · Accepted Answer

Costco is using penetration pricing strategy by pricing their prescription drugs lower than conventional drugstores to attract customers to use their pharmacies rather than their competitors. Their maximum markup policy of 14 percent ensures that the prices remain competitive and affordable for consumers.

Pharmacies Are a Relatively New Addition to Costco